Free Business Report Example
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Business Report Example
The mind of every human is made in a way that every time an aspect of our life, present, past, or imaginary, is mentioned, colorful pictures – associations – are built in it. It the era of technological advance and all-absorbing shopping, the associations we get are usually connected with particular brands, or the names of the stores. It may be said that today we live in the time of brand recognition, being as loyal of costumers as it is possible to be. When talking about promptitude, elegancy and high class, one imagines Ferrari, Lamborghini, or Bentley. When mentioning ostentatious smartness, the richness of color and scent one may think about Chanel perfumes or Armani suits. But without a shadow of doubt, when talking about glamour, sex appeal and style, especially using it in the context of lingerie, one straight off thinks about…Now try to think…Frederick’s of Hollywood? Palmers? Wolford? No… Victoria’s Secret.
Yes, Victoria’s Secret is definitely glamorous, alluring, sexy and innovative. Moreover, containing the word “secret” in its name adds the spirit of delightful obscurity to the brand. In reality, the origin of a company name is often unknown. The Victoria of Victoria’s Secret probably is a referral to the British Queen Victoria. So one may presume that there was some kind of a “secret” concerning Queen Victoria. Or the concept of a “secret” is just a mere part of a branding strategy. However, having a background with aura of Anglicism, Victoria’s Secret was started in San Francisco in 1977 by Stanford Graduate School of Business alumnus Roy Raymond.
Roy felt embarrassed trying to purchase lingerie for his wife in public. The environment of the malls of that time was awkward and not encouraging for the buyer to buy. So Roy decided to change it. He opened the first store at Stanford Shopping Center, and quickly continued on his business with a mail order catalogue and 3 other stores. His main purpose was to establish a comfortable, pleasing, and relaxing atmosphere similar to that of a Victorian boudoir. Raymond’s stored were very different from their counterparts, instead of racks of bras and underwear in every size, there were several styles displayed on the walls. Men and women chose the style they liked and then asked the staff worker for help in picking out the right size.
The response to the Victoria’s Secret catalogues and newly opened stores was immediate and spectacular. From day to day “Raymond’s business mushroomed in size” yet he had problems meeting demand and “running the mail order business”. So under those circumstances in 1982, Raymond sold the company, which at that time consisted of six stores and couple of catalogues. The price was $4 million that the purchaser, Leslie Wexner, the founder of the Limited women’s apparel firm, was happy to pay.
From that time Wexner took the “reigns of government” into his hands and the company started growing at amazing speed. In 1991 Victoria’s Secret put out swimwear, which was a triumph. Two years later, in 1993 V.S. began selling cotton panties and a year later, in 1994, launched bath and body line and introduced Miracle Bra, asking for a potent on it. In 1995 the first runway show was held and the same year was marked by the spun off by The Limited. In 1996 they introduced such an innovation as seamless bras. And in 1998, having advanced with seven-league strides Victoria’s Secret went online with firm website. The company chose to move online as aggressively as it had always chosen to when building the brand. Soon Victoria’s Secret became a leader in online innovation as well as one of the top most-visited websites.
But Victoria’s Secret had not stopped on that and in 1999 they held the first live web fashion show. The tickets for the show had been extremely hard to obtain, and that brought much bigger attention and enthusiasm to the webcast. That same year V.S. has also debuted with Dream Angels fragrance collection that brought the company millions of dollars. Next year, in 2000, V.S. sponsored AIDS fundraiser with Miramax Films and launched first men’s fragrance collection. In 2001 it launched Pink fragrance as well as signed license with Shiseido Company Ltd. for cosmetics. In 2002 Victoria’s Secret announced “a 9% gain in first half-year 2002 sales and a 30% gain in operating income”. The years from 2003 to 2006 were marked by high profits, and even though the market growth was slowing down V.S. managed to have the average total sales (in millions) of $ 4,447.9(Limited Brands).
Over the course of its rather long life, Victoria’s Secret made buying lingerie not only a pleasure but a necessity. The main Victoria’s Secret’s achievement is that it has helped to attract attention to the lingerie industry, that used to be unnoticed. Before the appearance of V.S. lingerie area in the mall was overlooked, uncovered and hidden behind the seven doors. However, Victoria’s Secret took shopping for lingerie from the abandoned corners of the malls and put it in thousands of glamorous boutiques all over the United States.
Today Victoria’s Secret is the leading retailer of lingerie and beauty products. It operates more than 1,000 mostly mall-based stores across the United States. It is also a dominator of the lingerie world with modern collections, delicate fragrances, famous supermodels and world-famed runway shows. The company works for its customers having everything they might desire available for them. The buyer may purchase the product through Victoria’s Secret lingerie and beauty stores, the catalogues or the www.VictoriasSecret.com. The customers can shop the brand anywhere, any time, from any place.
A person who must be mentioned when giving the business analysis of Vitoria’s Secret is Sharen Turney. She was named Chief Executive Officer and President of Victoria’s Secret Direct, as well as “the brand’s catalogue and e-commerce arm”, in May 2000 (Durbin). Ms. Turney had brought her broad “experience and expertise across the retail spectrum including stores, catalogue, and e-commerce” to the company.
Previously to joining the staff of Victoria’s Secret she worked with Neiman Marcus. In his company she held numerous management positions starting from 1989. When joining Vitoria’s Secret’s Direct Despite she understood that the particular changes should be made in order to keep the achieved success. To her surprise, the changes were rather hard to implement because of the overall “environment of dot-com hysteria and dreams of instant wealth” that were roaming within the staff (Durbin).
Under Turney’s influence and strict supervision the company resisted the temptation to create a separate Victoria’s Secret Company for the online business. That proved to be the right choice. Their decision at that time was to keep the channel within the Direct family. Following Turney’s strategy Victoria’s Secret online store and catalogue were managed as a single unit. At the beginning, the company tried to operate its web store through influencing its existing infrastructure but later gave up that idea. From then on both catalogue and online orders were filled out of its warehouse in Columbus, Ohio. In order to ensure a consistent customer experience, Turney made sure that the product styles and promotions matched the catalogue. At that point the company was completely customers-directed (Durbin).
However, integrating the web purchases with catalogue and store sales was not as easy as it seems. Indeed the growth in web sales did not come without a cost. The customer migration caused such a process as “cannibalization of sales for the catalogue and store channels” (Durbin). At that time Victoria’s Secret estimated cannibalization rates as high as 50- 70%. On the other hand, the online business was definitely a successful one, proving itself to be a great vehicle for customer attainment. The interesting fact was that the web sales equaled only 30% of the Direct division’s business, nevertheless a disproportionate number of new customers came from the web. One thing was clear: web fulfillment costs were cheaper than catalogue orders as the mailing costs have increased highly. In order to improve the business results the company tried a sophisticated algorithm called Recency, Frequency, and Monetary Value (RFM). It is based on the idea that “recent shoppers were more responsive to catalogue mailings, as were more frequent shoppers and those with higher recent order sizes”. This algorithm used each customer’s transaction history to determine which customers should receive the largest amount of mailings based on their tendency to purchase. Still, even with the use of these complex tools, costs continued to rise. And due to the cost rises, the company was forced to reduce the catalogue mailings. As a result, whilst mailings had increased steadily from 1978 to 1998 to over 400 million yearly, they were actually reduced from 1998 to 2002, to 350 million (Durbin).
Victoria’s Secret’s extraordinary success has brought much financial growth as well as controversy. As the years passed, Victoria’s Secret Fashion Shows, Victoria Secret Catalogs and Victoria Secret models have became more revealing and controversial(History). Over the years, the company has been the subject of various protests and accusations. Some claim it promotes hyper-sexualized images of women. It is said that Victoria’s Secret has a steady and successful advertising campaign built on “selling sex and sexuality”. Though, Victoria’s Secret backs up its sexual claims by displaying its products on a beautiful woman (Hornberger). Victoria’s Secret had to pay a $50,000 fine promising to improve computer security after a problem that had occurred on its website: Because of the technical problems the viewers were capable of browsing other customers’ online orders (Schwarz). And also Victoria’s Secret is constantly accused of polluting the environment. According to the nature protectors, approximately 395 million catalogs are mailed by Victoria’s Secret each year and most catalogs end up in the trash or recycling. Almost all of these catalogs are produced from fiber paper with little content for recycling, so the paper for these catalogues is simply destroying the scarce forests.
But no matter what is said about Victoria’s Secret Company it stays what it is – a powerful company that represents a unique mixture of lingerie and fashion products, and a forceful mailing and pricing strategies, and is successful indeed.
Victoria’s Secret has also proved us that sex does sell by making $3.7B in sales in 2006. Owing to Victoria’s Secret, today lingerie drawers are full of underwear in a countless amounts of colors, fabrics, and styles. Victoria’s Secrets has years of experience behind its back, and for sure this company will be able to use this experience to achieve more in the future.
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