Micheal Kors Marketing Strategy Analysis in Canada

Social Factors

The country has a stable economy. The people are more from the middle class. They are educated and wealthy people. There are comparatively causal people than Americans and Europeans. They are not really styled conscious people like Europeans. So, the company should take care of the tastes and demands of Canadians. They are more casual people. They prefer to buy things which give them more comfort than style.

Technological Factors

There has been seen a lot of technological development in the country. This also led to such a method through which the company can make its products at lesser costs. The company is making its products at lesser costs, which means more profit margins. The company is enjoying a lot of profits due to technological advancements.

Internal Environment of Capri Holdings

The parent company of Michael Kors is Capri Holdings. The analysis of the internal environment of Capri Holdings is as follows (S&P, 2020):

Strengths

1. Capri Holdings is one of the world’s leading companies. They have the best staff from all around the world. They have the world’s best management teams and fashion designers.
2. The company believes in setting trends. The company also believes in innovation. They come up with new designs and styles every year. They keep on innovating in order to stay ahead in the market. They have excellent marketing and business strategies. This all gives them a big push ahead (Intelligence, 2015).
3. The company has made shopping easier for customers. Customers can shop from the comfort of their homes. This can be done by online shopping. The customer can even shop by booking its item on the phone. So, there are many methods through which customers can buy their products. There is an evolution in shopping methods. The company has Omni-channels capabilities.
4. They have insured their stores. The company has many stores all around the world, but they all are insured. They have been insured fully. So, this gives a lot of safety to the businesses.
5. They have built an exceptional relationship with the whole sellers in the market. They all are on good terms with the company. They hired the best professional people as whole sellers. They all were exceptional in their jobs. So, they all are working well for the company.
6. The company offers a range of products for both men and women. They have their expertise in footwear and accessories. These are their hot selling products. They get a lot of profits from these two segments from all around the world.

Weaknesses

1. The company has no such cybersecurity systems. They are vulnerable to cyber theft. The company should protect its online products from getting copied.
2. The company depends heavily on a few whole sellers. They should find more whole sellers. So that if one whole seller is unable to do its work, the other should do the work. This way, there will be no hindrance to their work. The work will not stop.
3. The company also faces difficulties in implementing an ERP system. There is a failure to redesign business processes to fit the software. The company doesn’t get enough senior management support while implementing ERP. The end-users mostly lack skills to operate such a system. So, the company faces these problems.

Capri Holdings (Company Profile)

Capri Holdings is a multinational company located in the British Virgin island. It has its executives’ offices in London and New York too. The company was founded in 1981 by Michael Kors. The company sells handbags, accessories, footwear, jewelry, and clothes for both men and women. The brand is more popular among women than men. It has more than 550 stores and over 1500 in house boutiques all around the world (Miljö, 2019).  

Michael Kors was a drop out of a fashion school. Then he joined a design company as a sales executive and later launched his own company with the name Michael Kors. In 1990 the company became the licensee for KORS. This was a garment outlet for Michael Kors. In 1993 the company launched Celine (Shaikh, 2016). The ready to wear designer clothes for women. In 2002 the company left Celine and launched Michael Kors Holdings limited with investments from Canada and Hong Kong. This was offering both men and women products. In 2017 the company purchased Jimmy Choo. In 2018 the company also purchased Versace. The company was renamed Capri holdings from Michael Kors holdings limited. The company had a net income of $670 million in 2014. They had 827 full-priced stores and 133 licensed stores (Today, 2017). So, they decided to expand their business even more. In 2018 the company launched its two stores in America and Canada.  The company also decided not to use fur in its products in 2017 (Holdings, 2017). This adds to their corporate social responsibility. So, they also claim to take care of their environments. The company is listed on NYSE. Its goal is to have its presence globally while making sure that the company is independent and maintaining its exclusive DNA.  The company has good growth. There has been seen an 11% growth of the company from 2018 to 2019.

2. Competitor Analysis

The two big competitors of Michael Kors are Kate Spade and Coach.

Coach

The company is known for having good quality leather products and handbags. The company was founded in 1941. It was a family run business. In 1996 the company became an international brand. The company offers a range of products. It offers handbags, ready to wear clothes, shoes, and accessories for both men and women.

Kate Spade

The company follows the motto “live colorfully.” They incorporate this thing in all their products too. They use bright colors and whimsical motifs in their products in order to give them a lively and playful look. The company offers clothes, jewelry, footwear, babywear, fragrances, home goods, and stationery. The company launched its men collection with the name jack spade. So, the company offers products for both men and women. They target audiences of age between 20 to ’40s.

The comparison of the three companies is given below (Chung, 2014):

	Michael Kors	Coach	Kate Spade
Relay in Sales Growth	The company has shown strong growth in the past ten years. It is because of the right mix of retail, wholesale, and licensing. 80% of the sales are of accessories. So, they have a very well-defined business model.	The growth of Coach declined in 2015. They are not very popular like Michael Kors. Their unpopularity is affecting their growth a lot. 58% of their sales come from handbags, and 11% of men wear.	The company has shown strong growth over the last few years. This is expected to grow to 24% in the next year. This is also expected to surpass Michael Kors in the coming years.
Earnings Growth: Who makes the cut	The EPS of the Michael Kors is extremely high. It is also expected to grow in the coming years.	The EPS is expected to fall in the coming years. This shows they have a bad growth rate.	The growth rate of Kate Spade is expected to grow. Their current growth rate is 176%. This is extremely high. This is the result of restructuring the company has undergone.
Players stats: Capital Efficiency	Michael Kors is making high returns on return on investment, return on equity, and return on invested equity. This shows they are making efficient use of their capital.	Coach is also using its capital efficiently. It is on the downside since 2012. This is a worrisome point for the company.	The company showed fluctuations in using its capital efficiently until it was the last year when they restructured the company. After restructuring, there is a jump of 258.4% increase in its efficiency.
Price Play	The stock price of Michael Kors has increased over the past. The company has shown constant growth over the past, so it’s a safe pick for investors.	The stock price of Coach has decreased over the past.	The stock price of Kate has increased over the past after the restructuring of the company. The investors will be reluctant to invest because of the fluctuations in the past.
Weighing on value	Michael Kors Price/Sales is high as compared to Coach. It is expensive as compared to Coach. Its profitability and future growth justify its high rates though.	Coach has the most stable value of the stocks. It has the lowest price/ earnings, price/cash flow, price/book value, and highest cash flow yield. The company has a more than 40% payout ratio. This is the highest among these three companies.	Kate is performing really bad here. They have poor earnings. They have negative cash flow. It does provide consolation to its investors to protect them.
Financials	The company has been making good profits. Their sales are going up. They have steady upward growth. The cash is increasing. They have no debt.	Coach has a very strong income statement. The number has been decreasing over the past ten years as their sales are decreasing. The cash in the company is decreasing as their sales are going down. They are still expanding their business, and also, they pay a lot of dividends. So, there is a downward slope of cash for the company.	Recently, the company has shed off its dead investments. This has led to more sales and more cash. The company is putting in efforts to cut costs and make more profits.

Michael Kors has been showing strong growth for many years, unlike Coach and Kate Spade. Kate Spade is showing strong growth, too but after their restructuring. They had a fluctuation in their growth over the past year. So, the investors will think twice before investing in Kate spade while Coach is going down. Michael Kors is the safest pick of all. Coach is planning to have new positioning of their company. This will have an effect on its market share. Kate’s sales are increasing day by day after their restructuring. So, these two companies are most dangerous for Michael Kors as they have a promising future.

3. SWOT Analysis

The SWOT analysis of Michael Kors is as follows (Bhasin, 2019):

Strengths

1. The company has a range of products. They offer ready to wear clothes, accessories, jewelry, handbags, footwear for both men and women. They are also famous for jackets and semi-formal dresses.
2. The company has a very strong social media presence. They have around 18 million followers. They are also working on building campaigns around their brand on social media.
3. The company has a multi-channel distribution. They are also present online. One can do shopping by sitting at home. They have built the experience of online shopping in such a way that the customer is shopping from the store. They have used advanced technology for online shopping.
4. There are many celebrities who are regular customers of Kors like Michelle Obama, Jennifer Lopez, etc. They wear their dresses on events and red carpets. So, they have a strong customer base.
5. The company has positioned its products right. They target all the women who like to wear urban clothes with the latest trends in the market. This is one of the reasons for their success.

Weakness

1. The company has a poor presence in Asia, unlike Louis Vuitton and Gucci. The company has the potential to grab around 100 billion customers by merely having a presence in Asia.
2. They target the market with high income. So, they cannot cut their prices and offer to the masses as their target market is upper-middle-class people mostly.
3. There is a lot of criticism about the brand as it repeats the colors and styles. This led to their negative publicity.
4. The brand is more prone to recession as it is the elite brand of the market. So there are chances of its downfall.

Opportunities

1. The company has a poor presence in Asia. By having a presence in India and China, they can gather around 100 billion customers. The company should look at other emerging markets too in order to gather more customer base.
2. Michael Kors is not offering anything for kid-wear for now. They can expand their business and offer kids wear too. They have a strong presence in men and women products. They can use these channels to introduce their kids-wears too.
3. There is an increased demand for their products in the USA market and neighboring countries. They have more demand because of their positive word of mouth and good quality of products. This way, they can tap more markets. They can have more customer base.

Threats

1. The competition is the biggest threat they have. Kate spade and Coach are their biggest competitors. As they almost have the same product lines as Michael Kors. Both have a promising future too. There are many other competitors in the market, too, like Gucci, Tommy Hilfiger, Dolce, and Gabbana, etc.
2. Their competition offers more stylish and more colorful products than Michael Kors. They have simpler products than their competition.
3. There are many other brands that are offering the same products as Michael Kors. So, their switching cost is very less (MBA Skool Team, 2020).

Bibliography:

• Bhasin, H. (2019). SWOT analysis of Michael Kors.
• Chung, S. (2014). Michael Kors Vs. Kate Spade Vs. Coach: The Battle Of The Brands.
• Holdings, M. K. (2017). “Michael Kors Holdings Limited Adopts Fur-Free Policy.”
• Intelligence, W. M. (2015). Michael Kors Holdings Ltd: Company Profile and SWOT Analysis.
• MBA Skool Team. (, 2020). Michael Kors SWOT Analysis, Competitors, Segmentation, Target Market, Positioning & USP.
• Miljö, H. o. (2019). A brief Introduction to Michael Kors.
• S&P. (2020). Capri holdings SWOt & PESTLE Analysis.
• Shaikh, S. (2016). Principles of Marketing.
• Today, U. (2017). “Michael Kors to close up to 125 stores as luxury retail woes deepen”.
• Turbo, C. (2012). Pestel Analysis of Michael Kors – Victim Of Its Own Success Case Solution.