FREEPORT STUDIO

Submitted by,Melbin Maria Noble

Roll No. 18MBA- S2

L L BEAN• Leon Leonwood Bean Founded his company in freeport, maine in 1912

• Their first product was hunting shoes.

• They are specialised in outdoor related products.

• For many years the business consist of the catalog, a manufacturing plant, and a single, but large store in freeport. • Since 1951, the store was open 24 hours a day to better serve its customers.

L L Bean- Growth• After the death of the founder Leon Leonwood Bean, his grandson Leon Gorman became the president

• He efforts to modernize the business, combined with a greater interest in outdoor leisure activities in the 1970s and 1980s led to period of rapid growth.

By the early 1990s, sales had reached $1 billion.

L L Bean had long mailed its catalogs internationally, but such sales had been modest.

L L Bean- Growth; cont.... Late 1990s company had become an internationally known brand, and the “flagship” store is still located on its original site and had grown to over 1,40,000 square feet in area.

The company’s primary was its catalogs which earned some 80 % of total sales.

They offered 16,000 products in over 70 different catalogs, and mailed over 200 million cataloges per year.

Challenges in the 1990s Stagment sales and heavy dependency on the 4th

quater, or holiday season.

L L Bean had long been a seasonal business with slow sales in january through october and huge jump in november and december.

This led to an unproductive use of company resources and had LL bean typically running at a loss for its first three quarters of the year.

Freeport Studio Freeport Studio was a new brand of women’s clothing sold through a catalog.

L L Bean created the brand in an effort to revive stagnating sales and reduce seasonal sales swings.

L L Bean decided that a women’s clothing brand both fit well with the company’s existing operations and had great potential in the marketplace.

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proposed concept

More about Freeport studio Freeport studio would offer high quality, well designed sportswear for the active busy woman

The line would include dresses, jumpers, skirts, slacks, jackets etc.

Freeport studio planned to offer slight styles and colours more fashionable than L L Bean’s traditional look.

Market Overview The women’s apparel market was estimated to be approximately $80 billion.

$7 billion sold through catalogs.

Market had been growing at some 4% per year.

Updated sportswear segment was growing faster at 6%

CompetitorsThe primary competitors were

J. Jill Coldwater Creek Nordstorm J. Crew Tweeds Orvis spin-off

Competitor’s sales

Nordstom Coldwater Creek

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Circulation plan of freeport studio

Freeport studio planned to produce four different catalogs; one per season

Each of the four catalogs would be followed by 1 or 2 remails.

Catalogs would be sent several months in advance of the season.

They would mail its spring catalog in january, followed by remails in february and march.

Circulation plan of freeport studio; cont.... Similarly they wouuld send mails in summer, fall, and winter seasons.

A total of 20-25 million catalogs, all to US customers were planned for the first year.

The overall response rate for the catalogs was expected to be 2% - 5% during the fist year and the average order value was estimated at $100.

The Launch Freeport studio mailed its first catalog on january 15, 1999, with an in-home arrival date of 18th or 19th .

Ten days after , the customers received their catalogs, Senior vice president Fran philip and her team began to conduct an early demand assessment.

Key issues identified after the launch

Delivery tracking service with which freeport studio had contracted functioned poorly.

They had overestimated the willingness of consumers to buy spring cloths in january. This trend had been declining in recent years.

Other issues Fran Philip lowered the estimated sales from the january catalog from $10.2 million before it was mailed to $7 million based on the 10 day results.

Further, estimated net sales for year 2 were dropped from $90 million to $65 million.

Performance after launch The situation at freeport studio improved after poor launch. Perfomance of spring catalog picked up in march largely.

Philip and her team felt optimistic that their hard work was beginning to pay off.

But the optimistic mood disappeared the following month. They mailed its first fall catalog in july and didn’t get much response.

Performance after launch; cont..... Sales were forecasted to be $2.87 million, 73% behind the plan of $10.47 million.

August mailing performed only slightly better than july; 60% below plan.

This led to freeport studio cutting its total fall( july- sept) sales projection from $37 million to $20 million.

First year sales projection, for the second time reduced from $66 million to $43 million, and first year contribution from a gain of $5.7 million to a loss of $2.2 million

Comments on freeport studio “It is a very conservative, classic look. The women dipicted in the catalog thinks she is still hip, but is growing very conservative with age.”

It is a classic style, but still trendy enough where you can show your own personality.

one woman stated, “ I really like the cloths a lot, but when I take my kids to the play ground I would not wear them.”

Clossing of Freeport studio Less than years after launching women’s apparel catalog Freeport Studio, general merchandise giant L.L. Bean planned to fold the book. The January 2002 issue was the title’s last.

Questions

What was the reason for less sales of freeport studio?

Freeport studio clothing has very conservative, classic look. Catalogs were not much effective.

What could have been the possible measures taken by the company to prevent it’s failure?

The present market leader ,had the advantage of different levels of price. Hence freeport should have taken a more realistic approach towards profit gain and market share. They had to wait several years to get good market share.

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