Alexa Bergman Lucy Colgan Kyle Jensen Kelsey Kramer Julia McClellan Kok Kit Sue Christopher Thomas

1. AlexaBergman Lucy Colgan Kyle Jensen Kelsey Kramer Julia McClellan Kok Kit Sue Christopher Thomas

2. Agenda

3. History S.S. Kresge Corporation officially changes it name to the Kmart Corporation Sebastian S. Kresge: invests in 5-and-Dime convenience stores, called the S.S. Kresge Stores Kmart merges with the Sears Corporation in hopes to obtain the Sears customer base 1897 1977 2005 March 1st 1962 2002 First official, “KMART” store is opened in Garden City, Michigan Kmart Corporation files for bankruptcy

4. Current Big Picture

5. Fundamental Entity • Kmart as distinct brand under Sears Holding Corporation • Discount Retail Space

6. Core Competence Core Competence Strategic Asset Benefit Maintaining/establishing exclusive brands with celebrities and designers Exclusive brands only sold at Kmart Unique products that drive consumers to Kmart Goal: Provide quality, discount products through its exclusive brands.

7. Marketing Objective/Source of Volume

8. Segmentation • Demographics • Females aged 28-49 years • Emphasis on Hispanicshoppers • Attitudes & Behaviors • Value low prices • Engage in discount shopping

9. Targeting • Meet Maria, 28 • Mother of 2 kids • Lives in Raleigh, NC • Works at Department of Labor • Discount shopper • Interested in cooking, spending time with herfamily, and maintaininga well-kept home

10. 5-Box Positioning Statement Kmart stores are outdated and do not fulfill my basic shopping needs Kmart offers exclusive brands like Sofia Vergara to attract adults Kmart meets my shopping needs and standards When I shop at discount retail stores, I go to Walmart or Target Kmart is my first choice discount retail store

11. The 4 P’s

12. Product • Offering a wide range of goods in the discount retail sector • Introduction of Smart Sense line by offering quality products that cost 20% lower on average • Introduction of exclusive brand lines, e.g. Bongo, Joe Boxer, and Sofia by Sofia Vergara

13. Price • In discount retail market • Offer low prices but not guaranteed to be the lowest

14. Promotion • Television Advertising • http://www.youtube.com/watch?v=sQTwtFUcGUg • Event and seasonally driven advertisements • Shopyourway.com • Online reward/loyalty point system • In Store promotions through signs • Promotes discounts, layaway, distinct brands • Weekly circulars

15. Place • Retail Locations – currently 1,300 stores • Warehouse of plethora of products • 3 sub-retail brands which each offer additional products • Kmart • Big Kmart • Super Kmart • Online Options • English/Spanish • Online Services, such as: Pick up in store, MyGopher delivery service

16. Our Kmart Adventure

17. Big Picture Problems

18. Revised Business Objective Skill at creating a fun, family retail expeience Core Competence Strategic Asset Benefit A family-friendly retail experience for all ages Widest breadthof family-oriented products Play spaces for Children

19. Revised Target DENICE CLARK JOHN CLARK Age: 42 Paramedic Age: 37 Dental Hygienist Expecting a baby KATIE CLARK Age: 13 Loves Katy Perry, to dance, trendy fashion GREG CLARK Age: 7 Loves baseball, action figures, playing outside

20. Revised Positioning At Kmart there is the widest breadth of family products and experiences Kmart is a one-stop-shop with products for my whole family Kmart stores are outdated and do not fulfill my basic shopping needs Kmart is my first choice discount retail store When I shop at discount retail stores, I go to Walmart or Target

21. Revised Place FOCUS: Retail stores that appeal to a FAMILY, FUN experience EXECUTION: 1. Shut down current Kmart stores that are in poor condition and decentralized areas 2. Renovate remaining stores to appeal to Family and Fun - Ball Pit, Jungle Gym area - Music Selection in fitting rooms - Tablet Kiosks in aisle

22. Sample Place

23. Revised Product FOCUS: Products that appeal to each member of the family EXECUTION: 1. Expand Grocery department 2. Expand on household appliances -utilize relationship with Sears 3. Further develop apparel lines for babies, toddlers and juniors 4. Expand toy and games department

24. Revised Promotion FOCUS: Promotions that market a FAMILY, FUN experience EXECUTION: 1. Advertisements that demonstrate the new dynamic variable 2. Move the weekly print circular to a digital medium 3. Seasonal promotions for kids

25. Sample Promotion Everything for the American

26. Summary • Kmart was lacking a dynamic variable • We recommend to: • Make dynamic variable a discount store that provides a family, fun experience for shoppers • Retarget to the family as a unit • Renovate locations to offer the family experience

27. Questions? Thank you!

28. Discount Departmental

29. Supercenters

30. Supercenters

31. 25-40: “Department stores often target advertisement and marketing toward this age group since they are more likely to have growing children and families for which they need to purchase merchandise.” –www.ibisworld.com

33. Product Differentiation • Private labels or exclusive brands account for about 20.0% to 30.0% of store merchandise. • 70.0% to 80.0% of merchandise is the same across most stores in this industry.

34. Competitor Distinct Brands • Walmart • Great Value • Super Target • Archer Farms • C9 by Champion • Circo • Merona

35. Driving Factors in Retail As shown in the following Figure, young adults are considerably more likely to report shopping at department stores and to do so frequently. The 25-34 segment is clearly an especially important target for many department stores, as many within this segment routinely shop within the channel.

36. In-Store Media “According to Mintel’s exclusive consumer research, 43% of mass merchandiser shoppers stated that it is extremely or very important to them that the retailers they patronize provide ways for them to learn about new products and other topics of interest. As such, the potential for this factor to influence sales should not be overlooked” –mintel.com “Of particular importance is the ability of electronic media to communicate the value of various products, thereby reducing the common fixation on price. By educating customers about the value of quality products, retailers can highlight store worth while reducing price sensitivity.” mintel.com

37. Important Factors