EXAM INSTRUCTIONS: Please read the MM.LaFleur case (below) and then answer the exam questions (also below). Send your answers to Professor Robson via email in a MS word .docx file. Your answers must be received by 5pm on April 18, 2020.

EXAM QUESTIONS:

1. Explain how needs, wants, and demands relate to the article about MM.LaFleur? (3 marks)

2. What is positioning and why is it important? What are four variables that are relevant to

the MM.LaFleur positioning, and how is MM.LaFleur positioned based on these variables? (5 marks)

3. Based on what you learned in the article, explain the ‘product’ for MM.LaFleur in detail.

What are the levels of the product provided by MM.LaFleur? (3 marks)

4. What are the three main pricing strategies, and which of these three main pricing strategies is MM.LaFleur is most likely to use? Why? (3 marks)

5. What type of an industry structure does MM.LaFleur operate in? Why do you think the

market is structured this way? (2 marks)

6. Explain what type or types of marketing channels MM.LaFleur uses in order to serve their customers? Describe the channel structure for MM.LaFleur. (4 marks)

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THE CASE: MM.LAFLEUR: MARKET SEGMENTATION AND TARGETING MM.LaFleur was a New York based clothing company that sold office wear to professional women – but it targeted a seemingly difficult-to-serve group of working women: those who didn’t want to go shopping. Yet, in June of 2019 – in just over five years since the company was founded – MM.LaFleur had grown from a small startup company into a thriving business with a loyal customer base. What could the company do to continue its strong growth and momentum? MM.LAFLEUR Sarah LaFleur founded MM.LaFleur in 2013 with the goal of rethinking the process by which professional women shop for work clothing. Her goal – and the company mission – was to take the work out of dressing for work.1 LaFleur recruited Mikako Nakamura, a designer who had experience working with big name fashion labels such as Zac Posen, to lead the creation of the MM.LaFleur collection. Shortly thereafter LaFleur recruited Narie Foster to serve as Chief Operations Officer, saying of the hire that “Narie came on a week before our first trunk show because at that point I felt that I didn’t have enough time in the day. Because we had worked together before at Bain consulting, I knew that Narie could do everything that I could do and vice versa so we could basically replicate each other”.2 These three women – LaFleur, Nakamura, and Foster – had worked as the company leadership ever since. They described the company as a styling service for professional women.3 THE MM.LAFLEUR CUSTOMER

I am so sick of the stereotype that all women are shopping-obsessed.4 Sarah LaFleur

Prior to founding MM.LaFleur, LaFleur herself experienced the desire to have a sharp, work appropriate wardrobe, but found that she had no interest in spending her limited free time shopping.5 Recognizing that she was not the only woman who felt this way, she decided to try to provide clothing to women like her – or professional women who did not have an interest in shopping. She said:

Our customer is too busy to shop. A typical e-commerce website is overwhelming to her. She comes home after a long day of decision-making at work, and the last thing she wants to do after putting the kids to bed is think about whether she’s a size 8 or a size 10, or whether gray will look better on her than brown. She wants to outsource that decision- making to someone else.6

With this in mind, MM.LaFleur catered to busy, professional women who simply didn’t have the time or interest in shopping for work clothing. This led to a customer base that was primarily between the ages of 30 and 557 and who earned between $100,000 and $250,000 a year.8 When MM.LaFleur first began operating, their customers were largely employed in finance or in law; however, over the years their

Page 3 * customer base had expanded to include women working in more fields, including creative fields and technology.9 These customers were highly loyal; 70 per cent of MM.LaFleur customers were repeat purchasers.10 To reach its target market of busy, professional women, the company launched an outdoor advertising campaign in some major US cities in 2017. Specifically, MM.LaFleur started advertising on billboards, signs, and posters along bus, subway, and other busy commuter routes in Boston, New York City, and Chicago.11 MM.LaFleur’s vice president of brand marketing, Jen Braunschweiger, said of the decisions that “We’re a fashion company that designs clothes for professional working women who are busy and overcommitted. We’re interested in meeting her with our brand message wherever she is. One place we can communicate with her is on her commute.”12 In addition, MM.LaFleur published a digital magazine known as The M Dash. This magazine focused on portrayals of modern, purposeful women.13 The company also had a number of social media accounts, including Instagram, Twitter, Pinterest, Facebook, and LinkedIn accounts. THE MM.LAFLEUR COLLECTION As the head of design, Nakamura led the MM.LaFleur design team in creating and improving the collection. She approached the MM.LaFleur collection with an eye to the unique needs of MM.LaFleur customers. For example, as the brand provides clothing for women who likely work long hours and have to travel for work, the fabrics, which were sourced from Japan and Italy14, were carefully checked for a number of qualities. These included whether the fabrics were wrinkle resistant, breathable, would hide sweat, would retain their shape, would hide undergarments, and whether they could be laundered using a washing machine rather than require dry cleaning.15 The design of the garments also took the unique needs of customers into consideration. For example, many garments had snaps to hold bra straps in place, underarm pads to absorb sweat, or pant legs with hidden buttons that allowed the pants to be easily adjusted to different lengths.16 Garments were also tested for a range of activities that women may have to engage in throughout their working days – such as whether women could bend over, raise their arms, or get in and out of taxis without flashing people.17 In addition, and although most clothing manufacturers developed clothing by creating a garment that fit a size 2 model and then scaled the garment up for larger sizes, Nakamura used a wide range of models from the outset. She said that the clothing was designed to be worn by “three-dimensional beings with hips, shoulders, butts, and boobs of varying sizes.”18 Ultimately, the MM.LaFleur collection included sizes 0- 22W. Once the fabric and design were determined, garments were produced in a variety of locations. Roughly 40% of the garments were produced in factories in New York and New Jersey, while the remaining garments were produces overseas in factories in Italy, China, and Vietnam which were chosen based on their experience and ethical standards.19 The decision as to whether to produce garments in international locations or domestic locations was made based on demand. Specifically, garments were initially produced in family run factories based in the United States; subsequently, if a particular garment was found to have very high demand for which the local family run factories could not keep up with, production was moved to a location abroad that could accommodate large scale production20. Prices of pieces in the MM.LaFleur collection, all in USD, ranged from about $30-$50 for smaller accessories to about $100-$300 for a dress to up to $500 for outerwear.

Page 4 * Many of the garments in the MM.LaFleur collection were extremely popular. For example, the brands Etsuko dress was first introduced to the collection in 2014. By 2017, this dress, which sold for $195, had been developed in 21 colors, restocked over 20 times, and had generated over $3 million in revenues21; the Etsuko dress in black was responsible for over $1 million of these revenues. Nakamura said of the dress that “When we designed this dress, we took into account all the things that our customers asked for: machine-washable fabric, long sleeves, wrinkle resistance, pockets, and lots of stretch and comfort. It also comes with a thin leather belt, so you don’t have to worry too much about styling this dress. You just put it on and go”.22 Other high selling dresses were the Tory and Casey dresses – both of which was so popular that they required waitlists of over a thousand customers each.23 SHOPPING AT MM.LAFLEUR

The concept of personal styling for women with better things to do than shop, has found a following: Sales are 50 times what they were five years ago. 24

Sarah LaFleur MM.LaFleur had both e-commerce and retail operations. As such, clients could purchase MM.LaFleur offerings online by requesting a ‘Bento Box’, online by purchasing pieces a la carte from the MM.LaFleur website, or by visiting retail outlets including showrooms or pop-up stores. E-Commerce Customers could view, select, and purchase items directly from the company website. In addition to a la carte sales of garments from the website, customers could opt to order a ‘Bento Box’. The MM.LaFleur Bento Box was a personally curated assortment of garments and accessories which was sent to a customer. When a Bento Box arrived, customers could try on each of the pieces, decide which ones to keep, and send the rest back; shipping was free both ways. Prices of the four to six items in the box ranged from $35 for accessories to up to $325 for a dress.25 To determine what items were curated for any particular Bento Box, customers had to complete a short questionnaire. This survey – which LaFleur knew needed to be short and easy to complete – asked customers practical questions about their office dress code, their size and body shape, women whose style they admired, and what types of clothing or accessories they were interested in receiving. “We actually know our clothes best,” LaFleur said. “If the customer shares a few details about herself, we think we can identify what will best work for her.”26 A personal stylist would then select a few pieces from the MM.LaFleur collection and carefully arrange them in in different compartments and layers within the Bento Box – much like how Japanese food is arranged in a bento box. This design helped the clothes to arrive unwrinkled, with garments packed in reusable, zippered plastic bags; many customers repurposed these bags to transport their gym clothes or to compartmentalize items in suitcases.27 The Bento Box was not a subscription service. Rather, it was simply a way for women to try out clothing or accessories to decide if they wanted to purchase them. The Bento Boxes were a hit: by 2017 they accounted for 80% of the company’s new sales and 40% of customers placed an order for a second Bento Box within 12 weeks of their first purchase.28

Page 5 * Retail Outlets Retail options for purchasing MM.LaFleur offerings included trunk shows, showrooms, and pop-up stores. Trunk shows were short term events in which sellers showcased their merchandise to customers in small venues, such as small sections of department stores, hotel rooms, or other suitable areas. In the early days of MM.LaFleur, the company hosted many trunk shows out of hotel rooms, as well as one out of a friend’s apartment in New York.29 Clients could not walk-away with clothing purchased from a trunk show. Rather, they were able to see or try on some items, and could then order what they wanted. Showrooms were typically held in larger spaces than trunk shows, and included samples of a wider range of garments. At first, MM.LaFleur began by testing a brick-and-mortar showroom in New York City30. Since then, they decided to set up a few permanent showrooms – including the one in New York City. By 2019, there were permanent or long term showrooms in New York City, Washington, D.C., Boston, Philadelphia, Houston, Atlanta, San Francisco, and Chicago.31 Like with trunk shows, showrooms carried samples of garments for trial only; customers had to order merchandise through sales associates in the showroom or via the company website. Although anyone could come into a showroom, the company encouraged customers to make an appointment in order to maximize the experience. With a showroom appointment, customers were given a one hour session with a personal stylist who would pre-select a number of styles to try out during the appointment. During this appointment customers were given a bottomless glass of Prosecco.32 This experience was highly effective in generating sales: women who booked appointments at showrooms often spent up to three times more than online-only shoppers.33 Finally, MM.LaFleur also opened up pop-up stores from time to time. Pop-up stores were an increasingly popular phenomenon in which a retail outlet ‘popped up’ for anywhere between a day and a few weeks. In 2019, MM.LaFleur had pop up stores in Palo Alto, CA in December, in Phoenix, AZ in February, in Minneapolis, MN in April, and in Los Angeles, CA in May.34

Page 6 * ENDNOTES

1 Julie Sygiel, “MM.LaFleur’s Cofounders Share Their Secrets To A Successful Business Relationship”, Forbes, September 28, 2016, Accessed May 10, 2019 from: www.forbes.com/sites/juliesygiel/2016/09/28/mm-lafleurs-cofounders-on-the-keys-to- successful-cofounder-relationships/#221fbb5b2166 2 Ibid. 3 Ibid. 4 Segran, Elizabeth. “This Women’s Clothing Brand Is Made For Professional Women Who Hate To Shop”, Fast Company, March 31, 2016. Accessed May 10, 2019 from: www.fastcompany.com/3058412/this-womens-clothing-brand-is-made-for- professional-women-who-hate-to-shop 5 Ibid. 6 LaFleur, Sarah. “7 Lessons I Learned While Building a Fashion Company”. The M Dash, October 19, 2017. Accessed May 10, 2019 from: https://mmlafleur.com/mdash/sarah-lafleur-interview-building-a-fashion-company 7 Halzack, Sarah. “MM.LaFleur: The startup that wants to dress you for the office”. The Washington Post, March 24, 2017. Accessed May 10, 2019 from: www.washingtonpost.com/business/mmlafleur-the-startup-that-wants-to-dress-you-for-the- office/2017/03/24/86fb8af8-0dd6-11e7-9d5a-a83e627dc120_story.html?noredirect=on&utm_term=.78d8ac3817bd 8 Segran, op. cit. 9 Pasquarelli, Adrianne. “Must-have dress boosts sales 550% at this SoHo startup”, Crain’s New York Business, November 23, 2015. Accessed May 10, 2019 from: www.crainsnewyork.com/article/20151124/RETAIL_APPAREL/151129960/sara- lafleur-s-womenswear-label-mm-lafleur-is-helping-to-style-those-too-busy-to-style-themselves 10 Leighton, Mara (a). “This new women’s clothing brand takes all the guesswork out of shopping for work”, Business Insider, June 11, 2018. Accessed May 10, 2019 from: www.businessinsider.com/mm-lafleur-bento-box-womens-work-clothes-review- 2017-4 11 Stambor, Zak. “Why MM.LaFleur embraces outdoor advertising”. Digital Commerce, October 15, 2018. Accessed May 10, 2019 from: www.digitalcommerce360.com/2018/10/15/why-mm-lafleur-embraces-outdoor-advertising/ 12 Ibid. 13 The M Dash. (n.d.) Accessed June 19, 2019 from: https://mmlafleur.com/mdash 14 MM.LaFleur. “Contact and FAQ” (n.d.). Accessed May 10, 2019 from: https://mmlafleur.com/help 15 Cowles, Charlotte. “The MM.LaFleur Design Philosophy: How We’re Revolutionizing Workwear”, The M Dash, July 26, 2016. Accessed May 10, 2019 from: https://mmlafleur.com/mdash/mm-lafleur-design-philosophy-miyako-nakamura 16 Blakely, Lindsay. “How This $70 Million Startup Transformed the Way Women Shop for Work”, Inc. Magazine, June 2017. Accessed May 10, 2019 from: www.inc.com/magazine/201706/lindsay-blakely/mm-lafleur-bento-box-design-awards- 2017.html 17 Morris, Alison. “Women’s work wear label MM.LaFleur expanding”, Fox 5 News, February 29, 2016, Accessed May 10, 2019 from: www.fox5ny.com/news/womens-work-wear-label-mmlafleur-expanding 18 Leighton (a), op. cit. 19 MM.LaFleur. “Contact and FAQ” (n.d.). Accessed May 10, 2019 from: https://mmlafleur.com/help 20 ibid 21 Leighton, Mara (b). “Sold out and restocked 22 times, this is the machine-washable work dress thousands of women are buying”. Business Insider, April 16, 2018. Accessed May 10, 2019 from: www.businessinsider.com/mm-lafleur-best-selling- black-work-dress-etsuko-review-2017-6 22 Leighton (b), op. cit. 23 Greenberg, Rachel. “Here’s why there are 1,400 people on a waitlist for this little black dress”. Today, December 4, 2016. Accessed May 10, 2019 from: www.today.com/style/mm-lafleur-s-black-casey-dress-has-1-429-person-t105542 24 Thau, Barbara. “MM.LaFleur CEO Unpacks its Strategy to Take the ‘Angst’ Out of Dressing for Work”. United States Chamber of Commerce, February 26, 2019. Accessed May 10, 2019 from: www.uschamber.com/co/good-company/the- leap/mmlafleur-sarah-lafleur 25 Sygiel, op. cit. 26 Segran, op. cit. 27 Blakely, op. cit. 28 Blakely, op. cit. 29 Halzack, op. cit. 30 Keller, Hadley. “How MM.LaFleur designed a retail concept based on female empowerment”. Architectural Digest, June 22, 2018. Accessed June 19, 2019 from: www.architecturaldigest.com/story/mm-lafleur-designed-a-retail-concept-based-on- female-empowerment 31 MM.LaFleur. “Contact and FAQ” (n.d.). Accessed May 10, 2019 from: https://mmlafleur.com/help 32 Blakely, op. cit. 33 Blakely, op. cit. 34 MM.LaFleur. “Contact and FAQ” (n.d.). Accessed May 10, 2019 from: