Advertising Plansbook Olivia Silvestri Spring 2011

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TABLE OF CONTENTS

I. THE INDUSTRY A. Overview 4 B. Industry History 4 C. Current Conditions 5 D. Industry Leaders 6

II. THE COMPANY

A. Overview 7 B. History 7 C. Company Mission 9 D. SWOT Analysis 10

1. Strengths 10 2. Weaknesses 11 3. Opportunities 12 4. Threats 13

III. THE PRODUCT

A. Stage of Product Life Cycle 14 B. Product Sales Features 15 C. Product Positioning 15 D. Distribution 16 E. Pricing 16 F. Sales History 17 G. Market Share 20

IV. TARGET MARKET

A. Primary Target Market 21 B. Secondary Target Market 21

V. COMPETITION

A. Top Competitors 22 B. Strengths of Competition 23 C. Weaknesses of Competition 24 D. Marketing Activities of Competition 25

VI. COMMUNICATION STRATEGY/HISTORY

A. Advertising 28 B. Promotion 29 C. Event Marketing 30 D. Direct Marketing 30 E. New Media 30

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VII. MARKETING A. Positioning Statement 31 B. Target Market Description 31 C. Marketing Objectives 32

VIII. ADVERTISING A. Advertising Objectives 33 B. Advertising Strategy 33

1. Media 34 a. Media Strategy 34

i. Media Mix 34 ii. Media Vehicles 35

b. Media Schedule 38 i. Media Flow Chart 38

2. Creative Strategy/Brief 38 3. Creative Executions 39

IX. BUDGET 41

X. MEASURES AND EVALUATION 43

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I. THE INDUSTRY1 2

A. Overview

J. Crew Group Inc. identifies with the following industry SIC codes: 5699, Miscellaneous Apparel and Accessories; and 5961, Mail Order Houses. Also, it is categorized with the NAICS code 448150 Clothing Accessories Stores. Companies within these industries specialize in sports apparel, uniforms, designer apparel, customized clothing, and women accessories. Typically many of these retailers rely on catalogs and the Internet for advertising and customer sales.

B. History

The Mail Order industry dates back to the 1490s just after Gutenberg invented the printing press. The first known catalog was established in Venice in 1498 and mail-order operations have existed in the United States since the colonial era. In the 1980s, companies benefited from computer and software advances, allowing retailers to manage customers and inventory better. In addition, the development of new methods of payments such as credit cards, made purchasing products through the mail safer and efficient. Between the 1980s and 1990s mail-order sales increased tremendously; however, by the start of the next decade as the economy suppressed so did sales. In 2000, the Mail Order Houses industry was redefined as retailers launched catalogs, catalog sellers opened stores, and many merchants made Internet sales. Through Internet sales the industry has exploded in growth. A noted example

1 "Catalog and Mail-Order Houses." Encyclopedia of American Industries. Online Edition. Gale, 2011. Reproduced in Business and Company Resource Center. Farmington Hills, Mich.:Gale Group. 2011. http://galenet.galegroup.com/servlet/BCRC 2 "Women's Accessory and Specialty Stores." Encyclopedia of American Industries. Online Edition. Gale, 2011. Reproduced in Business and Company Resource Center. Farmington Hills, Mich.:Gale Group. 2011. http://galenet.galegroup.com/servlet/BCRC

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was in 1998 when online sales for J. Crew quadrupled reaching $20 million, a significant increase from previous years. The Women’s Apparel and Accessories industry was dominated by fur retailers and peaked in 1987 reaching sales of $1.8 billion. However, when the economy took a turn, many stores dropped their fur departments. The set backs of this led to changes within the industry and in the early 1990s accessories became more popular. It was not until the mid-2000s when sales substantially increased as women looked more toward purchasing clothing that would transition from career wear to leisure wear. While shoppers remained budget conscious, they became more fashion savvy and began using accessories to keep their styles current. Stores categorized in this industry offered a vast selection within limited product lines and therefore were considered specialty retailers. In 2003 as the economy rebounded, the industry saw good growth rate because women began to splurge on the “little things” again.

C. Current Conditions

In the three most recent annual reports of the Multichannel Merchandise 100 (MCM 100), 83 of the top 100 companies reported year-over-year increase in catalog and Internet revenue for 2004, 2005, and 2006. That indicates the mail order house industry has stabilized after a difficult stretch in the early 2000s. In 2003, 70 of the top 100 companies reported year-over-year growth for catalog and Internet sales, while 60 of the top 100 reported such growth in 2002. Acquisitions helped several companies achieve growth in 2006, according to the 2007 MCM 100 report.

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The Direct Marketing Association (DMA) also noted positive growth in the industry through the fourth quarter of 2007. In its Quarterly Business Review (QBR) for the fourth quarter of 2007, DMA reported the industry experienced its eighteenth consecutive quarter of positive growth. Those results indicated the growth was slowing down, and DMA forecasted more modest growth in the first quarter of 2008. With an uncertain U.S. economy because of high-energy costs and difficulty in the housing and mortgage industries heading into the late 2000s, the mantra for accessory and specialty shops was "When the dollars get tight, the tight get accessories." Following strong years for accessories sales in 2005 and 2006, 2007 was mostly positive in the industry and the forecast for 2008 was favorable as well. Growth appeared mostly at the moderate and upper tiers as consumers in many instances opted to update wardrobes with accessories rather than replace them. The lower part of the market suffered somewhat with shoppers having to bypass some smaller impulse purchases in favor of gasoline.

D. Industry Leaders

The leaders in the Mail Order House industry include: • Dell Inc. • Amazon.com • Office Depot

The leaders in the Women’s Apparel and Accessories industry include: • Victoria’s Secret Stores • Claire’s Stores, Inc. • Gucci Group N.V.

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II. THE COMPANY

A. Overview3

J. Crew Group (J. Crew) is an apparel and accessories brand, which offers an assortment of women's and men's apparel and accessories. The company sells its products through stores, catalogs, and websites. Primarily they operate in the U.S. It is headquartered in New York City, New York and employs about 3,100 people. The company recorded revenues of $1,334.7 million in the financial year ended January 2008 (FY2008), an increase of 15.9% over 2007. The operating profit of the company was $172.5 million in FY2008, an increase of 37.3% over 2007. The net profit was $97.1 million in the FY2008, an increase of 35.5% over 2007.

B. History4

J. Crew Group started in 1983 when Arthur Cinader established a classic apparel catalog J. Crew, a name that connoted casual, collegiate clothing. First-year sales were recorded at about $3 million. The following year Arthur’s daughter Emily became the company’s chief designer. Although early catalogs included clothing from a number of manufacturers Emily moved the company to selling its own brand exclusively. J. Crew's early unisex styles were shaped by her desire to wear some of the same clothes she wore while growing up, such as her brother's chinos. J. Crew catalog sales grew rapidly during the mid-1980s.

3 “J Crew Group, Inc.” Datamonitor, New York, NY: 28 Dec 2009. Business Source Premier. http://web.ebscohost.com/bsi/pdf?sid=4a167157-805d-4e1a-8108-203438b89efb%40sessionmgr11&vid=15&hid=19 4 “History.” Hoover’s. Hoover’s, Inc., 2011. http://subscriber.hoovers.com/H/company360/history.html?companyId=40243000000000

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In 1989 Emily became president of the J. Crew catalog division and launched a risky expansion into retail, with its first store in New York City. Later in 1989 J. Crew unveiled an ambitious store-opening plan (50 stores in five years). However, a weakened economy and sharp competition slowed growth. In 1993 J. Crew signed an agreement with ITOCHU, permitting the Japanese retailer to distribute its clothes in that country. In an effort to recapitalize the struggling company, the Texas Pacific Group bought its stake in J. Crew in 1997, with an eye on taking it public when its performance improved. At that time Arthur retired and Emily succeeded her father as J. Crew's chair (Emily retired from the board in late 2006). In 1998 J. Crew attributed a loss of $27 million to disappointing mail-order sales caused by the USPS strike and a warm fall and winter. The company dismissed 10% of its workforce to reduce overhead costs that year. In 2001 J. Crew announced plans to launch a complete line of children's wear for boys and girls ages 6 to 12. Then the company laid off about 30 workers at its headquarters after recording disappointing sales. In 2003, former Gap executive, Millard "Micky" Drexler became Chairman and CEO. Just in time for Fashion Week in 2004, Drexler led J. Crew down the wedding aisle by introducing an abbreviated collection of wedding ensembles for men and women. The success of the wedding line prompted the company to launch a bridal-only catalog "J. Crew Wedding" in April 2005. Also in 2005 the company brought its J. Crew factory business to the Internet with the launch of jcrewfactory.com and began offering jewelry in May. In 2006 the company expanded into the children's apparel market with a new collection called Crewcuts for kids ages two through 10.

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In June, J. Crew finally went public with an offering worth $376 million, which at the time was the third largest apparel retailing public offering in history. In August the company launched Madewell, a new retail concept, in Dallas.

In 2008 the company opened a small men's shop in downtown Manhattan where it planned to work on fine-tuning for its men's apparel business in preparation for the launch of standalone J. Crew men's stores. In March 2011, TPG Capital and Leonard Green & partners took the company private for $43.50 per share in cash. The stock was de-listed from the New York Stock Exchange on March 7.

C. Company Mission5

In 2003, Millard “Mickey” Drexler joined J. Crew as Chairman and CEO, pushing service, quality and innovation to the next level. By partnering with the finest global fabric mills and craftsmen—as well as with iconic brands such as Jack Purcell®, Timex®, Thomas Mason® and Red Wing® (to name just a few), J. Crew focuses on satisfying its customers’ apparel and accessory needs and providing them with the best service possible. In addition, the company is committed to maintaining integrity and sees this as a critical long-term goal.

5 “About Us.” J. Crew. J. Crew, 2011 http://www.jcrew.com/footer/aboutus.jsp

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D. SWOT Analysis6

1. Strengths • Multiple Sales Channels

J. Crew offers its products through multiple sales channels including retail and factory stores and direct channels. Stores help in creating brand awareness and customer loyalty by bringing about a personal touch.

The direct channel comprises the website, jcrew.com and J. Crew catalog. In addition to offering the similar merchandise offered by the company at the stores, the direct sales channels also offer exclusive merchandise not available at the retail or factory stores.

In FY2008, the company derived 68.5% of its revenues from stores channel and 28.3% of its revenues from the direct sales channel.

J. Crew’s catalogs help in driving customers to other sales channels. Direct sales channels help the company extend its market reach and penetration without incurring additional infrastructure set up expense. Physical stores

6 “J Crew Group, Inc.” Datamonitor, New York, NY: 28 Dec 2009. Business Source Premier. http://web.ebscohost.com/bsi/pdf?sid=4a167157-805d-4e1a-8108-203438b89efb%40sessionmgr11&vid=15&hid=19

Strengths Weaknesses • Multiple sales channels • Product portfolio at multiple

price points

• Declining same store sales • Geographic concentration • Overdependence on suppliers

Opportunities Threats • Growing direct to consumer

channel • Increasing market presence • Growing U.S. apparel market

• Intense competition • Low consumer confidence • Affects of the sub prime crisis

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enable customers to personally select their outfits at leisure; websites and catalogs suit those customers who are pressed for time. Therefore, multiple sales channels enable J. Crew to reach out to a wider customer base and to earn more revenues.

• Product portfolio at multiple price points

J. Crew offers customer focused merchandise at various price points. Through J. Crew and Crewcuts, the company caters to affluent customers. The company caters to price conscious customers through factory stores and Madewell. Offering products at varied price points enables J. Crew to cater to varied needs of customers.

2. Weaknesses

• Declining same store sales

J. Crew has been recording a decline in same store sales over the last few years. Same store sales declined significantly in FY2008. In FY2008, the company recorded same store sales growth (an annual growth rate) of 5.6%, as compared with a 13% growth rate in FY2007. The same store sales declined from an increase of 16.4% in FY2005 to an increase of 13.4% in FY2006. Declining same store sales indicates that J. Crew is not able to stock a proper merchandise mix that appeal to customers.

• Geographic concentration

J. Crew’s operations are concentrated in the U.S. Though the company derives revenues from Japan through its license there, the revenue received by the company in the form of royalties is meager.

Geographic concentration exposes J. Crew to business risks associated with that particular region, making the company vulnerable to adverse economic developments in that market and also limits its growth prospects.

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• Overdependence on suppliers

J. Crew is over dependent on its suppliers. The company does not own or operate any manufacturing facility and therefore sources all of its merchandise from third party suppliers.

Of the total number of suppliers, J. Crew procures 52% of its merchandise from its top 10 suppliers. Of the total merchandise procured overseas, J. Crew procured around 86% of its merchandise from Asia. J. Crew purchased 50% of its total merchandise from a single buying agent in FY2008.

As the company depends entirely on suppliers for its merchandise it could result in longer lead times and quality issues. Both the factors could adversely impact the company and result in low revenues.

3. Opportunities

• Growing direct to consumer channel

Online shopping has steadily grown in popularity in the U.S. and was estimated to touch $329 billion in 2010. J. Crew offers its merchandise through its website jcrew.com. The company enhanced its website and updates it through the day to reflect the availability of the products online. The U.S. retail catalog business is projected to grow between 2006–2011 and is expected to be the world’s most lucrative catalog business. The company markets its products through J. Crew and Crewcuts catalogs. In FY2008, the company issued special catalogs to cater to the needs of specific segments of customers. A positive outlook for the U.S. online and catalog retail market would boost J. Crew's revenues.

• Increasing market presence

J. Crew plans to increase its market presence by expanding its store base. In FY2008, the company opened 23 retail stores and in FY2009 J. Crew proposed to open between 25–30 retail stores.

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Increasing market presence would enable the company to cater to a wider customer base and hence earn more revenues.

• Growing U.S. apparel market

J. Crew is engaged in the retailing of men’s, women’s and children’s apparel in the U.S. The U.S. apparel market is one of the largest in the world, it accounts for 34.6% of global sales. The U.S. apparel market is expected to grow by a CAGR of 2.6% during 2006–2011.

The company offers apparel, wedding and special occasion apparel, weekend wear, swimwear, loungewear, outerwear, shoes, bags, belts, hair accessories and jewelry. The growth in the U.S. apparel market could drive the revenues of J. Crew.

4. Threats

• Intense competition

J. Crew faces intense competition in men’s, women’s and children’s apparel and accessories. The company competes primarily with specialty retailers, higher-end department stores, catalog retailers and Internet business engaged in the retailing of women’s, men’s and children’s apparel, accessories, shoes and other merchandise. Intense competition and pricing differential could lead to a loss of market share and may also put pressure on the company’s margins.

• Low consumer confidence

Consumer confidence in the U.S. declined in March 2008 owing to weakening labor market and harder borrowing standards. The drop in customer confidence has been caused primarily by concerns over job security in a tightening job market.

The proportion of consumers expecting their incomes to increase declined to 14.9% in March 2008 from 18% in February 2008. This has contributed to a decline in

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consumer confidence. A decline in consumer confidence could adversely affect the J. Crew’s revenues.

• Affects of the sub prime crisis

According to data compiled by the National Retail Federation, a retail trade association in the U.S., rising home equity was one of the significant reasons for growth in retail sales in 2005 and 2006.

Since the onset of sub-prime crisis, housing prices have dropped. This has caused consumer spending to dwindle forcing not only sub-prime borrowers, but also other classes of borrowers to defer discretionary spending to meet rising debt repayments. As a result, the big retailers in the U.S. have experienced a fall in sales. If the sub-prime crisis spreads to other classes of assets, then the impact could be even bigger on the retail industry.

III. THE PRODUCT

A. Stage of Product Life Cycle

J. Crew is in the growth stage of the product life cycle. The company continues to increase its market presence through opening additional stores, including specialty boutiques specifically for segmented markets, and utilizing multi sale channels. Catering to more customers on multiple platforms results in higher revenues. Since 2010, J. Crew sales increased 9.14%, and as the U.S. market continues growing through 2011 the company’s expansion reflects this pattern looking optimistic.7 Remaining active in this stage is crucial for J. Crew. Capitalizing on strengths and opportunities such as catalog and online sales will help the company bring in more revenue and sustain itself in the growth stage.8

7 “Basic Financial Information.” Hoover’s. Hoover’s, Inc., 2011. http://subscriber.hoovers.com/H/company360/financialSummary.html?companyId=40243000000000 8 “J Crew Group, Inc.” Datamonitor, New York, NY: 28 Dec 2009. Business Source Premier.

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B. Product Sales Features

The crews depicted in the polished catalogs of the J. Crew Group are far from motley. The retailer is known for its preppy fashions, including jeans, khakis, and other items sold to young professionals through its catalogs, websites, and retail and factory stores in the U.S.9

The J. Crew Group offers complete assortments of women's, men's and children's apparel and accessories. The company's key products include the following: Men's apparel and accessories, women's apparel and accessories, children's apparel, footwear, bags, belts, hair accessories, and jewelry.

Currently J. Crew Group offers these products through three brands J. Crew, Madewell, and Crewcuts.10

C. Product Positioning11

Maintaining positive relationships with customers is key to J. Crew. The company positions itself inspiring consumers to buy into the J. Crew lifestyle. Throughout the years, J. Crew has re-invented its style and so have its customers. Instead of dropping the retailer, most customers, especially females, have altered their styles according to the J. Crew trends. J. Crew also demonstrates strong positioning tactics through its catalog and website. For example, the retailer shows how the clothing can work together in print and then customers can further explore these options online.

http://web.ebscohost.com/bsi/pdf?sid=4a167157-805d-4e1a-8108-203438b89efb%40sessionmgr11&vid=15&hid=19 9 “About Us.” J. Crew. J. Crew, 2011 http://www.jcrew.com/footer/aboutus.jsp 10 “J Crew Group, Inc.” Datamonitor, New York, NY: 28 Dec 2009. Business Source Premier. http://web.ebscohost.com/bsi/pdf?sid=4a167157-805d-4e1a-8108-203438b89efb%40sessionmgr11&vid=15&hid=19 11 “Case Study: J. Crew shows what print catalogs can add to the online shopping experience.” Meghan Keane. 3 March 2010. E-consultancy.com. http://econsultancy.com/us/blog/5516-case-study-j-crew-shows-what-print-catalogs-can-add-to-the-online-shopping-experience

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In addition, real life women who inspire J. Crew style are featured in catalogs and on jcrew.com. While this may not directly send customers to product links, it helps convey a lifestyle that a brand like J. Crew would promote.

D. Distribution12

J. Crew distributes products through its catalogs, website, and 355 retail, factory, and specialty stores in the U.S. It operates two distribution facilities and one customer call center. The company owns a 282,000 square foot facility in Asheville, North Carolina that houses its distribution operations for its stores. Merchandise is transported from this distribution center to stores by independent trucking companies, Federal Express or UPS, with a transit time of approximately two to five days. J. Crew also owns a 262,000 square foot facility, and leases a 63,700 square foot facility, both located in Lynchburg, Virginia. These facilities contain the company’s customer call center and order fulfillment operations for its direct channel. J. Crew outsources a portion of its customer calls to a third-party service provider. Merchandise sold via direct channel is sent directly to customers from this distribution center via the United States Postal Service, UPS or Federal Express.

E. Pricing13

J. Crew offers customers a mix of select designer-quality products and more casual items at various price points, consistent with its signature styling strategy of pairing luxury items with more casual items. J. Crew has introduced limited edition “collection” items such as hand-beaded skirts, which

12 “SEC Filings-Annual Report.” Hoover’s. Hoover’s, Inc., 2011. http://hoovers.api.edgaronline.com/EFX_dll/EdgarPro.dll?FetchFilingHTML1?SessionID=oA56HeLPrwnlyFF&ID=7810534#D10K_HTM_FIN156929_6 13 “SEC Filings-Annual Report.” Hoover’s. Hoover’s, Inc., 2011. http://hoovers.api.edgaronline.com/EFX_dll/EdgarPro.dll?FetchFilingHTML1?SessionID=oA56HeLPrwnlyFF&ID=7810534#D10K_HTM_FIN156929_6

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the company believes elevates the overall perception of its brand. J. Crew believes offering a broad range of price points maintains a more accessible, less intimidating atmosphere.

F. Sales History

14 “Financial Summary.” Hoover’s. Hoover’s, Inc., 2011. http://subscriber.hoovers.com/H/company360/financialSummary.html?companyId=40243000000000

Basic Financial Information14 Company Type Private Fiscal Year-End January Financial Filings SEC 2011 Sales $1.72B 1-Year Sales Growth 9.14% 2011 Net Income $121.50M 1-Year Net Income Growth (1.50%) Prescreen Score Low Risk Auditor KPMG LLP Company Website www.jcrew.com

Income Statement15 Year Revenue Net Income Net Profit

Margin Jan 2011 $1,722.23M $121.50M 7.06% Jan 2010 $1,578.04M $123.36M 7.82% Jan 2009 $1,427.97M $54.12M 3.79% Jan 2008 $1,334.72M $97.07M 7.27% Jan 2007 $1,152.10M $77.78M 6.75% Jan 2006 $953.19M $3.79M 0.40% Jan 2005 $804.22M ($100.31M) -- Jan 2004 $688.29M ($47.28M) -- Jan 2003 $766.38M ($40.59M) -- Jan 2002 $777.94M ($11.01M) --

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15 “Income Statement.” Hoover’s. Hoover’s, Inc., 2011. http://subscriber.hoovers.com/H/company360/incomeStatements.html?companyId=40243000000000 16 “Financial Summary.” Hoover’s. Hoover’s, Inc., 2011. http://subscriber.hoovers.com/H/company360/financialSummary.html?companyId=40243000000000 17 “Financial History.” Hoover’s. Hoover’s, Inc., 2011. http://subscriber.hoovers.com/H/company360/financialHistory.html?companyId=40243000000000

2011 Year-End Financials17 Debt Ratio 0.00% Return on Equity 27.40% Cash $381.36M Current Ratio 2.35 Long-Term Debt $0.00M Shares Outstanding 63.91M Dividend Yield 0.00% Dividend Payout -- Market Cap $2,774.96M

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18 “Financial History.” Hoover’s. Hoover’s, Inc., 2011. http://subscriber.hoovers.com/H/company360/financialHistory.html?companyId=40243000000000 19 “Financial Summary.” Hoover’s. Hoover’s, Inc., 2011. http://subscriber.hoovers.com/H/company360/financialSummary.html?companyId=40243000000000

Annual Income Statements19 Jan 11 Jan 10 Jan 09

Revenue $1.72B $1.58B $1.43B

Gross Profit $747.00M $695.66M $555.42M

Operating Income $213.97M $211.26M $96.68M

Total Net Income $121.50M $123.36M $54.12M

Diluted EPS $1.84 $1.91 $0.85

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G. Market Share20

20 “Competitive Landscape.” Hoover’s. Hoover’s, Inc., 2011. http://subscriber.hoovers.com/H/company360/competitiveLandscape.html?companyId=40243000000000

2010 Key Numbers J. Crew Lands’ End The Gap L.L. Bean

Annual Sales

$1,722.23M -- $14,197.00M $1,500.00M

Employees 12,000 -- 135,000 4,600

Market Cap

$2,500.77M -- $11,722.00M --

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IV. TARGET MARKET21

A. Primary Target Market

J. Crew primarily markets its “classic with a twist” apparel and accessories to women ages 25-40. Typically, these females have a household income of more than $125,000 and want high quality design, fabrics and craftsmanship in addition to regular fits and detailing.

B. Secondary Target Market

J. Crew’s secondary target market is aimed at children between the ages of two and 10 through Crewcuts, which offers high-quality apparel and accessories. Young children’s style is influenced by what their parents wear; therefore, customers who love the J. Crew style for themselves will want it for their kids as well.22

V. COMPETITION23

The specialty retail industry is highly competitive. J. Crew competes primarily with specialty retailers, department stores, catalog retailers and Internet businesses that engage in the sale of women’s, men’s and children’s apparel, accessories, shoes and similar merchandise.

21 “J Crew Group, Inc.” Datamonitor, New York, NY: 28 Dec 2009. Business Source Premier. http://web.ebscohost.com/bsi/pdf?sid=4a167157-805d-4e1a-8108-203438b89efb%40sessionmgr11&vid=15&hid=19. 22 “J. Crew Shrinks Down To New Market.” David Moin. New York, NY: 2006. Fairchild Publications, Inc. http://galenet.galegroup.com/servlet/BCRC?as1=j.+crew&ai2=KE&locID=loyoland_main&srchtp=adv&c=5&as2=target&ab1=AND&ste=31&tbst=tsVS&ab2=AND&tab=2&ai3=KE&ai1=KE&aca=nwmg&docNum=A142579914&bConts=2 23 “SEC Filings-Annual Report.” Hoover’s. Hoover’s, Inc., 2011.http://hoovers.api.edgar-online.com/EFX_dll/EdgarPro.dll?FetchFilingHTML1?SessionID=oA56HeLPrwnlyFF&ID=7810534#D10K_HTM_FIN156929_6.

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The company believes the principal bases upon which it competes are quality, design, customer service and price. J. Crew believes its primary competitive advantages are consumer recognition of its brands, as well as its multiple sale channels that enable its customers to shop in the setting they prefer. The company differentiates itself using its signature product design, ability to offer both designer-quality products at higher price points and more casual items at lower price points, focusing on the quality of products, and its customer-service oriented culture. In addition, J. Crew believes its success substantially depends on the company’s ability to originate and define product and fashion trends as well as to timely anticipate, gauge and react to changing consumer demands. Some of J. Crew’s competitors are larger and may have greater financial, marketing and other resources; therefore, there can be no assurance that J. Crew will be able to compete successfully with them in the future.

A. Top Competitors

J. Crew’s top competitors include: • The Gap24 The Gap’s 2010 annual sales were $14,197 million, a 2.26% increase from 2009. The Gap currently operates 3,100 stores worldwide and owns other major retailers Banana Republic and Old Navy. All Gap clothing is private-label merchandise made exclusively for the company.

24 “The Gap, Inc. Overview.” Hoover’s. Hoover’s, Inc., 2011. http://subscriber.hoovers.com/H/company360/overview.html?companyId=11469000000000

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• L.L. Bean25 L.L. Bean’s 2010 annual sales were $1,500 million. Mailing over 200 million catalogs per year, L.L. Bean specializes in outdoor apparel and gear. The company operates 15 retail stores and 15 outlet stores throughout the Northeast, Illinois, and China.

• Lands’ End26

Lands’ End’s is a private company that has not released any financial data. The firm markets casual apparel for men, women, and children through its flagship and specialty catalogs, website, and Sears department stores. It operates more than 290 in-store Lands’ End Shops at Sears locations plus freestanding retail stores in the U.S., U.K., Germany, and Japan.

B. Strengths of Competition • The Gap27 Compared to other retailers Gap has reported and maintained strong margins. Positioning Old Navy as a value priced family apparel retailer enables Gap to capture increased revenues; and its value focused outlet stores (Gap Outlet and Banana Republic Outlet) cater to the price conscious customer base. In addition, Gap’s global presence allows for a large and diversified revenue stream.

• L.L. Bean28 L.L. Bean’s large and varied product base offers costumers a seamless shopping experience and enables the company to

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“L.L. Bean, Inc. Overview.” Hoover’s. Hoover’s, Inc., 2011. http://subscriber.hoovers.com/H/company360/overview.html?companyId=40271000000000 26 “Lands’ End, Inc. Overview.” Hoover’s. Hoover’s, Inc., 2011. http://subscriber.hoovers.com/H/company360/overview.html?companyId=10883000000000 27 “Gap Inc.” Datamonitor, San Francisco, CA: 11 Jan 2011. Business Source Premier. http://web.ebscohost.com/bsi/pdf?hid=21&sid=92f7a185-9f90-4cd4-9b29-f52818103b5c%40sessionmgr12&vid=5 28

“L.L. Bean, Inc.” Datamonitor, Freeport, ME: 23 Dec 2010. Business Source Premier http://web.ebscohost.com/bsi/pdf?hid=21&sid=92f7a185-9f90-4cd4-9b29-f52818103b5c%40sessionmgr12&vid=12

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address specific customer needs and preferences, which increases average customer spending. Plus with multiple selling formats, the company can reach out to a larger audience enhancing sales.

• Lands’ End29 The company distributes its wide variety of products through multiple sales channels, with catalogs being its primary marketing tool and source of revenue. Existing in the global market allows Lands’ End more opportunity for growth and increase sales in multiple markets.

C. Weaknesses of Competition • The Gap30 Low productivity per store square footage has been recorded since 2005, as this continues it will negatively impact profitability. Also, a long-term risk involves the rise in increased markdowns compared to inventory growth outpacing sales growth.

• L.L. Bean31 L.L. Bean’s excessive dependence on the U.S. limits its market, creating a disadvantage compared to retailers with global profiles. In 2009, the company issued notices for a series of product recalls. Not only do recalls involve costs for the company, but also they indicate that the company’s quality control systems are lax. This negatively effects reputation and brand image.

29 “Lands’ End, Inc. Overview.” Hoover’s. Hoover’s, Inc., 2011. http://subscriber.hoovers.com/H/company360/overview.html?companyId=10883000000000 30 “Gap Inc.” Datamonitor, San Francisco, CA: 11 Jan 2011. Business Source Premier. http://web.ebscohost.com/bsi/pdf?hid=21&sid=92f7a185-9f90-4cd4-9b29-f52818103b5c%40sessionmgr12&vid=5 31 “L.L. Bean, Inc.” Datamonitor, Freeport, ME: 23 Dec 2010. Business Source Premier http://web.ebscohost.com/bsi/pdf?hid=21&sid=92f7a185-9f90-4cd4-9b29-f52818103b5c%40sessionmgr12&vid=12

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• Lands’ End32 Immediate parent company Sears, Roebuck struggles with finding a long-term strategy for Lands’ End. This can negatively impact the company in the future by diminishing its brand identity. In addition, with 293 Lands’ End shops at Sears stores compared to 14 freestanding stores, over dependence on Sears stores can substantially hurt the company.

D. Marketing Activities of Competition • The Gap In 2009, Gap said it would focus on growing its core brands, as well as its online and international businesses. As part of its growth strategy, the company said it would shift marketing initiatives for the Gap brand to a mix of traditional and nontraditional media. Its top priorities were driving traffic and improving productivity. In addition, Gap outlined its top marketing concerns for its Old Navy and Banana Republic brands. The company focused on improving product assortments and executing on a new store design for Old Navy. It hired agency Crispin Porter + Bogusky, Miami, to handle the creative elements appealing to young moms—a key target audience for Old Navy. Similarly, the marketing activities for Banana Republic were to drive business while continuing to market the brand to an affluent, mid-thirties, city style, professional demographic. The Gap expressed growth opportunity online through its e-commerce sites that serve as a marketing venue for its stores. According to the company, its online division grew from $595

32 “Lands’ End, Inc. Overview.” Hoover’s. Hoover’s, Inc., 2011. http://subscriber.hoovers.com/H/company360/overview.html?companyId=10883000000000

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million in net sales in 2005 to $903 million in 2007, and was expected to rise in coming years. 33 Recently in 2011, the Gap continues international expansion through launching online shopping in eight additional European countries. Old Navy they kicked off spring with a new marketing campaign that combines music, fun, and fashion to better engage with its fashion focused customers through enhanced in-store, online and mobile device experiences.

Banana Republic celebrates its new spring campaign with “Journey In Style” print ads and the first ever film trailer. This campaign was inspired by the brand’s heritage of discovery and hopes to engage customers through a variety of media. Also in 2011 to support its global business, the Gap shifted to advertising agency Ogilvy & Mather Worldwide.34

• L.L. Bean In the past L.L. Bean has strived off its marketing philosophy of getting out into the field a much as possible and doing the same things customers are doing. By using its own products, the company has a better idea of how they are performing and this practice helps them closer identify with customer experiences and needs.35 Recently L.L. Bean announced a new marketing strategy that will waive shipping fees with no minimum order. This permanent, no strings-attached policy was announced this March to cater directly to the company’s customers. Internet research firm comScore Inc. says the industry is moving towards this direction. In 2009, 30 to 35 percent of

33 “Gap Outlines Marketing Goals for 2009.” BrandWeek. 16 Oct 2008. http://www.brandweek.com/bw/content_display/news-and-features/retail-restaurants/e3i2fb2f531735004810b2e7d0e33c99c82 34 “Gap Inc. Announces Major Changes at Gap Brand.” Gap Inc., 2 Feb 2011. http://www.gapinc.com/content/gapinc/html/media/pressrelease/2011/med_pr_gapbrandannc02022011.html 35 “Company Information.” L.L. Bean. L.L. Bean, 2011 http://www.llbean.com/customerService/aboutLLBean/background.html#PRODUCTS

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online holiday purchases involved free shipping, and this past holiday season the numbers increased to 40 and 45 percent. 36 To announce this move to the public, L.L. Bean will be wrapping 10 Massachusetts Bay Transportation Authority (MBTA) buses to resemble mail-order packages and offering free rides to everyone who gets on those buses for the specific week, Monday through Saturday. The company is paying MBTA $216,000, which is roughly double what the 10 buses would collect in fares in a normal week. In addition, during the free-ride promotion, the fare box inside will also be covered to resemble an L.L. Bean parcel.37

• Lands’ End Lands’ End’s marketing is led by chief marketing officer Susan Sachatello. Sachatello is at the center of Lands' End brand marketing and creative services for catalog, online, and in-store initiatives. Her team encompasses divisions including multi-channel marketing, marketing operations, consumer insights, creative development, and public relations. Sachatello continues to advance Lands' End's understanding of customer connections to the brand by leveraging customer analytics to deliver compelling creative and marketing programs that better meet customer needs and build stronger customer relationships.38 Recently on landsend.com, the company offered great values and daily spring “breaks” on warm weather items, such as polo shirts, shorts, and beach towels.

After doing research, the company found out that families were participating in “stay-cations” rather than going on extravagant vacations. “Stay-cations” allow families to take a break from their normal routine and spend time together

36 “L.L. Bean embraces year-round free shipping.” David Sharp. 24 Mar 2011. Business Week http://www.businessweek.com/ap/financialnews/D9M5JDP01.htm 37 “L.L. Bean, MBTA wrap up free ride deal.” Eric Moskowitz. 25 Mar 2011. Boston Globe. http://www.boston.com/business/articles/2011/03/25/ll_bean_mbta_wrap_up_free_ride_deal/ 38 “Corporate Information.” Lands’ End. Lands’ End, 2011. http://www.landsend.com/newsroom/corp_info/exec_bio/susans_sachatello/index.html

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without breaking the bank. Promoting and marketing these “breaks” catered to customer needs.39

VI. COMMUNICATION STRATEGY/HISTORY

A. Advertising

The J. Crew catalog is the primary branding and advertising vehicle for the J. Crew brand. The catalog reinforces the J. Crew mission and brand image, while driving sales in all channels. J. Crew distinguishes itself from other catalog retailers by utilizing high quality photography and art direction. Additionally, in fiscal 2010, the company continued to expand its marketing strategy to include online, print and outdoor advertising. Deferred catalog costs, included in prepaid expenses and other current assets, as of January 29, 2011 and January 30, 2010 were $7,584 and $5,403 respectively. Catalog costs, which are reflected in selling, general and administrative expenses, for the fiscal years 2010, 2009 and 2008, were $41,859, $42,111 and $51,746 respectively. All other advertising costs, which are expensed as incurred, for the fiscal years 2010, 2009 and 2008 were $18,802, $14,700 and $8,763, respectively.40

39 “Lands' End is the Spring Break.” Lands’ End. Lands’ End, 4 Mar 2011. Destination.”http://www.landsend.com/newsroom/press_releases/index.html 40 “SEC Filings-Annual Report.” Hoover’s. Hoover’s, Inc., 2011. http://hoovers.api.edgaronline.com/EFX_dll/EdgarPro.dll?FetchFilingHTML1?SessionID=oA56HeLPrwnlyFF&ID=7810534#D10K_HTM_FIN156929_6

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• Print J. Crew clothing has been featured in magazines such as Real Simple Magazine41, InStyle Magazine42, Martha Stewart Magazine43, and New Yorker Magazine.44

• Celebrities J. Crew received attention throughout the 2009 Presidential campaign as a favorite of the first family. Outfitting the Obama girls in custom coats for the inauguration staged a major marketing coup. However, the retailer's website crashed when the news became public that Tuesday morning; and it wasn't until Thursday that the site featured actual sketches of the coats and messages from the designers on its home page.45 In 2010, J. Crew created advertisements called The Romantics’ featuring Katie Holmes, Josh Duhamel, Adam Brody, Malin Akerman, Rebecca Lawrence, and Jeremy Strong.46

B. Promotion

J. Crew’s private-label credit card offers customers exclusive benefits such as $25 reward card for every $500 spent, exclusive access to seasonal looks, card member-only private sales, and personalized service. In fiscal 2010, sales on J. Crew credit cards made up approximately 17% of its total net sales. J. Crew believes that

41 http://jcrewaholics.com/in-the-news/j-crew-featured-in-real-simple-magazine/ 42 http://news.instyle.com/category/j-crew/ 43 http://www.marthastewart.com/article/j-crew-fall-fashion-picks 44 “The Merchant.” Nick Paumgarten. 20 Sept 2010. The New Yorker. http://www.newyorker.com/reporting/2010/09/20/100920fa_fact_paumgarten 45 “Inauguration Scorecard.” Andrew Hampp. 26 Jan 2009. Crain Communications, Inc. http://galenet.galegroup.com/servlet/BCRC?as1=j+crew&ai2=KE&locID=loyoland_main&srchtp=adv&c=2&as2=advertising&ab1=AND&ste=31&tbst=tsVS&ab2=AND&tab=2&ai3=KE&ai1=KE&aca=nwmg&docNum=A192868173&bConts=2 46 “J. Crew’s ‘The Romantics’ Photo Shoot.” Jennifer Paull. 18 Aug 2010. Stylelist. http://www.stylelist.com/2010/08/18/j-crew-the-romantics-katie-holmes-josh-duhamel/

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its credit card program encourages frequent store and website visits and catalog sales and promotes multiple-item purchases, thereby cultivating customer loyalty to the J. Crew brand and increasing sales. Frequently catalogs contain coupons offering discount promos.

C. Event Marketing

Occasionally, J. Crew holds in store events welcoming specific groups of customers to interact and shop with special discounts. At these events the store provides refreshments and light snacks.

D. Direct Marketing

Through direct marketing J. Crew uses mailing and e-mailing lists to target customers. At the time of purchase customers can provide their e-mail addresses to receive coupons and other sales promotions and announcements.

E. New Media

J. Crew has adopted a Facebook fan page as well as a Twitter account, @JCrew_Insider. Through these social platforms, the company establishes online interaction with its customers. For example, J. Crew tweets provide links directed to jcrew.com. In addition, at jcrew.com customers can look at behind the scenes on photo shoots and view fashion documentaries produced by the company. The latest film series is called “Made in Italy” and gives customers a look into the Italian mills where some of J. Crew’s fabrics are woven. J. Crew also uses online banners as an advertising tool.

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VII. MARKETING

A. Positioning Statement

Utilizing the company’s products and styles, J. Crew positions itself by inspiring consumers to take part in its trends. Engaging consumers to feel as if they are part of the J. Crew lifestyle not only establishes positive relationships, but also creates long-term and deep connections with the brand. Strong tactics such as demonstrating how J. Crew apparel and accessories can work together both in catalogs and online, enables and motivates customers to easily make purchases. Combining J. Crew’s “classic with a twist” style with helpful shopping tools builds customer satisfaction—a core goal of the company.

B. Target Market Description

1. Primary Target Market

a. Demographic Profile • Women • Ages 25-40 • Household income of $125,000 or more • Educated • Career/Business savvy

b. Psychographic Profile

• Women who appreciate fashion • Want high quality design, fabrics, and

craftsmanship • Women who incorporate the latest accessories

and trends into their style • Value brand equity • Women who are willing to pay for brand name

products

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2. Secondary Target Market

a. Demographic Profile • Children • Ages 2-10

b. Psychographic Profile

• Children who’s style is influenced by their parents

• Parents value brand equity • Parents who are willing to pay the price for

brand name children’s apparel

C. Marketing Objectives

Through the marketing mix comprised of product, price, placement, and promotion, J. Crew strives to remain in the growth stage. By increasing market presence and satisfying existing customers the company will continue to expand.

1. Product

To focus on satisfying its customers’ apparel and accessory needs and providing them with the best quality, service, and innovation.

2. Price

To increase sales and profits through varied price points, while also remaining competitive within the market.

3. Placement To continue offering products through multi sales channels, expanding its store base, and capitalizing on the growth of online shopping.

4. Promotion

To create awareness and generate brand loyalty and equity aimed towards the target market as well as potential customers.

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VIII. ADVERTISING

A. Advertising Objectives

1. Express J. Crew’s core values, trendsetting attitude, and dedication to satisfying customers

2. Build strong brand equity and demonstrate J. Crew’s ability

to be a high-quality women’s apparel and accessory brand

3. Establish credibility throughout the ads and the overall

media strategy 4. Create informative, fun, catchy ads that always lead to a

call of action

5. Differentiate J. Crew from its top competitors by enhancing the brand image

6. Generate awareness and buzz about new styles and

products

7. Reassure J. Crew customers that they are a top priority B. Advertising Strategy

This 12-week advertising campaign will promote J. Crew’s Summer 2011 collection and be implemented in the New York demographic market area through June, July, and August. Using New York as the sole test market for this campaign is appropriate for several reasons. First, the company is headquartered in New York City, so its roots stem from the city and it has a strong sense and familiarity with the area. Second, it is a large DMA, ensuring widespread reach and frequency. In addition, New York City and the surrounding areas in the DMA are the exact environment of the primary target market; therefore, the campaigns message will hit its audience.

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I. Media

a. Media Strategy

i. Media Mix

Remaining true to J. Crew’s advertising nature, this campaign will focus on direct mail, digital, and introduce out-of-home. While print media is a popular and effective advertising approach, J. Crew prefers to spend company expenditures elsewhere that better suit company needs.

• Direct Mail Already implementing strong direct mail tactics, the campaign will continue to carry out these methods. Using catalogs and discount coupons, J. Crew not only builds off its foundation, but also targets consumers by directly satisfying their needs. • Digital As digital media becomes increasingly more popular, J. Crew’s online presence is crucial. With a simple click, customers will have quick and easy access to the J. Crew website. Using SEO tactics, banner ads will be generated to specifically hit women within the company’s target market. • Out-of –Home A large portion of the advertising budget will be used for billboards. Billboards are both an effective efficient medium to advertise to J. Crew’s target market. The benefits of using billboards are that they generate frequency and cannot be turned off or thrown out; therefore, the message will reach the audience.

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ii. Media Vehicles

• Direct Mail Catalogs along with promotional and discount coupon inserts will work together to motivate customers to make purchases. Mailing these directly to customers is the most effective way to pull in revenue from consumers who still rely heavily on catalog shopping and have not yet made the switch to online shopping. Direct mail also demonstrates J. Crew’s deep roots in the mail order house industry and its commitment to customer satisfaction. Providing customers discount opportunities, special holiday sales, and other promotional efforts at the time they receive the catalog creates an opportunity for consumers to be proactive and initiate a purchase. • Digital Online ads and banners will be placed on Google, Facebook, MarthaStewart.com and CNN.com. By distributing ads on a search engine, social networking site, home and lifestyle site, and a news site, J. Crew will be able to measure where the most traffic of its target market generates throughout the campaign. This information will allow the company to capitalize and make changes for future campaigns. Google47 Google began with the idea of search and that is where the heart of Google continues to remain. Its mission is to organize the world’s most information and make it universally accessible and useful. Google generates the majority of its revenue by offering advertisers measurable, cost-effective

47 “About Google.” Google. Google Inc, 2011. http://www.google.com/corporate/

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and highly relevant advertising. The company’s goal is for Google ads to be both as useful for people as they are for the advertisers. Placing ads on the most popular search engine, will definitely drive people to the J. Crew website. Facebook48 Everyday Facebook provides millions of people to keep up with friends, upload an unlimited number of photos, share links and videos, and learn more about the people they meet. As the number one social networking site that is increasingly expanding, J. Crew will benefit from ads placed on Facebook that can specifically target the company’s main consumers. MarthaStewart.com49 MarthaStewart.com engages 37 million creative consumers every month, providing them with inspiration and how-to for a life that is both beautiful and practical. Sharing tools and content to address consumer’s needs, MarthaStewart.com emphasizes lifestyle solutions and allows users to personalize their experiences along the way. Promoting J. Crew through MarthaStewart.com is an ideal location to capture women within the target market who are looking for new fresh ideas to better their lifestyle.

48 “Info.” Facebook. Facebook, 2011. http://www.facebook.com/facebook?sk=info 49 “Digital.” MarthaStewart.com. Martha Stewart Living Omnimedia, Inc, 2011. http://mslomediakit.com/index.php?/digital/marthastewart.com/

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CNN.com50 CNN.com is among the world's leaders in online news and information delivery. CNN.com features the latest multimedia technologies, from live video streaming to audio packages to searchable archives of news features and background information. The site is updated continuously throughout the day. With frequent updates, CNN.com is a well liked and reliable news source. According to J. Crew’s primary target market the business savvy consumer or women who just wants to “be in the know” will get her news online. Placing ads on CNN.com can lead these consumers to J.Crew.com during or after they catch up on news and events. • Out-of-Home Billboards provide the opportunity to reach fast-paced consumers within New York City. While on their way to and from work, both target market consumers and potential customers will be exposed to the J. Crew billboard. During a 12 -week campaign, a billboard would create millions of impressions. While these individuals may not take action immediately, because they are on the go, J. Crew will resonate in the back of their minds and at an appropriate time they will take action whether it is visiting a store or the online website.

50 “About Us.” CNN.com., Cable News Network, 2010. http://www.cnn.com/about/

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b. Media Schedule

i. Media Flow Chart

II. Creative Strategy/Brief

Advertising will convince the target market that J. Crew apparel and accessories will satisfy their clothing needs through fashionable styles, trends, and quality. By remaining loyal to customers and demonstrating customer satisfaction, J. Crew will continue to inspire new stylistic approaches and encourage customers to try new current looks. Advertising aims to create awareness, interest, and desire, leading consumers to take action. The tone of this campaigns advertising efforts will be fun and fashionable, influencing consumers to take the next step. J. Crew’s character will be visible through its overall consistent brand image, which is recognized through the clothing and accessories, models, and the company name.

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III. Creative Executions

Online Ad 1

Online Ad 2

Online Ad 3

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Online Ad 3

Billboard

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IX. BUDGET

$675,000

MEDIA VEHICLE DESCRIPTION FREQUENCY RATES TOTAL Catalogs51

& Coupons/Promos

Color catalog with

coupon/promo insert

June, July, & August

Mailings/ 1 Issue per month

Total Catalog & Mailing Costs

per month: $4,166

$12,500

Google52 Color Banner Ad June, July, & August

Cost per click: $1.25

(Est. 30 clicks per day)

Est. $3,150

Facebook Color Banner Ad June, July, & August

N/A Est. $3,150

MarthStewart.com Color Banner Ad 6 weeks total (First 2 weeks of

June, July, & August)

N/A Est. $1,500

CNN.com Color Banner Ad 6 weeks (First 2 weeks of

June, July, & August)

N/A Est. $1,500

Billboard: Clear Channel

Outdoor53 New York, NY

8 panels Weekly GRP 25 Rate per face:

$26,986

June, July, & August

4-Week Cost: $215,888

$647,664

With the total budget being set at $675,000, the majority of the campaign expenses will be spent on the billboard. As a result of running the campaign in the New York DMA, the costs become higher. However, despite this expense, a billboard in New York City will be very effective towards the campaigns objectives and reaching the target market. Since the online advertising rates were not available, based on the Google Ad cost per click rate, money in the budget will be set aside to cover the total costs at the end of the campaign. The estimated total for online advertising equals $9,300.

51 “SEC Filings-Annual Report.” Hoover’s. Hoover’s, Inc., 2011. http://hoovers.api.edgaronline.com/EFX_dll/EdgarPro.dll?FetchFilingHTML1?SessionID=oA56HeLPrwnlyFF&ID=7810534#D10K_HTM_FIN156929_6 52 Google. http://www.google.com/ads/displaynetwork/control-your-costs/pricing.html 53 Clear Channel Outdoor. http://www.clearchanneloutdoor.com/assets/downloads/media-planning-guide/2010-11-eyeson-rates.pdf

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All together the budget allows room, roughly $5,536, to cover extra online advertising costs or catalog/mailing costs.

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X. MEASURES AND EVALUATION

Measures will be noted throughout the campaign to evaluate the effectiveness of the strategy. Predominantly the online ads will be measured by how many cost per clicks (CPCs). In addition, the amount of traffic that these online ads are driving to the J. Crew website will be tracked. This is beneficial information that can be capitalized on or corrected for future campaigns. Catalog sales will be evaluated based on previous numbers. As a staple brand in the mail order house industry, J. Crew catalog sales should remain on target. The billboard cannot be evaluated based on actual numbers; however, total sales and revenues within the New York DMA can be measured. If sales increase significantly throughout the 12-week campaign than the billboard will prove to be a strong media tactic for J. Crew to utilize again in the future. Another method to measure the campaigns success, will be to provide target consumers with an online survey. The survey can conduct questions that will provide J. Crew with valuable information such as:

• What customers want • What they prefer • How they go about satisfying their shopping

needs • Their favorite method of shopping (online, in-

store, catalog) • How they become aware of new styles and

products (online advertising, billboards, etc.) • How they become aware of discounts and

sales (catalogs, emails, etc.) Not only will this campaign be beneficial for J. Crew if the measures show an increase in sales, but also because the company’s mission and the overall advertising objectives will have been positively demonstrated.