Chapter 7 - Business Marketing

Since 2007 Gilt has introduced discount shopping in a new way. As you are aware by now, a normal sales happens only at the end of every season. Normal discount sales can range from 20 to 70 percent and people wanting to buy clothing or shoes tend to wait and say to themselves, "I'll wait until it goes on sale." 

The people at Gilt saw that this trend grew large during the down fall of our economy. Time was essentially everything for Gilt's success. The company saw an opportunity and put together a team to find the best designers at a discounted price for their consumers. With the help of the internet, Gilt has marketed through social media platforms and reached people all over the world. "Business-to-business electronic commerce is the use of the internet to facilitate the exchange of goods, services, and information between organization." 

Online success is measured by 3 categories. First would be Recency, which relates to the fact that customers who have made a purchase recently are more likely to purchase again in the near future than customers who haven't purchased for awhile. This is very true since Gilt is a members base website and these insiders know they are getting the best deal around. Second would be Frequency, this information helps marketers identify frequent purchasers who are definitely more likely to repeat their purchasing behavior in the future. Since Gilt's business platform is a members only e-commerce store, every member's purchases can be retrieved and marketers can react to spending patterns and habits. Lastly, our third category of measuring online success is monetary value. The monetary value of sales is important because big spenders can be the most profitable customers for a business. Gilt acknowledges their top customers and has a program that allows top spenders privileges that a normal member does not have access too.

Chapter 8 - Segmenting and Targeting Markets

Gilt uses strategies for segmenting markets such as psychographic segmentation. The variables of psychographic segmentation are personality, motives, lifestyles, and Geodemographics. 

As a members based business, Gilt can acquire detailed information on all of their members spending patterns. They have developed internal software that can track a members favorite brands, categories, and their average sales transaction. This psychographic segmentation would fall under the category of "personality." The book states, "Personality reflects a person's traits, attitudes, and habits, Clothing is the ultimate personality descriptor. Fashionistas wear high-end, trendy clothes, and hipsters enjoy jeans and tee-shirts with tennis shoes. People buy clothes that they feel represent their personality and give others an idea of who they are." With knowing how a member shops, Gilt can adjust and or create special newsletters for a specific individual. For example, I recently purchased some ties and shoes from the website. Since then, I have noticed the new newsletters are featuring new dress shirts, socks and suits. As a marketer, you want the consumer to subconsciously say to themselves, "I just bought a tie and a shoes, maybe I need a new suit and dress shirt." Not only have they featured new categories on these new newsletters to me, but they have also featured new shoes and ties as well. 

It is very remarkable that a marketer can easily react and adjust how they feature specific information based on a individuals spend habits. This approach has been proven successful. The algorithmic software is something regular retailers cannot implement. Other department stores looking to reach out to new consumers can't access these type of big-spending consumers the same way. The CEO of Gilt states, "A Sak's or Macy's can't do this because they do not have a membership-only model. The only people who can do this area are flash sales types and Facebook."  

Chapter 11 - Developing and Managing Products

Developing and Managing Products are something that Gilt is familiar with in so many ways. Gilt has developing a genre of business in the retail world that has been classified flash sales. This chapter discusses the importance of new product. Our book states, "The term new product is somewhat confusing because its meaning varies widely. Actually, the term has several "correct" definitions. A product can be new to the world, to the market, to the producer or seller, or some combination of these." The book lists six categories of new product and Gilt's business model of flash sales would put them in the category called Lower-Priced Products. This category refers to products that provide performance similar to competing brands at lower price. 

Gilt has truly INNOVATED (a product perceived as new by a potential adopter) off price shopping to the masses through the world wide web. Normally when a consumer wants to buy something on sale, they would have to wait towards the end of the season or a special holiday sale such as "Black Friday." However, Gilt has developed a NEW PRODUCT (a product new to the world, the market, the producer, the seller, or some combination of these) by creating a web site that only sales discounted merchandise and travel destinations every second of the day. Now you can enjoy discounted prices from the comfort of your home and most importantly, any time of the year. 

The GROWTH STAGE (the second stage of the product life cycle when sales typically grow at an increasing rate, many competitors enter the market, large companies may start to acquire small pioneering firms and profits are healthy) of Gilt's business since 2007 has been truly remarkable. As said in chapter 1's blog post, "Gilt has truly taken off price selling to the next level by introducing Gilt Women, Gilt Men, Gilt Baby & Kids, Gilt Home, Gilt Food & Wine, Gilt City and Gilt Jetsetter. Gilt now has 8 different divisions under the umbrella including a full price website called ParkandBond.com." The company currently has roughly 1,000 employees and plans to file IPO in the fourth quarter of 2013.

According to the Wall Street Journal, "Gilt was valued at $1 billion last May when it raised $138 million from Goldman Sachs Group and other firms. The company hasn't raised any money since then, but its valuation has hovered between $880 million to $1.1 billion, according to July secondary market contracts for Gilt's common stock listed on Sharespost." 

Not only has Gilt grown, other major retailing firms such as Nordstrom's has seen a large potential in this business model by recently acquiring a similar flash website called Hautelook.com 

Chapter 16 - Integrated Marketing Communications

Chapter 16 talks about integrated marketing communications. The book's definition of IMC (Integrated Marketing Communications) states, "the careful coordination of all promotional messages-traditional advertising, direct marketing, interactive, public relations, sales promotion, personal selling, event marketing and other communications- for a product or a service to assure the consistency of messages at every contact point where a company meets the the consumer."

Gilt Groupe definitely accomplishes the books definition of IMC. Gilt acquires specific and detailed information on each of their members (as stated in chapter 18's blog post on Sales Promotion and Personal Selling) which the company uses to interact, direct market, personal sell, and build specific sales promotion for their members. 

The Promotional Mix is another key formula with IMC. Gilt combines promotional tools such as advertising, public relations, personal selling, and sales promotion to reach their target market and fulfill the company's overall goal. 

With advertising, the company customizes their newsletters to fit a members interests and sends them out on a daily basis. With the permission of the member, Gilt can access an individual's social media platforms such as facebook and twitter so their purchases from Gilt will be featured on the user's profile. This new generations of advertising has been proven very successful. Generally speaking, the new generation of consumers are looking to their friends for advice, therefore social media platforms are ways to feature ones interest. 

Gilt's public relations has been very successful. With features or Good Morning America, CNN and other major networks, the company has reached a very strong image in the E-Commerce off price shopping category.

Sales Promotion and Personal Selling are the company's expertise. As stated in chapter 18's blog post on sales promotion and personal selling. The company has built algorithms to pull specific information such as a member's spending habits, interests, gender, age, and where they live. With this information, the company's marketing managers can react and or created specific marketing campaigns to help the overall revenue of the company. 

Chapter 10 - Product Concepts

Chapter 10 focuses on product concepts which entails different types of consumer products, product items, lines and mixes, branding and finally packaging. These elements are some foundations to a company image and value. Gilt Groupe's business sells consumer products and the definition of consumer product is a product bought to satisfy an individual's personal wants. 

Gilt Groupe has many divisions under its umbrella. The company sells men's, women's, children's, home decor and appliances, city events, and vacations. According to chapter 10, Gilt's business model offers consumers a PRODUCT MIX WIDTH. This means the number of product lines an organization offers. 


BRANDING is extremely important to Gilt and the company prides themselves by offering their costumers the best deals on their PRODUCT MIX.  By building a brand based on discounts, each consumer that visits and shops on the site is reassured they are getting the best deal and it is even arguable that each individual is very satisfied because of that. 

PACKAGING is another element when it comes to building a brand. When receiving a package, Gilt tries to create an experience for their consumer. Opening the box to your already satisfied purchase is a great feeling. However, making sure that the packaging is elegant adds to the experience. Below is a photo of Gilt beautiful packaging. The company also uses 100% recycled cardboard for their packages. 

Chapter 18 - Sales Promotion and Personal Selling

This week's chapter focuses on a company's sales promotion and personal selling. Fortunately,  Gilt Groupe's entire business model features sales promotion and actively finds way on building their personal selling skills. As stated  in last week's post, Gilt's has a growing membership of over 5 million. With a membership base, the website programmers at Gilt can compile very vital information to the marketing managers and buyers on what type of items customers are buying.

Sale promotions are enticing to any consumer trying to find a deal. For example, if you walked into a store and saw a suit you really like, generally speaking the first think you would do is look at the price tag. Paying full price for something now a days seems a little bit wrong considering that our economy is in a financial crisis and saving every dollar really counts. Major department stores have sales more often than 10 years ago and consumers see this pattern. However Gilt Groupe is a company that runs sales all year round. This is their man advantage when drawing in new and repeating members to their website.

With its large member base, one can only assume that personal selling is something that is a major disconnect with Gilt. However, after being a member myself since the company started in 2007, Gilt's personal selling techniques are very effective. Being a members based platform, the company can track very unique information. For insistence, being a member requires one to input their first and last name, email address, home address, date of birth, gender.

Once a member, you can edit your email settings on what you type of newsletters you would like to see.

Lastly, a member can go through the company's brand directory and choose what brands are their favorites. This is one of many features for the company to edit their newsletters so that every time a specific brand in your favorite goes on the website, it will featured in the email you receive. Below is an example of the favorites option. 

Chapter 17 - Advertising and Public Relations

Since Gilt Groupe is an E-Commerce members only business model, their advertisement/marketing is featured solely through social media platforms and the company's very own website. By being a members-only business, the company can gather very unique and vital data on each customer. According to Gilt's CEO Kevin Ryan, the company sends out 2,000 different versions of its daily newsletter to its 5 million members based on their personal preferences. Its data also provides Gilt with the Holy Grail in advertising by quantifying data on the spending patterns of loyal, wealthy nearly recession-prof consumers. 

Other department stores looking to reach out to buyers can't access these type of big-spending consumers the same way. Ryan states, "A Sak's or Macy's can't do this because they do not have a membership-only model. The only people who can do this area are flash sales types and Facebook."  

But Gilt's data is more valuable than Facebook's for this particular breed of advertisers, because Gilt.com doesn't have to guess what people's spending habits are. Once you are a member, Gilt can gather precise information due to a member first and last name, age, home address and what type of things they purchase. Every time a customer makes a purchase on the website, the company stores this information and will adjust how they market and advertise to that individual. For example, if I start to buy more ties and suits, they will advertise an email newsletters to my liking. 

Below is a short 3 minute video the company created to show its Public Relations. 

Chapter 15 - Retailing

Unfortunately the original company I chose to write about (Gilt Groupe) is strictly an E-Commerce business platform and does not have any brick and mortar locations. Therefore I decided to write about Bergdorf Goodman for this week's blog post on Retailing.

Bergdorf Goodman is a luxury department store located in New York City. It was founded by Herman Bergdorf in 1899 and is one of the oldest department stores in America. Currently Bergdorf Goodman operates 2 locations across the street from each other on 57th st and 5th ave. Bergdorf Goodman's main store is located on the west side of the street and was opened in 1928. This location is the company's women, children, and home store. The 2nd location was opened in 1990 and is located on the east side of 57th and 5th ave. This is the company's mens department, servicing everything from made to measure suits, hair cuts and a nice shave.

I decided to write about Bergdorf Goodman (Men's store) because I have always been fascinated with luxury clothing at such a young age. Luxury clothing to me represents a form of success and achievement when one can afford expensive clothing. When walking into Bergdorf Goodman one may be taken back with how elegant the store is designed and merchandised.  Bergdorf Goodman arguably is the only location in New York City that sells all the luxury designer brands under one location. It truly is a one stop shop for designer clothing. In this store, one will find shop in shops. Shop in shops are small designated area for a designer to build a shop within Bergdorf Goodman. Below is a photo of the Tom Ford dress shirt shop in shop.

Here is another photo of the Yves Saint Laurent shop in shop located on the 3rd floor.

Below is a photo of Lanvin's shop in shop located on the 3rd floor.  This happens to be one of my favorite brands.

Overall Bergdorf Goodman exemplifies and prides themselves on a true shopping experience when visiting their store. The company's customer services does not fall short to the high prices clothing they sell.  One can buy YSL, Tom Ford, Ralph Lauren Purple Label, Gucci, Lanvin, Dior Homme, Givenchy, Balmain, Thom Browne, Isaia, John Lobb (and more) at each of these designer's privately owned stores all located within 3 city blocks from Bergdorf Goodman. However, customers will continue to shop at Bergdorf Goodman because of their excellent customer service and the feeling of being apart of "OLD NEW YORK." There is truly no other store in America quite like Bergdorf Goodman. 

Chapter 6 - Consumer Decision Making

It is very crucial for a firm to understand  how consumers make their decision when making purchases.  Acquiring this knowledge will help a firm's decision on how they specifically market their products to their consumer.

As you all may know by now, Gilt Groupe is a members only flash website that offers designer clothing for men, women, and children up to 80% off.  As a consumer, being apart of a members only website like Gilt.com creates an atmosphere of exclusivity for the shopper's experience.

We live in a world today were designer clothing and goods represent a sign of success and wealth. Generally speaking, the average person would choice to wear designer clothing but never do because of the high cost.  Gilt is a business platform that caters to all consumers that want to wear designer clothing but at very affordable price.

The first step to gain a consumer's trust is through brand recognition.  There are many off price flash websites in the market today but Gilt Groupe is the first of its kind.  Gilt's advantage to their business model not only from the product they sell but lies with the people they employee.  By hiring veteran clothing buyers that have priceless relationships with designer brands provides the company a major advantage.  These relationships allow Gilt.com to sell these designer clothes at a discounted price on their website exclusively. Once a consumer gains the trust of a company through brand recognition, a stimuli occurs and now you have a customer making a decision based on how well things are priced on the website. That is why Gilt.com has over 5 million members and still counting.

Chapter 5 - Developing a Global Vision

In 2007, Gilt Groupe started off by catering only to the US market by facilitating orders domestically. With the help of the world wide web, Gilt Groupe managed to grow at such a rapid rate. As the company's membership grew to 5 million people, the company knew the next step was to grow their customer reach and allow people from all parts of the world to shop on their site. In 2010,  the company decided to facilitate orders to 103 countries. Now international customers can participate on Gilt.com with just a minimal shipping fee of $19.95. Now that customers from over 100 countries can shop on Gilt.com, the possibilities of reaching a true global market would be more tangible for the company. With the help of the international customers nearly 50% of merchandise sells out within the first few hours, the company says.

In 2011, Gilt Groupe  decided to test the waters with the overseas market and launched Gilt Japan.  Now people in Japan seat comfortable at home, office or on their smart phone through Gilt's mobile application and partake on Gilt's flash website. Gilt Japan offers their customers the same discounts on  men's clothing, women's clothing, children's clothing, home goods, and city events. 

Chapter 4 - The Marketing Environment

According to QuantCast.com the average person that visits Gilt.com is a Caucasian women that is roughly 25 to 34 years of age and has a college degree. Her house hold income is roughly $50-$100k or 150k+, and she has no children.

In May 2012, Gilt's web traffic for the entire month was just shy of 1 million people visting their site.

As you can see, Gilt's customer base is predominantly women with 72% of females visting their site.

Gilt's Age demographic varies from 18 to 60 years of age. However, their core age group that visits their site would be 25-34 years. This specific age group makes up 30% of their visitors.

Remarkably, more than half of customers that are visiting Gilt.com do not have children.

It is very interesting to see the report on the household income. As you can see there is a tie on the customer base that visits Gilt's website. The tie goes to the average house hold income of $50-&100k (middle class) and the average house hold income of $150K+

44% of the vistors on Gilt Groupe have College degrees. The average person using the internet that has a college degree is 41%.

The majority of Gilt's vistors are Caucasian (58%). Second place would be African American making up 26%. 

Chapter 3 - Ethics & Social Responsibility

With the success of Gilt's business. The company feels very passionate about giving back to the world and to humanity. 

In 2010, for Earth Day, Gilt Groupe partnered with The Nature Conservancy and National Audobon Society to support both charity's missions. As part of their Earth Day promotion, Gilt curated a collection of eco-friendly fashions, accessories, home goods and more that supported The Nature Conservancy. Gilt contributed $40,000 to The Nature Conservancy from it's Earth Day Collection on April 22, 2010.  In addition, Gilt held a first time sale of Nature Conservancy photography prints from some of the Conservancy's favorite commissioned photographers including Mark Godfrey. Finally, for those who became a member of Gilt Groupe between April 22 to June 30, 2010,  The Nature Conservancy received $25 for the initial purchase by these new members.

Another charity Gilt worked with was in the December 2010. Gilt Groupe launched a special, charity-minded promotion that made customers feel even better about all the shopping they did on Gilt. For every purchased item on Gilt between 12/6 and 12/12, the company donated $1 to charity: water, an organization dedicated to providing clean, safe drinking to people living in developing countries. In addition to all that, in an effort to throw some love back to their loyal fans, Gilt selected 10 members at random each day and giving them each $100 in Gilt credit to spend as they see fit.

Chapter 2 - Strategic Planning for Competitive Advantage

Gilt Groupe's CEO Kevin P. Ryan understood that the U.S. economy had been in trouble for quiet some time and that the average consumer wishes to buy luxury goods but cannot afford them at full price. Brick and Mortar stores notice that a large percentage of their full price business had been affected because of our economy's finical problems.  Generally speaking, consumers would rather wait a few months for something to go on sale than pay full price.

Ryan noticed a pattern and set out to build a core founding team that would develop a website that allowed consumers not have to wait for sales and offer merchandise up to 60% off. He brought on Mike Bryzek and Phong Nguyen as the technical masterminds. From the start they worked to create the fastest, most exciting and elegant shopping experience online. They strove to ensure that all customers who shopped on Gilt received unparalleled customer service from the moment they entered the virtual doors, to the instant the gleaming box arrived at their doorstep. Alexis Maybank and Alexandra Wilkis Wilson, long time friends and devoted New York City designer sample sale shoppers, were next to join the team, bringing their personal passions for online shopping to the group. Alexis, with a background in eCommerce at eBay and AOL, and Alexandra, with a background in luxury goods from Bulgari and Louis Vuitton, set out to build the rest of the Gilt team. 

They got the word out to savvy shoppers across the country, set their sights on the best designer brands and services and convinced these brand partners to be featured on Gilt.com. From there they have cornered the marketing by introducing and creating 8 different divisions under the Gilt Groupe umbrella. 

Another aspect of the business Gilt does to separates themselves from their competitors are their continuous marketing strategies through social media and a men's editorial fashion blog that teaches fun facts. 

With hiring the most affluent people in the industry, customers feel validated knowing that they are offered the best of the best. A true one stop shop.