Michael Kors: Retails Next Billion Dollar Man - Term Paper Example

Michael Kors built his retail empire by joining forces with some smart investors that had a lot of experience and success in the retail industry. In 2003 Lawrence Stroll and Silas Chou bought a controlling interest of 85% in Kors brand for $100 million. These two entrepreneurs invested in Tommy Hilfiger in 1989 and three years later they turn his company into a publicly-traded corporation. The process to turn a company from a private business into a public firm that can sell its stock in the open market is known as an initial public offering (IPO) (Investopedia, 2011).

Kors has implemented a lot of smart marketing strategies that have allowed his brand to differentiate itself from other designers. The firm recently introduced a new collection of clothes that has the same prestige as the Kors line, but at a lower price point. Another strategy that Kors utilized to increase the profitability of the company was product diversity. The utilization of a product diversification strategy enables companies to expand their market (Theproduct, 2011). Kors began selling perfumes, handbags, and watches. These products have a higher profit margin than clothes. These new products are considered cash cow products. A cash cow is a product that produces a constant dependable source of income (Answers, 2011). Kors and his management team have a massive expansion plan for the company. The firm has 80 stores in the United States and 20 global stores. The firm plans to open an additional 100 retail outlets worldwide by the year 2012. The growth plan the company is undertaking has the objective of maximizing shareholder’s wealth in order to optimize the market price of the firm’s stock once it goes public.

Michael Kors is a great designer that has the foresight to partner up with some smart business people that had a lot of knowledge of marketing and the fashion industry. The business realized that the market trend in a recession is for consumers to lower their consumption patterns. In order to attract new customers, Kors introduced a new clothesline at a lower price point. The strategy enabled the firm to satisfy the needs of the customers without lowering their prices. The lower prices were for newly introduced items. The traditional clothesline had the same price structure. In the changing business world of the 21st-century marketers have to adapt in order to satisfy the needs of the customers.