Session 1 Group 3Internal Analysis

Martha Stewart Living Omnimedia

Ayse Cueto, Toi Valentine, Arielle Scoblinoko

IBCInnovative. Brand. Consulting.

Our Name:

VISION STATEMENT: To be a leading consultancy firm that provides innovative strategic planning to companies looking to expand their offerings and enter new markets.

MISSION STATEMENT: Our mission is to be the leading strategic planning firm that offers services to companies looking to expand their consumer markets. We strive to provide our customers with quality insights using the most cutting edge, innovative resources that allows for seamless transitions or expansions into new markets. By keeping up with ever changing markets, our goal is to sustain our, and our client’s, success through consumer and market trend progression.

-Extensive knowledge on entering new markets (strategies)

-Branding strategies

-Ability to break down companies and analyze what parts are successful and what parts need immediate change

-Create strategies for short and long run benefits

Competitive Advantage

Industry Analysis for Martha Stewart Omnimedia

Session 1 Group 3

1. High Rivalry- Because there are many firms and much competition, large product differentiation, and exit barriers, there is a high rivalry for MSLO.

-There are a large number of firms competing in celebrity brand names and household good brandsOprah2006 Sales alone $325,000,000. Harpo INC also accounts for other celebrity brands including Rachel Ray, Dr. Phil. According to a poll conducted by bloggingstocks.com in 2007, 73% said that Oprah was a better media empire.Rachel RayTyraWamsutta Brand by Springs Global which holds multiple brands in home goods industry. 2006 Sales $2,536,800.Laura Ashley An established home brand name sold at multiple retailers internationally. Sales $400,000,000.

-Product differentiationMultiple design and quality opportunities ”Our products compete in what is for Macys about a $4 billion category. Our goal is to claim 10% of this category” Martha Stewart Omnimedia CEO Susan M. Lyne 2/2008. MSO recently bought out fellow celebrity brand, Emeril

LagasseDifferent price points Martha Stewart products available at Kmart and Macys, main competition includes retailers not supplying MSO products, Target, Wal-Mart, etc.

-High exit barriersPublic ImageLarge amount of money already invested22.91% of public shares of MSO held by insiders,Shareholders will be affected 43.60% held of public shares held by institutions

-Price of Market Share

2. Hard to enter industry- Because of the Martha Stewart name and the brand loyalty that comes with that, it is harder to enter this particular industry of celebrity brands.

Huge brand loyalty established network of retailers and products

High absolute cost advantage

Government regulation doesn’t really affect

BARRIERS AND PROBABLITIYHigh Risky Returns

Low, stable returns

Low, risky returns

High, stable returns

High, risky returns

EXIT

ENTRY

Low High

Low

High

3. Low threat of substitute products

Due to high brand loyalty associated with celebrity

Not many substitutes exist in homegood products.

Because there is less competitive threat from substitutes => does NOT affect price as much.

4. Bargaining Power for SupplierSupplier has some bargaining power because there is only one manufacturer per product type of Martha Stewart labeled goods

Buyers (Macys, Kmart, independent dealers of rugs, magazine shops) all purchase Martha Stewart Living labeled products from those particular manufacturers only.

5. Bargaining Power for Buyer- Buyers do not have as much bargaining power as the supplier because there are many different buyers of Martha Stewart labeled products, while there is only manufacturer. However, these buyers have many other relationships with other celebrity brands.

Macy’s, K-Mart, Wal-Mart, Independent Dealers (book Shops, Furniture Stores, etc).

They already have a large number of business partnerships with other brand name labels Celebrity brand Emeril Lagasse, new partnership with WeddingWire, Jessica Simpson, and other celebrity brands at Macy’s.

Dominant power in the specific level of retail other celebrity brands provide a different range of productsMacy’s and K-Mart target different markets and levels of retail.

Competition Among Buyers Because manufacturer can sell to different reetailers that sell celebrity brands, they can hold more bargaining power than the buyers.EX: K-Mart competing against Wal-Mart

SWOT Analysis Overview

Strengths: leverage in both media and merchandise-several TV shows and websites-4 magazines-Sirius radio channel-15 retail and manufacturing partners-2 major brands-Martha and Emeril

Weaknesses: very spread out, lacks a focus.-need to focus more on what could drive most impact

Opportunities: connecting the media and merchandise sides, great opportunity to expand.

Threats: many of their target markets are suffering in a larger economic scale-housing slump- less people purchasing homes/home goods-economic crisis- less spending money -> retail industry in trouble (especially K-Mart).

Intensive Strategies

Market Penetration: This Martha Stewart living ad attempts to increase product usage, frequency of use, and consumption of Martha Stewart Living Gardening Products by taking the same tools and marketing them as tools for Sustainable Living. During a time when Sustainable Living and Organic Food has become a growing lifestyle and an individual's part in helping the environment, Martha Stewart Living focuses on this growing trend and promotes further use of her products in this more significant way.

Market Development: The concept behind this Martha Stewart advertisement is that men too are consumers of Martha Stewart products, including grilling supplies, cookbooks and course her TV show and magazines. The visual attempts to expand and develop the Martha market by opening up new ideas and specifically reach out to men, a market that has received little attention from MSO.

Product Development: This Martha Stewart advertisement promotes an extension of Martha Stewart products into children’s arts and crafts. The selling point of the line is “easy-clean creative fun.” At this point Martha Stewart advertises primarily to adults, but this advertisement promoting her new “easy-clean creative fun” line extension speaks to children and their parents.

Market Penetration Ad

Use MS gardening projects more than just for a hobby, start using them for a lifestyle.

Market Development Ad

Product Development Ad

Diversification Strategies

Related: Crayola -> kids crafts market Febreze -> household cleaning market

Unrelated: Goody -> beauty/accessory market Purina -> pet market

Integration: FORWARD (Martha Stewart Living Retail Store)

GRAND STRATEGY

GRAND STRATEGIES

*Strength/Opportunity (S/O) Based Strategy*

MSLO's strong hold on four major industries affords increased capitalization based on elevated obsession and awareness of celebrity brand into the children's arts and crafts market.

*Strength/Threat (S/T) Based Strategy*

The fact that MSLO’s "omnimerchandising" platform has a strong presence in the home improvement market affords the brand to reduce fiscal effects from the housing market slump by emphasizing the easy "do-it-yourself" home improvement products.

http://www.reuters.com/finance/stocks/companyProfile?symbol=MSO.N

http://www.brandweek.com/bw/content_display/news-and-features/retail-restaurants/e3ia9dec6e36d9df17442800c3aca3938bd

“Brand Loyalty to Martha Stewart Improving, Research Firm Says.” By Maria Halkias

http://psucomm473.blogspot.com/2007/03/martha-stewart-rise-fall-and-rise-again.htm

http://www.novelguide.com/a/discover/cps_03/cps_03_00428.htmll

http://phx.corporate-ir.net/phoenix.zhtml?c=96022&p=irol-homeprofile

http://74.125.113.104/search?q=cache:M8m_nOTpWp0J:www.occ.treas.gov/handbook/mis.pdf+management+information+system&hl=en&ct=clnk&cd=2&gl=us#19

www.marthastewart.com/corporateinformation

Sources