Marketing Study of cK One - The Perfume by Calvin Klein

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Note on this Essay: It was published March 26, 2001, for a class on Consumer Behaviour at the Wharton School. This is the first of two parts, click here to access part two. If you find my essay useful, or if you have any comments, please visit my homepage for info on how to contact me.

Brooke Shield’s 1980 designer jeans advertisements for Calvin Klein do not only mark the year in which the now famous CK jeans were introduced, but they also

symbolise the start of a series of controversial marketing campaigns. Now a famous actress, Brooke Shields was 15 years old at the time and received $500,000 for the job, and in a lolita-like fashion, she implies that she is not wearing anything beneath her jeans. The non-conciliatory line of Calvin Klein has certainly alienated many consumers, but has also allowed Calvin Klein to grow and succeed in a very competitive market with quickly changing trends and high entry costs.

Being extremely gifted at noticing trends in the market, the privately held company has shown a remarkable skill at introducing the right products at the right time. Calvin Klein proved this point again in 1995, when it introduced cK One, a unisex perfume that revolutionised the fragrance market by targeting both women and men. This paper will discuss the marketing strategy implemented in the introduction of cK One and also the nature into which the product was introduced and the values it promotes. Still, as cK One is highly intertwined with its parent company’s profile and values, the product can not be studied without including a broader focus on Calvin Klein as a whole and the qualities embodied by the company. A particular focus on cK One is, in other words, implemented to exemplify Calvin Klein’s unique marketing strategies. In addition, issues concerning the product strategy and promotion strategy will be studied in detail. Before considering these and several other issues, though, a throughout presentation of Calvin Klein will be given.

Calvin Klein was born in New York in 1942, and studied at the Fashion Institute for Technology in the same city. After having worked for other Seventh Avenue fashion houses for about five years, he decided to found his own company in 1968. The designer borrowed $10,000 from childhood friend Barry Schwarz, who still serves as chairman and CEO of

the company. Initially, Calvin Klein started producing a very simple product: coats.

The designer quickly realised the benefits of having a very limited distribution, and the unique qualities of an exclusive distribution system will later be studied in greater detail. From 1973-75, Calvin Klein became the first designer ever to win three consecutive Coty Awards for women’s wear. In 1975, the fashion magazine Vogue called him "a definitive picture of the American look." Calvin Klein started producing sportswear in 1970, and did, as earlier mentioned, introduce his designer jeans in 1980. In the early 1980s, his now famous fashion house started producing boxer shorts, which were soon followed by Calvin Klein’s first fragrance, Obsession. Calvin Klein’s licensed out its cosmetics department to Unilever in 1989, but as Calvin Klein Inc still markets and carries the brand name, issues specifically concerning the licensing of products like "cK One" and "Obsession" will not be discussed in great detail. Currently, 90% of Calvin Klein’s revenues are in licensing, but the company is famous for its in-house agency that does every TV spot, print ad and concept. As this paper mainly is concerned with the marketing strategies of Calvin Klein, the licensing system will be discussed only when relevant to for example the company’s limited distribution system.

Calvin Klein released its line of sunglasses in 1991, but almost went bankrupt a year later due to an unfortunate 1983 buyout of Puritan Fashions. Entertainment tycoon Pal David Geffen intervened and helped the company stay afloat, partly by licensing the underwear business out to Warnaco. Due to a change of trends in the youth market, Calvin Klein experienced a resurrection in the period following 1991. The demand from young consumers influenced the designer to shift down to a more universal, casual look. This is not to say that Calvin Klein stopped being an exclusive brand, but the brand made a conscious move to become more accessible. Some now argue that Calvin Klein soon became too accessible.

Many have blamed Gabriella Forte, an Armani veteran who became president and COO of Calvin Klein in 1994, for having given the company too wide a distribution system. The same year as Forte entered the company, Calvin Klein opened its first retail store in Tokyo. One year later, Calvin Klein introduced home products as blankets, pillows, towels and rugs into department stores. Warnaco, which in 1992 bought the rights to Calvin Klein’s underwear business, also acquired Designer Holdings, Calvin Klein’s manufacturer of jeans, in 1997. Calvin Klein is said to have been concerned about having so much of his company’s manufacturing with Warnaco, and in June 2000 he confirmed his own initial doubts by suing Warnaco for various agreement breaches. The designer told Larry King on CNN: "We want our license back, and want it to be in the hands of a responsible jeanswear company." The two parties reached a deal in January this year, but the details of the deal are not publicly known. In some ways, it may seem odd that Calvin Klein has not released more information on the settlement, this as the company is suspected of doing whatever it takes to get any kind of publicity. When Calvin Klein’s daughter was kidnapped in 1978, for instance, it was rumoured that the disappearance was nothing but a publicity stunt.

Ever since the 1980 controversial advertisement campaign featuring Brooke Shields, Calvin Klein has been a master at gaining free publicity when introducing new

products. The mid- and late-1990s were no exceptions, and the company has, among other things, been accused of promoting paedophilia, drugs and anorexia. The introduction of cK One was not to prove this general tendency wrong, and was promoted with the use of several androgynous looking models. Before studying this campaign in more detail, though, an explanation on how the social environment can influence consumers will be given.

Various levels of the social environment can influence consumers. The latter represent many different subcultures, but may often share the same cultural values. Even when this is the case, though, the consumers may reflect on their cultural values in different ways. Individuals may use different means to reach the same ends, and an important challenge for marketers is to change some aspect of the social and physical environment as to make their product more attractive. Calvin Klein can change the environment in several ways, and the following illustration presents the most important ones.

Figure 1 outlines the major marketing strategies used to influence consumer affect, cognition and behavior. Possible promotion strategies include advertising, sales promotions, publicity and personal selling. To Calvin Klein, the first three become especially important factors. Product strategy involves the numerous characteristics that influence product success. It might seem surprising that Calvin Klein does not have an official webpage, and an search on the world wide web for many of the company’s brand names will often be done in vain. A luxury analyst with Lehman Brothers, Andrew Gowen, says: "I am skeptical about luxury brands going on the internet. They do not need to find a lower-cost distribution channel and they do not need to establish an online presence in order to protect their brand, because the barriers to entry into the luxury goods sector are already secure. Moreover, luxury goods are all about exclusive distribution, while the Internet is a mass distribution medium." Gowen’s opinion illustrates the sometimes confusing logic conerning exclusive distribution, especially that increased distribution can lead to the brand’s downfall. Calvin Klein’s dispute with Warnaco originated in the designer company’s dissatisfaction with what it considered to be a dragging down of the Calvin Klein brand through discounting, poor quality, violations of trademarks and breach of contracts.

The issue of discounting is certainly one of great importance to Calvin Klein, and the company certainly wants its name to remain one of the leading brands in the luxury industry. Critics have questioned if Calvin Klein’s extensive licensing is damaging its brand name, and it seems obvious that companies in the luxury industry have to find a balance between broad appeal and exclusivity right. Currently, many of the top companies in the fashion industry seem to be moving away from licensing. Gucci’s Tom Ford, who recently took charge at Yves Saint Laurent, says "You never have the same control as when you are doing everything vertically. If you have licensees in multiple countries, each manufacturing and distributing in a single way, it becomes virtually impossible to control. And for the design staff to follow each step would be an enormous work." Giant consumer groups like Unilever and Scottish & Newcastle operate in a business very different from that of the relatively smaller companies in the luxury industry. Just before entering the year 2000, for example, the two mentioned giants witnessed their year-on-year share price fall by over 30%. The luxury companies experienced a profitable period, though, and a company like Gucci saw a 178% end-of-year increase in stock during the same period. A period of economic slowdown and bad results for a giant consumer group may, in other words, be one of profitability and growth for a company in the luxury industry.

Calvin Klein can, in other words, lower its sales prices and become more desirable to lower income brackets, but will then loose much of the appeal it has to affluent consumers. The company can open stores in every major city around the planet, but will then loose the exclusive appeal it currently possesses, though Calvin Klein in some circles already is known as the Coca-Cola of the fashion world.

All the physical and social characteristics of a consumer’s external world are part of what we call the environment, and marketers are interested in how the environment is perceived by the consumers. Individuals who share certain interpretations of the environment are placed into groups, the latter consisting of people sharing similar cultural, ethnic or various other characteristics. Marketers generally analyze the environment on two levels Emacro and micro. The former includes general, large-scale factors, as for instance an upswing or a downturn in the economy. Characterizing more tangible physical and social aspects of someone’s immediate surroundings, the micro environment operates on a much more local level. The macro and micro environment do, in other words, differ in many of the same ways as macro and micro economics.

Before discussing Calvin Klein’s role in the environment, it is important to understand that the environment also is divided into a social dimension and a physical dimension. Even though marketers have little control over both the social and the physical environments, the two dimensions are capable of influencing consumersEovert behaviours in addition to their affective and cognitive responses. CKOne, the unisex perfume, was released as a response to changes that had taken place in the social environment. When released in 1995, the product was generally considered a natural continuation to the sexual revolution. On one hand, some women were looking for an alternative to traditional feminine perfumes. On the other hand, men identifying with the image of the “Sensitive New ManEseemed willing to try a gender-neutral alternative to traditional masculine scents. Additionally, CKOne was also believed to be a product with great appeal to both lesbian and gay subcultures. A quick diagram explains how social changes in the environment created a market for a unisex perfume.

It has been argued that CKOne was introduced as a “play on, and rationalising of, the idea of a unisex fragrance Emen and women as `one´ indeterminable category (and therefore, how can we distinguish between opposite and same-sex desire?) E It should added that this niche market until recently remained largely unexplored, this due mainly to risks connected to entering the market. As earlier explained, though, Calvin Klein is not a company known for avoiding controversial decisions and campaigns, and it was perhaps not surprising then that the company turned out to be the first to release a unisex fragrance on the market.

As cK One in many consumers' minds is highly associated with Calvin Klein, it should be assumed that most of the general and procedural knowledge had about the company and product is the same. To get a clearer picture of what this knowledge actually is, the following page presents an associative network diagram containing both general and procedural knowledge concerning Calvin Klein. Even though many American consumers are unlikely to have had any experience with any of the company’s products, the diagram assumes that some intrinsic information as logo and designer information will be known by heart. Undoubtedly, a successful marketing mix should influence the consumer to activate positive knowledge on the product when exposed to it, and an associative network is interesting in this sense as it provides marketers with information on what information consumers actually possess.