Mkt 571 New Product Launch Marketing Plan Part 3
New Product Launch Marketing Plan, Part III
Christy Church, Ayanna Green, Marisa Smith
MKT/571
Armando Salas-Amaro Jr.
May 11, 2015
New Product Marketing Launch Plan, Part III
Executive Summary
Situational Analysis
Market Growth Potential and Competitive Analysis
In terms of market growth with its Innovate to elevate platform, Hanesbrand has succeeded in driving its margin expansion. Considering in 2014, its innerwear segment operation profit grew 130 basis points year after year up to 20.4%. This has surpassed 170 basis point of expansion in the prior year. Yet, it is believed Hanesbrands ' Innovate to Elevate platform is currently in its early stages. It is also estimated that Innovate to Elevate platform products account …show more content…
for less than 15% of its sales. Hanesbrands ' sees expansion in socks, intimates and kids ' underwear as well as marketing tactics are increasing this penetration. Additionally, it is determined that active wear is in earlier stages on Hanesbrands ' Innovate to elevate innovations at Maidenform have not started yet. Furthermore, Hanesbrands has been successful at using acquisitions in order to drive earnings growth. Considering, $50 million is spent per year on research and development and 400 people globally that are committed to innovation, this has become a complicated model to replicate, in the view of Hanesbrands that requires both scale and controlled supply chain. What’s more is that Hanesbrands produces nearly 1.9 billion units per year and has 70% of manufacturing employees in three of its lowest cost regions. This is also with less than 3% of its workforce in China. Also, when its manufacturing can internalize high volume styles, it is estimated that savings as much as 15-20% can be achieved. Furthermore, as Maidenform, DBA and Knights are integrated; Hanesbrands advisory believes it can drive an additional $50 million, $95 million and $20 million in operating profit through synergies, respectfully speaking. (Bridget Weishear. 04/24/15) In terms of competitive analysis, Handesbrands advisory believes it has a high degree of confidence in the defensibility of Handesbrands ' competitive position, considering advantages that are complicated for competition to replicate including Hanesbrands ' large owned and controlled supply chain, core produce positioning in an area where brand is more important than price, in addition to economies of scale that are achieved through a growing portfolio of synergistic brands. (Bridget Weishear. 04/24/15)
In terms of competitive analysis, Handesbrands advisory believes it has a high degree of confidence in the defensibility of Handesbrands ' competitive position, considering advantages that are complicated for competition to replicate including Hanesbrands ' large owned and controlled supply chain, core produce positioning in an area where brand is more important than price, in addition to economies of scale that are achieved through a growing portfolio of synergistic brands. (Bridget Weishear. 04/24/15)
Segmentation, Target Market, and Positioning
Pricing and Distribution Strategies
Hanesbrand advisory currently thinks earnings per share could double in the next four to five years in terms of pricing premiums, further leverage of the global supply chain and additional acquisitions that are synergistic to core products.
Additionally, it is believed that Hanesbrands leverages extensive manufacturing capabilities in order to produce quality products, in addition to charging an economical price. Furthermore, Hanesbrands operates a large owned and controlled global supply chain which includes 60% of its operations in the Western Hemisphere and 40% in the Eastern Hemisphere, which is thought allows it to maximize low cost production and global distribution. Hanesbrands has 72 facilities that produce 1.9 billion units. Considering it is wholly owned and operated, a research and product design and development team works on manufacturing processes in order to find the lowest cost production method for new product innovations. Additionally, the production process is as much a priority as the new product itself. Therefore, this integration in development and the benefits of scale afforded a synergistic brand portfolio those results in a competitive advantage. Finally, it is believed that these manufacturing capabilities also allows Hanes to deliver high returns on acquisitions, given the success of Hanesbrands has accomplished in terms of integrating prior acquisitions that includes Maidenform and DBApparel, in addition to the steady pace of acquisitions at …show more content…
approximately one per year. Therefore, it is also believed that acquisitions will be a core driver of returns for shareholders going forward. (Bridget Weishear. 04/24/15)
Marketing Communication Plan
Hanesbrand advisory currently thinks earnings per share could double in the next four to five years in terms of pricing premiums, further leverage of the global supply chain and additional acquisitions that are synergistic to core products. Additionally, it is believed that Hanesbrands leverages extensive manufacturing capabilities in order to produce quality products, in addition to charging an economical price. Furthermore, Hanesbrands operates a large owned and controlled global supply chain which includes 60% of its operations in the Western Hemisphere and 40% in the Eastern Hemisphere, which is thought allows it to maximize low cost production and global distribution. Hanesbrands has 72 facilities that produce 1.9 billion units. Considering it is wholly owned and operated, a research and product design and development team works on manufacturing processes in order to find the lowest cost production method for new product innovations. Additionally, the production process is as much a priority as the new product itself. Therefore, this integration in development and the benefits of scale afforded a synergistic brand portfolio those results in a competitive advantage. Finally, it is believed that these manufacturing capabilities also allows Hanes to deliver high returns on acquisitions, given the success of Hanesbrands has accomplished in terms of integrating prior acquisitions that includes Maidenform and DBApparel, in addition to the steady pace of acquisitions at approximately one per year. Therefore, it is also believed that acquisitions will be a core driver of returns for shareholders going forward. (Bridget Weishear. 04/24/15)
Financial Information
Intended Marketing Objectives for Y1, Y2 & Y3
We expect our 2015 full year sales to be between $5.775 billion and $5.825 billion. Interest expense and other related expense are expected to be approximately $90 million to $95 million. We estimate our full year effective income tax rate to be approximately 13% with slightly higher rates in the first half of the year. We expect cash flow from operations to be $550 million to $600 million, which reflects approximately $100 million in expected pension contributions. Net capital expenditures are expected to be approximately $75 million and dividend payments are expected to be roughly $160 million. The basic apparel market is highly competitive and evolving rapidly. Competition is generally based upon brand name recognition, price, product quality, selection, service and purchasing convenience. The majority of our core styles continue from year to year, with variations only in color, fabric or design details. Some products, however, such as intimate apparel, activewear and sheer hosiery, do have more of an emphasis on style and innovation. Our businesses face competition from other large corporations and foreign manufacturers, as well as smaller companies, department stores, specialty stores and other retailers that market and sell basic apparel products under private labels that compete directly with our brands.
Implementation Milestones
Evaluation, Control Metrics & Performance Measurement
All guidance for adjusted performance measures exclude charges related to the acquisitions of DBA and Maidenform Brands, Inc., and other actions.
Hanes’ new guidance range for net sales is approximately $5.350 billion to $5.375 billion, up from previous guidance of approximately $5.075 billion. The company increased guidance for adjusted operating profit by $25 million to a range of $735 million to $755 million, up from the previous guidance range of $710 million to $730 million.
Hanes has increased its guidance for interest expense and other expense by $5 million to approximately $90 million to reflect the DBA purchase. While the DBA acquisition is expected to have a slightly positive effect on the company’s corporate tax rate, Hanes continues to anticipate the 2014 rate to be in the low teens. The company expects slightly more than 103 million weighted average shares outstanding in 2014.
Adjusted EPS guidance for 2014 has been increased by $0.20 to a range of $5.40 to $5.60, up from previous guidance of $5.20 to $5.40, reflecting the DBA contributions to sales, adjusted operating profit and the corporate tax rate, partially offset by higher interest
expense.
The company continues to expect net cash from operating activities to be $500 million to $600 million for the year. Any cash generated in 2014 by DBA is expected to be substantially offset by cash closing expenses for the acquisition. The company continues to expect to make pension contributions of approximately $60 million and net capital expenditures of approximately $70 million.
Contingency Planning
The marketing contingency plan for Hanesbrands includes a number of factors. The first factor is being aware of risk factors and vulnerabilities such as economic conditions that may negatively affect demand for Hanesbrands ' products and thus reduce access to credit and cause Hanesbrands ' customers, suppliers and other business partners to encounter financial hardship. This can all have a negative impact on Hanesbrands ' business, results of operations, its financial condition and cash flows. Also, significant fluctuations and volatility in the price of various input costs including cotton and oil related materials, freight, utilities and wages, may result in a negative impact on Hanesbrands ' business, results of operations, financial condition and cash flows. Additionally, the economic environment in which Hanesbrands is operating continues to be uncertain and volatile, which can result in unanticipated adverse effects on its business and beyond. Hanesbrands operates in a highly competitive and fast evolving market and Hanesbrands ' market share and results of operations can be negatively affected if Hanesbrands fails to compete effectively in the future. It is also important to be aware that Hanesbrands relies on a relatively small number of customers for a significant portion of its sales. Also the loss of or material reduction in sales to any of Hanesbrands ' top customers could result in a material negative effect on its business, results of operations, financial conditions and cash flows. Finally, any disruption in Hanesbrands ' supply chain or adverse impact on its extensive network of operations may negatively affect its business, results of operations, financial conditions and cash flows. Considering Hanesbrands has an extensive global supply chain, a significant portion of its products are manufactured in or sourced from areas in Asia, Central America and the Caribbean. Therefore, potential events that may disrupt Hanesbrands ' supply chain operation include political instability, acts of war or terrorism; other security risks; operations disruptions; disruptions in shipping and freight forward services and interruptions in the availability of basic services and infrastructure, including power shortages, etc.
Conclusion
References
Fully Integrated Marketing Plan for Hanesbrand-Univision. Published by Megan Gill. Retrieved on May 2, 2015 From http://www.scribd.com/doc/58675104/Fully-Integrated-Marketing-Communications-Plan-for-Hanes-Univision#scribd
Investment Thesis. Hanesbrand by Bridget Weishear. 04/24/15. Retrieved on May 2, 2015 from http://analysisreport.morningstar.com/stock/research?t=HBI®ion=USA&culture=en-US&productcode=MLE
Christy Church, Ayanna Green, Marisa Smith
MKT/571
Armando Salas-Amaro Jr.
May 11, 2015
New Product Marketing Launch Plan, Part III
Executive Summary
Situational Analysis
Market Growth Potential and Competitive Analysis
In terms of market growth with its Innovate to elevate platform, Hanesbrand has succeeded in driving its margin expansion. Considering in 2014, its innerwear segment operation profit grew 130 basis points year after year up to 20.4%. This has surpassed 170 basis point of expansion in the prior year. Yet, it is believed Hanesbrands ' Innovate to Elevate platform is currently in its early stages. It is also estimated that Innovate to Elevate platform products account …show more content…
for less than 15% of its sales. Hanesbrands ' sees expansion in socks, intimates and kids ' underwear as well as marketing tactics are increasing this penetration. Additionally, it is determined that active wear is in earlier stages on Hanesbrands ' Innovate to elevate innovations at Maidenform have not started yet. Furthermore, Hanesbrands has been successful at using acquisitions in order to drive earnings growth. Considering, $50 million is spent per year on research and development and 400 people globally that are committed to innovation, this has become a complicated model to replicate, in the view of Hanesbrands that requires both scale and controlled supply chain. What’s more is that Hanesbrands produces nearly 1.9 billion units per year and has 70% of manufacturing employees in three of its lowest cost regions. This is also with less than 3% of its workforce in China. Also, when its manufacturing can internalize high volume styles, it is estimated that savings as much as 15-20% can be achieved. Furthermore, as Maidenform, DBA and Knights are integrated; Hanesbrands advisory believes it can drive an additional $50 million, $95 million and $20 million in operating profit through synergies, respectfully speaking. (Bridget Weishear. 04/24/15) In terms of competitive analysis, Handesbrands advisory believes it has a high degree of confidence in the defensibility of Handesbrands ' competitive position, considering advantages that are complicated for competition to replicate including Hanesbrands ' large owned and controlled supply chain, core produce positioning in an area where brand is more important than price, in addition to economies of scale that are achieved through a growing portfolio of synergistic brands. (Bridget Weishear. 04/24/15)
In terms of competitive analysis, Handesbrands advisory believes it has a high degree of confidence in the defensibility of Handesbrands ' competitive position, considering advantages that are complicated for competition to replicate including Hanesbrands ' large owned and controlled supply chain, core produce positioning in an area where brand is more important than price, in addition to economies of scale that are achieved through a growing portfolio of synergistic brands. (Bridget Weishear. 04/24/15)
Segmentation, Target Market, and Positioning
Pricing and Distribution Strategies
Hanesbrand advisory currently thinks earnings per share could double in the next four to five years in terms of pricing premiums, further leverage of the global supply chain and additional acquisitions that are synergistic to core products.
Additionally, it is believed that Hanesbrands leverages extensive manufacturing capabilities in order to produce quality products, in addition to charging an economical price. Furthermore, Hanesbrands operates a large owned and controlled global supply chain which includes 60% of its operations in the Western Hemisphere and 40% in the Eastern Hemisphere, which is thought allows it to maximize low cost production and global distribution. Hanesbrands has 72 facilities that produce 1.9 billion units. Considering it is wholly owned and operated, a research and product design and development team works on manufacturing processes in order to find the lowest cost production method for new product innovations. Additionally, the production process is as much a priority as the new product itself. Therefore, this integration in development and the benefits of scale afforded a synergistic brand portfolio those results in a competitive advantage. Finally, it is believed that these manufacturing capabilities also allows Hanes to deliver high returns on acquisitions, given the success of Hanesbrands has accomplished in terms of integrating prior acquisitions that includes Maidenform and DBApparel, in addition to the steady pace of acquisitions at …show more content…
approximately one per year. Therefore, it is also believed that acquisitions will be a core driver of returns for shareholders going forward. (Bridget Weishear. 04/24/15)
Marketing Communication Plan
Hanesbrand advisory currently thinks earnings per share could double in the next four to five years in terms of pricing premiums, further leverage of the global supply chain and additional acquisitions that are synergistic to core products. Additionally, it is believed that Hanesbrands leverages extensive manufacturing capabilities in order to produce quality products, in addition to charging an economical price. Furthermore, Hanesbrands operates a large owned and controlled global supply chain which includes 60% of its operations in the Western Hemisphere and 40% in the Eastern Hemisphere, which is thought allows it to maximize low cost production and global distribution. Hanesbrands has 72 facilities that produce 1.9 billion units. Considering it is wholly owned and operated, a research and product design and development team works on manufacturing processes in order to find the lowest cost production method for new product innovations. Additionally, the production process is as much a priority as the new product itself. Therefore, this integration in development and the benefits of scale afforded a synergistic brand portfolio those results in a competitive advantage. Finally, it is believed that these manufacturing capabilities also allows Hanes to deliver high returns on acquisitions, given the success of Hanesbrands has accomplished in terms of integrating prior acquisitions that includes Maidenform and DBApparel, in addition to the steady pace of acquisitions at approximately one per year. Therefore, it is also believed that acquisitions will be a core driver of returns for shareholders going forward. (Bridget Weishear. 04/24/15)
Financial Information
Intended Marketing Objectives for Y1, Y2 & Y3
We expect our 2015 full year sales to be between $5.775 billion and $5.825 billion. Interest expense and other related expense are expected to be approximately $90 million to $95 million. We estimate our full year effective income tax rate to be approximately 13% with slightly higher rates in the first half of the year. We expect cash flow from operations to be $550 million to $600 million, which reflects approximately $100 million in expected pension contributions. Net capital expenditures are expected to be approximately $75 million and dividend payments are expected to be roughly $160 million. The basic apparel market is highly competitive and evolving rapidly. Competition is generally based upon brand name recognition, price, product quality, selection, service and purchasing convenience. The majority of our core styles continue from year to year, with variations only in color, fabric or design details. Some products, however, such as intimate apparel, activewear and sheer hosiery, do have more of an emphasis on style and innovation. Our businesses face competition from other large corporations and foreign manufacturers, as well as smaller companies, department stores, specialty stores and other retailers that market and sell basic apparel products under private labels that compete directly with our brands.
Implementation Milestones
Evaluation, Control Metrics & Performance Measurement
All guidance for adjusted performance measures exclude charges related to the acquisitions of DBA and Maidenform Brands, Inc., and other actions.
Hanes’ new guidance range for net sales is approximately $5.350 billion to $5.375 billion, up from previous guidance of approximately $5.075 billion. The company increased guidance for adjusted operating profit by $25 million to a range of $735 million to $755 million, up from the previous guidance range of $710 million to $730 million.
Hanes has increased its guidance for interest expense and other expense by $5 million to approximately $90 million to reflect the DBA purchase. While the DBA acquisition is expected to have a slightly positive effect on the company’s corporate tax rate, Hanes continues to anticipate the 2014 rate to be in the low teens. The company expects slightly more than 103 million weighted average shares outstanding in 2014.
Adjusted EPS guidance for 2014 has been increased by $0.20 to a range of $5.40 to $5.60, up from previous guidance of $5.20 to $5.40, reflecting the DBA contributions to sales, adjusted operating profit and the corporate tax rate, partially offset by higher interest
expense.
The company continues to expect net cash from operating activities to be $500 million to $600 million for the year. Any cash generated in 2014 by DBA is expected to be substantially offset by cash closing expenses for the acquisition. The company continues to expect to make pension contributions of approximately $60 million and net capital expenditures of approximately $70 million.
Contingency Planning
The marketing contingency plan for Hanesbrands includes a number of factors. The first factor is being aware of risk factors and vulnerabilities such as economic conditions that may negatively affect demand for Hanesbrands ' products and thus reduce access to credit and cause Hanesbrands ' customers, suppliers and other business partners to encounter financial hardship. This can all have a negative impact on Hanesbrands ' business, results of operations, its financial condition and cash flows. Also, significant fluctuations and volatility in the price of various input costs including cotton and oil related materials, freight, utilities and wages, may result in a negative impact on Hanesbrands ' business, results of operations, financial condition and cash flows. Additionally, the economic environment in which Hanesbrands is operating continues to be uncertain and volatile, which can result in unanticipated adverse effects on its business and beyond. Hanesbrands operates in a highly competitive and fast evolving market and Hanesbrands ' market share and results of operations can be negatively affected if Hanesbrands fails to compete effectively in the future. It is also important to be aware that Hanesbrands relies on a relatively small number of customers for a significant portion of its sales. Also the loss of or material reduction in sales to any of Hanesbrands ' top customers could result in a material negative effect on its business, results of operations, financial conditions and cash flows. Finally, any disruption in Hanesbrands ' supply chain or adverse impact on its extensive network of operations may negatively affect its business, results of operations, financial conditions and cash flows. Considering Hanesbrands has an extensive global supply chain, a significant portion of its products are manufactured in or sourced from areas in Asia, Central America and the Caribbean. Therefore, potential events that may disrupt Hanesbrands ' supply chain operation include political instability, acts of war or terrorism; other security risks; operations disruptions; disruptions in shipping and freight forward services and interruptions in the availability of basic services and infrastructure, including power shortages, etc.
Conclusion
References
Fully Integrated Marketing Plan for Hanesbrand-Univision. Published by Megan Gill. Retrieved on May 2, 2015 From http://www.scribd.com/doc/58675104/Fully-Integrated-Marketing-Communications-Plan-for-Hanes-Univision#scribd
Investment Thesis. Hanesbrand by Bridget Weishear. 04/24/15. Retrieved on May 2, 2015 from http://analysisreport.morningstar.com/stock/research?t=HBI®ion=USA&culture=en-US&productcode=MLE