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ZALES

Final Group Project


MKT 310
Dr. M. Gail Vermillion
by:
Agnes Czesak, David Alvarez, Abbey Winter, Paul Ridgeway

Introduction
Zales is one of the largest jewelry retail stores in the United States. However, the
store had been struggling for the past few years due to an adoption of a new marketing
concept. Zales had about 1,300 stores that produce annual revenue of $1.6 billion. It all
started in 2009 with the economic downturn paired with poor holiday sales left the oncelargest U.S. jewelry retailer without the cash it needed to pay suppliers. It canceled
orders and took the unusual step of asking vendors to purchase inventory for cash.
Zales encountered poor customer retention and weak customer compatibility. By
January 2011, the top three executives left the Company, stock prices had fallen 91%,
and had lost almost $1 billion in market capitalization and the retail store image had
fallen so far that customers no longer were buying diamonds from Zales.
Zales Corporation, whose stores are typically positioned within shopping malls,
encountered challenging conditions in when it tried to go more upscale, but had to
heavily discount its merchandise due to competition, which hurt its profits. Zales
Marketing Concept of product, place, price and promotion all had issues with
consumer involvement. The combination of all these factors forced Zales to close
hundreds of stores in 2010, but still needed to close hundreds more underperforming
stores in order to return to profitability. Conversely, Signet Jewelers Limited saw the
potential that Zales had to offer if problems were rectified and purchased the company
in 2014. As a result, Zales is now undergoing a top to bottom corporate change and the
newly acquired company will look much different in the future. With that taken into
consideration we offer a marketing plan that will the notion that the company had not
been purchased.

Marketing Concept
Zales new marketing concept will be one that is a combination of both
marketing concept and societal concept Zales is part of the U.S. retail jewelry
industry, which is composed of five main segments: bridal jewelry (30%), fashion jewelry
(22%), watches (18%), precious stones (15%) and precious metals (15%). The
marketing concept of consumer oriented philosophy that customer satisfaction of their
needs will be the driving force for product development. Combined with the
development of a marketing strategy that will help Zales meet its targeted financial
projections.
Furthermore, Zales will use the societal marketing concept that will adhere to
the principles of social responsibility in the marketing of their jewelry. Zales will also set
out to meet the needs and wants of the target market in ways that preserve and
enhance the well being of the customers of Zales and also the society as a whole.
Bridal jewelry is considered a necessary component of jewelry retail and is less
influenced by economic conditions than fashion jewelry, which is considered a luxury
good
Zales, faced with some big problems, should look to their competitors to try to
understand how they had gained an advantage in identifying customer behavior of
both personal consumers and organizational consumers. First problem was with
sales personnel in the store lacking proper training and experience, which is one of the
critical success factors in the jewelry industry. Tiffanys and their little blue box meet all
the requirement of the marketing concept. For example they have the highest
customer satisfaction, customer value, customer trust, and customer retention.

Being the best in all of these for components is why Tiffanys is the number one in the
eyes of the public. Perception of the performance of the product or service that Zales
offers needs to be boosted.
To rise above the competition Zales will strive for the highest customer value.
By having the ratio overwhelmingly tilted in favor of the perceived benefits over the
cost is a priority for our marketing concept.

Marketing Mix
The market mix will target Zales customer perception, value, trust and
retention. Zales has a better customer perception in the mind of consumers because
it is offering a medium to high-quality product at lower prices. That is why its market
standings are better than other companies.. Zales will have a marketing mix that
focuses on company strengths as well as improving weaknesses and taking advantage
of opportunities.
Product
Zale Corporation should consider a comprehensive restructuring product plan to
address its various issues to most effectively reach their target market. Zales will offer
a medium to high-quality diamond jewelry at lower prices. By increasing the customer
value of having a high quality diamonds at medium cost the consumer will have a
greater customer satisfaction. Although mass merchants, such as JC Penney and
Wal-Mart, fall in the (low prices and low to medium quality jewelry) and Signet, a highend jeweler that primarily sells fine jewelry at higher price Zales will stick to its target
market and increase customer perception across all its products.
Price

Driving customer demand is critical in all retail industries. One possible strategy
for Zale would be to increase direct marketing efforts dramatically to create brand
awareness while investing in store updates and new product lines. Zale should
consider introducing an aggressive price program to help build a stronger customer
value ideal. Another price promotion that Zales will include will be the introduction of a
Zales Credit Card. BY offering customers a payment plan at affordable rates the
customer will be willing to reach just a little further. By adopting a new credit card
payment system Zales will instantly increase their customer trust and value because
the customer will have a longer direct relationship with Zales.
Place
Zales has a very concentrated demographic segmented customer base in a
large geographical segmented customer location. The locations of the companys
stores are limited to North America. This is a disadvantage because most of Zales
competitors are more geographically diversified. Although the company has expanded
its business online, it has mostly expanded its business in North America. Competitors,
such as Blue Nile and Tiffany, now operate in countries in Europe and Asia through a
web portal, which makes it easier to reach a broader specter of customers. By focusing
mainly on geographic segmentations in North America, the company increases its risk
and limits growth at the same time.
Promotion
Zales promotional strategy will include advertising in magazine as well at
television commercials. There will also be sales promotions that are both local and
nation sales. Zales will increase personal selling efforts to help build awareness of Zales

as a company as well as the demand for their jewelry. Jewelry sales are both seasonal
and cyclical in nature, with 40 percent of revenue and the majority of profits generated
in the fourth quarter and 25 percent of annual jewelry sales occurring in December.
Jewelry sales are high during the Christmas season and during the weeks proceeding
Valentines Day. Mothers Day experiences a spike in sales as well. With this known
Zales will heavily promote sale and jewelry during these time seasonal periods.
In addition to selected seasonal periods, Zales will strongly promote the
underperforming e-commerce business. Through its website, customers can get
information about various stones, maintenance advice, and help on product purchases.
The website also allows consumers to design their own jewelry, such as rings and
wedding bands. By promoting the website Zales will again increase their overall
marketing concept of increasing customer value, perception, satisfaction and
customer retention.

Value, Satisfaction, Trust, Retention


The goal of Zales marketing team is to build and maintain successful
relationships with their current and also prospective customers. In addition, we want
customers to be able to see the value of those perceived benefits as exceeding the
cost of the jewelry and diamonds that Zales sells to the public.
Customer value is way that customers view their perception of what they gained
vs. what they gave up to purchase a product or use a service. Zales will create value
propositions, which will be statements of the value their jewelry offers to consumers.
The value propositions will be clear and applicable to each consumer with in each of

their respected demographic and geographic segmented markets. Finally, customers


will understand the strength of the product benefits and why they should be buying
Zales jewelry and diamonds instead of other retailers.
Customer satisfaction is important because understanding the role of customer
expectations is vital for Zales. Zales will always strive to exceed customer
expectations in all aspects of customer interaction. By creating customer delight
Zales can have a higher customer satisfaction. According to Schiffman, when
customers are highly satisfied, they can become loyalists who continue to purchase or
apostles, who provide very positive word-of-mouth. When customers are disappointed,
they can become defectors and move to the competition or terrorists, who spread
negative word-of-mouth. Some dissatisfied customers become hostages and stay
with the company but are very unhappy. Mercenaries are satisfied but are not really
considered loyal and will move from company to company. Zales will strive for the
highest customer satisfaction to promote a stronger positive word-of- mouth to other
potential customers.
Another aspect that is closely related to customer satisfaction is customer
trust. Customer Trust within Zales will help build customer loyalty. Zales customer
retention goal is to make customers stay with Zales and generate positive word-ofmouth about their jewelry and diamonds.

Consumer Power
Zales should concentrate only on profitable brands and divest unprofitable
brands in order to address the consumer value and satisfaction. By Focusing on
Fewer Brands, and divesting others and Increasing designer jewelry will also help the

company to increase its brand value. Due to the demographic changes and increase
in the proportion of the wealthy population, Zale should consider introducing high-end
designer jewelry similar to what Helzberg Diamonds sells at specific demographic
segmentation locations. Furthermore, Designer jewelry will help the company to drive
sales up and
Zales should stress more on employee training because it is one of the most
important factors in customer retention and driving sales up and customer perceived
value. By increasing employee training the customer will have more educated
employees who are equipped to answer any questions they are asked. In doing so
customers will trust employees in their recommendations. Sales employees should be
able to determine if a customer wants to be helped and be trained to understand each
customers need. This will help increase customer satisfaction and perceived quality
of Zales Corporation.

Strategy:
A Differentiated Marketing Strategy is what Zales needs to appeal to a wide
range of consumers that will soon be very valuable source of revenue. If Zales was to
use a Concentrated Marketing Strategy it might be to focused on one particular
segment of the market and ignore other Subcultures that are also looking to spend
their money on luxury products as well. It would be a mistake to try to just appeal to
younger Caucasian consumers when there are many other growing subcultural groups
such as the African-American, Hispanic and Asian segments that are only going to get
bigger and are looking to spend their hard earned dollars. Counter Segmentation may
be an option for Zales as many of their established brands such as Zales Jewelers and

Gordans Jewelers carry weight in their own markets and may be a good jumping off
point as to base this strategy. Micro-Targeting will be helpful to get your products to be
viewed by young consumers that tend to never go anywhere without their mobile
phones and are constantly checking their text and emails.

Consumer Socialization:
Zales is already an established brand name among both our United States and
Canada. The emergence and growth in power and wealth of the millennial generation
has provided us here at Zales with a great opportunity to build new relationships with an
entire new segment of the market. In the Family Life Cycle discussed in chapter 10,
these people would be in first and second stages of the cycle. The target market we are
looking for here are people within the ages of 22-28 that may just be getting out of
college or getting their first permanent jobs. These people would be in the first or
Bachelorhood stage of the Family Life Cycle. Some members of the target market,
may also be newlyweds in their Honeymooner stage. People in this segment are
looking to spend cash from their recently found jobs and careers on people that are
close to them, especially partners. People in this target market are more likely to never
have been married, but possibly looking to do so. Members of this group might also be
part of Alternative Family Life Styles such as Childless Couples and
Single Parents II.

Social Class:
Young Middle and Upper-Middle Class would be a short way of explaining the
social class of our desired target market. Some Objective Measures that we will use to

identify social class will be Education, Salary and Occupation. As many of these
people will be college graduates and even some with post-graduate education, they will
often have above average salaries. People within the ages of 22-28 with an annual
income of $50,000-$100,000. The salaries will not likely be excessively high as many of
the people in this segment are just starting down their career path.

LifeStyle Profiles:
The customers we are trying to attract when looking at the VALS system would
be towards the Innovators area of the spectrum. These customers would be Thinkers
rather than Believers, Achievers over Strivers and Experiencers over Makers.
These are people that are High in Resources and Innovation.

Culture:
Millennials in North America have a wide range of cultural Beliefs, Values and
Customs. Through the Invisible Hand of Culture we are taught what is acceptable
and what is not. In the Lifestyle Matrix for Global Youth these consumers would most
likely fall in the The In Crowd. These are people looking for a sense of Validation and
Achievement in their selections. Jewelry is heavily entwined into the Ritual category of
how we learn about our own culture(Enculturation). We are taught that when we want
to get married we are supposed to buy an engagement ring to ask our partner to marry
us. Another thing to consider when trying to market to millennials would be to
remember that many in this category are very environmentally and ethically aware. It

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might be a good marketing plan to show that the jewelry that we sell is not going to fund
a conflict in another part of the world.

Subcultures:
Age:
The age range that we will be attempting to target are younger consumers
between the ages of 22 and 28 years old. These are people in the Generation Y
Adults category. As some of these will not yet have a vast amount of income available
to purchase jewelry, the expansion of payment programs and other financial assistance
programs would help bring in new youthful customers that are looking to purchase
something special for their significant other.

Nationality:
Zales Jewelers operate in the many of the busiest markets in both the U.S and
Canada. Therefore the target market by Nationality would be Americans and
Canadians.

Gender:
Although a vast majority of the purchasers of jewelry are men, It would be foolish
to ignore half of the population that is earning more and more of the income share every
year in the United States. Women like men also buy jewelry and other accessories

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such as watches for themselves. It has also become more common for the woman in
the relationship to make the decision about which ring she will get and most importantly
where she wants to look for rings. Wife-Dominated households have grown in
numbers over the years as many women have had to maintain the household and hold
down a full time job.

Geographic:
When creating advertisements it may help to try and tune your ads to the market
you are trying to connect to. Zales as a whole would not want to focus entirely on just
one Geographic segment of the U.S or Canada. Different regions have different taste
and personalities and therefore this would be where Zales could come in with creative
advertising to appeal to the consumers of their own region. Here people on the West
coast of the U.S would be marketed to differently then consumers say in Toronto,
Canada.

Religious:
The exchanging of Jewelry has a very sacred or almost Ritual connotation in the
U.S. Engagement rings are often bought by men all over the U.S hoping to get married
to their sweetheart. Marriage itself is a Religious practice and often take place inside a
place of worship. Summer is traditionally marriage season and it would be a good idea
to promote Zales heavily in the time leading up to the Summer as to bring in as many
prospective grooms as possible into their stores. Protestant and Catholic traditions of
the exchange of these rings or other forms of jewelry has become part of western

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culture and it is now expected of you to give some sort of token whether or not you are
a member of these religions.

Race:
There are many racial subcultures here in the U.S that comes from the American
tradition of being a nation of immigrants. A drive through Chicago will take you through
Greek, Hispanic, Ukrainian, Asian and many African American neighborhoods all that
have their own culture inside the wider body that we call American culture today.
Although these culture has vastly different traditions and lifestyles they share the same
goals. In early economic structures, countries would peg their own currency to the
value of gold. This was because gold was not just accepted as a form of payment, it
was the medium by which all currencies would be measured as it was something every
culture valued and cherished. To target one specific Race would limit the scope of the
business in my opinion. Although there is a Caucasian majority in this country now,
there is evidence that this trend will not be for much longer. Minority groups with the
Hispanic population leading will have become the majority of the population by 2043
according the U.S Bureau of the Census.

Personality:
When trying to identify with this young and growing target market it is important
for you to remember that your Brand Personality is just as important to the quality of
your products. Younger consumers today are drawn to products by celebrity
Endorsements and Testimonials. In my opinion Adidas has taken a decent size of the
market share in the U.S in the past few years by securing high profile Endorsements

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from the likes of Derrick Rose and Jay Z. Zales could learn a lot by looking at some of
the success Adidas has seen and the steps it has taken to ensure that success. When
marketing jewelry it will be easiest to connect with Visualizers in terms of Cognitive
Personality Factors. It will obviously be easier to show how beautiful something than
to say how beautiful it is.

Motivation
The needs of our customers are based on wants and not needs. Based on our
prices, our target market is customers who need good quality jewelry at a price that is
convenient to them. Zale wants to make sure that our customers are happy with our
prices as much as they are with our products. To be a little more specific, our customers
are typically people who purchase jewelry as gifts, so they want to be able to impress
whoever it is they are going to give the gift to. Zale customers are individuals who earn
between $35,000 and $100,000 per year. Their customer also favor locations based at
the mall. Zale products average about $300 per item. Again, the target market is the
people who can afford those items, which at those prices, is quite a large amount of
people.
Based on Maslows hierarchy of needs, the customers needs are at the 4th
level, which is ego needs. Ego needs satisfy cravings for prestige, status, or selfesteem. Obviously, people need to fulfill their psychological and safety/security needs
first before they fill their ego needs, meaning that people need food, water, air before
they need jewelry. On the third level of Maslows hierarchy of needs falls social needs,
but depending on the person, that doesnt always fall as a top priority. Almost everyone

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needs to fulfill social needs, such as friendship, belonging, and affection, but depending
on the person, it may be less of a priority than ego needs.
In order to reach our target market and fill their needs, they need to be segmented.
Segmentation is necessary because consumer needs differ. Zale needs to figure out
exactly who they are targeting so then they can choose the way they want to market to
them. Since we believe that the target market should be for young college graduates,
we suggest that Zale use social media first and foremost to advertise. It will reach the
consumers the fastest. At this point, this is pretty much all that people these days pay
attention to, so as long as they advertise on a media that can be accessed on a
computer, tablet, or smartphone, that would be their best bet.
Perception :
Consumers make their decisions based on three different factors. The first is the
nature of the stimulus. The consumers look at the physical attributes of the product,
the package design, the brand name, and advertising amongst other things. The second
factor is expectations. Consumers will purchase a product if they are familiar with it
and/or have a positive previous experience with it. Finally, consumers will purchase a
product if they have a motive; they will purchase a product if they have a need or want
for it. As mentioned earlier, jewelry is an ego need, therefore many people purchase it
because they have a desire for it. When they start looking for a specific type of jewelry,
then they start to consider the nature of the stimulus by looking at the physical
attributes. As a company trying to regain customers, we have to be aware of their
perceptual selections. Customers seek out messages which are pleasant. They want
messages with which they can sympathize, and messages that reassure them that they

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made a good purchase. Zales has to prove to their customers that they can provide
100% customer satisfaction.
Consumer Learning
There are four elements of learning theories. The first one is motivation which is
triggered by unfilled needs. The second one is cues, which is stimuli that directs
motives. The third one is response, which is a consumer reaction to a drive or cue. And
finally, the fourth is reinforcement, which increases the likelihood that a response will
occur in the future as a result of a cue. Behavioral learning is based on observable
behaviors that occurs as the result of exposure to stimuli. Cognitive learning is
learning based on mental information processing. It is often in response to problem
solving. We are using all of this information to help us learn what it is our customers
want, and based on that information, we figure out how we can fulfill these needs for our
customers. Many jewelry purchasers have the same need, and that it to impress
another person with their jewelry purchase. Then when they decide what it is they want,
they will either make the purchase or not. Depending on the satisfaction of the
customer, it will trigger the customer to both make a future purchase, and perhaps
recommend the product, or it will trigger the customer to not return, and have a dislike
for the company.

Attitudes
Customers formed their attitudes based on Zales prices and items. Its their
attitudes that either have a customer purchase the items or not. As Kay and Jared
jewelers started advertising more and more, it seemed like Zale was trying less. Kay

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and Jared seemed the like go-to places for jewelry, and Zale started getting forgotten
about. As Zale started losing its customers, the worse attitudes people had of it. Zale is
in a tough situation because not as many customers are purchasing their items. Their
attitudes have changed. In order to change the way people think about Zale, we must
make it a popular jewelry option once again. We need to have more customers,
because the more people that purchase our products, the more people will hear of our
name, and the better our reputation will be. First of all, Zale needs to figure out what it is
people are looking for in jewelry, and they must keep up with peoples changing
demands. Then it needs to put more effort into advertising perhaps coming up with a
catchy phrase like Kay (Every Kiss Begins with Kay) or Jared (He Went to Jared)
has. Once Zale gains their customers again, they will have to adjust to customers
constantly changing demands and keep their customers. Thats how the successful
companies remain on top.
First off, if we take a look at the Tricomponent model, we can break down what
it is exactly that Zale needs to change. The first component is the cognitive
component. This is formed through a customers experience with the store. Zale should
make a friendlier and more comfortable atmosphere for the customers; something that
makes them feel welcome. That will change their attitudes in general, and may look at
our items in a different way. Also, our products should prove to be worthy of purchase.
They cannot break or rust otherwise that would ruin the attitudes. Next is the affective
component. It is similar to the cognitive component, but this focuses only on the
emotions and not so much the experience. Again, focus on making the customers feel
like they are the most important people to us.

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Finally, for the conative component, we have to ensure that after changing the
way we treat and serve our customers, that it makes our customers purchase our items
more, perhaps talk about our products to other people, bring new customers, and
raising our products.

Communication Plan
After looking up what Zales was doing to advertise their jewelry I noticed their
social media sites were used sparingly. With social media being a huge part of todays
society, we will make Zales Jewelers more prominent and versatile by creating an up-todate Twitter, Facebook, Instagram, and Pinterest. Social media is an informal source
and inexpensive, but a very useful marketing source to businesses trying to expand
their market. It is extremely important that there is a marketing mix with daily posts on
each social media site regarding a new product (bracelet, ring, necklace, etc.) that just
came out, upcoming or current sales going on, or simply just posting featured pieces of
jewelry. These posts will have different target markets, such as a struggling future
fianc deciding what company they should invest in for their engagement and wedding
ring. When consumers are browsing on their social media accounts such as twitter or
instagram, they are reminded that Zales is a superior jewelry store with beautiful, highend pieces. We want to create ads that show Zales Jewelers is their best option
because our products are the highest quality and youll gain prestige when purchasing
from us. Our ads will create repetition to consumers and will convince them theres no
other jewelry store as fine as ours.
Another way of communicating to our customers is to send out a daily, biweekly,
or weekly email notifying them of any events or sales going on throughout the store.

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Email is a cheap and efficient way of spreading business. An incentive for people to sign
up for these emails is to give a small percentage off after they sign up with their email
addresses. This brings in business by persuading them to buy something with their
discount and communicates future sales.
After a customer purchases something from Zales, we want to create brand
loyalty by providing them with a 10% deduction on their next purchase. If they choose
to fill out a quick 5-minute survey, they will get an addition 5% back. This will be a
paperless process sent to their emails as the survey will ask questions about their
experience with Zales. Using this survey as a technique to get feedback on
effectiveness will also help our communication methods because the customer will
automatically be added to our email list/network.
Decision Making Process
Its important to understand consumer behavior when selling a product. By
advertising our jewelry on social media sites, its essential to send the message that
there is a psychological need to buy our product to feel power or social acceptance.
The need could also be to show love, or fulfill self-actualization. Once they feel like
there is a need to purchase jewelry, they will start to read secondary research about
different companies and where their dollar is best spent. The consumer will also look at
external data and possibly internal data if theyve been a previous customer of Zales.
Theyll evaluate their past purchase, if any, with Zales as a guideline to their future
purchase.
In order to be successful, Zales must distinguish themselves from their
competitors. Providing the customers with services that are not offered by the

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competitors will give them a positive motive for them to be a customer at Zales. Once
the customer evaluates each company, they will have a selection of goals they want to
achieve from this purchase goals accessibility in the social environment.
Once the customer is going through the decision-making process, Zales will
ensure that they have a 30 day money back guarantee policy. This eases the
customers perceived risk and allows them to purchase a piece without the worries of
losing money. If a customer keeps the piece of jewelry over 30 days, we will ask them to
complete a customer survey on their experience with Zales. Completing this survey
will give them the incentive to purchase another piece with a 15% discount. Doing so
will also give feedback to our company on how they like the product, and what could be
done to make their experience more enjoyable. The survey brings in more business,
too.

Ethics
When thinking of Zales, the attitude we strive for is that its the go-to jewelry
store because of the trustworthy, outstanding customer service and only the finest
quality. In order to gain customers trust, the societal marketing concept will be
incorporated into our advertising by associating ourselves with eco-friendly ways and
showing social responsibility.
Zales will not engage in exploitative targeting because we know the
consequences that could occur from selling to children who do not understand the
responsibilities of purchasing such an investment. In order for a customer to purchase
from us, we will need a down payment based on the price of the product to avoid over

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aggressive promotion. Zales will not contribute to false advertising or manipulating


customers into thinking they can afford something only to get a sale out of it.
Conclusion
Zales Jewelers will be successful once it becomes more prevalent on social
media sites because of our tech-savvy society. There needs to be a differentiated
marketing strategy to appeal for all types of customers, not just one segment.
Providing customers with the option to have a payment plan will also help bring in
business. Its extremely important to understand the selection of goals a majority of
our customers have because it will create brand loyalty. Being a socially responsible
company and committing to our ethics will create trust among our customers. Zales has
the chance to recreate itself by changing the attitude and consumers perception by
understanding the wants and needs of different target markets, and by having a more
effective communication plan.