CWTR » Topics » Marketing and Promotion

This excerpt taken from the CWTR 10-K filed Jun 21, 2006.

Marketing and Promotion

Throughout all of our marketing and promotion activities we seek to present a consistent brand image. The primary initiatives in fiscal 2005 were aimed at retaining existing customers and attracting new customers while building overall brand awareness. National magazine advertising, Coldwater Creek catalogs and e-mail campaign initiatives were discussed above under the caption “Increase Share of Women’s Apparel Market.” In addition we also continued to mail millions of our Northcountry and Spirit catalogs, participated in an affiliate website program and periodically offered our customers a gift-with-purchase.

As a catalog company we have been able to create an extensive proprietary database of customer information including customer demographics, purchasing history, and proximity to an existing or planned premium retail store. We believe our ability to effectively design and manage our marketing and promotional programs is enhanced by this rich source of information, allowing us to adjust the frequency, timing and content of each program to maximize the benefit gained.

Co-Branded Credit Card Program

In the second quarter of fiscal 2005, we introduced our co-branded credit card program. To encourage pre-approved customers to accept the credit card, we offer a one-time discount on merchandise purchased at the time of application. Cardholders are also able to earn points for every dollar spent at Coldwater Creek and at other businesses where our card is accepted. Cardholders who accumulate the requisite number of points are issued a coupon towards the purchase of Coldwater Creek merchandise. In addition to earning points, all participants in the co-branded credit card program receive exclusive offers throughout the year. These offers have included discounts, Coldwater Creek shopping events, and periodic opportunities to earn double and triple points.

 

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Under the co-branded credit card program, we receive from the issuing bank a non-refundable marketing fee for each new account that is opened and activated. We also receive a sales royalty from the issuing bank based on a percentage of purchases made by the cardholder at Coldwater Creek or at other businesses where the card is accepted. The sales royalty is intended to offset the cost of merchandise coupons given for points accumulated under the reward program. Approximately 153,000 new accounts were activated during fiscal 2005.

This excerpt taken from the CWTR 10-K filed Apr 13, 2006.

Marketing and Promotion

Throughout all of our marketing and promotion activities we seek to present a consistent brand image. The primary initiatives in fiscal 2005 were aimed at retaining existing customers and attracting new customers while building overall brand awareness. National magazine advertising, Coldwater Creek catalogs and e-mail campaign initiatives were discussed above under the caption “Increase Share of Women’s Apparel Market.” In addition, we also continued to mail millions of our Northcountry and Spirit catalogs, participated in an affiliate website program and periodically offered our customers a gift-with-purchase.

As a catalog company we have been able to create an extensive proprietary database of customer information including customer demographics, purchasing history, and proximity to an existing or planned premium retail store. We believe our ability to effectively design and manage our marketing and promotional programs is enhanced by this rich source of information, allowing us to adjust the frequency, timing and content of each program to maximize the benefit gained.

Co-Branded Credit Card Program

In the second quarter of fiscal 2005, we introduced our co-branded credit card program. To encourage pre-approved customers to accept the credit card, we offer a one-time discount on merchandise purchased at the time of application. Cardholders are also able to earn points for every dollar spent at Coldwater Creek and at other businesses where our card is accepted. Cardholders who accumulate the requisite number of points are issued a coupon towards the purchase of Coldwater Creek merchandise. In addition to earning points, all participants in the co-branded credit card program receive exclusive offers throughout the year. These offers have included discounts, Coldwater Creek shopping events, and periodic opportunities to earn double and triple points.

 

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We receive a non-refundable, non-recurring fee from the issuing bank for each new account opened and activated. Approximately 153,000 new accounts were activated during fiscal 2005, resulting in a fee of $12.3 million. We also receive from the issuing bank a small sales royalty which is based on a percentage of all purchases made by the cardholder.

We believe over time the fee revenue component of our co-branded credit card program will decrease as a larger portion of our customer base enters the program. At the same time, we expect the sales royalty revenue to increase. This increase will be mostly offset by an increase in the expenses associated with the accumulation of points. The issuing bank has the right to modify certain terms of the agreement that govern the co-branded credit card program. Changes made to the terms of this agreement may not be to our benefit. We do not bear the credit risk associated with our co-branded credit card.

This excerpt taken from the CWTR 10-K filed Apr 13, 2005.

Marketing and Promotion

        Our marketing and promotion initiatives focus on reinforcing our brand message and retaining our existing customers and attracting new customers. As we grow our business and broaden our retail footprint, we intend to increase our mass marketing initiatives to enhance national visibility of the brand. For example, in early fiscal 2005, in an effort to drive customers to our retail stores, we introduced multiple page magazine advertisements in national and regional publications that will display the current season's merchandise assortment.

        During fiscal 2004, we used a variety of print media advertising to promote sales in retail stores, over the internet and through catalogs, while, at the same time, promoting heightened awareness of the Coldwater Creek brand. Our print media consisted of three primary vehicles: national magazine advertising, traditional catalogs and "retail mailers." National magazine advertisements were placed in high-circulation publications such as Oprah, Good Housekeeping, Better Homes & Gardens, Country Living, Southern Living and Cooking Light. These advertisements were designed to drive customer traffic to our three selling channels, as well as to increase brand awareness. Our traditional catalog mailings are designed to generate sales through our Direct Segment and are circulated under the titles Northcountry, Spirit and Sport. Retail mailers were catalogs that included an assortment of items from all three catalog titles, featuring merchandise that can be found in our retail stores. These retail mailers were designed and produced to drive retail store traffic and, accordingly, were primarily mailed into markets where we had an existing store.

        We believe our ability to effectively design and run each of our marketing and promotional programs is enhanced by our proprietary database of customer information, which includes demographic data, purchasing history by sales channel and their physical proximity to our existing and planned retail stores. This system allows us to segment our customer base according to many variables to analyze each segment's performance and buying patterns. We use the resulting information to adjust the frequency, timing and content of our various programs and promotions to maximize the productivity of each one.

        As we have moved to a multi-channel strategy we have implemented the following marketing and promotional initiatives to maximize purchases by our existing customers in all three of our channels, reinforce the Coldwater Creek brand, and encourage customer loyalty:

    We place kiosks linked to our user-friendly, e-commerce website in our retail stores to encourage our customers to explore our website and, if they prefer, place their order over the Internet;

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    We prominently display our website address and the location of our retail stores in each of our catalogs;

    We send retail mailers to our retail customers and prominently display our catalogs for customers in our retail stores;

    We publicize our retail store openings utilizing cover wraps on local catalog mailings, announcement mailings and e-mails and various local advertising media;

    We send customized e-mail messages alerting customers about special sales events and the arrival of new merchandise; and

    We run promotional events in our direct and retail channels each month, which are designed to increase order size, clear seasonal merchandise or reactivate customers who have not recently shopped with us.

        As part of our e-commerce marketing initiatives, we participate in an affiliate website program. We select popular Internet search engines, consumer and charitable websites to promote the Coldwater Creek brand to their visitors and provide convenient hotlink access to our website in exchange for a commission based on net sales from referred customers.

        We also conduct a national magazine advertising campaign to reinforce awareness of Coldwater Creek as we open stores in new markets, draw the attention of potential direct customers and establish national visibility for our brand. We run multi-page, color advertisements to promote our three channels in lifestyle and shelter publications consistent with the Coldwater Creek brand, including Oprah, Good Housekeeping, Better Homes and Gardens, Sunset, Country Living, Southern Living and Cooking Light.

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