Case Study: Neumann Marcus

Please see absorbed instructions. If you were CEO, what would you do to move the aggregation forward? Accede primary ambition (pg 5) aggressive advantage (marketing mid, pg 7, PEST and competitors. All instructions and allocation rubic attached.Case Assay 3 Neiman Marcus Instructions Please apprehend the case: Chump Focus at Neiman Marcus: "We Abode to the Client" and  complete the case analysis. Question to be addressed in your case analysis: Neiman Marcus filed for defalcation on May 7, 2020. This case abstraction provides accomplishments  information about Neiman Marcus from its aperture in 1907 to 2006 aback the case was written.  Use the admonition in the case, forth with the admonition you accrue through alien sources,  answer the afterward question: If you were the CEO or CMO of Neiman Marcus, what would  you do to admonition the aggregation move forward? • Amuse accede the primary ambition bazaar (on folio 5) and agenda that the primary ambition bazaar  drove 90% of the sales acquirement (on folio 7). • Amuse accede the aggressive chump advantage (i.e., business mix) - price, location,  service, and commodity (on folio 7). • Amuse accede the alien environments (PEST) and competition. Please accomplish abiding to assay the allocation guidelines and explanation above-mentioned to alive on this case  analysis. Amuse lath the afterward in your case analysis. 1. Awning page 2. Arbitrary of key business activity issues. 3. Appraisal of key issues 4. Adduce and absolve your own solutions 5. Recommendations 6. References 7. Amuse administer business concepts or theories alien in this beforehand or you accretion from  external sources. Case write-ups should be at atomic 5 pages not including awning folio and advertence page, bifold  spaced, chantry admeasurement 12 in Times New Roman. Amuse abide it in MS Word format. 5-405-750  ROBERT D. DEWAR  Customer Focus at Neiman Marcus:  “We Abode to the Client”  There is never a acceptable auction for Neiman Marcus unless it is a acceptable buy for the customer.  —Herbert Marcus  This simple aesthetics bidding by Neiman Marcus co-founder Herbert Marcus became the  foundation of a awful acknowledged customer-focused activity with which Neiman Marcus became  the added bigger and the best assisting specialty retail alternation in the country.  The “Client” in 2006  She’s rich—the minimum assets of the ambition chump domiciliary is $200,000; she’s  fashionable—she knows fashion, lives fashion, and watches it wherever it appears; she cruises the  Internet (e.g., Style.com) and reads the “right” publications; she demands quality—she wants  actualization able-bodied fabricated and she wants the absolute thing, no imitations; she wants the unique—no copies,  no accumulation production; she’s as accustomed as tomorrow—she’s afterwards the latest and will booty a accident to  exhausted her aeon to tomorrow’s best; she gives and appreciates actualization advice. She demands  claimed able annual and attention. And she is accommodating to pay. She’s been the Neiman  Marcus customer1 for ninety-nine years.  History  Opened in Dallas in 1907 by Herbert Marcus, his adolescent sister Carrie Marcus Neiman, and  her bedmate Al Neiman, Neiman Marcus was created as “a abundance of quality, a specialty store—the  abandoned abundance in the burghal whose stocks were anxiously bedfast to ladies’ outergarments and millinery  and which presented added varieties and added absolute curve than any accession abundance in the South.”2 The aggressive founders absitively to not attack anon with accession sellers of women’s  clothing, but to actualize a new retail advantage for women in the South. They perceived a gap in the    1 The agreement “customer” and “client” are acclimated interchangeably at Neiman Marcus. Aback the Neiman Marcus cast signifies  able selling, “client” is acclimated added frequently for the best, i.e., highest-spending, customers. 2 Advertisement, Dallas Morning News, September 8, 1907. ©2006 by the Kellogg Academy of Management, Northwestern University. This case was able by Professor Robert D. Dewar. Cases  are developed abandoned as the abject for chic discussion. Cases are not brash to serve as endorsements, sources of primary data, or  illustrations of able or abortive management. Because of the arcane attributes of some of the capacity discussed, some  admonition has been advisedly distorted. To adjustment copies or abode permission to carbon materials, alarm 847-491-5400 or e-mail  cases@kellogg.northwestern.edu. No allotment of this advertisement may be reproduced, stored in a retrieval system, acclimated in a spreadsheet, or  transmitted in any anatomy or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Kellogg Academy of Management.  CUSTOMER FOCUS AT NEIMAN MARCUS 5-405-750  top-quality women’s accouterment bazaar in Dallas. While there were abounding women who could afford  and were acquisitive to abrasion the finest clothing, the actualization communities of New York and Paris were  too abroad for them. In an accomplishment to best serve this anew articular chump base, three  objectives were of arch importance: (1) to beforehand the affection and availability of ready-to wear ladies’ clothing; (2) to activity a array of styles at the alpha of all-embracing fashion  trends; and (3) to lath barter with aloft annual and commodity incomparable in  affection and all-embracing value. These attack guided the business from the day Neiman Marcus  opened its doors as the aboriginal specialty abundance in Texas.  Everyone seemed acquisitive to be allotment of the growing Dallas actualization scene, and Neiman Marcus  became the abode to shop. As the abridgement of Dallas exploded, Neiman Marcus thrived on the  abundance accomplished by bounded citizens. The newfound riches, aboriginal from cattle, afresh oil, and afterwards real  estate, accustomed these individuals to beforehand aesthetic tastes. Pragmatism was beforehand abreast to make  allowance for extravagance, and Neiman Marcus acquired civic acknowledgment through such publications  as Vogue. By the 1950s fashion-conscious individuals from all over the apple catholic to Dallas  to boutique at Neiman Marcus.  As the acceptability of the abundance spread, sales affiliated to increase, and the chump base  connected able-bodied aloft Dallas. During this time the Marcuses were consistently on the anchor for  new items to accompaniment the accustomed merchandise. Accouterment items such as shoes, furs, and other  ladies’ accessories, as able-bodied as allowance items and a jotter line, were added to the store’s already successful repertoire. Afresh in 1951 amplification began with the aperture of a added Neiman  Marcus abundance in the burghal Preston Centermost Mall alfresco of Dallas, which bankrupt in 1965 abandoned to  be replaced by a aloft abundance in the North Park Arcade Mall. In 1969 accession abundance opened in  Houston.  The Founders’ Activity and Philosophy  In adjustment to beforehand its position as the arch agent of higher-priced women’s fashions,  Neiman Marcus administration accomplished the allegation to consistently accompany altered and innovative  accessories to the Dallas market. The blueprint and ambiance created in the Neiman Marcus stores  fabricated a appointment not artlessly a arcade cruise but a arcade experience. Food were brash by  acclaimed architects with abreast actualization as their keynote. Aisles were anxiously wide; as  one abundance administrator said, shoppers should be able to airing bottomward any alley and beat their accoutrements in a  amphitheater with allowance to spare. Affectation shelves chock-full able-bodied abbreviate of the ceiling, and displays were  bright and able-bodied maintained. Every affiliate of the agents was answerable with the responsibility  of authoritative anniversary chump feel like a acclaimed bedfellow of the Marcus family.  A aloft agency in instilling chump focus in abundance advisers was the affiliated managerial  attendance of a Marcus ancestors member. While Herbert was acutely in allegation until his afterlife in  1950, his son Stanley took on greater responsibilities and emerged as Herbert’s obvious  successor, confined as CEO until 1974 and afresh administrator and afterwards administrator emeritus until his  afterlife in 2002. Stanley’s adolescent brothers additionally formed in the business at one time or another. 2 KELLOGG SCHOOL OF MANAGEMENT 5-405-750 CUSTOMER FOCUS AT NEIMAN MARCUS Expansion into a Civic Chain, 1969–2005  From 1907 until 1969 Neiman Marcus was a family-owned and -operated business. Afresh in  1967, with three food and an all-embracing reputation, Stanley Marcus capital to aggrandize beyond  Texas. Aback internally generated funds would not be acceptable to abutment an aggressive plan and  the auction of aggregation banal to accomplish funds for amplification would abate ancestors ascendancy of the  business, Stanley Marcus absitively the best beforehand of activity was to seek a merger. He approved a  new ancestor aggregation able of continuing the attitude and acceptability for arete that had  amorphous sixty years beforehand in Dallas. Afterwards exploring attainable collective ventures with several  organizations, Neiman Marcus was awash to the Carter Hawley Hale Stores, Inc. in 1969. Stanley  Marcus was promised the freedom he adapted to abide active Neiman Marcus, and Carter  Hawley Hale acutely bedevilled the assets that accustomed dispatch of a civic expansion  program.  Common acumen in retail adumbrated that amplification would beforehand to economies of calibration in  centralized operating costs (e.g., the affairs organization) while at the aforementioned time it would  advantage the affairs adeptness of added food with the Neiman Marcus name and image.  Afterward the accretion by Carter Hawley Hale, the Neiman Marcus alignment began a rapid  amplification that grew from three Texas-based food in 1969 to twelve locations from bank to coast  in 1980. Amid 1981 and 1985, an added nine food were opened (see Exhibit 1 for store  locations). No best a southwest bounded chain, Neiman Marcus acquired operational challenges  that adapted acceptable adaptability to address. Its amplification chock-full in 1986 aback Carter Hawley  Hale had to adapt banknote to bulwark off a takeover attack by the Limited. Afresh aback the Limited  raided Carter Hawley Hale afresh in 1987, Carter Hawley Hale aloft banknote by affairs Neiman  Marcus, Contempo Casuals, and Bergdorf Goodman to Boston-based Accustomed Cinema  Corporation (now alleged Harcourt Cinema3). Beneath Carter Hawley Hale there were insufficient  funds to acclimate stores, and some developed a anachronous and dried appearance.  When Accustomed Cinema took control, it invested heavily in adding, updating, and remodeling  stores. Bristles food were added from 1989 to 1992, bringing the absolute to twenty-seven. From 1992  to 2005, Neiman Marcus added ten added food forth with eleven approval centers and three  Gallerias. Four added food were appointed to attainable by 2007. Gallerias, baby food focused on  adored and accomplished jewelry, gifts, and home furnishings, that CEO Burt Tansky alleged a good  agreement that failed; all bankrupt by 2004. Accordingly, as of 2005 Neiman Marcus had three  groups of food based on sales volume: AAA stores, added than $100 actor a year; AA stores,  amid $50 and 100 actor a year; and A stores, beneath than $50 actor a year. There were seven  AAA stores.  As a aftereffect of the geographic expansion, Neiman Marcus began aggressive against  accession civic high-fashion specialty chains such as Saks Fifth Avenue, Lord & Taylor, and I.  Magnin. Antagonism additionally came from bounded specialty shops and artist boutiques. Not abandoned did  the antagonism adapt from burghal to city, but Neiman Marcus bound accustomed that there were  inter- and akin intra-city variations in tastes and fashions.    3 Accustomed Cinema became Harcourt Cinema afterwards it awash its bottling business to Pepsi, bankrupt the Contempo Accidental Chain, and with banknote from the bottling auction purchased Harcourt Publishing. The aggregation afresh operated cine theaters and Harcourt Publishing in  accession to the Neiman Marcus Accumulation (Neiman Marcus Stores, Bergdorf Goodman, Neiman Marcus Direct, Kate Spade, and Laura  Mercier). In 2005 Warburg Pincus and Texas Pacific Accumulation took the Neiman Marcus Accumulation clandestine with a leveraged buyout for $5.1  billion. KELLOGG SCHOOL OF MANAGEMENT 3  CUSTOMER FOCUS AT NEIMAN MARCUS 5-405-750  Multiple Directions and Growing Strains, 1983–1993  While Stanley Marcus remained administrator of the lath for Neiman Marcus, he relied heavily  on the admiral (after 1987, the CEO), who oversaw the two key functions: sales (the stores) and  affairs (the merchants). Amid 1983 and 1993 there were bristles altered individuals in this  position, four of whom came from alfresco Neiman Marcus. David Dworkin captivated this position  from 1983 to 1985, followed by Richard Marcus from 1985 to 1986, Allen Questron from 1987  to 1989, and Terry Lundgren from 1990 to 1993.  Each of these presidents had a altered retail philosophy. While one emphasized sales per  aboveboard foot, accession was a merchants’ man, i.e., “the store’s role is to acquaint what the merchants  buy,” and accession was a abundance man, i.e., “the merchant’s role is to buy what the food can sell!”  The aftermost aloft activity during this aeon was the “much better” activity (so alleged by  consultants). “Much better” was a activity of affective into lower bulk point commodity to  aggrandize the Neiman Marcus chump base. In the assessment of Burt Tansky, who became CEO in  November 1994, the accurate Neiman Marcus chump was not absorbed in affairs lower-priced  merchandise. At the aforementioned time, the new barter whom the activity was brash to acquire  were abundantly abashed by the Neiman Marcus angel and could accretion the aforementioned affectionate of lower priced commodity in accession retail stores. During the “much better” era the exclusivity of Neiman  Marcus declined, and at the end of 1993 Neiman Marcus banal was at $17.42, $5 from its all-time  low and $49.40 from its abutting ($66.70) aloof afore the advertisement of the leveraged buyout in  the bounce of 2005 (see Exhibit 2).  The accelerated amplification of the aboriginal 1980s (nine food were added in bristles years) created such a  allegation for added abundance cadre that, for the aboriginal time in its history, Neiman Marcus was  afflicted to ample a ample cardinal of key positions with bodies from alfresco the organization. Some  had adversity adapting to the Neiman Marcus adeptness and resigned. As one of its assembly put it,  “the affairs ancillary was gutted” to ample the ever-increasing cardinal of sales administration arch and  abettor abundance administrator commodity positions. The cardinal of buyers added from 70 to 110  amid 1975 and 1985. However, so abounding larboard for abundance positions due to promotions or through  accustomed about-face that the celebrated adeptness akin of the buyers was actively reduced. At that time  it took three years to absolutely beforehand a buyer, but in 1986 aback the accelerated amplification stopped, only  about 35 percent of buyers had three or added years of experience. To cope with this inexperience,  the albatross of anniversary appellant was arrangement to narrower curve of merchandise, e.g., responsibility  belted to men’s ties instead of all men’s accessories. As a result, the claiming and array of  the job declined, buyers acquainted underpaid and overextended, and about-face increased. Communication  with food additionally became beneath able and relationships with vendors suffered.  As Carter Hawley Hale absent assets to bulwark off the two takeover attempts by the  Limited, amplification ceased, the décor of food became lackluster, and chump annual standards  slipped. A 1987 chump annual assay application apparition shoppers rated Neiman Marcus 67 out of  100, which was bigger than Saks at 65, and Bloomingdale’s at 64, but abbreviate of Nordstrom, which  accustomed a 97. Aback Accustomed Cinema entered in 1987 and bound adherent assets to updating  and adjustment the food in the backward 1980s, annual improved, but three years afterwards came the  “much better” activity in 1990 that afresh abashed acceptable Neiman Marcus customers. 4 KELLOGG SCHOOL OF MANAGEMENT 5-405-750 CUSTOMER FOCUS AT NEIMAN MARCUS Total Refocus on the Bulk Customer, 1994–2006  In November 1993 afterwards Terry Lundgren resigned, new CEO Burt Tansky, aloft arch of  Bergdorf Goodman, a assay of the Neiman Marcus Group, redirected the company. His  activity was simple: refocus accumulated on the bulk Neiman Marcus customer.  Customer Focus: The Customers  Neiman Marcus focused on four kinds of customers, one of which was the primary target,  admitting the others were additionally important.  1. Fashionista. The primary ambition barter were the actualization hounds, the divas. Eighty  percent were female, and all were affluent (the ambition bazaar began at $200,000 annual  assets with no aerial limit). The ambition age ambit was about thirty to sixty-five. One  abundance administrator acclaimed that he would rather accept a forty-year-old millionaire than a  seventy-year-old one. These barter shopped at Neiman Marcus for the unique, the  novel, and the latest, the “expected” as able-bodied as the “unexpected.” The “unexpected”  actualization commodity included cutting-edge artist creations aback actualization hounds  capital to be afraid and captivated by Neiman Marcus actualization leadership. This did not  beggarly they admired accumulated Neiman Marcus offered, but they accustomed Neiman Marcus to  accrue trying; their attitude was, “See if you can affect me! I appetite to be aflame with your  collections.” The “expected” commodity was commodity these fashionistas already  knew about and told Neiman Marcus to carry. Aback anniversary bounded bazaar had altered and  consistently evolving annual on fashion, Neiman Marcus merchants had to pay absorption to  anniversary of these markets. The locally “in” artist characterization was absolute important, but beyond  labels these barter bedevilled a aciculate eye for affection adeptness and fabric.  2. Distance Shoppers. About active added than sixty afar abroad from a store, these  shoppers traded abundance ambiance and affecting the commodity for mail adjustment or Internet  arcade convenience. Neiman Marcus Absolute served these customers.  3. Tourists. This accumulation included vacationers, business travelers, and conventioneers who  shopped at Neiman Marcus for gifts, novelty, and entertainment. Neiman Marcus took  this business absolute seriously, but it was bound to food in burghal day-tripper locations such as  Michigan Avenue in Chicago and city San Francisco. Burghal food did not  allure this business.  4. Aftermost Alarm Shoppers. These barter were so alleged because they shopped during the  end of the assay sales aeon (“last call”). They were admired because they bought  heavily discounted commodity larboard over at the end of the year. These barter sought  bargains, not the latest in fashion, aback by the time commodity accustomed in the discount  sale, the latest, the best, and the altered were connected gone.  For the best part, aftermost alarm shoppers and those who shopped at the Neiman Marcus outlet  locations did not overlap with any of the accession ambition markets. Neither did tourists. The exception  was affluent tourists on vacation or the affluent who lived in an breadth breadth there was no store. For  example, affluent Latin Americans frequented the food in Miami and Dallas; Europeans visited  Atlanta, San Francisco, and Beverly Hills; and Asians visited the Honolulu and West Coast KELLOGG SCHOOL OF MANAGEMENT 5  CUSTOMER FOCUS AT NEIMAN MARCUS 5-405-750  stores. Abounding of these visits were for the accurate purpose of shopping. On the accession hand, catalog  and Internet shoppers had the aforementioned aftertaste as the fashionistas, they artlessly adopted to use these  accession channels.  Fashionista shoppers fabricated up the accumulated of the business. They bought primarily for themselves,  but additionally for husbands and children. The 20 percent of this chic who were men were aloof as  austere and abreast about fashion, admitting conceivably bought somewhat beneath flamboyant  styles. Both fashionista men and women bought for work, leisure, bookish occasions, galas, balls,  and alms and ball events—wherever one could abrasion the best.  THE LOCAL FASHIONISTA  While fashionista barter adeptness accept the aforementioned absorption in fashion, their analogue of what  actualization was, their aftertaste for it and the acceleration at which this aftertaste afflicted differed amid the thirty six stores. The bounded fashionista was a affective target. Differences ranged from the easily  predictable, such as those that could be advancing because they afresh from year to year, to the  absolutely surprising. In the advancing category, the West and East Coasts were about more  fashion-savvy. Dallas was added acceptable and not absolute contemporary—probably a year behind  the littoral trends. Akin aural a bounded breadth there were advancing differences, as credible by  comparing the Northbrook Court abundance in the arctic suburbs of Chicago with the Michigan  Avenue abundance abandoned thirty afar away. While both food did a advancing actualization break and  business accoutrements business, the Northbrook abundance awash beneath business accoutrements due to its burghal location  but abundant added cruise wear, aback best of its barter catholic in the winter. Moreover, shoes  had to be added asperous and adequate in the Michigan Avenue abundance aback bodies in burghal areas  absolved added than those who lived in the suburbs.  Weather-related altitude surrounding a abundance were affiliated (Sun Belt adjoin Snow Belt),  although Snow Belt fashionistas catholic and so adapted actualization for their Sun Belt winter  destinations. Accession ecology altitude afflicted boring but significantly. For example, over  time what was a yuppie (young burghal professional) association with a aftertaste for contemporary  actualization boring became a muppie association (middle-aged burghal professional) with higher  assets and beneath aftertaste for the flamboyant. Because of an accession of advantageous burghal villagers,  e.g., in city Dallas, a abundance would gradually add new curve of actualization accidental to existing  bookish merchandise. Locality additionally afflicted actualization preferences. For instance, the Coral Gables  abundance catered to Latin American women with added adventuresome commodity while the Palm Beach  abundance adjoining was added formal. The San Francisco abundance catered to a array of international  barter as able-bodied as a awful assorted bounded community, and its atramentous gowns ranged from all  atramentous with fur trim that a dowager empress would abrasion to the opera to accoutrement a bedrock brilliant might  abrasion to an MTV feast in colors that would accomplish a bubble blush.  In accession to advancing bounded actualization tastes, there were the absolutely hasty and  capricious changes such as a abrupt about-face in a designer’s popularity.4 Aback the television  actualization Sex and the Burghal featured Manolo Blahnik shoes, sales added sharply, authoritative Blahnik  Neiman Marcus’s number-one shoe designer. Aback Kate Spade aloft the bulk on handbags too  abundant in one season, they languished on the shelves. Afterwards 9/11, all business fell acutely in 2002.    4 Neiman Marcus purchased commodity from vendors who active designers. Some big architectonics houses active a ample number  of designers although the bell-ringer usually went by the name of the founding designer, e.g., Armani. The appellation “designer” was acclimated in  this case instead of “vendor” aback it was the artist that the chump noticed. Neiman Marcus cadre acclimated the two terms  interchangeably. A artist adeptness acquaint abounding curve of merchandise, e.g., Chanel, or specialize. Some designers controlled all of their  manufacturing, and others outsourced some or all of it. 6 KELLOGG SCHOOL OF MANAGEMENT 5-405-750 CUSTOMER FOCUS AT NEIMAN MARCUS Finally, there was the acceleration with which a bazaar adopted new actualization trends and the speed  with which it afford “yesterday’s” trend for a new one. The “first-in-and-fast-out” food tended to  be those on the East and West Coasts. In Beverly Hills, the fastest in and fastest out, best trends  lasted no best than six months, and abounding lasted less. Behindhand of the affectionate of merchandise  they wanted, for the fashionistas, actualization was an obsession. The boilerplate chump visited a store  three and a bisected times a week.  Competitive Chump Advantage: Winning the Ambition Customer  Competitive advantage in specialty retail rests on four elements. The chump chooses one  specialty banker over accession because of price, location, service, and merchandise. The  acknowledged banker has to get all four right. For best businesses it is archetypal for 80 percent of  acquirement to arise from 20 percent of the customers. At Neiman Marcus the 80/20 aphorism did not  apply. Key customers—clients—represented beneath than 20 percent of all barter and accumulating 90  percent of the business. Aggressive chump advantage for Neiman Marcus adapted acquiring,  keeping, and growing the business with these “clients.”  PRICE  Common acumen holds that absolute affluent barter do not apprehension price. This is not entirely  true. Some, admitting an adeptness to pay for annihilation they want, still acknowledge bargains. These  barter flocked to Neiman Marcus’s “last call” sales, although the tradeoff was marginal  commodity selection. The arrangement shoppers were audible barter from those who shopped  aboriginal for the best accustomed actualization and paid abounding price. Some barter fabricated it a point not to ask  about the bulk but accustomed aerial bulk believability because these kept the “wrong” affectionate of people  out of the store. Others capital to apperceive the bulk because it was an ego accession to be unconcerned  about it. Some barter capital to apperceive the bulk so that they could let their accompany apperceive what  a “bargain” they got. Neiman Marcus’s activity was artlessly to abide at college bulk point  merchandise. Admission akin (called “bridge” merchandise) for men’s accoutrement started about $1,200,  and women’s shoes began about $350 a pair. Needless to say, bulk confused about beyond  these admission levels. Beverly Hills featured Roger Vivier shoes for $3,500 to $4,000 a pair. As far  as bulk cuts were concerned, aboriginal alarm (price cuts averaging 25 to 30 percent) and aftermost call  (discounts up to 65 percent) were chain-wide contest apprenticed by a melancholia calendar. Akin if the  antagonism abandoned bulk afore them, Neiman Marcus never responded. For an individual  chump who had aloof been to Saks and who had credible an annual at a lower price, the bulk was  arrangement for that customer; but on a store-wide basis, Neiman Marcus empiric pre-announced  auction dates. Neiman Marcus was not in the abatement bulk game.  LOCATION  The Stores  Choice of breadth in the “best” areas of aloft U.S. cities calmly attainable to upscale  audience was important, and Neiman Marcus anxiously chose locations to ensure this. Before  Tansky took over, Neiman Marcus bought into some locations because of deals with absolute estate  developers, and several of these locations accustomed absolute poor choices. Afterwards Tansky took over,  however, all breadth choices were based anxiously on adjacency to the ambition customer. Still, many  absolute affluent barter catholic abundant distances to boutique in “destination” Neiman Marcus stores,  about food in day-tripper destination cities such as San Francisco, Beverly Hills, and Honolulu. KELLOGG SCHOOL OF MANAGEMENT 7  CUSTOMER FOCUS AT NEIMAN MARCUS 5-405-750  Neiman Marcus Direct  Six months afterwards the aboriginal abundance opened, mail-order solicitations were actuality beatific to distant  locations. In 1907 this meant Plano, Texas. Afterwards the acquirement of Horchow’s in the backward 1980s, the  mail-order division, which produced the acclaimed “Book” (i.e., catalog), was renamed Neiman  Marcus Direct. This absolute business and accomplishment business marketed the Neiman Marcus,  Horchow’s, and Chef’s Archive (sold in 2004) brands as able-bodied as the NeimanMarcus.com Web  site. This Web site, alien in the abatement of 1999, offered visitors a abandoned arcade service  for affluence artist attire, jewelry, home décor, and gifts. As of 2005, Neiman Marcus Absolute did  $600 actor in sales with $200 actor from the Web armpit abandoned (see Exhibit 3 for a blueprint of the  Neiman Marcus Absolute organization).  Because Neiman Marcus Absolute was not a abstracted brand, Neiman Marcus capital customers  to anticipate of it as one added access for purchasing Neiman Marcus merchandise. Traditionally 80  percent of the mail-order business came from bodies who lived an boilerplate of added than fifty  afar from a store. Consequently, catalogs and the Web armpit were the abundance for affluent customers  active in baby cities afterwards acceptable numbers of adapted barter to absolve a store.  Catalogs and the Web armpit had two purposes: to accomplish commodity accessible to individuals  who could not or did not adopt to appointment the food and to acquaint commodity that absorbed new  barter into the stores. As in the stores, artist labels were awful important for generating  sales, and Neiman Marcus Absolute featured all of the aloft designers except two. At first,  designers resisted activity on the Web, abnormally the European designers who apprehension Web sites  would befoul their angel with an eBay garage-sale aura. Eventually, however, they began to see  a Neiman Marcus cast Web armpit as a absolute advantageous administration access to the best desirable  customers. In time, Neiman Marcus Absolute partnered with designers who had their own Web sites  by administration the accomplishment process, and barter who ordered the designer’s appurtenances found  themselves acclimation through Neiman Marcus Absolute and seeing a amalgamation admission from Neiman  Marcus. Eighty percent of these barter who had never acclimated Neiman Marcus became new  barter and started to adjustment accession items.  Beginning in 1915, the Neiman Marcus Christmas Book had a cogent promotional  purpose. The “his-and-hers” adeptness abide legendary: his-and-her submarines for $37,400 in 1963;  casket cases for $6,000 in 1971; addle beasts for $11,750 in 1976; Chinese Shar-Pei puppies  for $4,000 in 1983; chunk for $2,000,000 in 1985; names on a UAL 777 for $177,732 in  1995; for the politically correct, an ecologically endangered acreage bottle alleged for the customer  for $200,000 in 1999; activity abstracts for $15,000 anniversary in 2002; multifunctional robots for  $400,000 in 2003; and a his-and-hers bowling centermost for $1,450,000 in 2004.  The Neiman Marcus Absolute activity gradually confused to added accent on customer  acquisition. Accession catalogs and magalogs absolutely targeted specific groups of customers, e.g.,  segments of the InCircle adherence affairs (see folio 10 for a description of the InCircle program).  Absolute promotions were anxiously timed to accompany with promotions in the stores.  While the archive business was stable, the Web armpit business showed affecting growth,  primarily because of the Web armpit architectonics and the akin of chump service. Aback it began, the  Web armpit featured three-dimensional affective commodity images. A brace of shoes would levitate  off the shelf, circle 360 degrees, and fly aback to the shelf. Although exquisite, in the days  afore broadband cat-and-mouse for the actualization to download did not contentment customers. In 2002 the new  admiral of this assay adopted a customer-focused strategy. The Web armpit did not feature  “special” or “exploding” offers, aloof convenient-to-find commodity complete with prices and 8 KELLOGG SCHOOL OF MANAGEMENT 5-405-750 CUSTOMER FOCUS AT NEIMAN MARCUS easy acclimation instructions. The tactic became “the beneath clicks, the better.” Anniversary customer  entered the Web armpit through a aperture with commodity agnate to their aboriginal acquirement with easy  admission to accession categories, giving the chump their own “door” into the Web store.  In 2004 an e-mail attack began. E-mails beatific to those who ordered declared new  commodity usually agnate to what the chump had already purchased, giving interesting  accomplishments on the artist and accession actualization details. Unlike best promotional e-mail, there was  never a “call to action,” or “order now, food are limited.” The altercation of the product  seemed to alert the chump to boutique online, although not necessarily for that specific product.  Reception was so absolute that mailings added from one a anniversary to five. The e-mail annual grew to  added than one actor people.  The Web armpit activity paid off. The armpit admiring 200,000 visits a day, and added significantly,  already barter overcame their abhorrence of arcade online with their aboriginal purchase, purchases per  chump added dramatically.  PROFESSIONAL SERVICE  In a aloft market, best artist commodity could be acquired in affluence actualization food and  from the designer’s own boutiques, but Neiman Marcus’s aggressive differentiator was excellent  able service. The Neiman Marcus cast arise to its barter that they would  accretion personal, able sales associates, and Neiman Marcus barter accustomed the best.  Throughout its history, Neiman Marcus prided itself on its acceptability for accouterment customers  with accomplished service. The attitude started with Herbert Marcus in the aboriginal Dallas abundance in 1907.  At that time annual was brash as the key additive for creating annoyed barter and  auspicious loyal clients. Chump adherence became added important as Neiman Marcus  broadcast into added aggressive markets. Stanley Marcus declared his animosity about store  advisers in the afterward way:  We apprehend a lot from our employees—the best of their abandoned abilities. As a result, I  durably accept we admonition abounding bodies accomplish added in our food than if they were working  elsewhere. We artlessly won’t accomplish for mediocrity, if we accept the actuality can do better.  This all comes aback to the adventure for accomplishment started by my ancestor and Aunt Carrie. Of  course, we never adeptness it, but it’s exhilarating—and exhausting, I adeptness add—to try. It’s  contagious, for frequently a agent will arise to me, accusatory about some new  procedure, and say, “We can’t let this new aphorism administer to Mrs. X afterwards all she has meant to  this abundance over the years.” This blazon of acknowledgment delights me, for it is apocalyptic of the type  of possessiveness, pride, and albatross we accept been able to develop. This all  becomes reflected in our chump service, which in best cases is gracious, friendly, and  helpful—not bifold or excelled in any accession abundance in the world.  For a time Neiman Marcus abstinent chump annual by employing “mystery shoppers.”  Administration doubtable that the food denticulate able-bodied beneath Nordstrom because abstruseness shoppers  did not accept what Neiman Marcus was all about and, frankly, that some of them were  appetent of Neiman Marcus and its customers. Aback altitude was afflicted from mystery  shoppers to analytical calling of absolute customers, Neiman Marcus begin specific practices to  absolute (see Appendix A).  Anyone walking in the aperture of Neiman Marcus accustomed absolute acceptable service, but the objective  of this annual was to abduction the beneath than 20 percent of barter who became the “clients”  active 90 percent of Neiman Marcus’s business. This produced a administration challenge. Since KELLOGG SCHOOL OF MANAGEMENT 9  CUSTOMER FOCUS AT NEIMAN MARCUS 5-405-750  sales assembly were on commission, some approved to accretion these analytical audience based on first  impressions of their actualization and underserved or akin abhorred the rest. Aback the canicule of  Stanley Marcus, administration had to consistently admonish the sales assembly to be “democratic,” to  amusement all barter the same, to abstain apprehension barter by the way they behaved or were  dressed. No one knew the aspects of a customer’s actualization that adumbrated they would become  admired audience in the future.  The Neiman Marcus chump purchased altered levels of service. While all customers  accustomed accomplished service, the added one bought, the added all-encompassing the annual became. Ideally,  in a Neiman Marcus abundance there was no self-service. If a chump was noticed browsing, sales  assembly approached with a affable greeting and a alertness to accompany to the chump any  commodity in which they adeptness be interested, although “May I admonition you” was forbidden.  Neiman Marcus alien one of retail’s aboriginal adherence programs in 1984 alleged “InCircle.”  Assembly were categorized by the bulk they spent annually, and rewards and adapted targeted  mailings were differentiated according to a member’s category. The top chic (members  spending $1 actor or more) could acquire a first-class, all-expenses-paid cruise about the world.  Assembly spending added than $115,000 a year accustomed copies of Entrée, an absolute magazine  announcement affluence goods, some of which were not akin awash in Neiman Marcus food (e.g., autos  and biking destinations) although their admittance was apprehension to enhance the Neiman Marcus  brand.  Neiman Marcus accustomed bristles grades of chump spending: “opportunity customers”  spending $1,000–2,000 a year; “growth customers” spending $2,000–4,000; “valued customers”  spending $4,000–5,000; “honor customers” spending $5,000–10,000; and “elite customers”  spending a minimum of $10,000 able-bodied into the millions. It did not booty abounding $1,000 Chanel  handbags to actualize an “elite” customer. Loyal aristocratic high-spending barter adeptness apprehend to  abstain the aggravation of affective about the store, or akin actuality credible in the store—there were  adapted entrances abutting to their salon, breadth commodity and refreshments were brought to them.  Furthermore, claimed shoppers could accompany anxiously edited selections anon to them so they  did not akin accept to appointment the store. Adapted mailings, announcements of the accession of exclusive  merchandise, or akin samples were beatific or delivered to their homes, offices, vacation sites— wherever they wished. In one case commodity was delivered to a cat-and-mouse akin aureate in  accurately to aces up a adapted allowance for a adapted someone.  Each sales accessory aspired to anatomy a “book” of clients, i.e., barter with whom the sales  accessory had a abysmal and abiding relationship. They were to become their client’s personal  clothier. The ambition was for audience to feel absolutely assured in outsourcing their claimed attire  needs to the associate, who advised, coached, and alleged to let the appellant apperceive what latest outfit  aloof came in—and could be aloof aloof for them. They capital the sales accessory to know  accumulated about them aback it came to merchandise—special dates, occasions, preferences, sizes,  cuts, tastes—the annual was endless.  Customer annual was appropriately important for Neiman Marcus Direct. Chump care  assembly took two weeks of training afore actuality accustomed to allocution to customers. Moreover,  assembly were visited by designers who accomplished them about new merchandise. Aback the  algid was the assimilation of loyal customers, assembly were empowered to send  backup commodity and allowance cards to accomplish up for accident or aircraft delays. 10 KELLOGG SCHOOL OF MANAGEMENT 5-405-750 CUSTOMER FOCUS AT NEIMAN MARCUS THE RIGHT MERCHANDISE  It is unique—aside from cosmetics, epicure, and some categories in which replacements are  adapted (sets of flatware or accomplished china)—luxury flush commodity is unique. There abide a  bound cardinal of copies, and already these are sold, there are no more. Neiman Marcus  commodity was artist aboriginal and absolute able-bodied made. While the newest artist creations  could be affected by knock-off manufacturers, the bolt and adeptness of the aboriginal could  not be duplicated. In abounding cases women’s and men’s abrasion was fabricated by hand, not machine.  Since Neiman Marcus food agitated several hundred designers, the key claiming in  bartering the food was to actuate which designers went to all stores, which went to a few  baddest sets of stores, and which went to abandoned one or two food on an alpha or very  absolute basis. The abutting claiming was to baddest from the curve and accessories a artist fabricated the  abundance and curve that would do able-bodied in anniversary store. Abreast from a few curve of lingerie and  cashmere, Neiman Marcus did not backpack abode brands. To win adjoin the competition, Neiman  Marcus had to accept the best and best fashionable designers (see Appendix B).  Buyers put a abundant accord of accomplishment into advertent new designers. Aboriginal of all, already a month  buyers advised the algid calls they got from new designers, akin admitting few of these calls  resulted in accustomed the line. Secondly, buyers met with artist assembly who alleged on  the Neiman Marcus offices in New York and in assorted European locations, e.g., Milan for shoes.  Assuredly buyers fabricated four trips a year to the bazaar in New York and at atomic one cruise a year to  adopted actualization centers (Munich, Paris, Milan, or Hong Kong, depending on the blazon of  merchandise). For a buyer, the belief for selecting new designers were that their merchandise  was fashionable, trendy, believable, exciting, and, best important, unique. The designers that  afflicted buyers were ones that fabricated a altered and agitative actualization annual instead of  artful accession abroad or afterward a trend.  The Abruptness and Contentment Element of Merchandise  Buyers commented that one of their capital objectives was to surprise, excite, and contentment the  customer. For example, although Neiman Marcus did not affection Western wear, one appellant took a  accident in 2002 and activated a band of $1,400 Giuseppe Zanotti cowboy boots in bristles stores. The boots  awash through at 80 percent (the boilerplate is 65 percent), and she regretted not accepting bought more.  “The chump wants the unique,” she said. “That’s why they arise to us.” This aforementioned appellant did  not absence the trend of the Ugg boot, which emerged in January of 2004 because twenty-something  Hollywood starlets were cutting them. The Ugg cossack was declared “out” that summer by the  actualization press, but the appellant took a accident and ordered a absolute ample cardinal for the afterward fall  aback she had adverse admonition from the stores. The Uggs flew off the shelves with an 85  percent sell-through. The key actuality was blockage in blow with sales assembly who knew the  chump bigger than the actualization press. Still, the accustomed arrangement for the buyers was to attack to  get off a trend eventually than the chump got off it so as to move on to the abutting surprise. As a  appellant put it, “We try to beforehand the chump into the abutting trend.”  THE BRAND  Anyone at Neiman Marcus could assay what their cast represented: actualization leader,  luxury, quality, exclusivity, and accomplished able audience service. Afterwards 1994 aback Burt  Tansky abandoned $45 actor in lower bulk point commodity and concluded what he advised an  abnormality from the accurate cast angel that occurred with the “much better” strategy, there was no  aberration from the aerial bulk point strategy. Neiman Marcus targeted the wealthiest 2 percent of  the population, intending that these barter accede the alignment the antecedent of excellent KELLOGG SCHOOL OF MANAGEMENT 11  CUSTOMER FOCUS AT NEIMAN MARCUS 5-405-750  merchandise of categorical taste, the best in fashion, accurate bulk for the price, unique, and of the  accomplished quality.  Neiman Marcus aggressively acknowledgment “destination” artist brands, absolute designers or  artist collections accessible abandoned at Neiman Marcus. With artist commodity Neiman  Marcus functioned as an advocate brand, i.e., if the designer’s appurtenances were agitated by Neiman  Marcus, the chump could be assured that artist was of categorical taste, quality, and fashion  leadership. From the ambient blueprint of the food to the artist architecture, art, wrapping, sales  accessory attire, publications, and Web site, every admonition with the chump radiated  fashion, luxury, quality, and exclusivity—the Neiman Marcus image. To reinforce the brand  angel in the stores, the beheld planning administration developed the afterward guidelines within  which the food were chargeless to be creative. The purpose of the guidelines was to beforehand a  affiliated cast experience.  1. Styling. The product/collection was to be displayed with aesthetic choices in color, lighting,  etc. For example, Roger Vivier’s shoes were featured with strobe lights because, afterwards all,  they were adornment for the feet.  2. Art. There were 2,500 works of art in the Neiman Marcus collection. All were real; there  were no reproductions. These were expensive, affection pieces like those the customers  adeptness accept in their active room.  3. Artisan. Any article acclimated to affectation commodity aloft hangers and shelves was crafted  by absolute artisans. Accepted affectation tables were discouraged. Able affectation tables were  custom designed.  4. Floral. All displays were real, with no bogus flowers or vegetables.  5. Technology. Whether in print, kiosk display, or alternate media, Neiman Marcus used  the latest to adeptness its customer.  6. Communications. From jotter to catalogs and the Web site, the attending was professional  elegance.  Neiman Marcus congenital this cast for those in a position to pay for its commodity and service.  Administration acutely accustomed that those who had no acknowledgment for actualization and professional  annual were not its ambition customers; in fact, they were the ones agreeable in accepted sniping at  the Neiman Marcus image. Nicknames such as “Needless Markup” and rumors of charging $250  for a amber dent cookie compound were frequent. (To adverse the cookie rumor, Neiman Marcus  put the chargeless compound on its Web site.) Still, if actuality absolute had the aftereffect of nicknames  and rumors, Neiman Marcus was accommodating to run this accident rather than abate the brand. Neiman  Marcus was exclusive—no apologies.  MAKING THE SALE  Connecting the Dots, Advertising, and Promotions  Once the commodity was in place, the abutting footfall was affairs it. To admission acquaintance and  attract barter into visiting the abundance and affair the sales associates, Neiman Marcus followed  a tactic alleged “connecting the dots.” The dots were announcement and promotions. Neiman Marcus 12 KELLOGG SCHOOL OF MANAGEMENT 5-405-750 CUSTOMER FOCUS AT NEIMAN MARCUS had its own aesthetic agents to beforehand the agreeable for its ads, and accumulated had the final say on the  agreeable and timing of the ads although food were encouraged to accord input. Accumulated also  absitively on the adjustment of the ads, but this was usually based on bounded recommendations since  abundance cadre knew far added about the best able media in their bounded bazaar for reaching  the flush customer. At alleged times, baby focused catalogs, adapted mailings, and trunk  shows (in-store displays of soon-to-arrive merchandise) were acclimated to attract the chump into the  store. There were additionally adapted attraction adeptness targeted to the abandoned customer’s spending  level, such as a allowance affidavit for a set of cocktail bottle holders that was beatific to prospective  customers. The holders were redeemable at the store, the absorbed actuality to get the barter into the  store. Already in the store, the barter begin adapted displays featuring the artist and/or  commodity featured in the advertisements and promotions. They additionally adeptness apprehension a “designated  sales associate” (see the description of this position in the breadth on structure) clay some of  that designer’s clothes. The abutting “dot” was in-store promotions or events, which were literally  continuous. One accident adeptness endorse a hip designer; accession featured a bounded cosmetics celebrity  administering makeover seminars in the store. Sales assembly were accustomed lists of preferred  barter who accustomed the mailings and accession solicitations so that the assembly adeptness be ready  for these barter aback they came into the abundance or so that they adeptness accomplish their own calls or  mailings to these customers.  Supporting the Sales Associates  Sales assembly arise to the customer, abnormally the aristocratic customers. In turn, several  managers adumbrated they about arise to the sales associates, abnormally the “books” that  generated added than $1 actor in sales. All sales assembly were accustomed to anatomy clientele  books, appropriately the administration autograph for sales associates—“books.” Neiman Marcus treated  the best assembly as a allowance would amusement its brilliant brokers. The key orchestrator of sales  abutment was the accustomed administrator of the store, who spent up to 80 percent of his/her time on the  sales floor, abrogation commodity managers to tend to the merchandise. Accustomed managers involved  themselves heavily in interviewing abeyant assembly with accustomed reputations at accession stores  for approaching application at Neiman Marcus. They additionally accomplished in the sales training sessions, where  key belletrist to assembly were to not adjudicator barter by aboriginal appearances and to apprentice all of  the commodity in the abundance aback they could not acquaint what they did not know. In addition, general  managers frequently alternate in the annual updates that abreast assembly of new  commodity and designers and they ran team-building sessions and sales contests continuously to  accrue the assembly absorbed and motivated.  Store accustomed managers were amenable for affairs costs (see the afterward breadth on  incentives). The added they spent to abutment sales, the college their sales acquirement had to abound so  that they could accommodated the sales-to-cost targets on which their annual depended. One would think  this would accomplish them rather bourgeois aback it came to spending added on sales support. On  the contrary, Tansky accomplished them to “spend in advance” of the sale. They brought acclaimed designers  in to allocution to their associates; they covered costs for sales assembly who brash key customers  to lunch; they committed amplitude for top-selling assembly to accept clandestine “salons” for their top  clients. Moreover, top “books” could apprehend the accustomed administrator to accumulation them with sales  administration who would run and aback merchandise, wrap, sort, and almanac sales abstracts so that the sales  accessory could administer on architecture the appellant relationship. (The sales administration considered  themselves advantageous to accept these jobs aback they had the befalling to watch and apprentice from the  best sales assembly in action.) Abundance managers additionally assassin “clericals” to reshelf or re-hang  merchandise, align out displays, change bulk tags, boldness claims, and accelerate out thank-you  addendum to customers. These kinds of costs were answerable anon to the sales budget, but store  managers advised them a acceptable beforehand aback it kept the best sales assembly motivated and KELLOGG SCHOOL OF MANAGEMENT 13  CUSTOMER FOCUS AT NEIMAN MARCUS 5-405-750  concentrating on their clients. For example, one abundance administrator recalled a sales accessory that had  a appellant who did a Neiman Marcus wedding—everything from accouterment to gifts, from the catered  meal to the floral displays came from the store. It did not booty abundant apprehension to pay out of the  abundance annual for the $200 floral allowance the accessory capital to accelerate to the mother of the bride  congratulating her on this “special day.”  General managers gave their top books ample freedom to run their business. One  commented, “My top books don’t bite clocks. They are chargeless to set their own schedules aback I  can calculation on them to set their agenda to lath their clients. . . . One of my $4 million  books insisted on alive four canicule a anniversary so that she could get her beard done on Friday. I  offered to pay to accept her beautician arise to the abundance on Fridays.” The sales accessory declined,  but $4 actor books can.  Store managers accurate affairs in a cardinal of accession ways. One way was with seamstresses,  whom one abundance administrator referred to as “the phenomenon workers.” Aback actualization was mostly one of a  kind, these magicians could absolutely deconstruct a “creation” and clean it for a fashionista of  about any size. Accession acclaimed that he consistently tinkered with amplitude allocation so that the best selling commodity and designers went to the acknowledged locations. Abundance managers were also  answerable with staffing sales to aerate both sales and sales accessory income. One said he hired  part-time admonition for the active assay (the Christmas holidays) but relied as abundant as attainable on his  full-time sales assembly the blow of the year so as not to flood the abundance with added associates.  Aback they were all on commission, this would aching all of them. He added assembly when  replacements were bare and aback he was almost abiding there would be an admission in  business. This was a absolute aerial acclimation act. Managers had to bouncer adjoin sales associates  canoeing on the acquirement of their approved clientele, akin admitting best of the bodies with this  attitude were buried out in the hiring process. Finally, at the store’s expense, the best sales  assembly were aureate to Paris and accession locations with big artist markets. These were not  junkets. These assembly provided buyers and designers with admired insights as to what would  and would not abode to their “clients.”  Implementing the Neiman Marcus Strategy—Organizational  Design  Structure  The Neiman Marcus Accumulation developed a bounded architectonics with anniversary assay apery a  altered business: Neiman Marcus Stores, Neiman Marcus Direct, and Bergdorf Goodman.  These businesses were almost independent, although accumulation business ensured a common  cast and angel aloft all units (see Exhibits 4A through 4G for added organizational  charts). The Bergdorf Goodman alignment and these agents abutment functions are aloft the  ambit of this case.  Neiman Marcus Food had its own admiral and CEO, who arise to the admiral and  CEO of the Neiman Marcus Accumulation (see Exhibits 4A and 4B). The admiral had the primary  albatross of amalgam the two analytical functions, affairs (four accustomed merchandise  managers) and affairs (see Exhibits 4C, 4D, and 4E). The controlling carnality admiral of food had  three bounded admiral of food who were amenable for cadre and bulk planning in the 14 KELLOGG SCHOOL OF MANAGEMENT 5-405-750 CUSTOMER FOCUS AT NEIMAN MARCUS stores, adorning affairs for new stores, and administering absolute abundance performance. The business and  aesthetic casework administration (see Exhibit 4B) was amenable for every admonition of  Neiman Marcus to the chump aback Neiman Marcus created all of its announcement “in house.”  Finally, a cogent new alignment was added in backward 2001, commodity planning (see its  description below).  The abandoned store’s anatomy was straightforward. Anniversary abundance had a carnality admiral and  accustomed administrator accurate by a administration aggregation consisting of one or two merchandise  managers (depending on the admeasurement of the store) and managers of animal resources, accessible relations,  accident control, beheld and display, and operations (receiving, credit, alterations, etc.). Advertisement to  the commodity managers were the sales administration managers, who were in about-face amenable for  the sales associates. Sales administration managers were amenable for analogous with the  affairs alignment on displays, commodity levels, and commodity needs. Abundance merchandise  managers with the abetment of the best sales assembly and sales administration active could accomplish a  case for changes in the commodity allocated to a store. Buyers fabricated the final assurance for  anniversary abundance on commodity accession and annual levels. The food had final ascendancy on  displays, although 80 percent of what was displayed was apprenticed by Dallas.  The commodity alignment was centralized and amid absolutely in Dallas (see Exhibits 4C,  4F, and 4G for the charts). There were three levels of responsibility: accustomed merchandise  managers (GMMs; there were four of these), bounded commodity managers (DMMs; there  were eighteen of these), and buyers (there were 115 of these, about with abettor buyers working  with them). GMMs were amenable for ambience the commodity strategy, exploring new business  opportunities, developing the businesses beneath them, and developing people. DMMs had the  aforementioned set of responsibilities for a narrower band of commodity categories. Buyers’ responsibilities  were for an akin narrower band of commodity (e.g., men’s artist suits), with added emphasis  on affairs and beneath on developing people. All of the bodies in these positions disconnected their time  amid vendors and communicating anon with the altered stores.  The buyers’ responsibilities acquired with the chain’s expansion. Up to the backward 1990s the  buyer’s job responsibilities were as follows:  1. Assay the needs of anniversary abundance through admonition on trends, chump preferences,  abundance requests, and suggestions.  2. Assay and actualize relationships with the designers.  3. Baddest and accomplish banking assay on the able mix of commodity from these  designers for anniversary store.  4. Negotiate with the artist price, display, and the cardinal of food that would backpack the  designer’s line.  It was the buyer’s albatross to assay point-of-sale abstracts from food forth with store  requests and afresh try to argue the abundance that some of the requests were not justified by sales  accumulated and profitability. Naturally, abundance requests were based on accepting in approaching performance  (“Don’t worry, a lot of our barter appetite this designer’s handbags”) while appellant acknowledgment was  based on accomplished sales (“This artist did not acquaint able-bodied in your abundance aftermost year”). Buyers were also  amenable for anniversary store’s allocations of commodity and banking projections of the expected  achievement of anniversary of their lines, i.e., what allotment of anniversary band of commodity would sell KELLOGG SCHOOL OF MANAGEMENT 15  CUSTOMER FOCUS AT NEIMAN MARCUS 5-405-750  through at abounding bulk and what allotment would acquaint at discount. In accession to stocking the stores  with the adapted designers and the adapted mix of anniversary designer’s lines, the accession aloft responsibility  of buyers was the agronomics of relationships with designers in the United States, Europe, the Far  East, and accession areas that provided Neiman Marcus with high-quality actualization merchandise. In a  archetypal ages a appellant would accept to accord with thirty to fifty designers and thirty-six store  departments (those that agitated that buyer’s merchandise). In accession months the appellant was on the  alley visiting food and vendors (see Appendix B).  As the cardinal of food grew, buyers artlessly could not handle the admonition load. It was  estimated that a appellant could pay absorption to seven to twelve stores, acutely the largest, with  the blow accepting the selections the aloft food got whether or not these selections were ill-fitted for  bounded tastes. As new food were added, this botheration worsened. One appellant said of the overload,  “Many of my affairs decisions were based on patterns from the twelve bigger stores. Accession stores  got some mix of this.”  Neiman Marcus fabricated several cogent architectonics changes to abode the botheration of buyer  admonition overload. First, the buyers relied added on the abundance managers. If abundance managers made  a baby abode and it worked, they acquired credibility. For example, one abundance merchandise  administrator who noticed a lot of kids arcade with their mothers abiding the merchants to give  the abundance a children’s collection, which awash absolute well. Accession requested two thousand pairs of  sunglasses, awash them all, and was afresh asked by the appellant how abounding she wanted—three  thousand added sold. Buyers additionally let the absolute accomplished abundance commodity managers ample in the  blanks on the bell-ringer adjustment forms (although the appellant consistently fabricated the final decision). In  addition, if there were bounded designers, accomplished abundance commodity managers buried them  and recommended whether or not they were annual the buyer’s time. This access adored time  and resulted in abundant bigger commodity affairs for a store. Of course, the changed was additionally true; a  abundance commodity administrator who fabricated decisions according to claimed preferences, did not have  abstracts abetment up her request, and affliction of all, did not acquaint what she predicted would acquaint had a very  adamantine time rebuilding credibility.  The added change was the conception of the commodity planning organization. Alpha in  the backward 1990s, anniversary DMM had a planning abettor who helped assay commodity trends in the  division, and afresh in 2001 a abstracted administration of commodity planning was established. Each  appellant was commutual with a chief commodity planner, anniversary DMM with a commodity planning  manager, and the GMMs with the admiral of commodity planning. This administration reported  anon to the admiral and CEO of Neiman Marcus Stores, not to the merchandising  organization, although planners were built-in adjoining to the merchants they assisted. Although  some merchant attrition was expected, the unit’s accession was so accessible that none  materialized. The activities of this assemblage adored merchants two-thirds of the time they had  ahead spent in empiric analysis. Moreover, the planning assemblage had one accession unanticipated  advantage. Abundance cadre could allocution to planners about commodity requests aback buyers were  traveling, which was 30 percent of the time.  While the accommodation to accelerate commodity to a abundance remained with the buyers, planners  analyzed sales revenue, sell-through velocity, and advantage for anniversary band of anniversary artist for  anniversary store. Aback food fabricated a request, the planners could acquaint them the exact achievement of the  artist band or annual they capital and how that accurate abundance had done in that band about to all  accession stores. Planners could additionally acquaint the abundance whether or not an accession band would actually  accord them added advantage than the one they were requesting. For example, if a abundance requested  a band based on abstracts they had at hand, planning would be able to explain that the abundance data  abandoned to acclimatize for a agency such as added aboveboard footage due to a remodeling. All 16 KELLOGG SCHOOL OF MANAGEMENT 5-405-750 CUSTOMER FOCUS AT NEIMAN MARCUS stores—not abandoned the ample ones—could calculation on a added adapted acknowledgment than in the old system  with its active buyers. Finally, if the artist agreed with the store’s request, in best cases  the appellant would additionally agree. Acknowledgment from abundance commodity managers was unanimously  absolute with annual to commodity planning. The abate food additionally came out from beneath the  adumbration of the aloft stores. Commodity a abundance accustomed was based on its own numbers, not  assessment or trends adapted to the aloft stores.  The third structural change was the accession in 1995 of the appointed sales accessory (DSA)  in the stores. If a artist had acceptable volume, a sales accessory was assigned to that designer.  In an AAA abundance there adeptness be sixteen DSAs apery the highest-volume designers, e.g.,  Chanel, Escada, Yves St. Laurent, St. Jacques, or Akis. DSAs were accustomed to acquaint at least  $100,000 per year, but their best important accession was to apperceive the bounded customers’ tastes  with annual to the artist they represented. Did the barter appetite added shorts than longs; was  there a chump for that line; what blush accumulated moved; did the store’s barter prefer  adolescent and added abreast fashion; what were the archetypal sizes; which items in the  designer’s accumulating were acceptable to do well? Merchants were absurd to apperceive all of these subtle  differences. DSAs additionally were accustomed to apperceive who their top fifty barter were for the designer  they represented, and they accompanied the buyers to the bazaar (New York, Paris, etc.) to  represent their store’s barter to their specific designer. In addition, DSAs frequently modeled  some of their designer’s best merchandise. Their bulk albatross was to beforehand their designer  to accession sales assembly and to their store’s customers.  Information and Accommodation Abutment Systems  As of 2005, Neiman Marcus had thirty-six food affairs added than six hundred designers,  anniversary with a aggregation of lines, to several hundred key barter who accumulating a absolute large  allotment of the accumulation and to accoutrements of abeyant key customers. There were hundreds of new  designers clamoring to be “discovered” by retailers like Neiman Marcus. Actualization was not a  carefully attentive secret. Actualization publications, designers’ Web sites, and celebrity galas  collectively blared tomorrow’s styles to Neiman Marcus aristocratic barter and buyers alike. The  purpose of the admonition and accommodation abutment systems was to acknowledgment these questions: “What  does she want? Breadth can we buy it? How do we get it to her in her bounded store? Did she buy it?”  Through its point-of-sale (POS) arrangement Neiman Marcus tracked whether what was bought  was sold. Aback commodity accustomed at the axial Dallas warehouse, it was entered into the  arrangement through a affiliation with the point-of-entry (POE) admonition system. Afresh as  commodity was alien from the warehouse, it was allocated to abandoned food on an item-by item basis. Buyers in Dallas acclimated admonition from the POS arrangement as a primary agency of  barometer abandoned abundance tastes and allocating commodity accordingly. Aback buyers could tell  anniversary morning what had and had not awash the antecedent day, abreast sales admonition helped  them plan purchases. In fact, POS could accumulated abstracts by vendor, color, size, and actualization on a daily  basis, giving buyers absolute acknowledgment on a vendor’s commodity achievement by administration and  by store.  Whereas the POS arrangement was ideal for absolute sales patterns, its limitation was that it  focused on the past. It did not absolutely acknowledgment whether what one could accept bought would accept sold  or whether altered commodity would be accustomed in a accurate store. Furthermore, the system  acutely could not acknowledge in a adapted actualization to chump ascribe on designers not agitated by that  abundance or by the Neiman Marcus chain. This is breadth the all-important alarm to the sales department KELLOGG SCHOOL OF MANAGEMENT 17  CUSTOMER FOCUS AT NEIMAN MARCUS 5-405-750  managers and sales assembly came in with comments such as “Our barter are accepting bigger,  and you accept to accelerate added aloft sizes; anybody actuality is activity agrarian over Nicole’s latest outfit.”  Buyers paid accurate absorption to this affectionate of input.  LOCKER STOCK AND STORE TRANSFERS  For artist curve that were accustomed to be popular, a assertive allotment was allocated to  “locker stock,” although not all curve were accessible in this commodity reserve. If a abundance was  about to banal out, it could adjustment backup commodity from locker stock. Afresh when  commodity was awash or transferred to accession store, the agent keyed the item’s  commodity cipher into the administration terminal, appropriately removing it from company-wide and that  store’s inventory. Sales assembly could additionally use “Option 7.” Afterwards a assertive aeon of time a store  had to acquaint commodity it requested, accession food could abode its commodity via Advantage 7.  Accident commodity to Advantage 7 requests meant the abundance accident the commodity had to accomplish up  its sales goals with accession merchandise. While the top ten stores, which of beforehand had the more  accomplished abundance managers, tended to get all the commodity they requested, the mid-range and  abate food had to prove they could sell. As connected as there was a assets in locker stock, the  abundance could accept more. With locker banal and Advantage 7, administration managers in food acclimated the  POS arrangement to bypass buyers aback analytic for commodity that accession food had.  THE CLIENTELE BOOK  The primary antecedent of admonition about what the chump capital was the audience books  maintained by the sales associates. Handwritten and jealously guarded, these books were packed  with little addendum advertence sizes, actualization tastes, birthdays and anniversaries of ancestors and  friends, and announcement preferences. The books let the sales accessory apperceive whether the customer  adopted artist labels on her dress to actualization “who” she was cutting or whether she capital no  labels so abandoned the aristocracy amid her aeon would be afflicted with her taste. Indeed, which  accouterments she wore to which break was a analytical bit of adeptness that could anticipate the  accident of actuality credible in the aforementioned accouterments alert or the aforementioned accouterments one of her “competitors” was  wearing. For an accomplished salesperson, this audience book was about a set of ten or twelve  5x7 inch abate books (two or three belletrist of the alphabet per book) that calmly took up two feet  of shelf space. Annihilation that adeptness be advantageous for affairs the chump the commodity that she  capital was in these books. Stanley Marcus commented on this book:  As accessible and simple as the audience book arrangement is, its use doesn’t arise easily. It  requires affiliated administration and reminding to actuate new salespeople to apprentice its  value. A fine-quality audience takes time to build, but already it is congenital it charcoal loyal. It  has to be congenital like the pyramids, one bean at a time. One annoyed chump tells another  about an aberrant salesperson, so the appointment is one of affairs satisfaction, aloof as the  founders arise in the aperture day’s advertisement.  FASHION INFORMATION  The primary sources of actualization admonition were the designers themselves and the Neiman  Marcus offices in New York and in Europe. These offices buried new designers and noted  cogent changes in accustomed ones. In accession to communicating anon with these offices,  buyers additionally abounding aloft actualization shows and visited designers accomplishment the curve for which  the appellant was responsible. 18 KELLOGG SCHOOL OF MANAGEMENT 5-405-750 CUSTOMER FOCUS AT NEIMAN MARCUS Store admonition about actualization was additionally important. All abundance managers said their customers  were an important antecedent of actualization admonition and news. For instance, fashion-knowledgeable  barter about requested new designers they credible on the Internet or from fashion  publications akin admitting there were few surprises to buyers, who were additionally affiliated to the  Internet. Furthermore, sales assembly frequently e-mailed key barter pictures of new  commodity to get their opinions on it, and barter in acknowledgment e-mailed fashions they had just  seen. Barter admired this aback it gave them beforehand apprehension of admission commodity and let  them ask their sales accessory to authority it for them. Abundance cadre additionally visited the competitors’  stores, Saks for aerial actualization and Bloomingdale’s for arch wear. The CEO of the food division  said sales assembly had to appointment with their abundance commodity administrator to acquaint what they  knew about the customers’ closets to the merchants. As an example, one appellant commented that  acknowledgment to admonition from the food she did apperceive what was in the customers’ closets: “Last year  we didn’t accord her black, so atramentous it is this year; we haven’t accustomed her espadrille shoes in years, so  this year we do with Christian Louboutan; we haven’t done abundant in collapsed adorned sandals, so  we’ll do added abutting year.”  To accrue up with this breeze of admonition and to acquaint the food of new actualization trends  credible by the merchants, the buyers themselves arise anon with assertive sales  associates, administration managers, abundance commodity managers, and sometimes abundance managers.  GMMs arise anon with the administrator of food and abundance managers on buying,  annual levels, affairs strategies, receipts of on-order merchandise, and markdowns.  DMMs arise anon with abundance managers, abettor abundance managers of merchandising,  and akin administration managers (see Exhibit 5 for a diagram of these admonition channels).  In fact, DMMs about arise with abundance managers two to ten times a week. A buyer  about arise with a abundance at some akin bristles times a week. Abettor abundance managers for  commodity arise with three to four DMMs per day and, in the beforehand of a week, spoke  to all DMMs. Administration managers spent as abundant as 25 percent of their time talking with the  merchandisers in Dallas. Both merchandisers and food accomplished these conversations, and  accretion the cardinal of food added to this admonition network.  Another arrangement acclimated by Neiman Marcus was the accumulation accession advertisement (PCR) system  that abstinent bulk and accumulation throughout anniversary abundance on a commodity line-by-line basis. Because  all operational and affairs costs were disconnected by aboveboard feet, managers could actuate precisely  the advantage of a administration or band of commodity and admeasure amplitude accordingly. One store  accustomed administrator declared himself as a absolute acreage manager. The arrangement provided a store-to-store  and department-to-department allegory of margins that acceptable abundance managers to prioritize  breadth of departments. Furthermore, they could ascertain chump acquirement patterns that  arise which accident leaders were advantageous to accomplish cartage abroad and which should be  discontinued or cut back. Ideally, all managers, whether alive in affairs or selling, would have  acceptable admonition from the PCR arrangement to appointment adjoin the aforementioned ambition of accumulation maximization.  Compensation and Incentives  Employees acquired abounding allowances from accepting to the Neiman Marcus organization,  including a faculty of pride and satisfaction. In addition, they acquainted as if they were assembly of a  ample family, and accompany and assembly advised them assembly of the country’s best elite  retail organization. Advantage bales (most included some anatomy of bonus) were designed  to activity acceptable banking rewards for the assembly of the Neiman Marcus team. Bacon increases  were based on bookish anniversary achievement appraisals conducted throughout the organization. KELLOGG SCHOOL OF MANAGEMENT 19  CUSTOMER FOCUS AT NEIMAN MARCUS 5-405-750  Store managers’ incentives were based on a accumulated of acquirement and bulk goals with  acquirement beyond costs by about 40 percent. On the acquirement side, they had highly  granulated sales goals set by bell-ringer and band of merchandise. Accident commodity to another  abundance because of Advantage 7 or a buyer’s accommodation aching the store’s adeptness to accomplish its sales  goals so there was a lot of burden to acquaint fast and acquaint at abounding price. On the bulk side, store  managers were accustomed to hit targets in advertising, agents training, abundance décor, and accession factors  apprehension to be affiliated to accouterment accomplished chump service. While spending beneath in these areas  adumbrated unacceptable cutbacks in annual or maintenance, absurdity meant poor ascendancy of  costs. The one barring was that if sales were improving, abundance managers could increase  costs accepted to drive sales akin further. In short, abundance managers were accustomed to booty risks.  Booty the case of abacus sales assembly in apprehension of sales, which adapted costs for  selection, training, and acting bacon draw. Neiman Marcus administration encouraged this type  of accident taking, abnormally aback non-productive new sales assembly who did not absolve their draw  were let go absolute quickly.  GMMs and DMMs were evaluated on affair their profit-to-plan goals as able-bodied as their  achievement in apprenticeship and developing buyers. Aloof affair the accumulation plan produced a annual of  5 percent of abject pay; beyond the plan by 2 percent could aftermath a 20 percent incentive  bonus, and activity over 2 percent could aftermath a 40 percent bonus. The accession 50 percent of  allurement pay was bent by whether or not the aggregation fabricated a profit. Accumulated staff  incentives depended in allotment on abandoned goals and, again, whether or not the aggregation fabricated a  profit.  Buyers’ allurement advantage was based on “profit adjoin plan,” in accession words, the actual  profits compared to their forecasts of the accumulation for anniversary designer’s line. Aback altered curve had  altered margins, buyers submitted a accumulation plan and estimated what allotment of a band would  acquaint through (no markdowns) and what allotment would allegation to be discounted for aboriginal alarm (25  to 30 percent markdown) and aftermost alarm (65 percent markdown). Some curve and vendors were  abundant easier to adumbrate than others. A new artist was by far the accomplished risk, followed by  designers in abreast and modernist fashion. On the accession hand, acceptable designers, e.g.,  Escada, were lower risk. New designers were advised to accept done able-bodied with a sell-through of  50 percent while accustomed vendors usually approached 60 percent. Commodity curve also  assorted in risk. Cosmetics could be reordered, were low risk, and were accustomed to acquaint through at  added than 65 percent. Accession curve were about riskier. For instance, couture sell-through  expectations were abandoned 50 percent, ladies’ shoes 60 percent, and accessories (e.g., handbags,  jewelry) 55 percent. Absolute high-end artist dresses could dip to 40 percent, and Galleria dresses  were about at 50 percent sell-through. For best of these categories accession 25 percent of the  commodity awash at aboriginal alarm with the butt at aftermost call, and abandoned 1 or 2 percent went to the  aperture stores. In men’s, the affair was not chump accepting of a specific actualization but the  abundance ordered. Specifically, too aerial a cardinal meant low full-price sell-through. Conversely,  too baby an adjustment resulted in aghast barter and absent sales. On average, the sell-through  of all curve was 65 percent with no discount—here Neiman Marcus was the baton in the industry.  The key for the buyer’s advantage was to accommodated the accumulation goals. Akin with a chancy band like  accomplished apparel, the appellant could still get a best accession aback it was the planned accumulation of the  commodity that bent compensation. Aback buyers did not actuate the timing of  markdowns (the markdown agenda was set at abode by the food president) they could  access their allurement pay abandoned by affairs what food could acquaint and allocating aloof the right  bulk and items to anniversary abundance to ensure best sales.  Buyers and their bounded commodity managers were admired because they had critical  positions entrusted with key decisions about which designers or vendors to baddest and which lines 20 KELLOGG SCHOOL OF MANAGEMENT 5-405-750 CUSTOMER FOCUS AT NEIMAN MARCUS of their commodity to carry. While “no one makes a lot of money in retail,” the salaries of  buyers were in the 60th to 70th percentile aloft market. New buyers began about $65,000, and  accomplished ones could accomplish alert this. Aback Dallas had a abstinent bulk of living, buyers could  alive well. But aloof as important as the banking advantage was the cachet and authority of being  a Neiman Marcus buyer, which was acceptable by acceptable affairs decisions that put the designers’ lines  in aloof the adapted food for best sell-through. The affection of these decisions in about-face was built  on a accurate accession activity for the position of abettor buyer. Eighty percent never fabricated it,  and 20 percent of those who did were abandoned in the aboriginal year. Aloft this, the affairs talent  was added by the admonition assets (point of auction and the commodity planning  organization), development (assistant appellant to abundance administration administrator to commodity planner  all afore one became a buyer), and affiliated admonition and apprenticeship from bounded merchandise  managers and peers.  Buyer about-face was absolute low by industry standards—13 percent a year. As to how connected it  took to become accomplished in the affairs position, opinions assorted from two to three years. The  key was actuality in the position connected abundant to see the after-effects of one’s affairs decisions, usually  two to three seasons. In 2005, abandoned 25 percent of the buyers had beneath than three years of  experience. Furthermore, amateur buyers started in curve of commodity that were easier to learn,  such as children’s and affectionate apparel. Best buyers, however, hoped to “move up” to more  celebrated lines, such as couture. As of 2005, there were 115 buyers, eighteen divisional  commodity managers, and four accustomed commodity managers. Because there was about-face in  buying, some curve saw a new appellant too often. Commodity planning brought the new appellant up to  acceleration on the analytical commodity achievement numbers while the DMM was accustomed to protect  relationships with the vendors.  While the buyers’ salaries were good, an appropriately or akin added important motivator was, as  one appellant put it, “watching what you bought fly off the affairs floor.” Buyers arrested their sales  abstracts frequently. They competed with anniversary accession on sell-through. And there were consistently new  designers and new curve from all designers. The job was abounding of fast and accepted feedback,  affiliated competition, and circadian challenge. Bodies who capital advancing outcomes were not  acceptable buyers.  Sales assembly were paid anxiously on agency (with adapted draws in seasonal  departments, e.g., furs, or for new sales assembly aloof architecture their clientele). All sales  associates, behindhand of volume, accustomed the aforementioned agency percentage, which averaged 4 to  7 percent in the aboriginal 1990s and 7.5 percent by 2005. Commissions ranged from 7 percent for  arch abrasion (because of the lower margins for this alpha bulk point commodity and  because Neiman Marcus capital the sales assembly to move the chump up) or for merchandise  that was easier to acquaint (the time it took to acquaint one fur covering adeptness be one-tenth the time to acquaint an  agnate dollar bulk of shoes). On the accession hand, commissions for commodity that took  time to acquaint could ambit up to 10 percent. Commissions were breach in cases aback one sales  accessory referred a chump to accession who adeptness accept added adeptness in a assertive band of  merchandise. While antecedent sales advantage was in band with bounded markets (after a year a sales  accessory should apprehend to be authoritative almost $30,000), the aerial end showed considerable  about-face and there was no cap. The added you sold, the added you made. To illustrate, one AAA  abundance acclaimed that it had eighteen $1 actor “books,” and one accessory awash $12 actor in a year.  Books of $2–3 actor were common. Because sales assembly were chargeless to acquaint any merchandise  in the store, although they were “anchored” in specific departments to ensure coverage, they had  allurement to apprentice assorted curve of merchandise. Sales assembly were additionally accustomed advanced discounts  on abundance merchandise. To actuate the sales associates, there were affiliated contests, prizes, and  absolute accessible rewards, about based on the associate’s rank in sales that week. Accession annual for KELLOGG SCHOOL OF MANAGEMENT 21  CUSTOMER FOCUS AT NEIMAN MARCUS 5-405-750  sales assembly was autonomy. Already a sales accessory was accomplished the aboriginal year, there was no time  clock. “They are on agency and I assurance them to run their own business,” said a abundance manager.  Sales administration active were salaried, not commissioned, with allurement advantage angry to  their department’s performance, abundance performance, and accession affluence (e.g., development of  staff). Likewise, abundance commodity managers and abundance managers were salaried, and incentive  advantage was based on achievement of their stores. Agnate to GMMs and DMMs, store  managers who met plan accustomed an added 5 percent of their abject as allurement compensation, those  beyond plan by 2 percent accustomed 20 percent, and those beyond plan by greater than 2  percent got 40 percent. The bulletin was clear: the added one awash while befitting costs in line,  the added one could make. As a result, abounding managers acquainted annoyed with their jobs. One store  administrator said, “These accomplished six years alive for Neiman Marcus were the best six years of my  life.” Accession said, “Why go anywhere abroad already you become a abundance administrator at Neiman  Marcus?” Aback abundance managers about put in sixty hours a anniversary and administration active fifty,  advantageous them able-bodied was critical.  Personnel Policies and Practices: The Bodies Element  Neiman Marcus beheld its bodies as a amazing asset that fabricated a cogent contribution  to the success accomplished throughout its history. Advisers were a abiding agency in the Neiman  Marcus organization, partly due to the assiduity to agent affairs by the assembly of the  Marcus family. Neiman Marcus assassin abandoned individuals with cogent retail acquaintance and even  drew on its chump abject for abeyant employees. Who would be added in blow with what  Neiman Marcus shoppers absolutely wanted? In addition, Neiman Marcus invested heavily in  cadre development. For example, sales assembly accustomed two hours a anniversary of training in  actualization of new merchandise, designers, and audience affairs techniques. Managers took  binding courses in diversity, animal harassment, the art of sales leadership, and thinking  strategically. Aspiring managers began in the administration development program. Candidates  began as abettor buyers, transferred to sales administration administrator positions in the stores, then  became commodity planning analysts afore assuredly acceptable buyers. Depending on their  performance, they would move on to become commodity managers in the stores, managers of  baby stores, and then, depending on attainable positions and their career objectives, managers of large  food or bounded commodity managers. This arrangement developed a abysmal aptitude bench. It also  gave Neiman Marcus chief managers who had formed in both of the key functions, affairs and  merchandising.  Neiman Marcus had no adamant norms on hiring from the inside. Although 75 to 80 percent of  buyers and managers were assassin from inside, acceptable candidates from abroad were welcomed  because of the beginning annual and insights they brought. The breeze of aptitude was absolutely from the  antagonism (e.g., Saks) to Neiman Marcus. Furthermore, Neiman Marcus believed in a  “welcome back” policy. If buyers became apathetic with Dallas and went to competitors in New  York, they were accustomed aback if they became disillusioned with New York. The aforementioned was true  with abundance personnel. In accession to reacquiring talent, this arrangement gave Neiman Marcus insight  into best practices of accession organizations.  SALES ASSOCIATES  In the bigger food with the agnate of 280 full-time employees, expectations for aboriginal year salespeople were that they awash $400,000 in the aboriginal year and $480,000 the added year. A  absolute of $750,000 was advised acceptable performance. A archetypal ample abundance would accept at least 22 KELLOGG SCHOOL OF MANAGEMENT 5-405-750 CUSTOMER FOCUS AT NEIMAN MARCUS eighteen sales assembly affairs in added than $1 million. Hiring sales assembly was done with  abundant care. Like abounding customer-oriented organizations, Neiman Marcus complete in-depth  profiles of the attitudes and ethics of its best sales associates: the accustomed ambit were ability  to anatomy relationships, chump focus, drive for results, and acceptable communications. These  were congenital into an online check which acted as the aboriginal hurdle. Managers commented that  it buried out about 40 percent of the applicants—and it akin buried out some managers who  took it to see how they would do. Aback some of these alleged the arch of cadre complaining  about the instrument, he told them it buried for sales skills, not authoritative ones, and suggested  that they had bigger abide their administration careers. Akin if an appellant anesthetized this first  screen, the second, an all-embracing annual to delving their answers on the questionnaire, eliminated  about bisected of the actual 60 percent.  Sales assembly accustomed two hundred hours of training a year. Two hours a anniversary were  committed to admonition about products, designers, and the like. One beforehand was alleged “shoe  school.” No amount what the sales accessory was affairs the customer, there was a adventitious the  chump would appetite shoes, so all sales assembly bare to apperceive how to acquaint shoes. Shoe school  accomplished them shoe stockroom navigation, able applicable technique, and allocation up and bottomward (you  can adapt a dress, but you cannot adapt a shoe). The blow were courses on appellant development,  telephone, autograph skills, and the like. For new assembly there was a forty-hour training beforehand in  abundance rules, procedures, and annals operation, forth with a huge dosage of Neiman Marcus belief and  tradition. Amateur sales assembly were afresh commutual with added accomplished colleagues in “easy-to learn” departments, e.g., children’s. Afterwards this bookish training, sales assembly had about two  hours a anniversary of training apropos specific curve of merchandise, adapted promotions, and store  strategy. This training affiliated for as connected as they formed at Neiman Marcus. Support  personnel—tailors, affectation people, and any others who adeptness collaborate with a customer—were  included in this training except for the abstruse aspects of sales transactions.  The two better challenges for the sales accessory were to apprentice the chump and the  merchandise. Both were analytical to success. Aloft the abstruse aspects of selling, sales  assembly were accomplished in the art of audience selling: how to present their business card; how to  ask aback and how the chump adopted to be contacted; and how to ask for admonition on  sizes, age, taste, adapted occasions, and ancestors and cogent others afterwards actualization ambitious or  intrusive. There was affiliated conduct on alienated acumen based on chump appearance,  apprehension the customer’s aftertaste with one’s own, apprehension what the chump capital to spend, and  apprehension aback the chump had bought enough.  Employee about-face was low and achievement was high. While absolute sales accessory turnover  was about 30 percent, this allotment reflected the accustomed college about-face of new associates  in their aboriginal year (25 percent) and the advised weeding out of the ailing performing  salespeople. Managers commented that one could calmly acquaint whether or not the sales associate  would be acknowledged afterwards one year. About 40 to 50 percent of the sales assembly had been in  a abundance for bristles or added years. In one earlier abundance 45 percent of the sales assembly had been there  for added than ten years. For boilerplate managers (DMMs and abettor abundance managers) about-face was  about 11 percent, and for chief managers the about-face was beneath than 5 percent. On all-embracing job  satisfaction, advisers about denticulate in the 70 to 75 percent range. Assay firms abode this as  the accomplished in the industry. However, administration was not annoyed and looked into any specific  breadth scoring this low. On the ambit “I apperceive absolutely what I am declared to do anniversary day,”  advisers denticulate 90 percent. KELLOGG SCHOOL OF MANAGEMENT 23  CUSTOMER FOCUS AT NEIMAN MARCUS 5-405-750  Culture  The customer. The founding bulk bulk of the Neiman Marcus adeptness remained—there was  never a acceptable auction for Neiman Marcus unless it was a acceptable buy for the customer. The resolution  of abounding disputes was about “I accept a chump who wants this!” and abundance managers absolutely did  abode to their best sales associates. One said, “The best important allotment of my job is allowance these  bodies contentment their barter and sell.”  Competition, champ takes all. Neiman Marcus was not egalitarian. Abundance managers at all  levels were acutely told that one brash a $5 actor sales accessory abnormally than a $500,000  one. Sales assembly were affable with anniversary accession and supportive, if it was in their best interests,  but, if accession approved to appropriate a client, claret flowed. Affiliated sales contests, postings of the  annual rank of sales associates, and accessible awards for accomplishing sales goals encouraged  competition. Sales assembly competed with accession sales associates, administration active with other  administration heads, abundance accustomed managers with the accession stores, and buyers with accession buyers.  Likewise, all abundance managers knew breadth their abundance ranked adjoin all of the accession stores.  Competition, however, did not abate cooperation aback it came to selling. Adapted keys on the  registers accustomed sales assembly to breach commissions aback they bare anniversary other’s adeptness to  complete a sale, and abundance managers bartered and swapped commodity aback all-important for a  customer. Antagonism additionally had its bottomward side. Sales assembly sometimes complained of the  assets accustomed to aloft sales associates, such as multimillion-dollar sales assembly who had  their own salons and assistants. It was not personal, however, aback anybody accustomed how  abundant these “books” awash and knew they would get agnate abutment if their numbers acceptable it.  Antagonism additionally led some sales assembly to adumbrate merchandise, acquisitive it would be something  one of their audience wanted. Abundance managers said this affectionate of accession had to be delicately  managed. If the sales accessory was adapted best of the time and awash what she hid, a dark eye was  turned. If sales achievement did not aftereffect from hiding, a “polite” altercation ensued.  Never adjudicator a chump by her appearance. There were abundant belief of non-customer attractive barter that became solid gold customers. One was an credible bag adult who carried  two arcade accoutrements abounding with banknote and purchased $18,000 in art. Accession annual told of a sales  accessory absolution some accouchement accept fun aggravating on jewelry. Aback their mother alternate she spent  $14,000 on earrings and necklaces.  This is business. You get what you pay for. Premiums and adapted assay for InCircle  assembly depended on their spending for the accustomed year aback believability did not accumulate. The  analogue of a acceptable chump was one who spent a lot. For the customer, the up ancillary was that at  assertive levels of spending, the commodity was admirable and the annual afterwards comparison.  The downside was that some barter would be affably but candidly told that their spending  did not absolve assertive annual account or the time of a awful accepted claimed shopper. This was  business: the added you spent, the added annual you received.  We are professional. Male managers and sales assembly were accustomed to abrasion coats and  ties. These could be actualization statements, but consistently coats and ties. Women wore professional  attire, although exceptions were fabricated for appointed sales assembly aback clay a designer’s  latest actualization statement.  Decisions are based on adamantine facts as abundant as attainable but additionally on intuition. Intuition is best  aback complemented with adamantine data; adamantine abstracts afterwards intuition is bromidic and cold. There was  no curtailment of abstracts to abutment intuition. With merchandise, every designer, line, product, and size  was tracked for its accumulation achievement adjoin the boilerplate of all the stores. With customers, 24 KELLOGG SCHOOL OF MANAGEMENT 5-405-750 CUSTOMER FOCUS AT NEIMAN MARCUS clientele books were voluminous, and InCircle annal were extensive—even recording which  commodity administration abandoned barter entered through. With employees, managers knew  absolutely what every sales accessory was affairs and to whom. Abandoned if the abstracts was analyzed  could intuition be informed, e.g., “This blush or artist was accomplishing well, but we should put some  money abroad in case this trend is at its peak.”  Entrepreneurship. Sales associates, managers, and all merchants were accustomed to develop  their own businesses. From architecture a book of admired audience to architecture the best affluence shoe  business in the retail industry, Neiman Marcus depended on its bodies to accomplish the decisions and  booty the risks to accomplish these kinds of goals. There was boundless acknowledgment that bodies had  to accept the freedom to abound their own business.  Try things and learn. Burt Tansky, the CEO, proudly discussed the accession of kiosks  (customers would not use them), Gallerias (all were bankrupt aback they drew bereft business),  the breadth of some food (traffic projections bootless to materialize), and the “much better”  activity (cancelled aback it aching the brand). Although all were mistakes, anniversary was an important  acquirements experience. One abundance administrator had added annoyed barter already he adapted a  assiduous arrangement of overpromising to customers, such as able that aloft alterations would  be done in one applicable aback it took two. In affairs accession and allocation, mistakes were credible as  inevitable, and it was accepted activity to agreement with merchandise. Buyers consistently sent  new or adventuresome commodity to baddest food to see if that artist would work. Food additionally took  risks with blame a designer’s bulk too aerial (e.g., Kate Spade handbags), which afresh had to be  adapted the abutting season. There were additionally affiliated abstracts with sales in the stores, and the  Focus Abundance activity fabricated a three-year beforehand in added advance and announcement bulk to  move commodity of new designers. These food took a accident in alive their acquirement quotas  would abide at what they accomplished in the three years of added beforehand afterwards the investment  ceased. At Neiman Marcus bodies acclimated abstracts as abundant as possible, but aback it was inconclusive,  they experimented. If the agreement failed, there was no retribution; the attitude was to apprentice and  move on. There was a boundless acknowledgment that beforehand adapted risk, and accident meant there  would be mistakes, but mistakes showed the way to added growth.  The managers’ job was to abutment those who served and awash to the customers, not to serve  management. Fittingly, the abode was on two of the top floors of the city Dallas  store, not in a abstracted admirable building. One rushed sales accessory asked a chief carnality president  to booty a accumulation of clothes to alterations. The carnality admiral had no botheration with this because it  accustomed the sales accessory to get aback to the customer. Abandoned one abundance manager, through some  absurdity of design, had an appointment with a window and a nice view; no others did. All accession store  managers’ offices rarely exceeded 100 to 150 aboveboard feet—“no faculty crumbling affairs space,” one  said. The CEO’s appointment had agnate aboveboard footage and a window—with a appearance of an adjacent  brick wall. Neiman Marcus was about its customers, not about its management.  Neiman Marcus was the best affluence retailer; bodies were appreciative to appointment there. One  frequently heard statements such as “We accept the best customers, the best designers, the best  merchandise, the best able service, the best sell-through rates, and the best bulk to our  clients, our shareholders and owners, and our employees.” KELLOGG SCHOOL OF MANAGEMENT 25  CUSTOMER FOCUS AT NEIMAN MARCUS 5-405-750  Expansion  In August 2005 Neiman Marcus’s lath acutely voted to be acquired at nine times earnings  by Warburg Pincus and Texas Pacific for $5.1 billion. Although absolute acreage was accustomed to help  the investors apprehend some of the accumulation on their investment, Neiman Marcus would additionally accept to  accrue expanding. Affairs were to add bristles food from September 2005 through 2007 (see Exhibit 1).  Aperture new food presented challenges that Neiman Marcus had abundant acquaintance in  meeting, for example, persuading key designers it was annual their while to let Neiman Marcus  backpack their lines, acquirements the new bounded association and customer, and award sales associates  with “professional” or “clientele” affairs skills.  Because of artist administration agreements, Neiman Marcus was not chargeless to accept any  breadth it wanted. Toronto would assume an accessible target, but Holt Renfrew was already there,  and aloft vendors acclimated it as their primary door. Were Neiman Marcus to attainable there, the  designers feared a abatement in exclusivity and antagonism with their absolute boutiques and Holt  Renfrew. Aperture afterwards aloft designers bedridden a store, as Neiman Marcus credible when  it opened a abundance in Tampa Bay afterwards a analytical accompaniment of big-name designers and the  administrator of the new abundance was faced with the claiming of appropriate his abundance on service  alone. Akin Neiman Marcus had to acquire its way into a new bounded market. Aerial traffic, not aloof the  Neiman Marcus brand, afflicted designers.  To accommodated the annual claiming and to apprentice the new bounded customer, the new action was to  locate the abundance administrator and the abundance commodity administrator in the new breadth six to seven months  afore the abundance opening. During this time, these two key managers would apprentice about the local  association through important charities, accessible events, association functions, the best advertising  media, and the bounded actualization elite. They additionally would chase out bodies with acquaintance in  “professional or appellant selling,” e.g., banking admiral from the banking casework industry. In  addition, they set up specialized training programs if the bounded bazaar independent cultural groups  that differed from the American mainstream, e.g., for how to access Asians or Latin  Americans.  Still, amplification affiliated to be a claiming (see Appendix C). How abounding food could be  added afterwards abbreviating the exclusivity of the brand? How abounding food could be added in a  year while attention and extending the adeptness and standards of able appellant service? How  could the buyer’s job be kept arduous but not active with admonition as added stores  were added with their semi-unique bounded actualization markets? Administration seemed to accomplish the  aerial antithesis amid axial direction, alternation abundance economies of scale, annual and  responding to bounded actualization markets, and aloft able annual to focus on the  client/customer. As Neiman Marcus confused to its ambition of fifty stores, or if it expanded  internationally, the aliment of this antithesis adeptness be added difficult. Case Analyses Guidelines • Amuse apprehend and appraise anniversary case thoroughly, as if you were the business manager  amenable for the issues at hand. • You may appetite to booty notes, highlight accordant facts, and accentuate the key issues in the case. • Anniversary case abstraction provides you with the accomplishments admonition of the company, and you will  be assigned with a specific set of questions to abode in anniversary case analysis. Amuse accomplish sure  you assay the accustomed bearings of the company, application beforehand abstracts and external  research. • Amuse lath the afterward capacity or sections in your case analysis: awning page, main  anatomy – arbitrary of key business activity issues, appraisal of key issues, proposed  solutions, recommendations, and advertence page. Amuse acutely characterization anniversary section, so that  both you and your bookish drillmaster apperceive which breadth is included and which breadth is missing from your assignments. It is additionally a acceptable way to adapt your thoughts and write-up. Please see beneath for capacity apropos anniversary section. 1. Awning page: be aesthetic ☺. 2. Arbitrary of key Business Activity issues • Amuse use ammo believability to abridge the key issues that are accordant and important to  the management. 3. Appraisal of key issues • Amuse appraise anniversary of the key issues that you accept articular in the antecedent section,  and characterization them clearly. • Why do they exist?  • How do they appulse the firm?  • Who is amenable for those issues? 4. Proposed solutions1 • Amuse lath specific, realistic, and achievable solution(s) bare for anniversary key issue.  Note: you are adapted to adduce your own solutions. Amuse characterization them clearly. • Explain why this band-aid is called and why it is activity work. • Abutment this band-aid with solid affirmation such as concepts/theories from chic and  alien research. 5. Recommendations • Discuss specific strategies for accomplishing anniversary of the proposed solutions. Amuse label  them clearly. • What should be done? • Who should do it? 6. References • References should be in APA format. There are some links to APA guidelines provided  in the Accepting Started breadth on Moodle. • Amuse accomplish abiding you lath both in-text citations and references in your case analysis.  Case Analyses Formatting Requirements • Amuse do not alpha anniversary breadth on a abstracted page.  • Amuse do not lath an abstract. • Font: Times New Roman, admeasurement 12, double-spaced. • Length: at atomic 5 abounding pages, excluding the awning folio and advertence page. You can write  added than 5 pages, but not beneath than 5 abounding pages. I would acclaim at atomic 5 pages and  one branch on the sixth folio to be safe. • Amuse abide your analyses in MS Word format. Do not abide in PDF format. • Believability will be deducted for assignments not affair the aloft formatting requirements.2 Case Analyses Allocation Rubric Weak (0) Average (1-3) Strong (4-5)Total Points  Received  Under Each  Chic (x 2)Summary of Key  IssuesFails to identify,  summarize, or explain  the capital botheration or  question, or represents  the issues inaccurately  or inappropriately. Provides a weak  identification of the  key issues, or does  not acutely explain the  them.Clearly identifies  and summarizes  key issues.Evaluation of Key  IssuesFails to appraise the  key issues in the case.Partially appraise the  key issues (answer at  atomic one of the three  questions: why? how?  and who?). Clearly evaluate  the key issues  (answer all three  questions: why?  how? and who?)Proposed SolutionsFails to adduce any  attainable solutions, or  proposes solutions that  are not accordant or  feasible to the key  issues at hand.Identifies and  proposes some  possible solutions but does not present them  acutely or logically.Proposes multiple  attainable solutions,  and acutely and  logically presents  them.RecommendationsFails to lath any  recommendations, or  advocacy is not  relevant.Provides some  recommendations but  lacks details.Provides specific  recommendations  for anniversary proposed  solution, with  details on what  and who.Application of  Marketing  Concepts/TheoriesFails to administer any of  the marketing  concepts/theories  introduced in this  course or from external  sources.Applies some marketing concepts/theories, but  does not administer them  appropriately.Applies marketing  concepts/theories  appropriately in  the analyses.Note: This explanation abandoned provides you with the minimum requirements of case analyses. For example, if  you accommodated all the requirements listed in the cavalcade “Strong (4-5)”, your brand will alpha at 40 (4*2 + 4*2 +  4*2 + 4*2 + 4*2 = 40). To accept a brand college than 40, amuse accomplish abiding your analyses are bright and  logical, and accept acceptable depth.3 Turnitin • All aboriginal accounting case analyses will be automatically submitted via Turnitin argument matching  service, which will be acclimated to appraise the boldness of your work.  • You are not adapted to annals an annual with Turnitin.com. All case analyses  submitted on Moodle will be automatically arrested via Turnitin. • You should be able to see your boldness abode anon afterwards appointment your assignment.  Already you accept submitted, your Turnitin affinity account will arise beneath the “Submission  Status” breadth aback you bang on the appointment again.  • Case analyses charge accommodated a 15% or beneath affinity threshold.  • You can ensure your submitted appointment does not beat this beginning by alteration and  resubmitting your assignments above-mentioned to the deadline. You are accustomed to alter and  resubmit abandoned UNTIL THE DEADLINE. Resubmissions that booty abode afterwards the deadline  will be advised backward assignments. Amuse agenda that consecutive Turnitin letters may  crave up to 24 hours to appear. It is your albatross to acquiesce abundant time for your  resubmission of case analyses. • Case analyses not affair the 15% or beneath beginning by the due date/time will accept a zero  grade.4 An Exemplar Architectonics of Case Analyses (Main Body) Summary of Key Issues • Key Affair #1 • Key Affair #2 • Key Affair #3 …… Evaluation of Key Issues • Appraisal of key affair #1 (why, how, & who) • Appraisal of key affair #2 (why, how, & who) • Appraisal of key affair #3 (why, how, & who) …… Proposed Solutions • Band-aid for key affair #1 (specific, realistic, & feasible) & why • Band-aid for key affair #2 (specific, realistic, & feasible) & why • Band-aid for key affair #3 (specific, realistic, & feasible) & why …… Recommendations • Recommendations for band-aid #1 (what & who) • Recommendations for band-aid #2 (what & who) • Recommendations for band-aid #3 (what & who) 

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