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CMO50 2016 #26-50: Paul Stern, Kathmandu

  • Name Paul Stern
  • Title General manager, marketing, online and international
  • Company Kathmandu
  • Commenced role December 2014 (with Kathmandu since January 2010)
  • Reporting Line CEO
  • Member of the Executive Team Yes
  • Marketing Function 68 staff, 6 direct reports
  • Industry Sector Retail
  • 2015 ranking New to CMO50
  • Related

    Brand Post

    “When I commenced my studies 27 years ago, marketing was about ‘satisfying the needs and wants of customers’,” Kathmandu’s GM of marketing and international, Paul Stern, comments. “You can’t do that unless you know who you are targeting.”

    And that’s exactly what Stern and his team have been striving towards to ensure the retailer’s customer-led approach.

    Stern explains Kathmandu has a broad customer base, which he and the team have worked hard to devise into six core customer groups: Young and serious (Aspirational Achievers); young and casual (Fun Seekers); middle aged and serious (Experienced Enthusiasts); middle aged and casual (Family Adventurers); older and serious (Rediscoverers; and older and casual (Appreciators).

    It’s educated the business about these six core customer segments, focusing on the value that each delivers in terms of Kathmandu sales versus the outdoor market estimates, and what share of the business they make up.

    Not only have these target segments been ingrained cross functionally, it’s also achieved growth in the ‘Aspirational Achievers’, an underperforming segment.

    The growth in this segment hasn’t just been achieved by creating advertising, although that has been part of it, Stern says. It’s been achieved by the product team developing products that are both more technical and stylish, and the retail store teams being better able to identify the personality traits of the AA segment and adjusting their selling technique to meet their interests for more information around sustainability and product fit for purpose.

    “It is very rewarding when a product team member or store manager can tell you who an ‘AA’ is. This is when you know you’re becoming a customer-driven business,” Stern says.

    From the CMO50 submission

    Innovative marketing

    One of the key challenges for Kathmandu is that it is predominantly seen as a winter brand. So when it comes to the summer launch period at the start of October, the brand isn’t considered a natural destination by customers.

    To combat this, Stern and his team built out a strong overarching summer and travel theme that could tie into summer product launches. Following the brand’s Winter 2015 campaign, ‘embrace the cold’, a summer campaign was developed focusing on celebrating the joy of travel and exploration. It conducted its seasonal photoshoot via an epic five-day climb of Mt Rinjani, and offered Summit Club members the opportunity to visit the same location by sharing their top picks for holiday destinations. This was followed up a trans-Tasman backyard social swap, asking customers to upload a photo of their favourite spot in their own country backyard.

    The promotion reached more than 1 million people, and created 36,000 social actions. The summer campaign was also a catalyst for Kathmandu recording a significant turnaround in first half-year NPAT, going from a $1.8m loss in the first-half prior year to a $9.4m profit on the back of increased sales, improved margins and lower costs, including lower marketing spend.

    Empowered business thinking

    In addition to being CMO, Stern is responsible for planning and executing Kathmandu’s international strategy. He explains the ambition is to develop a blended model including a mix of wholesale, online and franchise partnerships.

    “In Australia and New Zealand, Kathmandu is predominantly a vertical business, where we design our own products and then sell them through our own physical stores and online channels,” he states in his CMO50 submission. “Developing an international wholesale, online and franchise side to our business requires significant change to the way our teams operate.”

    For example, the company doesn’t currently have a sales/account management function other than a customer service team that manages online orders and corporate sales. Legal and compliance requirements, finance elements, language and sizing issues to take into account with packaging, and customer service for returns and customer enquiries are just a sample of the issues Stern has worked through.

    He’s also working closely with Kathmandu’s project management office, an external consultant and cross-functional project teams to ensure teams meet the objectives set out in the two business cases approved.

    “Regular communication and updates that I provide also help to bring the team on the journey and enhance their understanding of why changes are being made to our organisation,” Stern says.

    “Our medium-term goal is to work toward 10 per cent of our business coming from new international markets, and in doing so reduce our reliance on our home markets.”

    Data- and technology-led approach

    A major growth opportunity in the global outdoor market which Kathmandu competes in has been the rise in participation of active sports such as biking, trail running, yoga, triathalon and adventure racing.

    Knowing Kathmandu’s active product range was not achieving its budgets, and that this is a significant category opportunity for the summer season, the marketing team undertook an analysis of its Summit Club member database to better understand who was buying active products, when they were purchasing, which stores were popular and what other products consumers bought in the same purchase.

    The most interesting discovery was that active products at Kathmandu were largely being bought by its older customer base. “We also confirmed it was largely a summer purchase,” Stern says.

    Following the analytics, Kathmandu ran focus groups with members to better understand and probe why younger customers weren’t purchasing our active range, which in turn generated more insights. These insights were translated into a new business strategy for the active range which resulted in a more stylish and on trend range, with a focus on trail running, which came out as having a strong association with the brand.

    Kathmandu also took on naming rights sponsorship of New Zealand’s most iconic adventure race, now called the Kathmandu Coast to Coast, and engaged highly regarded trail runners/adventure racers to act as ambassadors for its active range. This has already helped grow awareness and lift share of sales and more plans are afoot.

    Fostering capability

    When it comes to building team capability, Stern’s first priority is hiring good people with a mix of strategic and creative thinking, analytical and detail oriented skillsets.

    “Once you’ve got a good team mix, it’s about creating an environment where innovation and creativity can flourish and the team feel empowered to get on with their jobs and make decisions, without unnecessary sign off processes and other roadblocks,” he says. “I like to provide different team members with opportunities to present to our board, executive and wider Leadership team, and encourage participation in cross-functional projects.”

    A recent initiative was working with HR was to conduct a 360-degree appraisal process for the senior marketing team. The purpose was not only to give team members insight into how their own direct reports and peers view their management, but to identify more clearly their development needs.

    Another key change made by Stern over the last 12 months has been building out its in-house creative studio. As a result, Kathmandu has been able to reduce the need for external creative agencies and built brand knowledge and consistency, he says.

    Creativity

    Creativity plays a central role in Kathmandu’s marketing strategy and programs by helping the team tell disruptive and differentiated brand and product stories that are impactful, Stern says.

    “A lot was riding on our recent winter campaign,” he says by way of example. “After a challenging year last year, not least a takeover bid on the company, we needed to develop a campaign that drove brand consideration and preference across both members and the general active population.”

    The product team started the ball rolling, delivering an exceptional range of product for the winter season. Marketing identified key stories and put them under a winter campaign theme of ‘Gear that adapts’.

    “This theme aligned well with the brand positioning of ‘Adaptive gear for inspired travel and adventure’ and allowed us to tell stories of how our gear adapts to the different terrain, climate and individual, no matter where they go,” Stern says.

    The first winter launch video reached 2.7m people, attracted 1.8m views, and resulted in 35,000 website visits. This creative video involved a young couple texting each other to meet up in South America, and followed each of them as they layered up and walked through different climates and terrains to meet up.

    “The creative approach taken with the winter campaign has been a key ingredient in the achievement of both brand and social media KPIs, giving us confidence to continue to push the envelope in the coming summer season,” Stern concludes.

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