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Discovering VF Corp.’s Marketing Edge

Phalguni Soni - Author
By

Feb. 11 2015, Updated 3:05 p.m. ET

VFC’s customers

As mentioned earlier in the series, VF Corporation (VFC) has multiple product lines available in dozens of countries. Its customers include men, women, and children. Products are priced in the mid- to upper-mid-market segments. Due to the diversity of products, customers, and geographies, marketing campaigns are often brand-based.

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Marketing initiatives

Brand image is critical for fashion and apparel products. VFC’s products are available through its own stores, other retailers (wholesale customers), and its e-commerce websites. The company’s marketing dollars are designed to get the most returns from these channels through the following:

  • Direct advertisements in print, television, radio, and digital media, including mobile and social media
  • Promotions with other retailers in print and on television and radio on a shared-cost basis
  • Point-of-sale fixtures and signage at retail outlets operated by wholesale customers
  • Enhancing brand image in shop-in-shops and concessions located within outlets operated by wholesale customers
  • Having its own loyalty programs and participating in loyalty programs and discounts offered by wholesale customers
  • Direct discounts to customers at its retail outlets
  • Sponsorship activity that’s brand-dependent and benefits local communities
  • Supporting employees’ volunteering community service
  • Fundraising activities

Marketing spend

VFC spent ~$671 million by way of marketing expense in 2013, up from ~$575 million in 2012. Marketing as a percentage of revenues also increased from 5.3% in 2012, to 5.9% in 2013. The company has been increasing advertising and promotional spend in a bid to expand its brand reach.

The acquisition of Timberland in 2012 also contributed to the increase. Timberland’s expense margins are comparatively higher than the other VFC-owned brands. Around 50% of media costs incurred for Timberland pertain to the digital and social media channels.

ETF impact

VFC is part of growth ETFs such as the Vanguard Growth ETF (VUG), the iShares Russell 1000 Growth ETF (IWF), the iShares S&P 500 Growth (IVW), and the SPDR S&P Dividend ETF (SDY). It makes up 0.84%, 0.28%, 0.26%, and 0.24% of SDY’s, VUG’s, IVW’s, and IWF’s portfolio holdings, respectively.

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