3/9/2010

MARKETING PLAN FOR IN-STORE BUSINESS

Jennifer Dolfus Ford

SheidaVakili
Madison Nguyen
Charlie Huang
GopalKamalanathan
Joe Chenhansa
LeileeNikkhah
VivekDurairaj
Table of Contents
Company Background ............................................................................................................................................ 3
Environmental Analysis .......................................................................................................................................... 3
Competitive Analysis .............................................................................................................................................. 4
Collaborators........................................................................................................................................................... 5
Customer Analysis .................................................................................................................................................. 6
Business Problem.................................................................................................................................................... 6
Decision Alternatives .............................................................................................................................................. 7
Alternative 1: ...................................................................................................................................................... 7
Alternative 2: ...................................................................................................................................................... 8
Alternative 3: ...................................................................................................................................................... 8
Alternative 4: ...................................................................................................................................................... 8
Recommendation and Support ................................................................................................................................ 9
Implementation ..................................................................................................................................................... 11
Product .............................................................................................................................................................. 11
Promotions ........................................................................................................................................................ 13
Place.................................................................................................................................................................. 15
Store Locations ................................................................................................................................................. 15
Store Layout...................................................................................................................................................... 15
Financial Impact: .................................................................................................................................................. 16
Exhibits ................................................................................................................................................................. 17
Exhibit-1: SWOT Analysis ............................................................................................................................... 17
Exhibit 2: 5 Cs .................................................................................................................................................. 18
Exhibit 3: Porter’s Five Force Analysis ............................................................................................................ 19
Exhibit 4: Customer Value Proposition ............................................................................................................ 19
Exhibit 5: Customer survey form...................................................................................................................... 20
Exhibit 6: Print Books Market and Segmentation ............................................................................................ 21
Exhibit 7: Flight Demographics........................................................................................................................ 22
Exhibit 8: Average Annual Expenditures by region ......................................................................................... 23
Exhibit 9: Store Layout Guideline .................................................................................................................... 24

2
Company Background

In 1971, Tom and Louis Border founded Borders Group (hereinafter “BGP”) in Ann Arbor,

Michigan. Since then, BGP has grown to become the second largest mortar and brick bookstore in the

United States (hereinafter “U.S.”).BGP currently operates over 515 superstores in the U.S., three

superstores in Puerto Rico, and www.Borders.com. Additionally, BGP operates approximately 377

stores in the Specialty Retail segment (mall-based and other small format bookstores). These include

stores operating under: Waldenbooks, Borders Express and Borders Outlet names, and Borders-

branded airport stores.i

Borders superstores carry up to 192,000 book, movie, and music titles.ii In 2008,BGP opened its

first concept store in Ann Arbor, Michigan with plans to open more stores nationwide. These concept

stores feature a Digital Center where customers can mix and create CDs, download books and music,

publish books, explore family history, and create photo albums.

In 2009, BGP vastly expanded its Children’s Department by adding educational toys and games.

With this in mind, BGP staffed kids’ specialists who can answer questions regarding toys, games, and

book recommendations. In an effort to bring the community together, Borders superstores hosts a

myriad of in-store and community-centered events each year. Thus allowing the community to enjoy

the knowledge and entertainment Borders stores provides. This along with a high initial capital needed

for the new entrants gives Borders a competitive advantage. (Exhibit 1 and Exhibit 3)

Environmental Analysis

The growth rate in print-books has been flat in the past few years and negative in 2008 and

2009. One reason for this decline is the ongoing recession since 2007. Using publishers’ revenue from

print books as the measuring point, the print book market has been saturated with a meager growth
3
rate of around 1%(Exhibit 6). For 2008, the Association of American Publishers reported a decrease in

book sales of 2.8%.iiiFor 2009, unit sales of books decreased by 3%.ivWith the U.S. still in recovery, a

higher growth rate in the print book market cannot be expected for the year 2010.Moreover,the retail

book industry is moving from a brick-mortar business to ecommerce and also from the traditional print

book format to electronic book format.

Competitive Analysis

Borders’ main competitor, Barnes & Noble, Inc. is the leading book retailer in the US, with

almost 800 stores across 50 US states, and a market share of 26% compared to Borders’ share of 16%.

Barnes & Noble’s strong performance compared to Borders can be due to its proximity to customers,

dominant title selection, and its membership program. For an annual cost of $25, Barnes & Noble

offers its members substantial discounts of up to 40% for best sellers. This strategy helps Barnes &

Noble aim for a specific target market of mainly adults 35 years and older, who are the main

consumers of bestsellers and adult hardcover books.

Membership Card
fee Discounts Needed
$5 in Borders Bucks (gift card) for every $150 in annual qualifying purchases
Borders Group, Inc. $0 No
40% off the list price of the current hardcover bestsellers
Barnes & Noble, 20% off the list price of all Barnes & Noble designated adult hardcover books
$25 Yes
Inc. 10% off the marked sale price of other eligible items
Welcome package of $50 in bonus coupons

In the age group of 14-25 years, Borders has considerable competition from Follet Corporation,

the leading college bookstore in US. Follet has a market share of 14% and operates over 760 campus

bookstores across the country. Competition for Borders has also intensified by department stores and

mass merchandisers such as Target and Wal-mart. Although these stores don’t provide many books

offered in bookstores, they offer many best selling titles, such as Harry Potter series at a lower cost

4
compared to the typical bookstores. The discounted pricing makes these stores more attractive to

families and people with lower household income. Families can see a book and purchase it while they

are shopping for their regular household and every day necessities.

Moreover, at practically no cost, libraries offer a large selection of children and adult books to

the public. They are the biggest carriers of used books and their customers are normally people in the

lower income bracket.

Collaborators

BGP sells books from almost all the publishers. It maintains good relationships with its major

publishers, which includes: HarperCollins, Penguin Group, McGraw-Hill, and Oxford University

Press. Teamed up with Lulu BGP provides self-publishing tools that enables its customers to publish

and sell one’s own book through BGP’s distribution channels. Moreover, BGP has partnered with

Albiris to sell used, rare and out-of-print books. (Exhibit 2).

Borders buys all its books directly from the publishers and uses its centralized distribution

system which consists of three distribution centers at California, Pennsylvania and Tennessee, to

manage inventory on a store-by-store basis. Unsold books and magazines can be returned to vendors at

cost. This helps Borders from avoiding any overage fee. But recently Borders have come under fire for

returning execessive unsold books to the vendors. Borders also have difficulties paying its suppliers on

time. The average days payable has increased to 97.9 days in 2009 (year ended Oct 31) from 69.4 days

for the same period previous yearv. To alleviate their financial difficulties, Borders is paying its big

vendors in a timely fashion while neglecting the smaller publishing houses, some of which are

preparing to take legal action.

5
Customer Analysis

According to the National Education Association’s (NEA), the percentage of adults who read

literature (novels, plays, poems that are in print or online) increased from 46.7% in 2002 to 50.2% in

2008. Even though the literary reading rate increased from 2002 to 2008, book readers declined by

4%. The decline was widespread among the population of 18-54 year olds. This decreasing trend in

book reading might be partly attributed to increasing trend towards online reading.

To determine the customer profile of Borders a random in-store survey was conducted. A

random in-store survey was conducted as shown in (Exhibit 5). Based on 50 responses, only 43% of

the customers cited Borders as their favorite place of buying books. This shows that brand loyalty

among the Borders customers is not good. The customer segmentation was done mainly based on the

demographic variable, age group as shown in Exhibit 6.The differences in the in-store customer

segment share from the actual segment share determined from the census data as shown in Exhibit 6

gives us an idea of the current positioning of Borders and the existing opportunities in the market. The

in-store survey indicated that about 64% of the book sales of Borders came from the age group of 25-

45 who mainly read fiction and non-fiction books. This shows that Border’s current positioning and its

appeal mainly to the customers in the age group of 25-45 years. But from our market segmentation, it

is seen that the high spending customers are in 46-60 years and 60+ years age group with the biggest

segment being 46-60 years age group.

Business Problem

• Decrease in customer retention and customer acquisition – Customer preferences have been

moving more towards online purchase of books. BGP has been having difficulty in bring more

new customers to their stores and also in retaining their customers mainly due to changing

customer preferences and the ongoing recession.

6
 • BGP’s subsidiaries, Walden Books and other specialty bookstores carry a similar array of book

categories. Walden has a weak branding and having different brands to provide almost similar

book selections gives rise to ineffective use of brand equity created under Borders.

• Decrease in Customer Satisfaction - Due to financial difficulties, Borders is unable to retain its

well-trained employees who can assist the customers with their needs and interests.

• Increased Competition – Emergence of mass merchandisers as a reliable source of books and

discounters has undercut BGP’s profits.

• BGP’s music and video business has a lot of competition and is away from its core business of

selling books.

Decision Alternatives

From our market segmentation and in-store survey, it is seen that BGP’s customer profile is very

different from the actual segment shares of the market. This indicates that previous mass marketing

strategies were not enough to capture the segment shares effectively. Also considering BGP’s recent

financial difficulties, instead of mass marketing, we recommend that BGP should concentrate its

strategy on just one or fewer segments.

Alternative 1:

The first alternative is to target the high spending sixty plus years or older segment. This segment

consists of retirees whose disposable income may be limited to necessity items. Spending on non-

essential items may be difficult for some. However, they have more free time to spend at local

bookstores and may perhaps take advantage of the café/lounge areas. Ultimately, individuals in this

segment could have difficulty getting around and depend on others for transportation. Therefore, to

7
target this segment, location of the stores would be a key consideration. This segment provides the

second largest segment share but contributes the least to sales.

Alternative 2:

The second alternative is to market mainly to meet the needs of the 46-60 years age group. In this

segment, customers rate customer service and extra amenities to be their priorities in a bookstore. So

the bookstore employee will be trained to help the customers with their book needs. From our survey

we found that this segment mainly preferred reading cooking, adventure and Do-It-Yourself books

(Exhibit 6).So the book selections will be increased in the store according to the reading preferences of

this segment. From our segmentation, it is found that this segment is the biggest of all and by focusing

our marketing strategy towards this segment would help BGP in capturing a bigger market share.

Alternative 3:

The third alternative is to target both the segments of 36-45 age group and 46-60 age group. It was

found from our in-store survey that currently 36-45 years age segment constitute the core customers

for BGP which accounts to about 33% of Borders customers (Exhibit 6). As this segment being the

biggest revenue driver for BGP, by targeting 36-45 age group along with the 46-60 age group would

help in retaining most of its current customers while BGP positions itself to bring in new customers

from 46-60 years segment. The book selections will be increased accordingly in Non-fiction and

cooking, adventure and Do-It-Yourself categories. As both these segments consider recommendations

and suggestions before buying a book, the current employees will be trained and new knowledgeable

employees will be hired to help them select and buy the books.

Alternative 4:

The fourth alternative is to target the 14-25 age younger segment. This segment makes up 17.9% of

the books market. Product selection is a high priority and the books that are mostly bought by this
8
segment are textbooks. BGP could take advantage of this segment by participating in the textbook

selling industry. In essence, this strategy will require investment in campus bookstores to service

students and faculty on college and university campuses. BGP’s main competitor, Barnes and Nobles,

already has a strong presence in this market, servicing 636 college bookstores. However, with over

4,000 colleges in the U.S., there is room for BGP to enter the market potentially great results.

Recommendation and Support

Due to the highly competitive challenges facing the print books industry, we recommend that

BGP execute decision alternative three- “target both demographic age groups of 36-45 and 46-60 year

olds” with a revised strategic positioning of offering these consumer segments a high level of customer

service and extra amenities. BGP is in a financial dilemma and therefore has a limited supply of

capital. Choosing alternative three will not require as much capital as the other decision alternatives,

and will allow BGP to refocus its efforts on the two segments that are most attractive. These two

segments are most attractive because together the segments constitute 47% of the market, are in

consecutive age groups, and most importantly have a high level of combined spending on reading;

almost 50% of the average spending on reading comes from 36-60 year olds. Moreover, catering to

these segments now would help in fostering customer loyalty to BGP, even as the target customers

move into higher age groups. As a result, many of these customers will still consider Borders as their

bookstore, even when they are older than 60 years. In addition, this new target market encompasses

parents who will be impressing their bookstore experience at BGP on their children, which in turn will

result in future BGP loyalists. Thus, alternative three will inadvertently encompass more than the

focused age groups.

9
 Consumers aged 60+ years on average, spend the most money on an individual basis on

reading materials compared to the younger four segments. An individual in this segment spends an

average of $151 in reading materials. At first glance, it would make sense for BGP to choose

alternative one, targeting consumers who are 60+ years. However, this would require a large amount

of capital from BGP. In order to target 60+ year olds, BGP would need to relocate stores to shopping

areas nearby retirement homes. Moreover, this decision alternative is less attractive than alternative

three because the 60+ segment is price sensitive and is the smallest segment, in terms of population.

Using large amounts of capital for store relocation and catering to this segment’s high level of price

sensitivity would result in a lower level of profit for BGP. In addition, given the financial condition of

BGP, lenders may be less willing to offer credit for the opening of new stores.

Execution of decision alternative four also requires BGP to use capital that the firm does not

have to establish partnerships with universities and community colleges. BGP would need to invest

time and money to set up new channels to cater to college bookstores. Also, if BGP were to go this

route, it would categorize itself into the textbook industry and miss out on revenue from all other

segments.

Although alternative two targets the biggest segment, “46-60 years age group”, this would not

be the most rational approach since it would not give BGP the highest return in profit. It might also

create a risk of alienating the current core customers of BGP, “36-45 years age group”. Combining

both the age groups of 36-45 and 46-60 is more synergetic and would give BGP the highest level of

profit.

In choosing alternative three, BGP will only have to reallocate its marketing budget to

implement the new marketing strategy. By directing its focus on these two segments, BGP will be able

10
to move forward in enhancing its customer loyalty program and other aspects of its customer service,

which is very important to customers in these segments.

Implementation

BGP should implement the functional strategies that are consistent with the customer value

proposition.(Exhibit 4)

Product

The target segment 3 (age 36-45) and segment 4 (age 46-60) mainly read non-fiction books

such as Cooking, Adventure, Do-It-Yourself, Trade books, Religious books, Newspapers and

Magazines.(Exhibit-6) So Borders should increase their books collection in the above mentioned

categories and Newspapers and Magazine. At the same time, Borders should selectively improve

Fiction and Textbook collection instead of having wide selection, as we are not targeting the segments

which buy books in these categories. Within the above mentioned categories the book selections

should be changed according to the preferences of the local population. Borders should do data

warehousing and data mining to figure out the mix of the categories of the books sold in each

bookstore. This will help borders to raise it sales by offering more localized titles that reflect the

demographic and regional trends on a store-by-store basis.

Sales of music in the physical compact disc format have declined over the past several years, as

consumers have increasingly turned to digital downloads of music. This trend, which we expect to

continue, is also beginning to manifest itself in the book and movie categories. The store sales

decreased by 10.8% in 2008 and increased by 1.5% in 2007 whereas the music sales in stores have

declined by 16% in 2008 and 14.2% in 2007. vi Considering that the customer preference is changing

in the way they get their music and movies, the decline in music sales in the Borders superstore, the

low-margin and underperformance of this category, we recommend that the existing music and movies
11
section be replaced with the categories focused towards our target segments 35-46 and 40-60 years age

group.

Segment 46-60 years age group weigh extra amenities as an important factor in choosing a

bookstore. Having an in-house coffee shop with reading area is an important amenity that a book store

can offer. Borders have an alliance with Seattle’s Best Coffee, a subsidiary of Starbucks, for an in-

house coffee shop in all borders superstores. Seattle’s Best Coffee has been successful at driving

general same-store sales increase and in its category and provides a solid return on investment.

Therefore, Borders should offer Seattle’s Best Coffee in more stores. As our target segment use

stores as a place to read and casual browsing, providing free Wi-Fi with Borders.com as the opening

web page and book suggestions on it will increase the chances of a customer to buy a book. In October

2009, BGP announced that it will offer free Wi-Fi in a partnership with Verizon. We recommend BGP

to implement free Wi-Fi in every store.

To address Borders’ struggle with brand dilution through its Waldenbooks specialty stores, as

confirmed via a conducted survey of Borders customers, a strategy for Borders to pursue is to

strengthen the brand name so that customer know the quality of products and services offered, whether

at a superstore, mall, or airport, their customers are purchasing from the same store and that it is very

clear and apparent. This strategy would include renaming the Waldenbooks name to Borders Express

so that their customers know that they are receiving the same great products and service at the mall in

a smaller retail store than what they may normally expect from the superstores.

Borders superstores are known for its superior customer service and an inviting and

comfortable environment designed to encourage browsing. This is a key differentiation compared to

its main competitor Barnes and Noble. When hiring new employees, Borders should consider a

number of factors, including education, experience, diversity, personality and orientation towards

12
customer service. All new store employees participate in a training program that provides up to two

weeks of in-store training. Recently Borders is losing its edge in customer service because of

reduction in number of employees and losing knowledgeable employees through lay-offs and attrition.

Borders should train its employees on how to service their customers with the current level of staff and

it should also provide incentives based on customer satisfaction. Borders should also gain the trust of

the employees by announcing that there will not be any more layoffs. These strategies will help

Borders to stay ahead of Barnes and Nobles in customer service.

Promotions
As Borders sells straight to the customers, it is better to go for a pull strategy. For pull strategy,

Borders should increase spending on advertisement and promotions. Borders spent about $25 million

on advertising last year.vii Increasing spending by 20% for advertising and promotions will attract new

customers, increase same-store sales, increase store visits from existing customers and build customer

loyalty. A key component is the Borders Rewards program that gives special offers and coupons to

members.

The Borders Rewards loyalty program has 35 million members. From the in-store we found that 70%

of the BGP’s customers who were aware of the Rewards program used it. If the awareness of the

Rewards program is increased, it would considerably increase the sales. Increasing customer

participation in the Borders Rewards program through incentives and discounts promotions will attract

customers as well as build awareness of the program. By making it easier for members to earn and

redeem cash rebates and offering competitive discounts in key categories will differentiate Borders

from its competitors. Therefore, we recommend a discount of $5 for every $100 purchase instead of

$150 purchase that is currently offered. In doing so, customers will have greater incentive to purchase

books. Approximately half of customers surveyed said they use coupons for the purchases. Borders

13
has been using email campaign for coupons and this may be effective for the young and tech-savvy

customers. However, for the baby boomers in 46-60 years age group, mail-in coupons would be more

effective. Thus Borders should increase coupons sent through mail.

As target segments 36-45 and 45-60 years age groups are also mostly parents of kids of age

under 14 years, BGP should increase events targeted towards children which would pull the children

to the stores, thereby bringing in our target customers to the store. The events can be customized based

on the local preferences. This will enable Borders to become a destination for children and families to

not only buy books, but also to foster literacy and education in their children, to spend quality time

with their families and to interact with their community. The children and family events might also

increase customer loyalty among our target segments as these events create pleasant memories. Comment [D1]: Should be revised

A key tool for gathering customer data and analyzing behavior are the in-store kiosks. The

kiosks were introduced in Borders stores in the fourth quarter of 2008 in order to create a distinctive

cross-channel experienceviii The kiosks should be enhanced to allow customers to login into their

account and learn about in-store promotions, news and events. To increase utilization of the kiosks,

customers will earn points and/or receive in-store coupons for attending store events, providing book

reviews, enrolling friends and family in the Borders Rewards program or simply visiting the store.

The information and coupons provided as incentive to the customer will be targeted based on the

costumer’s profile and will increase brand loyalty. The CRM system can be used to analyze consumer

preferences in order to create and refine promotions to improve in-store sales through increased

effectiveness of the merchandise presentations and supply-chain activities.

Providing discounts for community groups and fundraisers for local schools or charities allow

Borders to integrate the store with the community and help sustain growth.ix For example, a book

drive to benefit non-profit organizations such as the Children’s Book Project

14
(www.childrensbookproject.org/) allows Borders to give back to the community while also

encouraging store visits.

Place

In targeting the demographic segments of 35-46 and 46-60 year olds, there are several placement

strategies that Borders can implement to focus on their target market. These strategies included store

locations, store layout and product placement.

Store Locations

With the highest concentration of readers in the nation residing in the Northeast, Midwest, and West

(Exhibit 8), Borders should prioritize implementing the product and promotional activities described

above in the stores in these regions first. The age demographics of airline travelers show that around

50% of the travelers are in 35-44 and 45-60 years age groups which are same as our target segments.

(Exhibit 7). Therefore, it will be important for Borders to increase the number of store in airports and

maintain services, product offerings, and promotions to be consistent with the Borders superstores and

should be focused towards our target market segments.

Store Layout

As Borders moves to a strategy focused on books and moving away from media, it is expected that

floor space in the majority of the superstores that was once occupied by the movies and music section

will free up. At several of the Borders superstores visited, especially on the weekends and holidays,

there was very limited seating and customers were seen standing and waiting for seats. The newly

available floor space will allow the Borders superstores to spread out the product sections and ensure

sufficient lounge space throughout the store resulting in increased customer satisfaction. Borders

should ensure ample seating area in the middle section of the stores where the travel/leisure and non-

fiction books would be positioned that the targeted market segment of 35-45 and 46-60 year age
15
groups are most interested in (Exhibit 9). Kiosks would appropriately be positioned in the largest

lounge areas of the store as well as towards the entrance/exit of the store for the customers’ ease of

access.

In addition, a simple store map will be accessible at the entrance of every store to ensure

customers know where to find what they are looking for as soon as they walk in. Although every

superstore may have a different size and floor plan, Borders should strive to keep the layout of each

store consistent so that when customers visit any Borders store, including Borders Express (except

without the lounge areas), they should be able to find what they are looking for very quickly. An

example of a Borders store layout is shown in Exhibit 9.

Financial Impact:

16
 Exhibits
Exhibit-1: SWOT Analysis

Strengths:
Weakness:
Borders is the second biggest book
Lack of Capital.
retailer.
Decreased leverage with publishers.
Strong store base.
Late and inefficient in getting books
Personal publishing.
to shelf.
Comfortable Atmosphere (In-house
No presence in college and
cafe).
universities.
Strong presence in 25-45 years age
Waning customer service.
group.

Threats:
Opportunities
Emmergence of innovative/newage
Segments -under 25; 45 and above
competitors - online retailers.
age groups.
New technologies and book
E-commerce
formats.
Partnership with universities
Book rentals.
E-books/Ereaders

17
Exhibit 2: 5 Cs

Competition
Customer Needs Direct Competitors:
-An easy way to buy books with preview - Barnes and Nobles - Largest book
and review retailer in the U.S. with more financial
- More services in-store than just buying leverage - discount pricing strategy,
books. E.g.: Cafe, wifi community awareness,customer loyalty.
- Convenient location of the book stores. -Follet Corp - leader in texbooks
-Affordability Indirect Competition
-Good book selections and in-store - Rare specialty merchandisers- Online
availability retailers like Amazon who undercut
Borders' profits.

Company Collaborators
Core Competencies: - Publishers i.e. HarperCollins, Mcgraw
- Second biggest in-store book retailer Hill, Oxford University Press
- Good in-store atmosphere - Partnership to provide self publishing
- High brand awareness. tools
- Goal: To change according to the new -Favourable return policy on books.
trends in book industry -Book signings and other events to
promote new releases.

Context
- World is still to recover from the
economic recession since 2008.
Consumers are still holding onto their
expenses.
-Traditional print book market is
stagnating with a negligible growth rate.
- Technological innovation bringing new
players in the industry.

18
Exhibit 3: Porter’s Five Force Analysis

Exhibit 4: Customer Value Proposition

“Offer the best book selections, customized to local preferences, and provide the best in-store customer

experience with a comfortable atmosphere, friendly customer service and convenient purchase process.“

19
Exhibit 5: Customer survey form

20
 Exhibit 6: Print Books Market and Segmentation

Wholesale publishers revenue:

Source of revenue 2004 2005 2006 2007 2008 2009E

Print-Books 24475 24330 24600 24891 24300 23571
% growth -0.6% 1.1% 1.2% -2.4% -3%
Figures in millions Source: U.S. Census Bureau,"2007 Service Annual Survey, Information Sector Services."

Retail Reading Market:

Segments 14-25 25-35 36-45 46-60 60+

Population 46,688,576 46,688,576 40,931,565 62,955,510 33,147,948

Avg reading spend per

person 100 72 107 137 151
Potential Segment size
in dollars 4,668,857,600 3,361,577,472 4,379,677,455 8,624,904,870 5,005,340,148
Segment share 17.9% 12.9% 16.8% 33.1% 19.2%
Border’s in-store
segment share as % of
sales 15% 31% 33% 11% 9%
Source:www.census.gov
Segement Description:

Segments under 25 25-35 36-45 46-60 60+

Avg spend very low low med high very high
30%
33% Book 30% Book Customer
selection 34% Book selection service 35%
22%Extra selection 30% customer 30% extra Location
Priority amenities 30%price service amenities 33% price
Other buys (not
books) low med med low Highest
75% self buy 64% self buy 70% self buy 50% recco 100% self
Attitude 25% best sellers 23% recco ~30% recco 50% self buy buy
Mostly
Mostly casual Use as a reading Use as a Mostly casual casual
Activity browsing place reading place browsing browsing
leisure - Fiction/Non-
Book pref(Most read) Text books Fiction Non fiction cookin/DIY fiction

21
Exhibit 7: Flight Demographics
Source: FrequentFlier.com/demographics.htm
Frequent Travelers, for Business & Pleasure

• Classic frequent-traveler demographic skews somewhat male (56% versus 44% female).
• 77% traveled 3 or more times during the past 12 months; 25% logged 10+ trips.
• 95% participate in airline frequent flyer programs; 46% are members of 4 or more programs.

AGE

18-24 2%

25-34 15%

35-44 22%

45-54 30%

55-64 21%

65+ 10%

GENDER

Male 56%

Female 44%

22
Exhibit 8: Average Annual Expenditures by region

Average Annual Expenditures on

reading by region
$160

$140

$120

$100

$80

$60

$40

$20

$-
Northeast Midwest South West

Source: U.S. Census Bureau - http://www.census.gov/compendia/statab/ , U.S. Bureau of Labor Statistics,

Consumer Expenditures in 2007, News, USDL-08-1746 (published 25 November 2008); and earlier reports.

23
Exhibit 9: Store Layout Guideline

Lounge Area Children’s Books Lounge Area

and Play Area

Fiction

Other Books
Misc Books

Kiosk

Leisure Lounge Area Non-Fiction

Magazines

Kiosk
Cafe
Map/Kiosk Best-sellers/
Promos

Entrance/Exit Checkout/Cust Serv

References:
i Available at: www.borders.com.
ii Available at: www.borders.com.
iii Available at: http://www.publishersweekly.com/article/CA6649298.html.
iv Available at: http://www.crainsnewyork.com/article/20091229/FREE/912299989.
v http://www.ft.com/cms/s/2/d4f8cecc-05dd-11df-8c97-00144feabdc0,dwp_uuid=e8477cc4-c820-
11db-b0dc-000b5df10621.html
vi
Borders 2008 10k
vii
Borders Group, SEC Filing Form 10-K Fiscal Year Ending Jan. 31, 2009
viii
Borders Group, SEC Filing Form 10-K Fiscal Year Ending Jan. 31, 2009
ix
Ross, A. (2010, Feb. 21). The Bottom Line - Booksellers Write Formula For Success, San
Francisco Chronicle, D2-D3

24