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Martha Stewart's contract with Kmart Corp. began in 1987, but it took a key marketing insight to get her look just right in the discount chain.

Steve Ryman, Kmart's divisional VP-home fashions, working as part of president-CEO Floyd Hall's turnaround team, realized that although Martha Stewart had an upscale image, the success of Kmart's domestic and home fashion offerings would depend on the line's positioning.

Kmart's core customer-moms age 25 to 49 with family income in the $25,000 to $60,000 range-may have aspired to Martha's style and flair but might not have the budget. As a result, Kmart's key was not to start at the top with high-priced brands targeted upscale, but to start at the middle.

"Start with the core-the middle-and go up" to the higher priced fashion line, says Mr. Ryman, 43. "Starting with the outer edges never works."

The first two lines launched were the lower-priced Blue Label line, starting at $5.49 for two pillow cases, and its higher priced cousin, the White Label line, where prices begin about $3 higher.

Martha Stewart's Everyday Colors line of interior latex paints was added to the Kmart collection. Martha herself, in a rolling video loop on in-store screens, gives instruction on basics, such as how to make a bed.

Next, this fall, Kmart will expand the collection to include a higher priced "Silver" line.

"We started with basics and wanted to work up to fashion," says Mr. Ryman.

As a result, Martha Stewart's "Everyday" collection is playing its role as a crucial element in Kmart's renaissance, a program that calls for the division of each store into clearly defined concept areas, each anchored by a big name brand.

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