Chapter 1
The Problem and Its Background
This study explores the branding and brand management in the fashion industry, particularly on Gucci Products in China, in order to find out whether popular brands are always beneficial. This chapter presents the research problem, questions, significance of the problem, brief description of the methodology, background of the study, and the expected outcomes of this research.
Problem Definition and Research Questions
Throughout the years, the strategic competitive advantage of fashion business in China is quite expressive. There are several instances that this type of business has been marketed not only in China but also in international market. However, because of the quick development in the current era, particularly the technological progress, businesses of this type also need some progress in order to stay or have an advantage not only in their current market but also to the said international/global market. With regards to the development in the fashion industry, there were high competitions of designs and productions of high quality fashion clothing in China.
In accordance to the current stance of fashion business in China, the products and services that have strong brands are easier to remember because they are already popular and are known for the quality. Companies try their best to build their brand name or brand identities because it helps consumers easily identify the product as well as acquire a rich set of symbols and meanings embodied by products (Levy, 1978). For successfully developed and managed brand names, the associations that consumers make with the brand name creates value, or brand equity, that can be a highly valued asset to the firm that develops the brand (Meyers-Levy, Louie, and Curren, 1994). Therefore, marketing strategies in building brands are essential for business firms that aim high sales and long term success.
Brand is usually associated with people’s social status. Those who are rich usually buy products or avail services with strong brands, which are usually expensive but are considered to have high quality, to show that they can afford to buy one, feel that they only deserve the best products available in the market or make them feel that they do not belong to the lower social classes in the society. Brand is important in the success of most companies because it is one of the most valuable assets that need to be managed and maintained.
Consumers prefer to or are usually encouraged to buy products with strong brands because they can be recognised easily, last in people’s memory, and become their long-time favourites. A strong brand represents the companies’ identity or image that can be solidly anchored in the consumer psyche (Meffert, 2000). It usually presented in with positive and attractive images or sound (names) in order to last in people’s mind. Once a brand becomes familiar and the people accept it, it results to strong ties, confidence, and loyalty even if its price is higher than other products (Hogl and Hupp, 2003). In order to build strong brands, advertising and marketing firms use efficient and effective communication strategies to attract the interest of customers. Howard, J. (1963) believes that brands with strong consumer emotional ties will continue to gain utmost importance building and maintaining strong brands due to the increasing competition and product homogeneity as a result of imitation and high demand.
Asher, J. (1997) have recognised the issue of whether well-known brands are always beneficial or whether global brand names can serve as competitive advantage. This issue is based on the premise that global brands may not be as always beneficial because local brands can also be as strong as global brands in the local markets. This is explained in the study of Alden, Batra, and Steenkamp (2003) in which they described global and local brands.
Global brands are usually considered as strong brands because they are well-known internationally but there are also local brands that can be regarded as strong brands because they are accepted and patronised by many customers. Global brands share similar technical specifications (Brady, Hunter, and Santiapillai 2000) and are usually preferred by customers because they are associated with higher prestige (Kerton and Bodell, 1995) because of their limitedness and higher price as compared to other brands (Bailey, Scott and Schultz, Don E. 2000). Despite exceptions, (e.g., Gucci) global brands create better self-image, greater prestige appeal, and customer aspiration because of greater scarcity, higher price, cosmopolitan, sophisticated, modernity, association with globally recognised events (e.g., Olympic Games, World Soccer Cup) and celebrities (e.g., Gerard Depardieu, Harrison Ford, Steffi Graf, Tiger Woods). People perceive brands as global because they learn (through media exposure, word of mouth or traveling overseas) that a brand can be found in other countries and marketing communications use endorsers, names, packaging, themes, and other symbols that are widely associated with a 'modern', urban lifestyle even if these brands are not available worldwide (Alden et al., 1999).
Local brands, on the other hand, are considered an alternative route for products to become an icon of the local culture (Anon 2002). Local brand managers from global brand firms can possibly achieve competitive advantage in using local cultural capital and targeting and positioning local markets by understanding the nature of local cultured (Bailey, S. and Schultz, D. E 2000). These local brand strategies create a sustainable unique value and offer the symbolism of authenticity and prestige. It is possible that local brands could become strong brands because people’s perception or standard of high quality products or services differ across cultures. The more products are needed locally, the more they should be represented in the local perspective. However, they should match the needs, expectations, and culture of local consumers while ensuring quality.
Alden et al (2003) found that consumers perceived global brands to have better quality, and they provide status and prestige or a way to become part of a global consumer culture (GCC). Their study was tested in Korea and the United States, across different product categories and brands. They found that business corporations have been focusing on building global brands with the belief that consumers worldwide prefer global brands over local brands, but this has not been systematically researched, established or justified, and it remains a controversy (e.g. De Mooij, 1998; Alden et al, 1999).
In addition, there are more consumers who belong to middle or lower class who buy products that are not expensive but there is an issue of consumer confidence crisis because of the difficulty of identifying which product is safe or not. Consumers usually regard brand as their basis in buying products. Trust in a product’s safety is essential under conditions of choice. Wright (1997) explores the importance of effective labelling in marketing concerning the abilities and motivations of consumers to understand and make decisions by using the information made available to them on the labels of the products which they purchase.
Therefore, further research is needed to determine whether well-known brand names or strong brands always beneficial. This is the primary question that this research seeks to answer by conducting a survey in the fashion industry in China. In particular, this research works on the following questions:
1. How do consumers in China perceive the brands available in the fashion market?
2. How important are brand names to consumers in China?
3. What types of brands do consumers in the fashion industry in China prefer?
4. What are the factors affecting the fashion consumers’ choice of brand name?
5. How beneficial are well-known brand names as compared to secondary brand names to fashion consumers in China?
6. What is the current stance of Gucci as branded fashion product in China?
Significance of the Problem
The research problem stated above warrants an investigation considering the lack of studies regarding the benefits one gets from purchasing well-known brands. This study is original in that it examines the status of Gucci products as well-known brand in China, with special focus on fashion market, and how consumers in the country perceive brand names.
While a number of studies have touched upon the fashion industry in China, this study provides sector analyses and drafts strategy to develop the fashion industry in the country, with special reference to Gucci company in China– it is to the knowledge of the researcher that no study has critically examined the relationship between the consumers and the brands in this industry. This is considering its important role in the overall economy of China.
Overview of the Methodology
This study uses qualitative and quantitative approaches in discussing and analysing research findings. Qualitative information was gathered from existing literature regarding brand management in relation to customers’ satisfaction, perception, and loyalty to Gucci Products. This is done through desk research. Quantitative data were gathered from the questionnaire survey with a sample of randomly chosen consumers from the different Chinese Consumers. The respondents were 60 males and 90 females who were willing to reveal their age (which is between 16 and 25 as the main criteria), answer, and return the questionnaire. In this survey, the respondents were asked how they perceive the brands available in the fashion market, how important to them are brand names, what types of brands do they prefer, and what are the factors affecting their choice of brand name. A semi-structured interview will be conducted with a sample of three Chinese consumers. Open-ended questions were asked to the participants regarding their perceptions on strong brands in the fashion industry.
Previous Studies on Strong Brand
Previous studies confirm the benefits of strong brands (Meyers-Levy, Louie, and Curren, 1994; Chan-Olmsted and Kim, 2001). While the tangible benefits of a strong brand are obvious, the problem most firms face is how to reveal and build a strong brand, one that is integrated throughout the organisation. LePla and Parker (1999) answer this question by presenting the integrated brand model. The term “integrated” means that the brand is built on the firm’s actual strengths and customers’ values. According to the authors, an integrated brand, rather than one that is communications-driven only, will provide long-lasting benefits in the areas of market leadership, company focus, and profitability. The integrated brand model is composed of three levels of activity: organisation drivers, brand drivers and brand conveyors. Taking the first of these levels of activity, by `organisation drivers' the authors refer to the organisation’s mission, values and story. These are said to provide the base for any brand a company creates, from the corporate brand to individual product brands. The second organisation driver is a company's values. The importance of company values is said to be that they can help drive company actions, ensure continuity of corporate culture, and help employees live the brand. The third and final organisation driver is the company's story which, according to LePla and Parker (1999), is the least understood and also the most powerful of organisation drivers in its ability to deepen the brand-customer relationship.
Chatterjee et al (2002) assert that the strategy that underpins success in marketing is built on customer relationships which can also be seen in almost all business sectors. In relation to customer relationship management, customer value should also be considered in order to attain goals because understanding their differences, attitudes, behaviours, needs and wants. There is ample literature on international and marketing strategies but this analysis focused on branding and brand management.
While some business firms target wealthy consumers, most of them aim to cater to the different market segments and social status in order to boost profitability. Today's marketers, who face great pressure to perform, at least have the tools and flexibility to address the challenge of effective brand management (Brady, Hunter and Santiapillai 2000). Treating brand management as a strategic management process is important in maximising the long-term value of a brand (Davis 1995). Branding highlights promotion or communication; innovation highlights product; channel-management highlights distribution and low-cost highlights price. Many mass marketing are expected to have a primarily branding strategy. However various mass marketing firms have a dual strategy, combining branding and innovation (Cravens, Merrilees, and Walker, 2000). Companies that put their names on products contravening their brand image usually pay a price. Active brand management requires more than the consistent development of sound products, painstaking consumer research, and expensive advertising and promotion.
Expected Outcome
In general, this study aims to provide better understanding on the relationship between consumers and brands in the fashion industry in China. Specifically, this research aims to shed light on the benefits of well-known brand names in the industry as perceived by fashion consumers. This research works on the following objectives:
1) To carry out a comprehensive strategic assessment (the following assessment tools are used: SWOT analysis and Porter’s Five Forces Model) of the fashion industry in China;
2) To examine, using secondary data, the characteristics of the consumers in the fashion industry;
3) To measure how consumers perceive brand names that are available in the fashion market;
4) To know what types of brands consumers prefer;
5) To identify factors affecting the consumers’ choice of brand name; and
6) To examine how beneficial are well-known brand names as compared to secondary brand names to consumers in China.
It is expected that the current research will show that:
1) Prestige and popularity of the brand name drive consumers to purchase a certain brand;
2) Chinese consumers are conscious in terms of what brand of fashion to purchase;
3) and Well-known brand names usually provide more advantages, as compared to secondary brand names, to consumers in China..
Chapter 2
Review of Related Literature
Many businesses exist and flourish because they are successful in satisfying a need in the market. These needs are determined by the consumers who are considered an important component of any business endeavour. The primary reason for a business existence is to continue identifying consumer needs and then come up with tangible responses to address these needs. This requirement makes business companies spend a considerable amount of effort and intellect in analysing the behaviour of the consumers in order to effectively formulate appropriate marketing strategies that would assist the firm in effective production and delivery. Smart, D. T., & Martin, C. L. (1992) argued that the study of consumers makes companies and organisations recognise and internalise consumer issues that would help strengthen their marketing strategies. In this paper several issues are discussed pertaining to luxurious fashion products in China. These issues are: the psychology of how consumers reflect, feel, rationalise, and choose between different alternatives of products and services; the psychology of how social groups affect the consumer’s decision; behaviour of consumers in formulating marketing decisions; how limitations in consumer knowledge or information processing abilities influence decisions and marketing outcome; how consumer enthusiasm and decision strategies vary between products considering their level of importance or interest to the consumer; and how marketing strategies can effectively adapt to successfully connect with the consumer. In this regard, this chapter will discuss issues pertaining to branding in Chinese fashion industry particularly to luxurious brands like Gucci.
Branding
Much has been said about the importance of brand management in an increasingly fragmented media marketplace and the tremendous impact of the Internet on traditional media such as those in business to business firms (Laforet, S., & Saunders, J., 2005; Laforet, S., & Saunders, J., 1999; and Farello, M., Mitchell, R., & Alldredge, K., 1996). In essence, the exponential growth of the Internet and the continuous development of its broadband distribution systems have changed the rules of competition in many media industries that were already being transformed by the arrival of more competitors, such as multi-channel video programmers, and the introduction of new technologies, such as digital television.
Many scholars (Close, A. G., Finney, R. Z., Lacey, R. Z., & Sneath, J. Z. 2006; Chan-Olmsted, S. M., 2002; and Asher, J., 1997) have presented extensive lists of the strategic value of the Internet. Most concluded that the Internet allows a business to access global markets, provides mass customisation, reduces marketing costs, builds strong business relationships with a greater degree of channel coordination, develops business intelligence, offers heightened communication with various publics to improve corporate image, and improves customer communication and service. In essence, the value of the Internet seems to rest largely on its capabilities to execute marketing and communication functions better than more traditional media and marketing systems.
Traditionally, business-to-business organisations have been highly product-focused, with less focus on brand identity. In such organisations, marketing activity was often spread across a wide, disparate line of products and services, with little forethought given to creating a unifying or enduring identity in the minds of customers. As was mentioned earlier, in recent years a number of leading business-to-business marketers have begun to reconsider the importance of branding in commercial and industrial markets (Asher, J. 1997). At the same time, they have recognised the critical link that must be maintained between the firm s branding strategy and its overall business strategies. Frequently this has led to redefining the relationship among corporate, divisional, and product-level brands (brand architecture). Such changes have important implications for the roles and responsibilities of those who are tasked with brand identity management (Asher, J. 1997).
Business-to-business marketers increasingly are joining with other organisations to leverage the value of their brands (Asher, J. 1997). This might be done through joint marketing alliances, market development partnerships, or cobranding relationships. Best-practice organisations have pursued cobranding relationships of all types more aggressively and successfully than have the sponsor firms.
In the 2002 study A Question about Brands, one of the most important characteristics that differentiated best-practice organisations from sponsors was the extent to which the partners had articulated a clear, concise, and compelling statement of the brand s essential value proposition or promise.
A key challenge facing branding organisations is how to project a consistent, coherent, and compelling brand identity using an expanding list of offline and online communication tools. Such firms are faced with coordinating brand messages across different communication functions and venues (advertising, public relations, trade exhibits, sales literature, online efforts, etc.) and must ensure that messages from different levels and divisions portray the brand appropriately and consistently (Asher, J. 1997). Increasingly, smart business-to-business marketers are not stopping at communicating the brand s values and attributes only to customers and prospects (Asher, J., 1997). Rather, they recognise the importance of internal brand communication.
Fashion Essentials
In the nineteenth century, the era of universal expositions and colonial exchange brought object categories such as silks from China, shawls from India, kimonos from Japan into the West and created businesses of copying and adaptation. In addition to the great textiles, ideas of Eastern dress have come to be a part of Western dress, including saris and dhotis from India, kimonos from Japan, caftans and djellabahs from North Africa, and cheongsams from China (Koda, 2004). The East offers a larger concept in alternative to the Western propensity for tailoring. In giving primacy to the textile, Eastern dress emphasizes the flat terrain of cloth, the looping and wrapping of the garment and the integrity of the untailored textile. These values, antithetical to postmedieval Western dress, have offered a paradigm of dressing and dressmaking to the West that has been sporadically influential as of the present time. Orientalism is not a picture of the East of the Easts. It represents longing, option, and faraway perfection. It is like Utopia, a picture everywhere and nowhere, save in the imagination (Koda, 2004).
There is continuous movement of uses and meanings of clothing mirrored by a series of temporal and spatial movements of the garment itself (Fashion Theory, 2003):
v a meta-spatial movement from designer’s paper to the actual fabric choice, cut, and garment creation
v several spatial movements: from the retailing place to the user’s wardrobe or body; from the geographical area of production to the places of wearing
v a temporal movement: from a ‘fashionable cut’ to ‘out of fashion’ – a garment passing through time loses its fashionability. This movement can be only symbolic: a piece of garment can be intentionally created with a retro touch
An important tension at play in most of these movements is the tension between being modern and being out of modernity. Modernity is both an analytic concept and a term daily used by people in different locations. The two are not completely separated as the fashion design is at the core of the creation of the image of modern individual and that there are zones of fashion in which the tension between modern and non-modern individual resurges, pointing to a stereotypical, aesthetic and racialized image of modern individual; it also designates the exotic non-modern, the mode in which they dialectically constitute one another, and it may denaturalize the link between geographic location and ‘culture’ (Said, 1982).
Nevertheless, images of veiled women appear in a series of advertisings, creating the tension necessary in any publicity campaign. The juxtaposition of symbols of modern and non-modern, and their display upon the same body generate the shocking effect. For example, a Reebok advertising appeared in spring 2001 shows a woman completely veiled, wearing Reebok sport shoes. Fashion is a modern category, and when the two of them come together, the question of blurring borders between modern and non-modern comes to mind (Moors 2000). Whereas in the analysis of postcards in Palestina, Moors argues that this tension is constituted between a traditional clothing piece and a modern body, which is marked by make-up or social origin of the models, my paper concentrates in the tension embodied by and in the clothing piece itself. . The veil is said to symbolize and even to prove the lack of liberty of Muslim women. Although liberal, multicultural societies accept and sometimes praise the display of cultural particularities, in the Western world the Muslim women’s veil is usually taken as symbol of their subjection to oppressive customs (Veer 1995 p. 3). Moreover, the conviction that the inner qualities are expressed by outside characteristics has to do with a very specific understanding of the idea of self. (Finkelstein 1991) shows how the emergence of this conception and the idea of bettering oneself through fashion are intimately linked (Said, 1982).
Although as argued before, fashion caries in it the entire philosophy of the modern subject, identity endowed self that expresses its inner qualities through consumption (Said, 1997) and that signifies at the surface of the body. There is a message of progress and linear time, of bettering of the self that fashion seems to transmit, and if somebody dresses ‘traditional’ than s/he opposes every term of this equation. The existence of fashion guarantees in the collective imaginary a specific mode of conceiving and caring for the self, and that is a ‘modern’ conception. (Ferguson 1999) offers an elegant critique of this view that affects and effects theoretical positions in various social analysis. Said (1978) defined Orientalism as a set of specific social practices located in the West, oriented towards the production of knowledge about, and the circumscription of, a geographical space, and that construed a hegemonic discourse of domination of the Western space over the East and Said himself returned upon his writing (Said 1993) adding nuances and affirming that ‘one are the days of simple binaries’. Is fashion design an Orientalist practice? In the realm of fashion design it is believed think that working with simple binary readings is somehow counterproductive. Fashion design is an activity that takes places in the larger social complex, and reflects a body of knowledge of the human body.
The main referent of fashion is the individual person’s characteristics. Fashion sketches constitute signs that precede the referent and they shape it apriori, in its absence (EI Guindi, 1999). In fact the shaping takes place, like in the case of imagining architectural spaces, in the presence of already existing assumptions about the human body. The preconceptions of fashion design impose to the body a set of habits directly linked with the shape of the clothes. As argued in the beginning, the modern individual has a symbiotic relation with fashion. Through fashion, an aesthetic model of modernity is put into place. Muslim women’s clothing constitutes an ideal background against which this image is projected, as in the advertising for lipstick discussed before. But, not only that this clothing itself may and does constitute fashionable dress as the Tehran fashion show proves it, but also Western fashionable accessories can be successfully integrated in Muslim garments: in Tehran a powerful mark of distinction is the designer signature on it (EI Guindi, 1999).
Social Class Issues
According to Bourdieu (1984), lifestyle is an expression of class position, identifiable by the volume and composition of types of capital - economic, cultural, social and symbolic - which were typically available to given households. Bourdieu argued that styles of consumption are means not just of deploying economic resources but also especially of exhibiting 'cultural capital'. The display of goods is part of a system of reputation, involving judgements about good taste, which results in members of different social classes systematically picking some items in preference to others.
In Bordieu’s view there is always struggle over the legitimacy of the definition of what was in good taste, but nevertheless there was widespread agreement at any point in time about its existence, its hierarchical character and its distribution. Social distinction was marked by tastes which were formed as part of class habitus and were mutually recognisable between individuals and groups in society. Symbols of distinction were of many kinds - for instance including body posture and accent - but possessions and pursuits were important parts of the common systemic code.
As the middle class prospered, more and more people become interested in fashionable clothing because they already had the income and the leisure time. It was the production of nineteenth-century popular magazines that introduced American consumers to the most up-to-date fashions. In addition to black-and-white or colour fashion plates, these magazines included needlework, knitting, and crocheting instructions as well as house plans, fiction, music, editorials, society news, and advice. Several fashion magazines such as McCall, Ladies' Home Journal, Harper's Bazaar, and Vogue, which started in the nineteenth century are still providing American consumers with fashion ideas.
The rise of the middle class in the nineteenth century paved the way for fashion industry trends that have contributed to the colourful history of fashion in America. These were the recognition of individual European fashion designers; the rise of department and specialty retail stores; and the prevalence of "sweatshop" conditions, which led to the establishment of apparel industry unions (Inge 1989). Although the ready-to-wear industry was growing, products were considered to be for the lower-class population who could not afford a seamstress or custom-made clothes.
The nineteenth century brought changes in the way fashion goods reached final consumers in the United States. Retailing by means of the barter system, trading posts, general stores, and itinerant peddlers dominated the colonial period. Increasing population and growth of cities led entrepreneurs to establish department and specialty stores such as Lord and Taylor, Bloomingdale's, and Macy's. The opportunity to sell merchandise by mail was met when needs of the rural population, coupled with the development of the postal system of rural free delivery arise.
In the early twentieth century, two highlights of the fashion industry: public acceptance of ready-to-wear clothing; and the recognition of individual American fashion designers. Textile and apparel manufacturing technology were already improved, and so as the quality of ready-to-wear garments that later lead to overcame its lower class shame. Ready-to-wear clothes were recognized by consumers, especially women working outside the home because of its vast convenience. Increased demand and acceptance for the clothes followed. Until the 1950s, the ready-to-wear industry was comprised mainly of small, privately owned, single-product businesses (Inge 1989).
Unfortunately, with the rise of the ready-to-wear industry, the gap between the middle class and lower class widened. Workers who labour hard to produce these garments but they themselves could not afford to acquire some of the fruits of their labour. As conditions worsened, unrest among workers grew. Some federal and state laws in the US were passed to improve industry standards, and in 1900 the International Ladies' Garment Workers Union was founded. Representing the men's clothing workers, the Amalgamated Clothing Workers of America was founded in 1914. Both unions worked for improved labour management relations; cooperation in research, education, and industry development; and social welfare services for members.” (Ingi 1989).
The Fashion Business in China
Fashion is one of the booming industries in China nowadays. From the traditional fashion of the Chinese people, luxurious brands of fashion products see the fresh market in this region. Chinese fashion particularly fashion with luxurious brands are becoming popular. Most companies like Gucci are now starting to market their brand in Chinese market. The ancient mood of fashion of Chinese shows a potential of being luxurious. Gucci sees the potential of Chinese people to luxurious fashion brands, however the company or even the industry need to form strategy to become successful in the market. As Bennett (1998) mentions when a company enters a foreign market, it needs to consider carefully all the available options, the costs, the distance, firm experience and size, possible loss of control and the risks involved. Furthermore, the market entry strategies chosen have to relate to the company’s overall strategies. The methods for entering oversea markets are:
v Exporting- is the marketing and direct sale of domestically produced goods in another country.
v Join venture- is a collaborative arrangement between unrelated parties which exchange or combine various resources while remaining separate and independent legal entities.
v Licensing/ Franchsing- consents a company in the target market to use the property of the licensor such like trademarks and patents.
v Direct investment- is the direct ownership of facilities in the target market.
In Gucci’s past expansion, they prefer owed- stores, franchising and join venture. According to Foster (2005), Since December 2004, three years after China joined the WTO, fashion retailers can pretty much do what and how they want. However, as above point out, China’s political environment is still a big issue to foreign retailers. Gucci might need to face strict restrictions on the location and number of outlets they could open. Therefore, having a local partner will be handy for Gucci to deal with the bureaucracy in China. Both franchising and joint venture are co-operative entry mode. However, considering macro and micro environment, joint venture will be the most beneficial entry mode for Gucci.
Advantages of joint venture for Gucci:
v Higher return than with franchising
v Possibly better relationship with China’s government because of having local partners
v Share resources such as distribution system and suppliers.
v Reduce personnel expense
Customer Relationship Management (CRM) in Fashion Businesses
At present, fashion industries are becoming more and more customer-oriented as customer demands and trends undergo multiple changes. A good business relationship between the business and its customers is now very much essential. In order to cope with this business challenge, industries are employing various mechanisms and strategies, primarily through the use of information technology. This integrated process is also termed as customer relationship management (CRM).
According to Boosting Consumer Satisfaction. (2002, August), CRM is concentrated on the use of information technology so as to aid the organisation to stay abreast of its customers’ needs and concerns. Customer Relationship Management also helps the organisation to respond in time and appropriately to their customers’ concerns. Basically, in the present era, CRM in the fashion industry needs to be integrated into a business’ operation by means of customised software or computer programs. Though several views have been used to define CRM, the rationale for its use remains the same, and that is the application of strategies to improve or enhance customer relations.
CRM requires that an organisation view customer relationships as means to learn about customers' needs and wants and how best to create, satisfy and sustain them while concomitantly helping the organisation to meet its objectives. In this manner, the financial institution is using all its resources to find other organisation that will help enhance the services that they are giving to their customer to be able to build an intimate customer relationship (Anderson, J. G., & Anderson, J. L., 1991).
On the other hand, customer relationship management has emerged as a strategy used to learn more about customers’ needs and behaviours in order to develop stronger relationships with them. It works on the fundamental tenet that the customers are at the heart business success. In general, the firm needs to value its customers based on the total value of their relationship with the company, the potential value of their relationship, the profitability of their relationship, the insights they can provide the company, and the influence that they wield over other customers. Through these, the firm can have an effective customer relationship management without using any technological database or software (Walden, M. L., 1990).
In brief, Customer relationship management not only in fashion industry is a business strategy that attempts to ensure every customer interaction that is appropriate and consistent regardless of the communication channel and that CRM is a core business strategy for managing and optimising customer interactions across the public or private’s institutions’ traditional and electronic interfaces. CRM can be used to gain clearer insight and more intimate understanding of customers' behaviours and in helping to build an effective competitive advantage and its relationship to the e-business process (Lee, J., & Soberon-Ferrer, H., 1997) and that committed customers can be viewed as company assets who are likely to be a source of favourable referrals and are more resistant to competitors' offers (Lee, J., & Soberon-Ferrer, H., 1997).
Apparently, the study of consumers helps companies improve their marketing strategies. Companies spend millions trying to understand and influence customers--to hold on to them and to encourage them to spend more. Every marketing organisation wants to develop loyal customers: customers that buy consistently over time, generally at regular prices, commonly ignoring the pleas and platitudes of competitors. Because of the implications for profitability and growth, customer retention is potentially one of the most powerful weapons that companies can employ in their fight to gain a strategic advantage and survive in today's ever increasing competitive environment (Kirby, R., & Capps, O. 1994).
Everyone knows customer loyalty is good. However, even satisfied customers often drift away from the company or the brand. The same holds true for customers who have exhibited brand or company loyalty through their purchases over time. Sometimes they simply stop buying. No apparent change in life-style, economic level, personal situation, or other factors seem to explain the shift in purchasing behaviour.
According to Kerton, R. R., & Bodell, R. W. (1995), it is important to understand issues such as the psychology of how consumers think, feel, reason, and select between different alternatives; the psychology of how the consumer is influenced by his or her environment; the behaviour of consumers while shopping or making other marketing decisions; limitations in consumer knowledge or information processing abilities influence decisions and marketing outcome; how consumer motivation and decision strategies differ between products that differ in their level of importance or interest that they entail for the consumer; and how marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer.
Johnson, E. B. (1996) argue that the heart of marketing management is to understand consumer psychology. Johnson, E. B. (1996) also suggests that for marketers to successfully communicate with their customers they need to study the behaviour of consumers. Understanding consumers has become the focus of attention in the business world due to the fact that the prosperity of companies is heavily dependent on satisfying customers and keeping them loyal (Johnson, E. B., 1996).
With regards to fashion consumers in China, organisations that capitalise on customers' active participation in organisational activities can gain competitive advantage through greater sales volume, enhanced operating efficiencies, positive word-of-mouth publicity, reduced marketing expenses, and enhanced customer loyalty (Dana, L. P. 1998). Additionally, customers who actively participate in organisational activities can directly increase their personal satisfaction and perceptions of service quality (Dana, L. P., 1998).
The commitment of companies to further improve on their accountability, transparency, and integrity should not be considered merely as an effort to serve customer relations purposes. Instead, this commitment should be regarded as an effort to maintain the long-term sustainability of these companies. As the customers demand for higher standards, any shortcomings on the part of the companies to deliver would jeopardise the life of their respective company. Hence, it is really important for companies to maintain and protect these intangible assets (Laforet, S., & Saunders, J., 1994).
Consumer Loyalty
A better appreciation of the underlying forces that influence the loyalty of customers--particularly their attitudes and changing needs—helps the fashion companies develop targeted efforts to correct any downward migration in their spending habits long before it leads them to defect. Such an appreciation also helps the companies improve their current efforts to encourage other customers to spend more (Kurtzweil, P. 1994a).
Differentiating and measuring degrees of loyalty is an evolving craft. In the paper of Kurtzweil, P. (1994b), there are several companies tried to measure and manage the customers' satisfaction, on the theory that increasing it would help them prosper. They also began to measure their customers' rates of defection and to investigate its root causes (Kurtzweil, P., 1994a). By measuring the value of the customers themselves, some companies also identified high-value ones and became better at preventing them from defecting. These ideas are still important, but they are not enough. Managing migration--from the satisfied customers who spend more to the downward migrators who spend less--is a crucial next step (Kurtzweil, P. 1994b).
Apparently, service delivery is an interactive and dynamic process, that from the consumer's point of view is much more than a passive exchange of money for a particular service. Characteristics of services often require customers to be actively involved in helping to create the service value -- either by serving themselves or by cooperating and often working collaboratively with service personnel (Lewinsohn-Zamir, D., 1998). In high-contact systems customers can influence the time of demand, the exact nature of the service, and the quality of service (Macdonald, M., & Douthitt, R. A., 1992). If consumers somehow become better customers -- that is, more knowledgeable, participative, or productive -- the quality of the service experience will likely be enhanced for the customer and the organisation (Miller, H. I., & Conko, G., 2006).
Organisations that capitalise on customers' active participation in organisational activities can gain competitive advantage through greater sales volume, enhanced operating efficiencies, positive word-of-mouth publicity, reduced marketing expenses, and enhanced customer loyalty (Polegato, R., & Zaichkowsky, J. L., 1994). Customers who actively participate in organisational activities can directly increase their personal satisfaction and perceptions of service quality (Polegato, R., & Zaichkowsky, J. L., 1994).
Brand and Consumer Loyalty
More businesses not only in the fashion industry are considering the importance of building and managing brand names because of the intense competition within the globalised economy, emerging trends in marketing, brand extension, acquisitions, and many other activities that cause confusions in the business (Laforet & Saunders, 1999). Consequently according to Chan-Olmsted, S. M., & Kim, Y. (2001), researchers in marketing, public relations, and corporate communications are concerned with corporate identity management and the benefits branding bring to the business. Moreover, building brand names means announcing the identity of a company (Asher, 1997). The focus in building brand names therefore is to develop an intuitive and memorable image of the firm, services or products by presenting what is unique and special about the company.
When it comes to the buying preferences of today's consumers, a major new business study reveals that what keeps Americans buying a particular brand has less to do with pricing and merchandising than with how well the company treats its customers (Mazis, M. B., & Raymond, M. A., 1997). The study of Mazis, M. B., & Raymond, M. A. (1997) finds a direct correlation between buying intent and a customer's experience with a company's consumer affairs department. Specifically, 90 percent of those consumers who were delighted with their experience say they will continue to buy the product/service while only 37 percent of the customers who were dissatisfied with their experience say they will remain brand loyal.
Underscoring the importance of these "relationship" factors, the study charts the influence of these attributes on brand loyalty and finds a direct association. Specifically, 88 Percent of respondents who gave "ability to demonstrate concern and interest" the highest ranking said they would be very likely to repurchase a company's products, while only 3 percent would be very unlikely to repurchase. The reaction to representatives who "show enthusiasm" was the same: 88 percent would be very likely and only 3 percent very unlikely to repurchase a company's products.
In fact, there are studies found out that when customers are satisfied with the way a company handles their questions or complaints, they sometimes become more loyal than customers who never experience a problem. Another way that customer service impacts sales is through the "word of mouth" factor, whereby consumers tell their family and friends about their positive and negative experiences with a company. In this study, 58 percent of all respondents told others about their experience with a consumer affairs department, with most telling three or more people.
Consumer Satisfaction
In today’s business world, the value and importance of customers is not something that should be set aside by companies. Marketing plans and strategies would be incomplete without paying much consideration to the customers. Customers will and should always be a part of the agenda in any marketing plan of any company. Because of the implications for profitability and growth, customer retention is potentially one of the most powerful weapons that companies can employ in their fight to gain a strategic advantage and survive in today's ever increasing competitive environment (Pettit, R. 2005).
Nowadays, companies’ concern does not only evolve around managing finances and operations. Companies have realised the importance of managing reputational risk. Business image and reputation are considered as intangible assets which are as equally important as tangible assets. These assets are founded on the companies’ relations with their customers. Integrity, transparency, and accountability are important elements in this foundation. Hence, it is important for companies to be able to secure this relationship by being able to keep the degree of these three elements high (Wang, G., Fletcher, S. M., & Carley, D. H., 1995).
The customer-company relationship is based on a continuum wherein both “always-a-share” and “lost-for-good” relationships occupy the two extremes of the continuum. In an “always-a-share” relationship, transactions are arms-length and discreet. Customers are valuable and at the same time, replaceable. On the other hand, in a “lost-for-good” relationship, the probability that the customer will purchase again from the same company is extremely low when the customer decides to terminate the use of a product due to product defects or problems (Ziol-Guest, K. M., Deleire, T., & Kalil, A., 2006).
The disconfirmation paradigm has been the dominant model used in explaining the customer’s satisfaction or dissatisfaction. There are actually 3 possible reactions that may come from the customer. Two of them are positive reactions while the other one is a negative one. A customer shows a positive reaction either when the product is able to perform as what he/she has expected (zero positive index) or the product is able to exceed its expected performance (positive disconfirmation index). On the other hand, a negative reaction (negative disconfirmation index) is expected when the product performs below the expectation of the customer (Ziol-Guest, K. M., Deleire, T., & Kalil, A., 2006).
Customer satisfaction refers to the consumer’s positive subjective evaluation of the outcomes and experiences associated with using or consuming the product or service. Satisfaction occurs when the product has been able to meet or exceed the conceived expectations that the customer has (Teague, J. L., & Anderson, D. W., 1995). Furthermore, customer satisfaction may also be considered as the measure of the high degree of quality of the product (Ziol-Guest, K. M., Deleire, T., & Kalil, A., 2006).
Consumer satisfaction may be considered as the measure of quality of a particular product (Teague, J. L., & Anderson, D. W., 1995). However, it should not be limited to the traditional concept of quality. In its traditional concept, manufacturers view quality as inherent in the product or service. Once a product or service has been delivered or sold, its quality is believed to have been established (Polegato, R., & Zaichkowsky, J. L., 1999). However, Polegato, R., & Zaichkowsky, J. L. (1999) argued that a product’s quality still has some other dimensions that are under the manufacturer’s control. These dimensions may still be modified and enhanced even after delivery.
Basically, in the strategic business unit (SBU) organisational structure, the levels of quality, delivery performance, cost competitiveness, customer service, and product advancements being achieved are more easily monitored and strengthened. As a result of this, the competitiveness and profitability of the SBUs are maximised. Just as the SBU structure helps support improving performance in these criteria for the various product and service lines within the corporation, the same concept can be applied to optimise the sources performing functions within each SBU. By viewing the sources for the key functions performed for the SBU as Strategic Business Sources, the performance of each can be easily monitored in the five criteria that impact profitability. Overall corporate performance and competitiveness will be improved as a result, since quality levels, delivery performance, customer service, and product advancements, as well as cost competitiveness, can be enhanced for each of the SBU’s sources. The problem of outsourcing not significantly reducing costs to the degree hoped for will be resolved because the focus is being placed on the performance of each source in all important criteria, beyond just the direct costs for their goods and services (Pol, L. G., & Pak, S., 1995).
The method used to develop a Strategic Business Source is the same used to develop the SBU. Specifically, performance levels for quality, delivery, cost, customer service, and product advancements are determined for the sources available to provide the goods and services needed by the SBU, whether internal departments or external suppliers. The performance levels of the various sources being considered to supply these goods and services are then compared. The best-performing sources become readily apparent, and the optimal source is selected by the company as its Strategic Business Source. On the other hand, if external suppliers can exceed the company’s internal performance levels in these five criteria for any SBU function, outsourcing may be the right choice. However, outsourcing is not the only option. As an alternative, the company may challenge an internal production department to improve performance, using the levels being achieved by external sources as benchmarks for which to strive. This helps improve the morale of the downsized corporate work force by providing employees with the opportunity to meet the challenge of improving performance beyond that of the external source (Pol, L. G., & Pak, S., 1995).
Quality must be incorporated into all activities with a clear customer focus. Customers usually compare perceptions of what they actually received from the organisation with their expectations. Customer delight arises when perceptions exceed expectations. External customer satisfaction shows the extent to which the organisation uses methods for determining and monitoring external customer's perceived quality and value; it shows the extent to which the organisation uses customer feedback to improve product/service quality; it shows that the company handles complaints, resolves them, and uses complaint information for quality improvement and prevention of recurrence of problems; it shows that the company measures performance against customer targets; and it also shows that the company compares its customer satisfaction results with those of main competitors (Pettit, R., 2005).
Getting the internal relationships working is essential if external customers are to be satisfied. Every single person in the organisation has an effect on the external customers. Internal cooperation needs to be stimulated to enhance organisational performance. The most effective leadership style tends to give high importance to teams and employee participation. Internal customer satisfaction shows that extent to which the organisation uses methods for improving coordination of interdependent tasks; It shows that the organisation makes people aware of the fact that they all have customers and suppliers; It shows that the organisation has a strong employee interaction with customers and suppliers; lastly it shows that the organisation focuses on external customers when tasks are being performed (Lebar, E., Buehler, P., Keller, K. L., Sawicka, M., Aksehirli, Z., & Richey, K., 2005). Customer satisfaction is one of the goals of a company. Companies want to make sure that they gave outmost satisfaction to their clients. They are willing to make use of anything that will help in providing this cause.
Synthesis
Gucci and other companies that sell luxury fashion products will be able to keep up with the demands of a growing market for the industry by making the industry quality-based instead of price-based. Companies engaged in luxury fashion products set their respective prices based on its quality and not on price alone. The key component of brand management is the implementation of an integrated approach where companies are able to say what they can offer relative to their competition, do what they offer and promise to customers and confirm it through consistent practice. The value of saying, doing and confirming should be internalized in the company culture (Cai & Hobson, 2004).
According to Nguyen and LeBlanc (2001), building brand image to achieve competitive advantage in any industry requires extensive management approach. In giving extensive management approach, fashion companies focus on providing a pleasant experience for customers to create the image that the fashion companies wants to portray to the market. However, the image is only established once the fashion companies is able to consistently do what it says to the satisfaction of the different needs of customers. Management will then direct all efforts of the company towards the creation of a company culture that provides a satisfactory service that meets the experience requirements of customers and eventually to achieve customer loyalty. It is after the achievement of a good brand image that the hotel can justify its price. The brand image justifies price and not the other way around.
In their article, Kim, Kim, and An (2003) stressed that brand image is one of the factors that hotels should consider if they plan to achieve consumer-based brand equity. Brand image affects the development of a customer base of the hotel and the consequent improvement in financial performance. The development of a brand image should be based on the customer’s viewpoint. This means that fashion companies should initially have updated information on the current trends in market demand before the company can formulate a plan to develop its brand image through customer satisfaction. The practice of providing total customer satisfaction was developed within the industry from knowing that customers require a hotel service that integrates accessibility and delivery of material needs with service.
Brand image is depending upon the feelings that consumers have about the organization in relation to the evaluation of other competing brands. Marketing activities, such as advertising and promotions, falls under the general image of the organization. Once the organization has built its brand image, it should maintain this image because a negative change in the way that the brand name is regarded reflects on a decrease in customers and consequently of revenue. It takes twice as hard to rebuild a good brand image rather than initially building it.
There are different management areas that the business should focus on in developing a good brand image. The people tasked to build brand image should think of two things in planning a strategy. The first is to sell the service of the organization as a short-term goal and second is to build image in the long run. During the process of promoting the brand name, the company should apply integrated marketing communications to ensure the efficient introduction of the quality of service that the organization stands for.
Image is related to the strengths and weaknesses of the organization. The fashion companies should integrate all available resources and recognize opportunities such as combining a strong image with an external opportunity to create a strategic advantage. A comprehensive analysis of the image of the organization and its strengths and weaknesses should be integrated to solidify the connection with customers. The brand image should consider the different consumer behavior to be able to introduce a consistent message with the target market.
To be able to effectively communicate the brand image to the public, it is important that within the organization the message and the brand image are clearly defined. The image should identify the values or principles of the organization and the extent that the organization has established its position. The purpose of communicating brand image is to instill a consistent and stable impression among customers. The general impressions that hotels should develop are quality of products in terms of elegance and culture. The key is to focus on consumers’ standpoints rather than the managers’ standpoint about the organization.
Brand image plays an important role in the perspective of the consumer. The brand image gives an assurance to the customer that the decision to obtain the services of the chosen organization in unfamiliar settings is worth it. Brand image also assures the customer of quality when the latter has no previous experience of the organization. The image perceived of the organization also lessens the time spent looking for accommodations when the image meets the experience needs of the customer. The brand image also determines the nature and extent of connection that the customer develops with the organization based on the perceived openness of the organization.
Brand image also plays an important role from the point of view of the organization. A good brand image ushers the acceptability of change and developments within the organization such as the introduction of new fashion products and the putting up of new branches in different locations. The brand image determines the ability of the organization to determine the price of its products. A consistent brand image and consistently meeting the needs of customers results to the return of customers and positive endorsements through word-of-mouth.
Chapter 3
Research Methodology
This chapter describes the research methodology used in collecting data in understanding the relationship between consumers and brands in the fashion industry in China. This study will also evaluate the current status of Gucci Products as luxury brand in China. The sections below outline and review the research philosophy, research design, research approach, and data collections employed in this research. The study is basically constructivism in nature philosophy, with a design adopting the principles of a descriptive research. Both the qualitative and quantitative approaches to research were also employed. Quantitative data were gathered from the survey involving consumers in the Chinese fashion industry. Qualitative data were gathered from in-depth interviews involving select consumers from this group. Desk research was also conducted to supply further information about the topic. Thus, triangulation was used in analysing data.
Research Philosophy
There are numerous reasons why an understanding of the research philosophy is important: (1) this can help the researcher to refine and specify the research methods to be used in a study, that is, to clarify the overall research strategy to be used; (2) knowledge of research philosophy will enable and assist the researcher to evaluate different methodologies and methods and avoid inappropriate use and unnecessary work by identifying the limitations of particular approaches at an early stage; and (3) it may help the researcher to be creative and innovative in either selection or adaptation of methods that were previously outside the researcher’s experience (Easterby-Smith et al., 1997). The constructivist epistemology guided the undertakings of the research project. This mode of inquiry is concerned with approaching phenomena as they present themselves to us instead of imposing pre-conceived ideas or hypotheses upon them (Dahlberg and Halling, 2001).
Research Design
The researcher sees that the most appropriate design for the study is the descriptive approach to research. Because science is empirical, all research are somewhat descriptive. The empirical nature of research means that statements are made only after evidence has been seen to substantiate them. When a report of any scientific investigation is presented, a description of the evidence put forward to substantiate the conclusions is always offered. It is in this sense, then, that all scientific research can be considered descriptive. The aim of descriptive research is to verify formulated hypotheses that refer to the present situation in order to elucidate it. Descriptive research is thus a type of research that is primarily concerned with describing the nature or conditions and degree in detail of the present situation. The emphasis is to describe rather than on judge or interpret.
Descriptive research has as its purpose developing a better understanding of a phenomenon in detail. Descriptive studies usually have as their purpose the first two aims of normal science as described by Kuhn (1970, pp. 25-26): “attempts to increase the accuracy and scope with which…facts…are known” or “determination…of those facts that…can be compared directly with the predictions from…theory”. The aim of descriptive research is to clarify the nature of a phenomenon in a specified, static context while viewed from a specific, fixed perspective.
Research Approach
The multi-methods strategy, or the mixture of quantitative and qualitative methods, was adopted for this research. On the whole, the multi-methods approach to gathering and analysing data was helpful in exploring and examining the behaviour of the consumers regarding brands in the Chinese fashion market. In essence, the quantitative approach pursues facts and is employed when researchers desire to acquire statistical truth. Quantitative research assumes that the social environment has objective reality that is relatively constant across time and settings; on the other hand, qualitative research assumes that individuals construct reality in the form of meanings and interpretations, and that these constructions tend to be transitory and situational (Gall, Gall and Borg, 2003).
Research using the quantitative approach describes and explains features of the objective reality by collecting numerical data on observable behaviours of samples and by subjecting these data to statistical analysis. According to Saunders, M., Lewis, P., Thronhill, A., (2003), “neutral, scientific language” (p. 9) must be used in quantitative research in pursuing exact facts. This means that the research itself must be expressed by universally acceptable digits. In this approach, in order to make generalisability, objectivity of the research is emphasised by using neutral scientific language. On the other hand, the qualitative approach aims to discover meanings and interpretations by studying cases intensively in natural settings and by subjecting the resulting data to analytic induction (Gall, Gall, and Borg, 2003).
In Creswell’s (2001) explanation, quantitative studies are based on postpositivist claims for developing knowledge, use experiments and surveys, and collect data on predetermined instruments that yield statistical data. On the other hand, qualitative studies use constructivist perspectives or advocacy/participatory perspectives, or both, and use narratives, phenomenologies, grounded theory studies, or case studies as strategies of inquiry. In this approach, research facts and researcher's value judgments or interpretations are inseparable. Thus the researcher becomes an insider to the research (Carr and Kemmis, 1986).
One of the major benefits of employing quantitative research approach points to generalisability: because the research results are derived by discovering exact facts, the same research methods and the results can be generalised. In short, such approach is applicable to many other situations because of its objectivity and being value-free. As for the qualitative research approach, one of its major benefits is that it highlights the researcher's viewpoint in the research process as well as on its results.
While the two research approaches and their respective mode of inquiries provide enormous benefits to researchers who utilise them, there are several limitations that must be considered. One criticism of the quantitative research approach in marketing is that the researcher’s perspective is not considered in the explanation of the research. Clearly, there are limitations in a numerical presentation in the complexity of human behavior. The quantitative research approach often has difficulties in expressing the problems particularly if the researcher deals with the psychological dimensions in human beings such as behavior, attitude, and decision-making – which are at the core in establishing relationship between consumers and brands. Ultimately, even though the quantitative research approach seeks objective value, the complexity of the society, changes over time, and cultural differences make it impossible for all research to be value neutral. In fact, it is debated whether neutral value research exists at all in a complex modern society.
While the quantitative research approach provides generalisability, it is difficult in the qualitative research approach to generalise to other research settings mainly because it is limited by the researcher’s unique viewpoint. In other words, theoretical model developed for one research project is difficult to generalise to other research projects. Thus, relying on the qualitative approach alone will weaken the generalisations made regarding the relationship between Chinese consumers and brands in the fashion industry. Along this line, Eisner and Peshkin (1990) ask whether it is possible to present research values with the unique situation of the qualitative research approach and how can research knowledge be accumulated if there are no generalisations on the research. Moreover, the qualitative research approach is limited by its nature that the researcher controls the research.
Considering the strengths and weakness of quantitative and qualitative approaches, the current research employed the principles of both quantitative and qualitative research approaches. Central to the discussion of the rationale behind the mixed methods strategy is the fact that knowledge is accumulated from a variety of sources in a variety of ways, thus, methodological diversity (Fiske and Shweder, 1986) is needed. Basically, the mixed methods approach proposes that traditional scientific approaches and their alternatives have their place and should be valued.
In the words of Barker, Pistrang, and Elliott (2002), “no single approach to research is best overall, rather, what is important is that the methods be appropriate for the questions under investigation. No single research method is inherently superior to any other: all methods have their relative advantages and disadvantages” (p. 245). Instead of clashing one approach against another, it is more fruitful to follow a strategy of integrating these methods. The primary benefit is that using such approach results to pluralism which can occur in an integrative way. This closes the gap between the quantitative and the qualitative approaches.
In reviewing the literature, there are only a few criticisms of the mixed method research approach, and these criticisms point mainly to the question of standards. In their commentary on issues in participatory action research, Riger et al. (2004) pose the question “Whose standards are used to evaluate [research] quality, and what are those standards?” (p. 237). The second question seems to be the launching pad of the critics in attacking the mixed methods approach. As a result, the practical issue of how to make judgments about the quality of diverse styles of research is constantly faced by researchers advocating this approach.
Research Strategies
Desk Research
There are a plethora of secondary data sources. If coming to the topic from the beginning, the researcher will start wide, and will go through the task of identifying and analysing information that has already been compiled and published in any form. Secondary data is obtained through desk research (Ruskin-Brown, 1999). One of the major strengths of desk research is its practicality – data and information are collected quickly and it is easier to conduct than field research. On the minus side, however, the secondary data may not be recent or accurate. Moreover, secondary data sometimes can be hard to find, depending on the subject. Finally, the data derived by others may not be relevant to the context under study. Nevertheless, the researcher did not encounter the aforementioned problems in desk research. For this study, the secondary sources of data were gathered from articles in journals, magazines, current events news, and books and other materials relating to consumer behaviour and attitude towards brands. Secondary sources were also collected using the online library Questia and other online data bases such as ProQuest and ScienceDirect. These sources provided the researcher a plethora of materials about the topic.
Survey
In gathering primary data, researchers need to consider the most appropriate and practical tools. For this study, primary data were collected through survey. Survey is a popular and common strategy in management research because surveys allow the collection of a large amount of data from a sizeable population in a highly economical way; data often obtained through questionnaire and are standardised so as to allow for easy comparison. The aim of the survey of this study was to examine how young consumers view brands in the Chinese fashion industry. The survey was conducted to gain find whether well-known brand names are always beneficial.
Fifty consumers and employees were selected through convenient sampling to participate in the survey. The samples are Chinese consumers and employees who are engage in a company that sells luxurious fashion products. It is interesting to know how this segment of consumers perceives the benefits of purchasing well-known brands. The survey questionnaire contained various questions related to the perception of brand names, to the types of brands they prefer, factors affecting the consumers’ choice of brand name; and how beneficial to them are well-known brand names as compared to secondary brand names.
The survey also determined the demographic profile of the respondents. Included in this part were the respondents’ age and gender. This would be needed to establish any patterns on how the consumers think based on these demographic factors. It also inquired on how often the respondents buy fashion products, what types of fashion products they usually purchase, and where do they usually buy such products. The questions in the perception survey were measured using a five-point Likert Scale ranging from Strongly Agree to Strongly Disagree.
Interviews
Three consumers were approached by the researcher to be interviewed regarding their perceptions about brands. One participant was interviewed on a scheduled date she set while the other two were interviewed on the spot. The aim of the interview was to obtain qualitative insights about brand perception. Semi-structured interviews were carried out with the interviewees. Unlike structured interviews which are standardised and do not allow the interviewer to deviate from the questions (Saunders, Lewis, and Thornhill, 2003), this type of interview does not limit response of the interviewees. Open-ended questions were also asked to the interviewees.
Data Analysis
In analyzing the quantitative data, percentage and weighted mean were the most appropriate statistical treatment used in the collated data from the survey. Percentage is used as descriptive statistics, which is relating a part to the whole. This is used in describing some personal characteristics of the respondents of the study. On the other hand, weighted mean was used to approximate the general response of the survey samples, whether they agree to a given statement or not. For the interview, the researcher developed inductive and thematic codes. The researcher first transcribed the recorded responses of the interviewees. Then, the researcher developed a rough coding scheme based on themes that appear in the multiple interviews. Then, interview excerpts were cut and pasted into an analysis document. The coding scheme was gradually refined so that it represented a listing of the umbrella themes that capture the range of experiences discussed in the interviews.
Chapter Conclusion
This research approached data gathering using the multi-method strategy, or the combination of quantitative and qualitative methods. A survey inquiring on whether well-known brand names, compared to secondary brands, are more beneficial for Chinese consumers was carried out. The participants of the survey responded using a five-point Likert scale ranging from Strongly Agree to Strongly Disagree. In-depth interviews involving select consumers were also carried out. The purpose is the same as the purpose of the survey. Quantitative data were gathered from the survey, whereas qualitative data were gathered from the in-depth interviews. In addition to survey and interview, a desk research was carried out. Secondary data were obtained from this method. The target population of this study is the Chinese consumers. Interviews were also conducted to gain insight about consumers’ perceptions about brands in the fashion sector.
Chapter 4 Analysis, Presentation and Interpretation of Data
This chapter presents the data gathered from the questionnaires conducted by the researcher from a company that sells luxurious products. As explained in the methodology, 50 respondents who are working and doing business in this company were selected in order to answer the questionnaires, which were either sent to them through e-mail or were approached personally. This chapter will have several sections in order to facilitate a better analysis of the data that were gathered. The sections will involve the characteristics of the respondents to give the readers an idea about the way that Gucci do in order to developed fashion products. Through the use of their marketing and corporate strategies the company is current known as one of the branded fashion products in the world. The next sections involve the questions that were mentioned in the first chapter as the main problems for the study. This is to ensure that the proper data will be collected and analyzed and be able to derive conclusions concerning the changes that the companies have imposed upon their strategies and culture in order to ensure their success in fashion business venture in China.
The conduct of this study entails a detailed account of the demographic profile of the respondents. It is assumed that the attributes of the respondents influence their behavior and answers on the survey questions. Of particular significance to the achievement of the goals and objectives of the study – which is to be an instrument of analysis of the institution to gauge where it is now and where it is heading, thus what changes are to be made – is to be able to answer the following questions:
Part 1. What is the demographic profile of the respondents in terms of:
1. age,
2. gender
3. civil status
4. educational attainment
The profile of the respondents is looked upon in terms of age, gender civil status, and educational attainment.
Figure 1
Age of the Respondents
Figure 1 shows the age range of the respondents. Fifty eight percent (58%) of the respondents were 26-30 years old, showing that most of them were already considered as young adult. Sixteen percent (16%) of the respondents were between 31-35 years old. Fourteen percent (14%) of the respondents were between 36-40 years old. Respondents’ aged 21-25 is 16% of the total respondents. On the other hand, 6% of the respondents are in the 40 and above status. Lastly, there is zero percent of respondents who are in the ages between 15-20 years old. The apparent diversity of the maturity of the respondents reflects several implications in the study’s findings. To illustrate, almost one hundred percent of the respondents stated that they are currently occupying a managerial position in the company since some of them are supervisor, owner, etc. In relation of the age bracket of the respondents, the researcher could presume that in the said percentage, a considerable number could be among the young adult members of the population.
Figure 2
Gender of the Respondents
Figure 2. The number of the female respondents (51%) is closed to the male (49%) with the total of 26 for female and 24 for male. Based on the figure, the dominated gender among the respondents is female. Based on the collated questionnaires, over a half of the population is composed of female respondents while 49% are males. This shows a virtually equal footing in terms of representation of gender regarding the perception of women in the effectiveness of leadership style in business. The male respondents outnumber the female respondents by approximately 2%; this data provides a glimpse of the aggregate size of women in the workforce particularly of business environment.
Figure 3
Civil Status
Figure 3. The above illustration shows the civil status of the respondents. 47% of the total respondents, which is the dominated response is single. There is only 42% who are married from the ninety-six respondents. As the figure was interpreted, there is a little percentage of respondents who are separated or widow. Likewise, the respondents were asked for their civil status and the report shows 47% of them are single and 42% are married. This is due to the large number of young adult in the sample as compared to those who are adult. Basically, the response of the respondents in this particular variable provides a great impact to the finding s of the study. Based on these responses, we can say that most of single and married respondents are aware about the current status of fashion products in their region.
Figure 4
Educational Attainment of the Respondents
Figure 5. Likewise, the respondents were asked for their educational attainment and the report shows 63 % of them are college graduate. The survey indicates that most of the respondents are college graduate that is engage to the study. The diversity of the population is further asserted when the respondents were asked regarding their professional history. This data illustrate the maturity of the respondents particularly in terms of experience. On the other hand, the apparent youthfulness of the respondents, provided by their age and their lack of professional experience could not be considered as deterrence to their responses considering that the researcher has made sure that the respondents have been connected with the company for at least twelve months. Moreover, there is a noticeable distinction of the respective positions of the younger generations in their respective perceptions towards the establishment of the structured training program.
Part 2. SWOT Analysis of Gucci
Most companies find it impossible to create any kind of sustainable competitive advantage based on product alone. Since competition is an important factor to consider before entering a business, companies should have successful competitive strategies to be able attract, retain and grow customers. However, before the company can plan and execute these strategies, it should be able to pinpoint its sources of competitive advantage which can be differentiated through products, services, channels, people and image (Kotler & Armstrong, 2001). Indeed, making a business successful in a particular setting demands crucial and detailed studies and examination of the factors that will generate the best results that will serve the aims and objectives of the company.
In this light, owners of big business organizations operating in a competitive business environment should be in constant look out with its competitors and the overall status and events in the industry. Taking advantage of the opportunities and intensifying the strengths while minimizing the risks and weaknesses of a business firm greatly helps in predicting the success of the business enterprise. As such it is important to examine the consequent (a) strengths, (b) weaknesses, (c) opportunities, and (d) threats of Gucci in order to accurately illustrate sound business propositions and recommendations pertaining to its aims to expand market share and increase profitability of their fashion business in China.
Strengths. Compared to the industry competitors of Gucci, the company exercises an almost direct access to mainland China’s market-base. Even tough the company is not originated and developed in Hong Kong which is China’s free economic zone economy the company’s experience to blend to other culture and its affiliation and subsequent participation in the activities of WTO, Gucci is highly of advantage compared to foreign entrants in the local market. This gives Gucci the experience, skill, and knowledge of the people along with the cultural orientation and social practices in the mainland.
Along with Group’s high familiarity and experience with the social, cultural, economic, and political setting in the world and of course in China, Gucci is also in synch with the international fashion trends since it houses designers and staff from diverse cultural background. This is in line with the company’s far-reaching share in the international clothing fashion market across the Asian region and other parts of the world. In this light, the company offers products and services that do not limit the designers’ talents to local markets. This is highly relevant in increasing the market share of Gucci clothing line since numerous expatriates or individuals from foreign countries stay in China due to the country’s abundant business ventures as well as tourist attractions and international events.
The franchising business expansion strategy of the company likewise proved to be successful in different locations. This enables Gucci to balance the centralized and decentralized approaches to business management and operations. The centralized aspect of the Group ensure capitalization of foreign franchisees abroad which results to good return of investments and profits while the decentralized business approach of the franchises extends possible business opportunities for the entire business in terms of product innovation, design, research and development. This makes possible continuous growth of the business enterprise through a pool of creative staff and employees that contribute to the competence, security, image and integrity of the company.
Weaknesses. Basically, fashion in today’s modern world is everywhere, with the help of globalization nonetheless. However, the problem with this is that world of fashion has witnessed a dramatic shift in the way in which fashion styles are determined away from an intrinsic interaction between fashion and the regional environmental factors towards the dominance by global fashion capitalism. Fashion is now being considered more of a retail material rather than a medium on which artists can express their artistic ideas to the fullest (Azuma & Fernie, 2003). Globalization has made fashion statements of different cultures available to every individual around the world. Although mass production of fashion is being created with extensive consideration on production budget and marketing research, Gucci should be sensitive to the importance of maintaining art in its products and designs so as not to fall into the common retail-crafted clothing line orientation perception regarding today’s fashion.
The franchising strategy of Gucci allows continuous product innovation and design as well as more cost-effective materials for manufacturing the companies clothing lines. As such, the development efforts and research initiatives and projects that the company invest in order to maintain continuous operation and competitive position call for wise selection of business opportunities as well as skilled leadership and risk management skills among its decision-makers. The staff and employees of the company should be highly familiar with the fashion existing and upcoming fashion designs in order to take lead in introducing new and future fashion trends. But more importantly, the company should foster tasteful and intrinsic creative designs for the consumers at the lowest possible prices.
The company should likewise intensify its promotion campaigns particularly the Gucci clothing line since China is a very large market. Advertising and marketing communications tools should leave a good impact to the target market to increase its appeal to the public. Good relationships with the suppliers and other business affiliations for the successful operation of the new clothing lie should be observed. Moreover, technological innovations and facilities in apparel manufacturing and marketing should be fully exhausted in order to serve the economic and aesthetic purposes of the company.
Opportunities. Since Gucci has long been familiar with the world market even in Chinese market, conceptualizations of the value propositions of its products are highly in synch with the lifestyle and fashion trends present in the targeted location. As such marketing and advertising strategies and opportunities come relatively easier to Gucci management with its compilation of market researches particularly the buying behavior of the Chinese people. This situation should be taken advantage by the management to gain competitive edge against foreign clothing fashion companies that are operating businesses in China.
The participation of China in the economic activities of WTO likewise opens opportunities for Gucci to earn not just the Chinese consumers in China but also a market base which includes the foreign business individuals and tourists in the locality. The lively business economies and activities in China can also provide potential business deals and partnerships with other foreign business entities operating in the country to further expand the market share of the company and increase profits. This serves the long-term viability and stability of the business in other foreign territories in the future.
As was mentioned earlier, the company operates foreign outlets and retails stores for its fashion clothing lines through franchises. Since each local franchise adheres to the regional design and ambiance projected by all Gucci apparel shops, the company is able to maintain its own fashion standards across diverse market base. But the management is also sensitive to the unique characteristics and demands of each local market in which the company is willing to meet. As such, specific product designs are not constrained by the limited know-how of the top management when it comes to products designs customizing some fabrics, cuts, and designs to the local contexts. This allows an array of product development and innovation particularly in terms of materials and workmanships.
Threats. The continuous transformation of the monopolistic economic environment of China and the apparel fashion industry in general into a free market system as initiated by the reforms proposed in the signed WTO agreements presented the Gucci (apparel) not just benefits but risks as well. The competitors in the local as well as the international clothing fashion industry is a major intimidation to Gucci since highly acclaimed, recognized, popular and sophisticated companies in the fashion industry can exercise the same market penetration initiatives of the company. In particular, there are highly stable local apparel manufacturers that supply and distribute materials, designs and products to other internationally acknowledged clothing lines. These local manufacturers are also distributing their products and designs in the local market under their own respective brand names. At the international level, European and American designs and products are existent and likewise persistent in increasing market share in lucrative business locations such as China.
As part of the threats in business, piracy of Gucci’s products is also an issue. The growth of luxury sales in China had been stressed further by the increased marketing campaign launches of the luxury-producing companies in the country. Magazines and other fashion-oriented publications during this time became full of advertisements promoting various expensive and luxurious foreign products. In spite of the notable progress of luxury sales in the country, the selected company and the rest of the foreign businesses struggle against the growing piracy problem in China. Considering that some consumers cannot afford the high cost luxury goods offered by these foreign companies, others would result to purchasing counterfeit version.
The article by Schafer (2008) stated that pirated luxury goods in the country have been affecting the operations of the foreign companies. Experts however noted that combating this issue seemed hopeless due to the country’s ignorance on intellectual property infringement. The country had been indifferent towards the intellectual property and piracy issue, giving foreign businesses and governments much frustration. Various foreign parties had then attempted to increase the pressure of piracy eradication in the country especially in its prominent cities. The United States for example, had coordinated with the World Trade Organization in order to encourage China to address the issue and take it seriously.
Part 3. Impact of Gucci’s Strategy to Marketing Orientation
As illustrated in the literature review chapter, the current company strategy provides significant effect to the progress of the organization, particularly to organization’s marketing orientation. Actually, strategies used by the companies may contribute to the company’s possible success rate especially in the branding aspect. The presence of a these strategies may give the company a competitive advantage over their rival corporations through their scheme on how the organizations or departments that make up the industry are able to work together, and at the same time how they establish their reputation in order to continue giving their services to their clients. In accordance to this, the presentation below shows the perception of the respondents regarding the impact of corporate strategy to marketing orientation.
Table 1. Descriptive Statistics
Statements
5
4
3
2
1
Weighted Mean
Std. Deviation
Interpretation
1.The current strategy of the company provides development in terms of sales increase.
16
18
10
1
1
4.0217
.9307
Agree
2.Current corporate strategy gain more customers.
9
14
17
4
2
3.5217
1.0486
Agree
3.The marketing orientation process of the company was excellent because of the current corporate strategy.
9
21
12
13
1
3.7391
.9294
Agree
4.The current corporate strategy is innovative thus marketing managers strive more to make their marketing approach more innovative than the approach of other competitors.
6
30
7
1
2
3.8043
.8594
Agree
5.With regards to the current corporate strategy, marketing orientation provide great contribution in terms of company development.
5
28
11
2
0
3.7826
.6964
Agree
Table 1. The previous table indicates the summary of responses of the respondents regarding the impact of corporate strategies to marketing orientation. In particular, the table above shows the result of the survey questionnaire of the respondents in regard to their perception towards marketing strategies. The column 5, 4, 3, 2, and 1 signifies the number of respondents who answered to the different degree of responses. For example, in statement number 1, there were only 16 respondents who answered 5, 18 for 4, 10 for 3, 1 for 2, and another 1 for 1. The weighted mean column shows the mean answer of that particular statement that is 4.0217 and interpreted it as agree. The table above shows that most of the respondents agreed on the given survey statements. All the statements from the survey are clear to the respondents.
Part 4. Effect of Branding to Marketing Strategies of Gucci
Basically, the website www.encyclopedia.com illustrated that a brand represents the holistic sum of all information about a product or group of products. This symbolic construct typically consists of a name, identifying mark, logo, visual images or symbols, or mental concepts which distinguish the product or service. It is useful for the marketer to think of this as a set of expectations in the mind of its consumer. A brand often carries connotations of a product's "promise", the product or service’s point of difference among its competitors which makes it special and unique. Marketers attempt through a brand to give a product a "personality" or an "image". Thus, they hope to "brand", or burn, the image into the consumer's mind; that is, associate the image with the product's quality. Because of this, a brand can form an important element of an advertising theme: it serves as a quick way to show and tell consumers what a supplier has offered to the market. In addition, corporate branding needs to be considered in marketing strategies. The following illustration presents the perception of the respondents regarding the effect of corporate branding to marketing strategies.
Table 2. Descriptive Statistics
Statements
5
4
3
2
1
Weighted Mean
Std. Deviation
Interpretation
1. Brand affects marketing strategies.
1
37
7
1
0
3.8261
.4855
Agree
2.From my experiences, branding significantly affects marketing strategies with respect to advertisement.
4
30
10
2
0
3.7826
.6638
Agree
3. Branding and appropriate marketing strategy goes together in the business industry.
2
43
1
0
0
4.0217
.2573
Agree
4. Brand influences the pricing of products, services, and other variables in business that leads to appropriate implementation of marketing strategy.
5
33
7
1
0
3.9130
.5898
Agree
5. Generally, branding has significant effect to the implementation of appropriate marketing strategies.
1
42
3
0
0
3.9565
.2949
Agree
The previous illustration shows that majority of the respondents agreed on the statements. Thus, these respondents believed that branding directly affects its marketing strategies. Actually, well known products acquire brand recognition. When a brand has accumulated a mass of positive sentiment among consumers, marketers say that its owner has acquired brand equity or brand franchise. In addition, brand equity measures the brand's value to the marketer thus most of the respondents agreed on the statement regarding the significant effect of branding to marketing strategies. Furthermore, brand equity is an assessment of the investment a company has made in a brand. Brand franchise measures the effect of this investment on the target market. When enough brand equity is created that the brand has the ability to draw buyers (even without further advertising), it is said to have brand franchise. A brand name comprises that part of a brand consisting of words or letters that humans can verbalize. A brand name that has acquired legal protection becomes a trademark.
Part 5. Marketing and Corporate Strategy Issues
With respect to the literature review and responses of the respondents in survey, this part of the paper discuss in detail the issues emerging to marketing and corporate strategies in accordance to fashion businesses in China. Basically, strategy is the crafting of plans to reach goals. Marketing strategies are those plans designed to reach marketing goals. A good marketing strategy should integrate an organization’s marketing goals, policies, and action sequences (tactics) into a cohesive whole. The objective of a marketing strategy is to put the organization into a position to carry out its mission effectively and efficiently. Furthermore, marketing strategies are partially derived from broader corporate strategies, corporate missions, and corporate goals. They are also influenced by a range of microenvironmental factors.
Marketing strategies are dynamic and interactive. They are partially planned and partially unplanned.
On the other hand, the website www.encyclopedia.com described corporate strategies as:
Strategic management/ corporate strategies is the process of specifying an organization's objectives, developing policies and plans to achieve these objectives, and allocating resources so as to implement the plans. It is the highest level of managerial activity, usually performed by the company's Chief Executive Officer (CEO) and executive team. It provides overall direction to the whole enterprise. An organization’s strategy must be appropriate for its resources, circumstances, and objectives. The process involves matching the companies' strategic advantages to the business environment the organization faces. One objective of an overall corporate strategy is to put the organization into a position to carry out its mission effectively and efficiently. A good corporate strategy should integrate an organization’s goals, policies, and action sequences (tactics) into a cohesive whole.
According to the respondents, appropriate business plan that includes marketing and corporate strategies should be considered in order to maintain the competitive advantage of their firm. In addition these interviewed individuals believed that building of power bases within a company encourages a competitive environment. As stakeholders of Gucci, they should set goals even if they seem unattainable since they are aware of the different strategies in maintaining a business. With regards to the marketing plan, it is all right if the company sometimes does not satisfy its costumers since it is definitely part of the game but with regards to status of fashion business in China, satisfaction of the customer should be considered. Basically, most of the respondents believed that a good leader accomplishes all the goals he has set. The decision of the manager must not be influenced by the suggestions of his/her people. In order for a company to maintain their business, it must, from time to time, change its marketing and corporate strategies to improved relations with the financial community that are normally caused by effective communications.
Part 6. Evaluation of Marketing Strategy of Gucci in China
A. Product Strategy
Cultivating customer loyalty is about establishing a relationship between the company and its consumers (Chow & Holden, 1997). This is emphasized by Michael Lowenstein (1997) who considers that gaining consumer loyalty is a business’s most advantageous strategic purpose because it has a constructive effect on company, culture, development and the bottom-line. However, customer loyalty is not a one-sided arrangement with the company reaping all the benefits. The customers also expect to be rewarded for patronizing the company. Aside from assuring customer satisfaction, the company will also devise strategies that will make the regular customers buy more or try new products of Gucci fashion clothing line.
These product strategies include (1) matching the organizational structure to the customers by anticipating and meeting the demands and expectations of the market; (2) extending design and innovation leadership by being sensitive to the dictates of and trends in the consumer demand or buying behavior of the clientele adapting technological means to widen product design and innovation reach; (3) developing leading positions in all major markets by adapting competitive stance that is committed to the aim of the company to excel and best other brands accelerating revenue growth and focus on selected consumer group; (4) achieving excellence in execution through consistent on-time retail delivery, ensuring best quality and the commitment and ability to go the extra mile for the customer along with maintaining the best-practice social and environmental standards, continuous optimization of the own-retail activities to best showcase the brands and products and to improve customer services; and (5) focusing on financial performance through effective management of working capital and generation of significant free cash flow to reduce debt and optimize financial leverage as well as increasing returns to shareholders through share price performance and dividends.
Rather than going after every potential source of revenue, companies eliminate useless assets that do not add value for customers’ satisfaction. Business organizations implement bureaucratic policies and procedures for the benefit of the staff, customers and the company in general. Moreover, Hessan & Whitely (1996) emphasized the idea to take advantage of the competitive situation not just by being better in how that product gets sold, serviced, and marketed at the customer interface. It requires that companies create breakthroughs in how they interact with customers, and design a way of interacting that makes an indelible impression on customers, one that so utterly distinguishes them from others that it becomes a brand in itself (p. 14).
The management initiated product development strategies by marketing their existing products in a new market, exporting products in different areas of the region and thereby advancing opportunities of increasing market penetration and market share through the Gucci clothing line. To ensure the success of the product launching in the retail industry as a fast-moving consumer good, the Group should make investments in store promotions as well as multi-media advertising in low-income areas in China. This will be likewise considered in conceptualizing other advertising and brand strategy schemes to effectively launch Gucci clothing line products in the Chinese market.
B. Distribution Strategy
According to David (2003), there are at least four types of resources which the company can use to achieve its objectives: financial, tangible, human and technological resources. These are the same critical success factors that Gucci should be equipped with in order to conceptualize efficient supply management and cost-effective distribution strategies from the main suppliers to the end-users of the products, particularly Gucci apparels.
In China, the domestic channels for apparel are characterized using three dominant patterns as shown in the schematic diagram (Figure 5). Approximately 70-80% of the garments in the local market are distributed in the local market through Pattern A (Almanac of China’s Textile Industry, 1994) through product supply chain and interchanges between the textile manufacturers, apparel manufacturers and the retailer to the consumers. the large cities of China normally employ Pattern A while Pattern B is dominant in small and middle-sized cities and towns. In pattern B, the distribution channels or retail outlets include the specialty stores, the department stores, and the street fashion peddlers. Pattern C is seldom used in the local market to distribute apparel products to the consumers (retail chains and direct mails) (China Textile University & Harvard Center of Textile and Apparel Research, 1999).
Figure 5. Distribution Patterns of China’s Apparel Products
Some of the ways that companies acquired cost advantages are by improving process efficiencies, gaining unique access to a large source of lower cost materials, making optimal outsourcing and vertical integration decisions, or avoiding some costs altogether. If competing firms are unable to lower their costs by a similar amount, the firm will be able to sustain a competitive advantage based on cost leadership. This has been the practice within Gucci manufacturing and apparel production through contracts with direct supplier in order to lessen the expenditures of the company spent on materials. Moreover, the franchising system that the company manages internationally in initiating expansion of its market penetration and market share contributes to the current functionality of the distributions system of the Group through its retail outlets.
C. Price Strategy and Promotion
Organizations that capitalize on customers' active participation in organizational activities can gain competitive advantage through greater sales volume, enhanced operating efficiencies, positive word-of-mouth publicity, reduced marketing expenses, and enhanced customer loyalty (Lovelock & Young, 1979; Reichheld & Sasser, 1990). Channel communications works in a two-way system wherein information transfers to the user and bounces all the way back to the producer (Goldberg & McCalley, 1992). In other words, marketing communications works like a feedback system, which allows company producers to relay information to the customers. In response to the provided information, consumers give certain reactions or behaviors. According to Bowers, Martin and Luker (1990), if consumers somehow become better customers -- that is, more knowledgeable, participative, or productive -- the quality of the service experience will likely be enhanced for the customer and the organization.
The changing world has then placed much emphasis on the importance of communication for effective marketing. All types of communication are involved in marketing communications, including literature, training, advertising, mail, telephone, product promotions and other contact relevant to marketing communication. Among the channel members, even follow-up on complaints as well as customer billing may be included within the communication loop. In order to effectively serve the marketing channel, correct timing and accuracy in communications is essential. Moreover, it is important for the company to recognize that all members of the channel have an obligation or important role in maintaining the efficacy of marketing communications.
To make the regular customers buy more or try new products, Gucci could initiate the following promotional strategies: (1) distribution of samples, (2) discount coupons to customers in the retail stores, (3) rebates, (4) price-off particularly a few months after the launching period, (5) bonus packs or tie-ups with the companies other products during the launching period, (6) sample packs, (7) special packs, (8) premiums, (9) free trials for new customers, (10) warranty or free health consultation on booths, (11) prizes through raffle draws, (12) issuance of patronage card/reward, and (13) product sponsorships for contests that are both directly and directly associated to the lifestyle of the target market. Discount coupons and club cards will serve as a marketing strategy to developed similar loyalty schemes in order to identify and stimulate brand awareness in the Chinese market. These database marketing and loyalty programs, the ultimate promotion strategies for the retailer are powerful, highly segmented customer-oriented forms of promotions, encouraging customer retention and purchase activation.
Moreover, e-marketing is a powerful tool that could be exhausted by the Group in achieving marketing its objectives through the use of available and up-to-date electronic communications technologies Smith and Chaffey (2001). E-commerce removes the geographical separation between regions, and made dealing with foreign trade a snap. E-commerce is just on its initial phase in China, but it is expected to grow as the Ministry of Information Industry starting to structure the basic framework for e-commerce development, rules and regulations. As such, the arrival of broadband internet means that more and more people will shop online - suggesting there is plenty of room in the market for the convenience store and its competitors. Service differences are likely to smooth out, making it more likely that people will choose on the basis of price and brand loyalty. With this, the Gucci management will need to reassess its goals as well as opt to take on a differentiation strategy by promoting unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition
Finally, the company’s social responsibilities should be taken seriously by supporting local charities, funding educational scholarships, and contributing to the socially relevant causes and projects that get publicity. Moreover, sustainable development efforts of the organization through environment-friendly social drives that promotes responsible waste management along with other cause-oriented social activities in the Chinese communities where there is market for Gucci apparel.
Part 7. Analysis of Data
The focus of this study is to investigate the current status of a certain fashion brand in China i.e. Gucci. This part of the chapter will present an examination of the data that were presented in the previously, wherein the data will be linked to each other as well as well as how they will be able to concentrate on the data.
A. Determining the Perception of the Respondents between Corporate Brand and Marketing Strategies
To evaluate and determine the effect of corporate brand to marketing strategies, the researcher performed the one sample t-test from the data gathered. Actually, one sample t-test determines the differences between the expected result and actual responses of the respondents. One sample tests, in general, examples of "goodness of fit" tests where we are testing whether our data supports predictions regarding the value of the population mean.
Thus, in this paper the researcher assumed that the responses are all agreed in every statement or the equivalent value/test value is simply 4. The table below illustrates the t-test analysis:
T-Test
Test Value = 4
Statements
t
df
Sig. (2-tailed)
Mean Difference
95% Confidence Interval of the Difference
Lower
Upper
1.Brand affects marketing strategies.
-2.429
45
.019
-.1739
-.3181
-2.973
2.From my experiences, branding significantly affects marketing strategies with respect to advertisement.
-2.221
45
.031
-.2174
-.4145
-2.028
3. Branding and appropriate marketing strategy goes together in the business industry.
.573
45
.569
2.174
-5.466
9.81
4. Brand influences the pricing of products, services, and other variables in business that leads to appropriate implementation of marketing strategy.
-1.000
45
.323
-8.696
-.2621
8.818
5. Generally, branding has significant effect to the implementation of appropriate marketing strategies.
-1.000
45
.323
-4.348
-.1310
4.409
In the above statements in the table, a significance value of 0.019 in statement 1 indicates a significant difference. Meaning to say, the responses of the respondents is different to the expected result and also the confidence interval for the mean difference does not contain zero that indicates the difference is significant. In statement 3, the significance value is high and the confidence interval for the mean difference contains zero (i.e. 0.5466), then we cannot conclude that there is a significant difference between the test value and the observed mean. Therefore, we conclude that the researcher’s assumption is correct. Thus, we may state that corporate branding and appropriate marketing strategy goes together in the business industry in accordance to the perception of the respondents. With respect to the results in the table, branding has significant effect to the implementation of appropriate marketing strategies.
B. Determining the Effectiveness of Marketing and Corporate Strategies
Based on the gathered data from the literature reviews, the effectiveness of marketing and corporate strategies are very essential since the future and development of a certain business are determined. Moreover, Nguyen, N. & Leblanc, G. (2001) hypothesized that effective marketing strategy adoption can be determined by examining the foundation (i.e. core competences) on which the organization operates. These may very well be significant factors that may help with further understanding on the business development.
Descriptive Statistics
Mean
Std. Deviation
Interpretation
The manager must be highly visible to bolster the company’s strategic reputation both marketing and corporate.
3.8043
0.6189
Agree
A manager should make a decision that commits the total organization to a given course of action.
3.7391
0.5748
Agree
Appropriate marketing and corporate strategies are the most important requirements for the success of the company.
3.9130
0.5508
Agree
A good marketing and corporate technique is branded, meaning distinct from other techniques.
3.9130
0.4631
Agree
Corporate culture should primarily be improved, rather than the procedures, in developing new business and products.
3.8478
0.6313
Agree
Competition within the company is a way of empowering the managers and employees.
4.0652
0.3267
Agree
Appropriate marketing technique is essential to the competitiveness and development of an organization.
3.8261
0.5293
Agree
The company must invest heavily in educational training provided for the employees rather than in other trainings.
3.8913
0.4820
Agree
The previous table shows the complete result of the survey questionnaire of the respondents in regard to their perception towards the effectiveness of marketing strategies and corporate strategies. Basically the weighted mean column above shows the average answer. For example in statement number 1, the computed mean score is 3.8 which simply signifies that majority of the respondents are agree on that particular statement. Meaning to say, most of the respondents believed that the manager must be highly visible to bolster the company’s strategic reputation both marketing and corporate. Actually, the table above shows that most of the respondents agreed on the survey statements given. All the statements from the survey are clear to the respondents.
On the other hand, the respondents initiated that advertising marketing and corporate strategies in attaining goals to business publication is dangerous because competitors may feed on this information. In regards to the condition of the firm, most of the surveyed respondents argued that corporate culture should primarily be improved, rather than the procedures, in developing new business and products.
Furthermore, competition within the company is a way of empowering the managers and employees thus appropriate marketing technique is essential to the competitiveness and development of an organization. The intended respondents also believed that more fashion companies in China like Gucci controls and shapes the behaviors of managers and employees in accordance to its corporate and marketing strategies. Apparently, these respondents argued that effective marketing and corporate strategies are the key source of the company’s competitive advantage to the tough business competition in the fashion industry.
Chapter 5
Conclusion and Recommendations
Conclusion
Why do brands "work" for customers? The reasons are familiar: they simplify everyday choices, reduce the risk of complicated buying decisions, provide emotional benefits, and offer a sense of community. Basically, strong brands are therefore enormously attractive to senior managers, whose interest is fed by any number of books and articles on how to get and keep them. But anyone who thinks seriously about branding soon realizes that there are basically two kinds of strong brands: those that are focused and those that are diversified.
Based on the analysis, the growth of own label and look alike products provides great effect to the manufacturer of established brands since the look alike products attempts to imitate that provides greater competition and loss to the established brands.
Apparently, the importance of branding particularly the well-known fashion products such as Gucci is difficult to overestimate in the present cluttered media industry and consumer markets. Television and other electronic media branding, with all its idiosyncrasies in consumer payment and brand definition, will be of continuing interest and importance for three main reasons. First, a strong brand identity is critical to producing audiences in a multichannel environment, an environment that is becoming more and more crowded as television converts to digital delivery. It is perhaps the only means of gaining a place in a television viewer's/ user's channel repertoire.
Second, brands are vital in expanding markets. Brand extensions marry an established brand to a new service as a means of establishing instant market credibility. Finally, branding is necessary in the leveraging of corporate assets to open new markets. These markets may be related to the present business of a branded entity (e.g., fashion Magazine, fashion web site), or may be nonrelated, if not totally separate (e.g., logo apparel and other merchandise, restaurant/bars). With the traditional advertiser supported model of television under increasing pressure, television providers, and especially broadcasters, are constantly looking for new revenue streams.
Ultimately the study of branding, brand equity, and promotion is a way of tracking the effects of the recent structural changes in the fashion industry. Studies of industry structure and consequent conduct and behavior are of use both to the industry and to anyone who wants to understand the dynamics of an ever more powerful global industry.
Recommendations
The rises of luxury sales and consumption in China have been emphasized in literature. Gucci’s marketing and business strategies are impressive in terms of brand management in China. However, this paper is more on the development of brands among luxury fashion products i.e. the products of Gucci. From the results of this study and SWOT analysis (see Threats, SWOT), there is still a need to consider other sides of branding i.e. piracy. Piracy appears to be a common problem encountered by luxury brand companies in the country. This research recommends having a follow up investigation pertaining to piracy of luxury products. Actually, piracy does affect the level of production and sales of luxury goods of Gucci, particularly in terms of demand. Not only does this business issue prevent the company from achieving optimum product demand, but this also affects the opportunity of the company to penetrate other new target markets. The company had made attempts to address the issue by means of various anti-piracy efforts. It is however difficult to determine whether this has been a major contributor to major sales development considering that there are a number of factors that affect this business aspect. Nonetheless, the impact of these efforts had not been fully successful due certain hindrances.
The price factor for example seems to be an important cause of worsening the piracy issue. Due to the high cost of luxury goods, consumers would resort to buying cheaper alternatives. Other obstacles such as the lack of public awareness about the problem, the inadequacy of enforcing relevant anti-piracy laws in the country and the difficulty of monitoring companies producing pirated luxury goods also worsens the rate of piracy. Despite the obstacles, the company believes that the continuous resolution will help in addressing the company. Thus, the company still has future anti-piracy plans despite the apparent difficulty of resolving the issue. It is also necessary that parties affected and involved in the issue should work together in order to maintain the booming success of luxury sales and consumption in China.
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