INTEGRATED MARKETING COMMUNICATIONS STRATEGY: An Executive Report on G2000 UWoman Clothing Line Marketing Plan in China
EXECUTIVE SUMMARY
Innovative marketing and product concepts made G2000 Group a leader in Asia’s apparel industry by penetrating new markets in foreign territories in the region. Franchise agreements among most of the overseas operations are implemented to ensure capitalization of local marketing expertise and practices of the franchisees. G2000 Group employs a merchandising information system which enables the management to analyze customer needs and preferences both on the regional and local market bases and customize product designs to exceed customer expectations. To gain management buy-in, the integrated marketing communications plan for launching the UWoman clothing line of the Group, this executive report provides relevant integrated marketing communications plan along with grounded recommendations in order to achieve the 15% annual increase in sales and to geographically expand existing target for UWoman clothing line in China so as to embark G2000 Apparel Limited as one of the top ten leading companies in the international clothing industry.
TABLE OF CONTENTS
I. INTRODUCTION……………………………………………………………………...4
A. G2000 (Apparel) Limited…………………………………………………..6
B. Peoples Republic of China……………………………………………….8
II. SITUATIONAL ANALYSIS………………………………………………………..10
A. Porter’s Five Forces Analysis…………………………………………..10
1. Suppliers……………………………………………………………11
2. Buyers……………………………………………………………….12
3. New Entrants and Barriers of Entry……………………………14
4. Substitutes………………………………………………………….15
5. Industry Competitors……………………………………………..16
B. SWOT Analysis……………………………………………………………17
1. Strengths……………………………………………………………18
2. Weaknesses………………………………………………………..19
3. Opportunities………………………………………………………21
4. Threats………………………………………………………………22
C. PEST Framework………………………………………………………….23
1. Political……………………………………………………………...23
2. Economic…………………………………………………………...25
3. Socio-cultural……………………………………………………...26
4. Technological………………………………………………………28
D. Product Analysis………………………………………………………….29
1. The Question Marks……………………………………………....33
2. The Stars…………………………………………………………....33
3. The Cash Cows……………………………………………………34
4. The Dogs……………………………………………………………34
E. Competitor Analysis……………………………………………………...36
III. MARKET SEGMENTATION…………………………………………………….43
A. Customer Analysis………………………………………………………43
B. Market Segmentation……………………………………………………48
C. Target Market……………………………………………………………..50
IV. MARKETING STRATEGY………………………………………………………53
A. Product Strategy…………………………………………………………53
B. Distribution Strategy…………………………………………………….55
C. Price Strategy and Promotion…………………………………………57
V. IMPLEMENTATION PLAN………………………………………………………60
VII. EVALUATION AND CONTROL……………………………………………….63
I. INTRODUCTION
Along with the changing business world, customers change as well, becoming more demanding and knowledgeable than before. The consumers of mass communication messages today are active and critical in the simple choices they make. As such, the mere purchase of everyday necessities has proved to be crucial in analyzing the consumer market at present. In turn, company management had shifted their focus on their clients or customers so as to stay successfully in business. The changing world has then placed much emphasis on the importance of communication for effective marketing. This transition meant that organizations have to completely reformulate their conventional business aims and purposes from being process-focused to customer-centered ( 1997).
In this age of globalization and information technology, deciding which brand to choose can be a problem. Competition is evident and intense, and the marketing and management divisions of corporations are surely giving everything they can to establish their brands. Competition forces certain brand names to become stronger than others because of product loyalty and name recognition. As such, all types of communication became more involved in marketing communications, including literature, training, advertising, mail, telephone, product promotions and other contact relevant to marketing communication (1992).
Moreover, consumers tend to buy what is already familiar to them (1997). A fine and well-advertised brand might have a competitive edge from a lesser exposed brand name. But then, a lesser known brand can also have an edge over price, given that they cost less than known brands (2002). Market researches are most of the time conducted before and after the launching or implementation of an advertising campaign so as to provide generalization or specific definition of the characteristics of the type of people belonging in market category as well as the reactions of the consumers to the product or service being made available (2002).
Such practice makes it easier for the product or service providers to predict the outcome of a particular advertising campaign. However, in the end, the decision still lies within the consumers. They are the ones who basically absorb all the messages being disseminated by companies or all the information pertaining to the products, whether they are positive or negative. In this light, this paper aims to provide relevant integrated marketing communications plan along with grounded recommendations in order to achieve the 15% annual increase in sales and to geographically expand existing target for UWoman clothing line in China so as to embark G2000 Apparel Limited as one of the top ten leading companies in the international clothing industry.
A. G2000 (Apparel) Limited
Hong Kong G2000 Group, formerly Generation 2000 Limited, was founded in 1989 and started as the single distributor for the US-based Britannia jeans in Asia. The company evolved into full service as a vertically integrated apparel marketing company that distributes its own designed and developed products for Asians under its own trademarks. G2000 was first introduced in 1985 as a specialty clothing chain distributing both fashionable career wears for men and women. U2 was established in 1986 as the Group’s second chain which also operates under the name LAB in few selected countries abroad and recognized as the leading retailer for casual wears among men and women. UWoman was the latest chain operating under the concept of more upscale image brand women’s wear line (G2000 (Apparel) Limited, 2006).
Innovative marketing and product concepts made G2000 Group a leader in Asia’s apparel industry by penetrating new markets in foreign territories in the region. The first overseas outlet of the Group in 1987 was opened in Singapore. As of March 2005, the Group has successfully expanded its consumer base through the 800 stores operating under the names of G2000, U2 (or LAB), and UWoman in Macau, China, Taiwan, Malaysia, Thailand, Indonesia, Philippines, Cyprus, and other countries in the Middle East. The company’s fashion leadership was made possible by its diverse designers from different cultural orientation and strategic marketers who have been successful in directing, interpreting and communicating the fashion trends in the region (G2000 (Apparel) Limited, 2006).
G2000 Group employs a merchandising information system which enables the management to analyze customer needs and preferences both on the regional and local market bases and customize product designs to exceed customer expectations. Quality, Fit and Value characterize the products, services, and store lay out of the Group’s chain outlets. Turnaround time for new product introductions are minimized and fit is guaranteed through the company’s own pattern-making and sampling studios. The Quality Assurance teams of the Group are recognized internationally to provide quality fabric products and workmanship services to the customers. The company likewise implements direct sourcing of fabric from mills to provide product offers at the lowest possible prices (G2000 (Apparel) Limited, 2006).
The foremost priority of the G2000 Group to exceed consumer satisfaction which is made possible through extensive investments in staff training and development particularly in sales which includes customer services, product knowledge, selling techniques, visual merchandising, and foreign language skills. Moreover, each of the specialty store format is designed to create a comfortable shopping experience proving unique moods for individual brands. Custom-designed fixtures are regularly updated to reflect the latest approaches in retailing for the benefit of both the customers and staff of the stores (G2000 (Apparel) Limited, 2006).
Franchise agreements among most of the overseas operations are implemented to ensure capitalization of local marketing expertise and practices of the franchisees. All shops have similar concept and design across Asia under the regional standards in shop layout, decorations display format and advertising campaign in order to maintain regional synergy. As such, enormous business opportunities for the Group and prospective franchisees are open in line with the success of the G2000, U2, and UWoman in Hong Kong (G2000 (Apparel) Limited, 2006).
B. Peoples Republic of China
China has done remarkably well since the beginning of the economic reform movement in 1978 ( 1996). Between 1979 and 1995, China's GDP grew at an average annual rate of 9.5 percent. China's exports grew even faster and China now ranks among the world's top 10 exporting economies. The government, in implementing the Coastal Economic Strategy, established four special economic zones in the coastal provinces of Guangdong and Fujian and 14 other coastal cities were opened in 1984 to attract trade and foreign direct investment. These economic zones and cities enjoyed relatively better tax treatments and preferential resource allocations (1998).
Moreover, China's entry into the WTO will make China's door even more open. Both foreign investment and foreign trade are expected to increase (2000). Foreign firms will begin to penetrate China's financial and telecommunication sectors. Trade will increase in both directions and Chinese tariffs will be lowered and Chinese goods will have better access to world markets open to members of the WTO. Using foreign competition to stimulate the domestic economy is a major objective in seeking to join WTO, as explicitly stated by
The immediate issues faced by the early investors were cultural differences, trade barriers and government restrictions. Coca cola, Philips, Kentucky Fried Chicken, Nokia, Microsoft, and Johnson and Johnson were some of the companies who succeeded in taming the “dragon”. There is social behavior in China that in itself is not bad, but it does affect the country’s globalization process. The predominant thought in Chinese Marketing System is that in order to do business successfully in China, the business must be organized, implemented, and operated in China. A business have no hope of much success if operated through long distance management, controlled by overseas main branch, or implemented by a foreign team that excludes participation by the locals. Being a home-grown business venture, G2000 (Apparel) Limited is characterized with advantages that are not exhibited by other internationally operating companies.
In terms of cultural orientation and highly similar social standards and practices, the Chinese are like westerners, sincerity and friendship is appreciated. A business in China must show acceptance of the host country. Donation to the government and charities, company leaders’ visits during China’s important days, company participation in China’s activities or drives, these are likely to make a foreign company accepted by the Chinese market. With the country’s participation in the international trade and other economic activities of WTO, increased market competition has since characterized China with the influx of foreign investors. Furthermore, the demand for women’s clothing line likewise increased due to modernization and improvements in the living standards. As such, G2000 (Apparel) Limited, particularly its UWoman specialty store is presented with opportunities to improve its revenue and to extend further its market reach.
II. SITUATIONAL ANALYSIS
A. Porter’s Five Forces Analysis
Understanding the dynamics of the competitors in the industry helps assess the potential opportunities of every business venture by differentiating the similar products or services offered by the company against other business organizations. Considering the factors that directly and indirectly affect and influence the entirety of the business operations contributes to the competitiveness of the whole functioning of the business. As such, it is important to review and critically examine the specific individuals or groups of individuals that manage parts or chains of operations that are relevant to the operations of the company and to realistically assess potential levels of profitability, opportunity and risk based on five key factors within an industry so as to determine the long-term profitability of a market or market segment.
Using Porter’s Five Forces Model, the (a) suppliers, (b) buyers, (c) new entrants and barriers of entry, (d) substitutes, and (e) industry competitors of G2000 (Apparel) Limited in the fashion market are examined.
1. Suppliers. An organization that offers products as well as services also depends on suppliers that deliver the company’s raw materials. This condition leads to the buyer-supplier relationships within different industries. Such relationship is directly influence by the changes in the supply and demand variables based on the existing needs of the consumer population ( 2002). The influence of the supplier is defined by its ability to dictate price and influence availability of materials. Other strengths of the supplier include their ability to (a) increase prices without suffering from a decrease in volume, (b) reduce the quantity supplied, (c) organize in a formal or informal manner, (d) compete in an environment with relatively few substitutes, (e) provide a product/material that is a critical part of the end product or service, (f) impose switching costs on their customers when they depart, and (g) integrate downstream by purchasing or controlling the distribution channels (1998; 1999; 1998).
As such, every company that depends on the services and materials from key suppliers need to be sensitive on the variables that are highly important and considered by the suppliers. In the case of the fashion industry, particularly in the current objectives and plans of G2000 (Apparel) Limited, decision-makers of the company should have a clear understanding of the business dynamics in which suppliers are directly involved in. These include the suppliers’ concentration or and core business interests, variety of products and design offered, and the alternative resources that are available for the Group in terms of business partnerships. In this light, it is most appropriate to build win–win relationships with suppliers or arrange the use of multiple suppliers in order to protect the interests of both ends.
2. Buyers. The power of buyers describes the impact customers have on an industry. When buyer power is strong, the relationship to the producing industry becomes closer to market conditions wherein the buyer has the most influence in determining the price (1998; 1999). As such the bargaining power of buyers increases when they have the ability to (a) make agreements with other companies providing similar products and services, (b) purchase a product that represents a significant fraction of the expenses incurred by the company, (c) purchase of a product that is undifferentiated, (d) incur low changes in costs when they change vendors, (e) be price sensitive by bearing in mind the options available, and (f) integration to purchase the goods of the suppliers ( 2002; 1990).
The study conducted by Greenberg and colleagues (1983) found that product choice, promotions and the atmosphere of the outlets were the most important factors involved in consumer decision making. Basically, based on the factors needed to be competitive in the fashion retail marketplace, branding is the most important and pertinent thing to consider. Because fashion is an aesthetic and cultural representation, it can be said that brands should consider reaching out to different cultures and trends, as well as different perception of beauty. These are just some of the factors that affect consumer behavior. They have been the subject of consumer research for years, for instance, linking them with customer service and customer satisfaction, or the efficacy and persuasiveness of advertisement, etc. In the fashion retail industry, these subjects also take place, obviously because the variables that makes the process of buying and selling creates the opportunity for such instances to be possible. These factors should be highly considered by G2000 Group for the successful marketing of the UWoman clothing line in China.
3. New Entrants and Barriers of Entry. The possibility of new companies entering the industry influences the pace of the competition. Thus, the key is to evaluate the methods of entry and exit for a new player to the industry. Although any company should be able to enter and exit the sector, each industry presents different levels of difficulty influenced by economics. These unique characteristics of the each industry are referred to as barriers to entry which may come from different aspects of the business ranging from supplies to technology. They seek to reduce the rate of entry of new entrants which leads to maintenance of a level of profits for the existing players.
In terms of fashion retailing, (1998) stated that its market has gained criticism for a lack of differentiation, possibly due to greater degrees of market concentration and the standardization of the fashion retail offer across stores and regions. With the addition of new technological developments, fashion retailers face both a differentiation dilemma and a challenge in maintaining any long-term advantage over their competitors. Competitive advantage is needed, and being unique and persuasive are important in order to attract the attention of customers and create positive consumer behavior that would benefit the company. (1992) stated that four things are needed to be considered in order for retail stores or fashion brands to achieve competitive advantage. They are: the ability to differentiate; command a price premium; have a separate existence to the corporation; and provide a form of psychic value to customers. Similarly, these are the significant considerations made by new fashion retail stores in entering the fashion industry market.
4. Substitutes. “Substitute products” as those that are available in other industries that meet an identical or similar need for the end user. As more substitutes become available and affordable, the demand becomes more elastic since customers have more alternatives. The treat of substitutes often impacts price-based competition since substitute products may limit the ability of firms within an industry to raise prices and improve margins. Other concerns in assessing the threat of substitutes include the presence of new technologies that can contribute to competition though more diverse and economical substitute products and services. A segment is unattractive when there are actual or potential substitutes for a product.
(2003) stated that fashion is an aesthetic expression that aims to communicate notions, subtleties, and therefore, as soon as an aesthetic order comes to be generally perceived as a code, then works of art tend to move beyond this code while exploring its possible mutations and extensions. The creative aspect of fashion in general cultivates the numerous ways of expressing oneself through other products available in the market. These include accessories and jewelries, bags, shoes, parlors and salons. Furthermore, fashion is believed to be a cyclical reflection of social, cultural, and environmental characteristics that are unique to a certain point of time in a particular geographical setting, in addition to playing a crucial role in complementing one’s self-image. As such, the never-ending and ever-increasing possibilities of portraying an individual’s self-image through other products available in other mentioned industries pose disadvantages as well as challenge in the entire clothing line of the fashion industry.
5. Industry Competitors. A considerable number of companies have developed into an essential part of the period of global competition, increasing development, improved business paradigms, and corporate reorganization. The continuing transformation from the traditional industrial framework with its hierarchical companies to a worldwide, knowledge-founded financial system and intelligent corporations necessitates business management to realign and relocate its strategies (1999). Along with the intense marketing nowadays, firms are faced with the challenge to maintain their own competitive edge to be able to survive and be successful. Strategies are carefully planned and executed to gain the ultimate goal of all: company growth ( 2002).
Among the largest apparel manufacturers in Hong Kong that likewise operates clothing fashion outlets in China includes Lai Sun Garments (under the brand Crocodile), Trinity Textiles, Smart Shirts, Giordano, Tal Apparel, Fang Brothers Knitting (with brand names: Jessica, Episode, Colour 18), Unimix (with brand names: Gieves & Hawkes, Lee Cooper Jeans), Peninsula Knitters, Esquel Enterprises, Yangtzekiang Garments (with brands: Michel Rene, Daniel Hechter), Crystal Knitters, Goldlion and Winner Co. Garments which offer retail apparel products internationally. Other recognized apparel companies that manufacture overseas through sub-contractors include Esprit, Bossini, G2000/U2 and Shanghai Tang. Esprit Bossini and G2000/U2 are the local retailers and franchisers which are characterized with relatively stronger local market share compared with the foreign brands in the same price range like Benetton and Mango (2004).
SWOT Analysis
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 G2000 (Apparel) Limited in order to accurately illustrate sound business propositions and recommendations pertaining to its aims to expand market share and increase profitability of the UWoman clothing line in China.
1. Strengths. Compared to the industry competitors of G2000 (Apparel) Limited, the company exercises an almost direct access to mainland China’s market-base. Since the company originated and developed in Hong Kong which is China’s free economic zone economy long before its affiliation and subsequent participation in the activities of WTO, G2000 is highly of advantage compared to foreign entrants in the local market. This gives G2000 the experience, skill, and knowledge of the people in China along with the cultural orientation and social practices in the mainland.
Along with Group’s high similarity and familiarity with the social, cultural, economic, and political setting in China, G2000 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 UWoman 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 G2000 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.
2. 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, G2000 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 G2000 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 UWoman 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.
3. Opportunities. Since G2000 has long been familiar with the local 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 G2000 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 G2000 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 G2000/U2 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.
4. 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 G2000 (apparel) Limited 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 G2000 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.
PEST Framework
The success of the business organization entails detailed understanding and examination of political, social and economic factors that influence the growth and continuous operations of the company. Studying the important consideration relevant to the organization to serve the purpose and objectives of the company will determine its success. Consequently, decision-makers of the company should be sensitive of the general trends and changes that are taking place in their industry. This will include efforts to maximize the opportunities available while reducing the risks that confront the business organization.
Political. The country of China has long bee recognized as the “Sleeping Giant” of Asia. Its geographic territory and the population that it embodies, distinguish it from other big countries in the world. The resources, human and economic, make this country the most promising country in Asia in the ability of its people and the nation itself to make a stand in the global community that defines the information world at present.
The regions of China during the early part of the Mao period was characterized by disparities when the central government undertook a two-part balanced redistribution system strategy reflective of the choice made under a planned economy ( 2002). According to (2002), the central government that time devoted most of the investments, for redistribution of industrial development, to the country’s inland regions instead of allocating the money in the richer coastal parts and “moved” the population into the poorest provinces that reversing it made the beneficiary regions collapse as the few other parts prosper. The price system was the other form of the redistribution system which overvalued the manufactured products and undervalued the agricultural ones (2002). However, the balanced redistribution system economic strategy of the central government collapsed because the provincial manufacturing industries have to significantly contribute to help the poorest regions which gave way to rapid growth in agricultural prices.
The government, in implementing the Coastal Economic Strategy, established four special economic zones in the coastal provinces of Guangdong and Fujian and 14 other coastal cities were opened in 1984 to attract trade and foreign direct investment. These economic zones and cities enjoyed relatively better tax treatments and preferential resource allocations (1998). In the late 1980’s the government extended the policy to all coastal areas of China which put the non-coastal provinces at great disadvantage as economic development was centralized in the coastal areas. (1996) showed that per capita gross domestic product disparity increased steadily before 1978, decreased between 1978 and 1990, and increased again after 1990. Shi (1996) found that per capita income disparity increased across the eastern, central, and western regions, from 111:95:100 in 1994 to 142:97:100 in 1995. (1996) also showed that the five areas with highest per capita investment directly from the central government are Beijing, Shanghai, Tianjin, Liaoning, and Guangdong. All are in the coastal region.
Economic. The concept of endogenous economic development highlights a China’s need to allow change and make room for the growth of its production system by developing and utilizing the potential of local resources especially its people through the investment of private firms and holdings as well as of the government itself through national economic policies. (2002) discussed that economic growth and structural change are the result of investment strategies and decisions of enterprises operating in the market and integrated into the cultural milieux that conditions economic dynamics of territory affecting the production of the organization, the relational system and innovation as well as the learning process. The country’s fast developing coastal areas and main regions like Beijing, Shanghai, Tianjin, Liaoning, and Guangdong distinguished and highlighted the need to extend such economic development in the interior regions.
Meanwhile, China’s capacity to meet the growing demands for products to be exported can be explained by the fact they have the biggest work force in the world and many countries trust them with investment. This fact leads to another fact that China is the largest manufacturer of finished goods. Because of the efficiency of the Chinese work force are able to produce finished good at a rate that they have a lot of surplus to export around the globe. And because of low workers pay manufacturers are able to distribute their goods at a much lower rate, once these goods hit the market there prices will still be within the reach of the average consumer.
Socio-cultural. China considered being one of the earliest centers of human civilization. It became a large united country with an advanced culture at a very early stage, outpacing most of the world in areas such as art and science. It is a country in continental East Asia with some outer territories in Central Asia and offshore islands in the Pacific Ocean that since 1949 has been divided de facto between the People's Republic of China and the Republic of China (1992). The Chinese is evidently one of the oldest continuous cultures on the planet, flourishing for 5,000 years, including over 2,000 years with a written pictorial language universally readable within the country (1995).
China has reached peaks of cultural attainment that equal, or surpass, anything that Western European societies or America have achieved. Some of the seminal developments include paper, gunpowder, and movable type. For many centuries, most notably from the 7th through the 14th centuries, China stood as the world's most advanced civilization and as East Asia's dominant cultural influence. During the 19th and early 20th centuries the country was too weak to repel European colonialism and Japanese invasion, while at the same time suffering internal conflicts which led to its continuing division. A Communist victory in the Chinese Civil War established the People's Republic of China in the mainland while the Nationalists held out in Taiwan (E1993).
China is the most populous nation in the world with a population of approximately 1.25 billion people (1998). The population is distributed over 22 provinces, 5 autonomous regions and 3 metropolitan municipalities under the central government. The provinces, which possess a high degree of fiscal independence, are themselves divided into 2182 counties (averaging 400,000 residents), 47,000 townships (averaging 18,000 residents) and 740,000 villages (averaging 1000 residents). The urban population has grown substantially since the 1960's. From 1960 to 1992 the urban population climbed from 19% to 28%, and is expected to increase further to 35% by the year 2000.
But then, many travelers want to see how these people live and what they think. Due to the "Open Door" policy in China that went into effect in 1978, numerous Americans have visited the country (1994). During the past decade, Hangzhou city has come across a rapid economic growth as well as a rapid urban development. The city has in fact become one of the most dynamic and vibrant metropolis and a most important central city in southern Yangtze Delta Region (1982). The Chinese society focuses on the well-being, attempting to provide adequate housing, universal education, access to medical care, and childcare. The success of these policies, especially wide-scale education, has produced massive educated elite in Beijing, Shanghai, Wuhan, and elsewhere that makes China a formidable force in the modern world (1992).
Technological. The tremendous growth of technological advancement has become the driving force of contemporary industries. The diffusion of the internet has revolutionized the business arena. The use of the Internet is changing high-tech marketing overnight while different industries have been trying to use it as part of their marketing strategy. It has not only reconfigured the way different firms do business and the way the consumers buy goods and services, but it has also become an effective instrument in transforming the value chain from manufacturers to retailers to consumers, creating a new retail distribution channel (1999).
China was able to adapt with modernization along with the technological advancement in progressive other countries. As the manufacturing capital of the world, China is among the leading users of highly advanced equipment in production, supply chain management, marketing and sales. This has long been evident in the bulk of produced goods in the country as well as the generated services provided by the different industries of China. Applications of advanced technologies in the country can be likewise observed in the emerging utilization and function of the Internet not just in business but also in other disciplines like politics and social welfare, environment conservation, culture and the arts, media and communications, and in education and research (2002).
Product Analysis
It is common knowledge that every one of the successful companies today sought and found a precise understanding of how it could create advantage in the operations system and delivery options of the business organization in order to address detailed customer specifications. Every business person is determined to know what kind of work they would and would not do for their customers and, in turn, they carefully learn how to fulfill the needs of each kind of customer in their target markets. Organizations are neither the rational, harmonious entities celebrated in managerial theory nor the arenas of apocalyptic class conflict projected by Marxists (1980). (1996) believe that modern organizations passed by the guild structures and as organizations grew larger, skills become increasingly fragmented and specialized and positions become more functionally differentiated. (1964) had defined three approaches to organization, which includes structure, technology and people.
With the ever-increasing demands by the clients and customers, raw materials suppliers, as well as the pressure from the upper management of the organization for increased efficiency and profit, collaborating and effective management of priorities in the production constantly pose challenges and beset the operations management of the company. As such, it is inevitable that the organization implement programs and production systems that will best suit the needs of the company and its clients. As such, it is highly important to undertake analysis of products and services offered by the company in order to achieve the set corporate goals and financial objectives of the business.
The Boston Consulting Group (BCG) Matrix is portfolio planning model which classifies business firms based on market growth or industry attractiveness and market share or competitive advantage relative to the largest competitor thus mapping the position of the company to determine its profitability. The assumptions of the model focus on the dynamics of cash generation and cash consumption of business units relative to its competitors in the industry. It assumes that (1) an increase in relative market share will increase generation of cash since a relative increase in market share results to cost advantage, and (2) growing market entails investment in assets to increase capacity which requires expenditures (Internet Center for Management and Business Administration Inc., 2005). Along with these assumptions, the BCG Matrix is recognized for its logical and simple approach to industry competition analysis as well as its functionality when allocating finances to specific products or services within a company.
Using the BCG Matrix, the products offered by the company result to four categorizations symbolized by (1) the stars, (2) the cash cows, (3) the question marks, and (4) the dogs. The stars are the products that produce or generate large profit or cash for having relatively strong market share but are also characterized with large expenditures due to relatively high market growth, therefore balancing its net cash flow. Meanwhile, the cash cows are the leading products in a mature market that generate large return on assets since they have large market share. Because cash cows have already exhausted growth rate in the market, expenditures on them are lower. Question marks are the products characterized with increasing market growth and thus entail cash consumption. However, since question marks are mostly new or immature products, they only have small or limited market share and do not generate large cash for the company. Lastly, the dogs are the products that exhibit low growth rate and market share that neither generate nor consume large amounts of cash. Most dogs are recommended for liquidation due to their little business potential (1998).
In this light, product analysis using the BCG Matrix of G2000 (Apparel) Limited is presented to illustrate the business growth rate as well as the relative market position and share of each clothing line offered by the company. Below is an illustration of the product analysis of G2000 Group clothing products using the BCG Matrix (see Figure 1).
Figure 1. BCG Matrix of G2000 Clothing Products
The Question Marks. All the products in the question marks category are critically evaluated, assessed and examined by the company in order to determine those that will be invested upon and those that will be kept for future market launching. The question marks products are the brand collection of the G2000 (Apparel) Limited which include the future formal ladies and menswear of G200, the future casual ladies and menswear collection of U2, and the present and future informal ladies wear collection of UWoman. These products are the collections that are growing and will grow rapidly and consume large production and manufacturing amounts but are characterized with relatively low market share and have relatively low profit generation capability. Under the question marks category, the company invests a few selected products in the hope of transforming them into stars and consequently to cash cows upon market maturity. Still a portion of these selected products has the possibility of degenerating into dogs in cases of continuous high production cost and low market share.
The Stars. The stars correspond to the products that are characterized with high growth and high market share. In the case of G2000 Group apparel products, stars include all the present and incoming collection for the succeeding seasons for both the ladies and gents formal (G2000) and casual (U2) clothing lines. These products are highly in demand in the market which requires the company to invest assets for their production and manufacturing. Moreover, the present informal ladies wear collection under the brand name UWoman is also classified under the stars category. These are also the clothes that entail high marketing and advertising cost in order to keep the market share and profitability to at least balance the net return of profits of the company. As such, the stars products of the Group call for further market growth rate to reach maturity and continuous increased market share to become cash cows products.
The Cash Cows. The cash cows are the products under the brands that G2000 (Apparel) Limited has constantly relied on due to high return on assets and low production expenditures. The presently offered G2000 formal ladies and menswear collection and the U2 casual ladies and menswear collection are among the products that are characterized with relatively high market share and relatively low production cost. These collections have greatly and continuously contributed to the net profit of the as the products that compose the Group’s bulk of regular sales. Upon product maturity and continuous increase in market share, the UWoman collection will be included in this category. In this regard, the G2000 and U2 collection should continue its high market share so as to maintain product profitability and to avoid demotion with the dogs as candidates for liquidation.
The Dogs. The dogs are products with relatively low growth rate and relatively low market share making them cash traps due to the money or investment tied to such products characterized with little business potential. In the case of G2000 Group, these products include the out of season collection of the G2000 and U2 brands which have long been available in the market. These collections include the past cash cows of the company and the divested options under the question marks category. The dog categorized products could prove to be unpredictable particularly to the past cash cows since there are cases when after a few years of low market share, demands for the products can occur based on the economics in the fashion clothing line industry.
Clearly, any commercial, entrepreneurial, private as well as public organizations and institutions who has a financial arm to manage the funds of the group, is faced with the objective of maximizing the shareholder wealth and not the profit as was stated in the theory of financial management. The business, in order to effectively execute any business strategy and plan, should be able to determine first and identify the resources that are available in the company. Studying and examining the opportunities of the available resources will help in constructing a business plan that will be profitable. The characteristics of the business should be clearly laid out and the ideas that will be made available should be thoroughly researched. This will provide relevant information that the general management can utilize so as to be able to allocate the funds of the company in the most effective way.
Competitor Analysis
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 ( 2001). Today’s market is characterized by highly competitive organizations which are all vying for consumer’s loyalty. Firms are faced with the challenge to maintain their own competitive edge to be able to survive and be successful. Strategies are carefully planned and executed to gain the ultimate goal of all: company growth. However, external factors are not the only elements which influence growth.
At present, most companies find that it impossible to create any kind of sustainable competitive advantage based on product alone. The traditional way of viewing company operations as an interplay between the product, the market and the organization is completely insufficient in a world of ever-hardening competition. For an effective marketing, a competition strategy should be created. For the key to superior performance, the competition strategy must encompass an analyse of the target market (the group of people whom the organization wants to reach) and a marketing mix (the conjunction of product, price, place and promotion) that will satisfy those customers in the target market ( 1992). Once the competition strategy of a firm is determined the whole business should be designed around the target customers` needs. It is common knowledge that every one of the successful companies sought and found a precise understanding of how it could create a customer-centered competitive advantage.
The McKinsey/GE matrix is a portfolio analysis model which has overcome some of the critiques against the BCG Box. It replaced market growth in the BCG with market attractiveness and it replaced BCG market share with competitive strength to be able to gauge the competitive position of each strategic business unit. It includes other factors which the BCG market growth has failed to include before (Day & Wensley, 1988; Wind, Mahajan & Swire, 1983). Among the factors that affect market attractiveness are: the (a) market size, (b) market growth, (c) market profitability, (d) pricing trends, (e) competitive intensity or rivalry, (f) overall risk of returns in the industry, (g) opportunity to differentiate products and services, (h) segmentation, and (i) distribution structure. Meanwhile, the factors that affect competitive strength include the: (a) strength of assets, (b) relative brand strength, (c) market share, (d) customer loyalty, (e) relative cost position or the cost structure compared to competitors, (f) distribution strength, (g) record of technological or other innovation, and (h) access to financial and other investment resources ( 1988; 2000; 1982).
Moreover, the McKinsey model argues that companies need to develop growth strategies based on (1) operational skills, (2) privileged assets, (3) growth skills, and (4) special relationships. The operational skills of the company are its core competencies which provides the foundation for a growth strategy; the privileged assets are the positive qualities and capabilities of the company which are difficult to meet, parallel, and/or replace by the competitors; the growth skills are the critical success factors or key performance indicators that the company needs to manage further; and the special relationships are the business contracts and agreements that can expand the ventures of the company through added options and opportunities (1988; 1991; 1983).
As was mentioned earlier, among the largest apparel manufacturers in Hong Kong that likewise operates clothing fashion outlets in China includes Lai Sun Garments (under the brand Crocodile), Trinity Textiles, Smart Shirts, Giordano, Tal Apparel, Fang Brothers Knitting (with brand names: Jessica, Episode, Colour 18), Unimix (with brand names: Gieves & Hawkes, Lee Cooper Jeans), Peninsula Knitters, Esquel Enterprises, Yangtzekiang Garments (with brands: Michel Rene, Daniel Hechter), Crystal Knitters, Goldlion and Winner Co. Garments which offer retail apparel products internationally. Other recognized apparel companies that manufacture overseas through sub-contractors include Esprit, Bossini, G2000/U2 and Shanghai Tang. Esprit Bossini and G2000/U2 are the local retailers and franchisers which are characterized with relatively stronger local market share compared with the foreign brands in the same price range like Benetton and Mango (2004).
Analyzing further the business competitiveness of G2000 against other existing companies belonging to the fashion clothing line industry using the GE/MacKinsey Matrix leads to presentations of the based on the clothing line offerred in the China. The following diagrams (Figures 2 and 3) show a rough comparison and market positioning of the Group in China’s fashion industry. As such, the ladies wear and the menswear clothing lines in China’s fashion industry were separately illustrated in two GE/McKinsey matrices.
Figure 2. GE/McKinsey Portfolio Analysis for Ladies Wear Clothing Line Fashion in China
According to (2004) female executives in the late 20s to mid 40s generally buy local brands such as G2000, Bossini, Giordano Ladies, Jessica, Esprit, Moiselle, Cour Carre, Gay Giano, Episode, Color 18, Michel Rene, Daniel Hechter or foreign labels like Mango, Susuza, Benetton, Indivi, A/T, French Connection, Polo Jeans, Ralph Lauren Polo, Tommy Hilfiger, Agnes B, Kookai, DKNY, MaxMara, Prada, Nicole Farhi, Gucci, Armani Exchange, Emporio Armani and Giorgio Armani. Unlike their male counterparts, very few female executives buy tailored work wear. Moreover, specific apparel products like (a) women’s or girl’s overcoats, car coats, capes, cloaks, anoraks (including ski-jackets), wind-cheaters, wind-jackets and similar articles; (b) women’s or girl’s suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear); and (c) women’s or girl’s blouses, shirts and shirt-blouses are among the best business highlights and prospects for the Chinese female population ( 2004).
It is evident, based on the cited study (2004), that the G2000 ladies wear clothing line fashion is highly favored by Chinese locals particularly the Hong Kong women executives which made the company very competitive compared to other local as well as international fashion apparel brands. This likewise provides explanation and rationale for the Group’s expansion initiatives in terms of products and designs for women through the UWoman clothing line which targets female consumers who prefer the informal wardrobe collections. It is also interesting to note that local brands are relatively highly chosen fashion apparel providers as compared to international brands like Mango, Susuza, Benetton, Indivi, A/T, French Connection, Polo Jeans, Ralph Lauren Polo, Tommy Hilfiger, Agnes B, Kookai, DKNY, MaxMara, Prada, Nicole Farhi, Gucci, Armani Exchange, Emporio Armani and Giorgio Armani.
Figure 3. GE/McKinsey Portfolio Analysis for Menswear Clothing Line Fashion in China
On the other hand, local male executives favor Marks & Spencer, G2000/U2, Kwun Kee Tailors, Dockers, Nautica, Ice Fire, D’urban, Brooks Brothers, Hugo Boss, Canali, Emporio Armani, Jean Paul Gaultier, Paul Smith and Giorgio Armani. Moreover, (a) men’s or boy’s overcoats, car coats, capes, cloaks, anoraks (including ski-jackets), wind-cheaters, wind-jackets and similar articles; (b) men’s or boy’s suits, ensembles, jackets, blazers, trousers, bib and brace overalls, breeches and shorts (other than swimwear); and (c) men’s or boy’s shirts are the apparel products that appeal most to the local male population (2004).
Analyzing the competitiveness of G2000/U2 male clothing line fashion, it appears that foreign brands are highly favored by the male Chinese compared to the market position of the locally manufactured and produced menswear clothing collection. Marks & Spencer gained the most favorable competitive stand followed by the G2000/U2 menswear collection. Despite such situation, G2000/U2 still holds a highly favorable market position in the local fashion apparel market.
With these findings, it is apparent the conceptualizing, planning and executing business strategies in order to create highly favorable competitive advantage and market attractiveness. These considerations could result to the achievement or attainment of the short-term as well as the long-term goals of the company to succeed in a particular industry. More challenging factors, however, are present when business organizations decide to initiate change in the industry through innovation and technology in product or service production and manufacturing, business operations, and advertising and marketing. Furthermore, initiating such developmental changes in different market orientation to offer products and services to people with diverse cultural and social orientation identifies other issues for a successful business venture.
According to (1993) business in our society plays a very important part in “shaping the structures of our society” and in “challenging traditional values”. Corporate competitiveness will be achieved by those companies that are successful in formulating, implementing and communicating sound global strategies. For decades, corporate strategy practitioners and academic researchers have drawn widespread attention to the importance of formulating comprehensive, sound, futuristic corporate strategies (1996). Corporate strategic success can be figured out by strategy implementation of the companies’ core objectives in order to achieve the long-term goals and mission of the organization.
III. MARKET SEGMENTATION
A. Customer Analysis
Customer satisfaction refers to the consumer’s positive subjective evaluation of the outcomes and experiences associated with using or consuming the product or service. It refers to either a discrete, time-limited event or the entire time the service or product is experienced ( 1998). Satisfaction occurs when the product has been able to meet or exceed the conceived expectations that the customer has (1996). Furthermore, customer satisfaction may also be considered as the measure of the high degree of quality of the product ( 1998). (2003) deemed that once a product or service has been delivered or sold, its quality is believed to have been established.
Customer satisfaction is the primary aim of marketing. Most enterprises ensure the best possible chance of attaining long-term stability and competitive standing through comptehensive customer analysis and implementation of marketing communication plans. Marketing makes the basic assumption that customer satisfaction should be the primary aim of the business. Such satisfaction can only be achieved and sustained through the provision of competitive products or services, at competitive prices (1996). It should focus on every aspect of marketing, not only on promotion and sales techniques, to persuade customers to buy but also on target market, marketing mix and the effective marketing strategy ( 2001) because successful marketing results in stronger products, happier customers, and bigger profits.
According to (2004) the demand from the Mainland Chinese tourists will emerge as the primary market trend setter in the coming years particularly the increasing imports of luxury apparels from Italy, France, UK, USA, Japan, Korea and the Philippines. However, the employment and unemployment rates in the country will highly determine the type of apparel that the majority of the Chinese population will look for. As such, low-end apparel as well as mid-priced clothing products that normally characterize the casual, wearable and suitable for everyday uses garments which are less designer-focused will have increased competition in the local market. US and locally made apparels comprise these future clothing trends as consumers become more cautious in spending.
Moreover, customers recognize the importance of knowledge in relation to the product being purchased. Several consumer behavior researches testified to this fact. (2000) argued that a customer evaluates a product or a service. Such action is based on the customer’s reaction from the using the product or service, which means that the product or service should leave a good perception to the customer’s contentment. (1995) explained that it can be ensured that a customer is satisfied by taking into importance the value package, which includes: price, product quality, service quality, innovation, and corporate image. Others also stated the importance of maintaining or establishing a uniqueness of the product, while also understanding customers and what pleases them ( 1993). Customers should also understand the product and be allowed to set their own standards in order to be satisfied ( 1995).
Furthermore, 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 (1999). Aside from having a strategic purpose, gaining customer loyalty is also a key corporate challenge today especially in this increasingly competitive and crowded marketplace because of the eventual profitability it will provide (1997). Every business wants to have a regular customer base because customers dictate profits and how the customer is treated will reflect on whether the customers will remain loyal with the company or not.
This concept is illustrated by (1997) in a study about the textile and apparel industry. Competition forces certain brand names to become stronger than others because of product loyalty and name recognition. Consumers tend to buy what is already familiar to them. Thus, it becomes imperative for retailing outfits, especially small or exclusive ones to build a steady base of customers to exist in the competitive marketplace. This relationship becomes mutually beneficial with the company, gaining steady profit and the consumer having the product/s of the said company. Consumers tend to buy what is already familiar to them (2000). It becomes imperative for retailing outfits, especially small or exclusive ones to build a steady base of customers to exist in the competitive marketplace.
(1994) stressed that the relationship of consumers to certain brands are established through the individual’s concept of oneself. However, the company can go a step further and make additional profits by cross-selling as well as save money from having to acquire new or replacement customers. The consumer, on the other hand, can also do the same, by demanding benefits from being a loyal customer that companies would certainly give to maintain them. Previous researches have concluded that satisfied consumers are more loyal to the product as compared to unsatisfied customers (2000). Meanwhile, customers may remain loyal for a number of reasons and may not even be happy with the product or service (1999). Customer loyalty becomes evident when choices are made and actions taken by customers (2003).
All these issues will be taken into consideration in order to facilitate effective market penetration of G2000 products, particularly the UWoman clothing line in the Chinese local market. Since the UWoman products cater to more usable and ordinary dressing attire which are relatively priced lower than the formal and the informal clothes, successful market integration of the company appears feasible and effective based on the growing trend towards more wearable apparel clothing as dictated by the local consumers in China, particularly by the local market. Brand competition seems negligible in this regard.
B. Market Segmentation
Initially, the understanding of buyer behavior is one of the more perplexing tasks confronting every manager (2000). The difficulty arises from the heterogeneity of buyers, from being groups of individuals who differ from one another. But notwithstanding differences, consumers do share attitudes, opinions, reactions, and desires at various times (2000). Business experience, marketing research, theoretical constructs and models, and trial-and-error methods help to find some of the common denominators.
Market segmentation fully recognizes that buyers of any product or service category need, desire, want and expect different performance characteristics from products or services in the category. It helps the company to position the product properly and prepare marketing strategies to satisfy a more focused range of consumer needs and wants. Furthermore, it is also a factor in effectively using limited marketing resources, identifying unique market niches, improving profitability and helping to retain consumer loyalty. The basis for the market categorizations of clients and customers include the (1) demographic characteristics, (2) the geographical location, (3) consumer behavior, and (4) psychographic characterizations (2001).
Consumers around the world are different in various factors such as age, income, education level and preferences which may affect the way they avail of goods and services. In the case of the initiatives of G2000 to penetrate the Chinese local market through the introduction of the UWoman clothing line, the product or service being offered could be a good start in planning and executing an effective campaign. Knowing the product and its demands in the market as well as the people who will likely avail and take advantage of the offer will open the possibilities for a campaign that will be most ideal in the market. Looking into the characteristics and thought processes of the people still holds as the most significant factor to be looked into by the individuals in the field of sales and marketing. The large scope of market can pose a hindrance to a successful marketing strategy in terms of over generalized definition of the target or niche market.
According to (2001), consumer buying behavior refers to the buying behavior of the individuals and households who buy the goods and services for personal consumption. This behavior then impacts how products and services are presented to the different consumer markets. There are many components which influence consumer behavior namely: cultural, social, personal and psychological ( 2001). As such, consumers can either be subjective or objective, testing the persuasiveness of brand names. Retail stores selling the products also play an important role in swaying the decisions of consumers. The whole package or visual appeal of the retail outlet can determine sales, or the service of the sales ladies or the clerks.
Furthermore, consumers may choose particular products/brands not only because these products provide the functional or performance benefits expected, but also because products can be used to express consumers’ personality, social status or affiliation (symbolic purposes) or to fulfill their internal psychological needs, such as the need for change or newness (emotional purposes) (2002). In this regard, the market segmentation for the UWoman apparel products focusing on consumer behavior and psychographics entails the identification of the governing social norms and culture in the local Chinese market as well as the general buying behavior of the Chinese population. Moreover, the existence of foreign nationals in the country should be likewise taken into consideration fro more effective and comprehensive segme3ntation of the market to identify the target consumers.
C. Target Market
Of all the components of a marketing plan, perhaps the most overlooked but most critical element is the definition of the target market. According to Claravall (2000), it is a homogenous group of people or organizations that a company wishes to appeal to. There are two basic targets for a product or service: the user and the non-user segments. Thus, there are also two business and marketing decisions that the company must decide upon in light of the basic targets. The first is to cultivate the present market alone while the second is to go after non-users. The former can inspire consumer loyalty which is an important factor in the survival of any business. These are among the consumer characteristics that G2000, particularly UWoman clothing line, should identify and gain market visibility.
Culture influences behavior through its manifestations: values, heroes, rituals, and symbols (2001). Since the market for chain convenience store is in the international orientation, the management as well as the advertisers should keep in mind the differences that are distinct between and among the target market from different cultural backgrounds which significantly affect the effectiveness of the campaign. The fact is there may be ideas that will not be applicable across the diverse target market population. Studies on the relationship of consumer behavior and their personal values and cultural orientation as well as their beliefs on certain principles, the dispositions they hold and side they take on political, gender and social problems and issues should be duly accorded.
Moreover, companies now face the challenge of making its target consumers respond accordingly to their marketing efforts and those who understand its consumers’ responses will have a great competitive advantage (2001). As such, there is a need for a common understanding with regards to UWoman offers and the needs of its targe5t market in order to initiate market share among non-users and extensive customer loyalty among patrons. This will further the economic gains of the company and the achievement of corporate goals and objectives. Since the UWoman clothing line focuses on the marketing of casual wear among the female middle age population of the local Chinese consumers, the company should make it a point to provide marketing and advertising efforts that will most appeal to the targeted market through critical market analysis of consumer preferences and consumer behavior in the locale.
Practically, essential decisions that are taken in developing an effective marketing mix for specific product/service are based in the systematic knowledge of the consumers that make up its permanent target market (1990). (1990) believe that understanding the behavior of the consumer is the most basic step in helping marketing authorities to visualize and predict future trends, reactions, and changes in the marketing mix. It may also serve as a reference in determining the potentials of new products and its adoption. The identification of the characteristics and buying preferences of the target market will make it possible for UWoman garments to strategically conceptualize the value proposition and marketing agenda of the products to appeal to the female population. Conceptualization and developing future products for the UWoman clothing will likewise prove easier and accurate to the needs projected by the female purchasers of casual wardrobes.
IV. MARKETING STRATEGY
A. Product Strategy
Cultivating customer loyalty is about establishing a relationship between the company and its consumers ( 1997). This is emphasized by (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 UWoman 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, (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 ().
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 UWoman 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 UWoman clothing line products in the Chinese market.
B. Distribution Strategy
According to (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 G2000 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 UWoman apparels.
In China, the domestic channels for apparel are characterized using three dominant patterns as shown in the schematic diagram below (Figure 4). Approximately 70-80% of the garments in the local market are distributed in the local market through Pattern A ( 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) ( 1999).
Figure 4. 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 G2000/U2/UWoman 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 (2006).
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 (1979; 1990). Channel communications works in a two-way system wherein information transfers to the user and bounces all the way back to the producer (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 (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, UWoman clothing line 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 UWoman 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 UWoman apparel.
V. IMPLEMENTATION PLAN
Recommendations as to how the company will conduct its marketing communications plans is governed by the assumptions that using the right mix of advertising tools (TV, Internet, print and radio) will allow the company to get the best of online and offline advertising. Following is the six-month communications plan for the launching of the company.
1st Two Months. This is when initial collaboration with prospective advertising partners should be done. They should be selected by virtue of their reputation and performance in handling advertising tasks. The company will contact partners that will cater to its need to be publicized online and offline. Specifically, the company will employ extensive new media, TV, radio, and print campaign. Each would-be partner will be given the chance to present their marketing plans for the company. There will intensive negotiations between suppliers, assessment of artworks, and evaluation whether such marketing strategies are designed following the company’s objective. The activities will include the following:
· Complete a detailed situation analysis to examine the context of the environment and to determine the need for the project.
· Involve the stakeholders of the project so as to consider their needs and preferences.
· Identify alternative options of the organization so as to exhaust the available alternatives.
· Set the assumptions and objectives of the project to distinguish the direction as well as the standards for project assessment.
3rd and 4th Months. Once the right mix and budget communications were decided, it is expected that at this time of the year, all the advertising outputs will be ready for their launching nationwide. The advertising efforts will be completed by criteria to measure its effectiveness. Intensive researches will be implemented to determine the success of each campaign tool. Advertising media could be in the form of brochure, newsletter, printed materials, the Internet, newspapers, radio, and television. The communications department of the company will be directly responsible on monitoring the content design, layout, dissemination, and communication training and development for employees and executives. Furthermore, the department is also expected to supervise all the market and attitudinal research. The activities will include the following:
· Determine project size in order to limit the concerns of the project, identify the necessary resources, and evaluate its feasibility.
· Examine the available resources whether material or human that should be acquired to meet the goals of the project.
· Analyze the risks, benefits, and costs of the project so as to ascertain the project's financial return that will assist to the long-term goals of the organization.
· Develop a master plan that details the focus and concerns of the project's goals.
5th and 6th Months. The last period of advertising campaign will focus on the maintenance and management of media relationships. Research findings must guide the company on appraising its marketing approaches. All the steps that will be taken must be geared towards the determination, development, and design of the organization image, presence, and reputation. The activities will include the following:
· Document all the development and changes of undertaking the project at all its stages.
· Coordinate planning and project efforts between all of the project participants.
· Effectively and efficiently manage information, technology and people.
VI. EVALUATION AND CONTROL
The art of planning for the future has always been a human trait as humans are thinking individuals. In essence a project can simply be captured on paper with a few simple elements: a start date, an end date, the tasks that have to be carried out and when they should be finished, and some idea of the resources (people, machines etc) that will be needed during the course of the project. When the plan is one which involves different things happening at various times, some of which are interconnected on each other, plus resources needed at varying times and in different quantities and perhaps working at different rates; monitoring and control of the project is required for its successful and timely completion. The following activities will be initiated during the entire monitoring and control of the marketing campaign:
1. Detail the activities undertaken to close the project.
2. Outline outstanding issues, risks, operational matters and recommendations.
3. Determine if the objectives of the projects were met.
4. Deliver all the outputs generated by the project.
5. Enumerate the significance and benefits to justify the cause and rationale of undertaking the project.
6. Prepare a report or presentation that will detail the accomplishment of the project.
7. Monitor and regularly evaluate the development to ensure the timely completion of the project.
8. Ensure a logical intervention strategy to minimize the unnecessary impact of undertaking the project.
9. Identify cross-cutting objectives to be able to work on the project based on the assumptions considered.
10. Prepare back-up plans to supply assist for the possibility of unforeseen difficulty during the course of the project.
11. Plan for capacity development and sustainability to ensure the continuous implementation, control, and evaluation of the project.
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