1: Introduction to Addicion: The Company
Addicion
is a French company dealing in fashion footwear and accessories. Addicion has
been serving customers with great shopping experience for 25 years. First
outlet was located in the area nearby an art gallery and patisserie which has a
deep impact on the aesthetical outlook of the store. Valerie has developed a
deep passion for fashion and enthusiastic about improving the lifestyles of
everyone. Over the next 10 years of excellence, more shops were included in the
entire region of France. Then it started out shops in Spain and Italy.
Furthermore, in 2008, the first shops in Germany and the UK were also started
out successfully. Now the company has a vast network of stores across the
Western Europe. The products of the company include heels, buckle belts, bags,
scarfs, hats, necklaces and patent bags etc. The core values of Addicions
revolve around three basic principles as follows:
Great Atmosphere: Provision of relaxed environment and
comfort zone has been the part and parcel of the core value of the company. It
provides a recluse from hectic street life of urbanized centers of Europe.
Great Design: Aesthetics has been an important and
integral part of Addicions. Without providing great designs a fashion hub
cannot be completed; therefore the company’s management ensures its clients
that it will provide the full support to its clients in what they want.
Great Service: The staff of company is always on the
forefront to help its clients out from any unwarranted situation. They guide
and inform them thoroughly to provide them a complete map of their services and
what they can do for them and what they can do for them.
1.1: Addicions Strategic Marketing Process (SMP Process)
Strategic
marketing process is a systematic way of marketing planning, aligning processes
and resources to establish a direction of marketing programme. SMP is a five
step process (Handlin, 2014) comprises of identifying company’s mission,
analysing the company’s situation in market, developing marketing objectives,
crafting appropriate marketing strategies and finally implementing and
evaluating developed marketing and business strategies.
2: Situational Analysis
It is
mandatory to conduct situational analysis prior developing marketing plan for a
company (McDonalds & Wilson, 2011). Complete knowledge of internal and
external environmental features play a vital role in formulation of marketing
strategies for business (Steenburgh & Avery, 2010). Managers can acquire
this knowledge through situation analysis (Bradford et al., 2012). Brown (2008)
stated that situation analysis provides a snapshot of business operations. He
further stated that situation analysis helps analysts identify the factors
which affect business operations. These factors include internal and external
market factors. Lussier (2011) also argued that situation analysis is conducted
to find the factors which have direct impact on business operations. This
analysis also helps evaluated current marketing strategy and identifies the
need of any changes in marketing strategy (Hair, 2006). According to Steenburgh
& Avery (2010) situation analysis can be conducted through different
methods such as 3C’s analysis, SWOT analysis and Porter’s five forces analysis.
First of all it is mandatory to study the market environment and structure of
UK.
2.1: Market Overview
Fashion
market of UK is growing steadily with the growth rate of 2.6% annually with the
size of market is £28.2 Billion (Sales). Market can divide in four segments on
the basis of demographic characteristics of customers (Drummond et al., 2010). The
segments are Children Garments, Young Fashion, Women’s Wear and Mature Women
Wear. On the basis of product category the market is clearly divide in four
sectors. The four product categories are Branded Clothing, Own Label Clothing,
Footwear and Accessories. Market competitive rivalry shows that there is a
tough competition between key market players. On the basis of market
competition it can be concluded that 50% of market share has been kept by five
major market players and the rest has been captured by domestic small
companies. Five major key players are Addicions, Dolly & Dan, Moores, New
Fair Lady and Pioneers. Each company is enjoying 10% market share with
specialised product lines they are offering.
Figure 1: UK Market Share in Sales
Graph 1: UK Market Share in Sales (Product Category Wise)
In UK,
sales of Own Label Clothing product category is approximately 2/3 of overall
market share and from rest of three product categories Footwear sales has been
recorded more than Accessories and Branded Clothing.
2.2: 3C’s Analysis
This
analysis is a useful tool in situation analysis to identify internal macro and
micro environment factors affecting business operations in a certain market
(Net MBA, 2010). This analysis comprises of 3C’s which include company,
competitors, customers, collaborators and climate (Net MBA, 2010).
2.3: Company Analysis
Researcher
identified that Addicions has the mission to be the best place for consumers to
buy fashion accessories for which Addicions has developed an effective
marketing mix which offers a range of variety in fashion accessories. The
product line includes heels, buckle belts, bags, scarfs, hats, necklaces and
patent bags etc. So, company has been
offering diverse product line to capture more customers.
2.4: Competitor Analysis
Addicions,
the company has four competitors in market and all competitors are targeting
the same market but every competitor is specialised in one segment or product
which is presented below.
Main Competitor
|
Products/ Markets
|
Business direction and current
objectives and strategies
|
Competitive Position (ranked by market
share)
|
Addicions
|
All ages covered but core business is
Accessories
|
Dominate the accessories market by
providing an excellent shopping experience
|
Joint #5 (10%)
|
Dolly & Dan
|
All products and market sectors
covered
|
Dominate the market by providing the
lowest priced fashion on the high street
|
Joint #5 (10%)
|
Moores
|
All ages covered but strongest in
Branded Clothing
|
Dominate the Branded Clothing market
by providing the very latest trends
|
Joint #5 (10%)
|
New Fair Lady
|
All products covered but focused on
Mature Women
|
Dominate the Mature Women's market by
selling high quality fashion
|
Joint #5 (10%)
|
Pioneers
|
All products covered but focused on
the youth sectors
|
Dominate the under 26 age groups by
being a truly ethical company
|
Joint #5 (10%)
|
Table 1: Competitor Profile (Source: See Marketing Plan)
The
company Addicions is competing with its competitors on the basis of excellent
customer experience which enhances customer’s loyalty towards the company
brand. This is a strategy to compete with strategic core values (Hooley et al.,
2008). Moreover all competitors have captured almost equal capital share but
their future plans may determine the dominancy of a single market player.
2.5: Customer Analysis
Customer
in UK fashion market has been segmented into four categories which includes
children (0 – 14 years), young women (15 – 25 years), women’s wear (26 – 39
years) and mature women (40 years and above) as Addicions is targeting all
consumer segments so it has more chances to capture large market as compared to
its competitors. Moreover four product lines are offered to these market
segments which includes branded cloths, own labeled cloths, footwear and
accessories. Consumers in UK market frequently purchase own labeled products.
2.6: SWOT Analysis
Brown
(2008) argued that SWOT analysis is a useful tool which identifies internal
environmental factors as well as external environmental factors which affect
business operations of a company. He further stated that this analysis helps
evaluate current utilization of company’s resources and identifies major
opportunities which can be grabbed through proper resource allocation. Here
researcher has identified that as overall fashion market is driven by strong
customer demand varying rapidly for new and distinct fashion so all competitors
have to work hard to fulfill those varying consumer demands. Major strengths of
Addicions include its marketing strategy of targeting all market segments for
which it has developed a diverse product line. But it is observed that Addicions
is offering only accessories to its consumers and not offering own label
clothing which has highest demand in the market.
UK
fashion industry offers many opportunities to all market players because there
are many segments with low competition which may be targeted to achieve
competitive advantage. Moreover, new technology and rising demand of consumers
is offering potential opportunities to serve consumers and achieve business
objective through enhanced sales and profit margins. Major threats observed in
UK fashion market includes tough competition among five major market players
because these five market players have equal market share and constitute 50% of
market share together. Moreover, other threats in industry include slower
market growth and varying consumer needs due to fast fashion.
2.7: Porter’s Five Forces Analysis
In
situation analysis, Porter’s five forces model helps evaluate industry
environment (Lussier, 2011). This model helps understand the current market
position for all market players in a certain industry (Lussier, 2011). Here
researcher has identified that market entry and exit barriers are not very high
for new entrants due to low regulating measures and cost to initiate the
business. So, fashion industry is well open for all new comers. Researcher also
found that currently five players are competing in the industry which shows
that substitute threat is higher currently in the industry. Moreover, supplier
bargaining power is not very higher due to availability of huge number of
suppliers of same raw material while bargaining power of buyers is also
moderate although many substitutes are available in market but brand loyalty is
higher among customers due to quality factor. In last, rivalry among
competitors is medium because customer is less likely to switch to other brands
due to higher values and quality perceived with their current brands so
competitors have to work hard to capture and raise the market share.
3: Addicions Marketing Objectives
On the
basis of assumptions which include that inflation would remain stable over the
described period of analysis, there will not occurs any disruption in business
and no new competitor will come on the fore, the researcher has developed the
SMART objectives for the work. These assumptions will be considered in every
market objective. SMART is an acronym of Specific, Measurable, Action-oriented,
Realistic, Relevant and Time-based. Hence, SMART objectives deal with what,
who, how much or how many, description of result, relevance to business and by
when of any marketing, sales or business planning.
3.1: Addicions Sales Objectives
For
marketing sector, key market sectors have been divided into four categories
i.e. of children, young fashion, women’s wear and mature women. Market sale is
divided into two periods in every year. For children’s section, the sale is
expected to increase 10.66% in first year, and 10 % in second and third year.
For every period in a year, the sale increase is 5%. In similar fashion, for
young fashion the sale is divided into two periods. For first year sales is
expected to increase by 10.66% and for second and third years, it is also
expected to increase by 10% for each year. Moreover, for every period, the sale
is expected 5% increase every year. Same marketing sales trends are to be found
for women’s wear and mature women. For these two categories, there has been
taken two periods for every year with 5% increase in sales.
3.2: Addicions Profit Objectives
In
marketing profits, during the first year, the profit for the segment of
children is expected to increase by 10.66 %. During second and third year,
there will be an increase of 10 % every year. As it has been mentioned above
that there are two periods every year; therefore for each period there will be
an increase of 5 %. In the market segment of young fashion, there will be an
increase of 10.66 % profit for the first year and 10 % for second and third
year. For each period there will an increase in 5 % profits. Similar trends in
the increase in profits have been found for other segments. The net profit for
the first year is found to be 10.66% and for the second and third year 10 %.
3.3: Addicions Product Group Objectives
Product
groups have been categorized into four segments: branded clothing, own label
clothing, footwear and accessories. Gross margin for branded clothing is -1 %
during first, second and third years. For own label clothing gross margin is 16
% for the first, second and third year. Similarly for footwear and accessories,
gross margin is 15 % and 16 % respectively for first, second and third year.
Profit on sales is 11 % for all products in the first years. Profit on sales
for second and third is 11 % for second and third for every product group.
4: Addicions Marketing Strategy
A
strategy which is implemented by marketers to attain competitive advantage in
marketplace is termed as marketing strategy (Libecap & Thursby, 2008) while
marketing strategy is a process of selection and targeting of suitable market
segment and developing an effective marketing mix for target audience (Ferrell
& Hartline, 2012). This process leads us towards STP process which is a
three step process used by marketers to develop marketing strategy. Here
researcher has identified the following strategies implemented by Addicions
during different periods. It is very clear that here whole UK fashion industry
is market which has been segmented into four categories on the basis of
demographics which includes children (both male & female and age between 0
to 14 years), young women (15 to 25 years), women’s wear (26 – 39 years) and
mature women (40 years and above).
Moreover all market players are offering
four kinds of product lines including branded cloths, own label brands, footwear
and accessories. Now, Addicions has been targeting all demographic segments
(Doyle & Stern, 2006) with its specialised product line regarding fashion
accessories which includes heels, buckle belts, bags, scarfs, hats, necklaces
and patent bags etc. With its diverse product line in accessories Addicions has
been generating almost same volume of sales and profit margins as compared to
its competitors who are specialised in other product lines such as branded
clothing, own label clothing and footwear. In order to enhance its market
share, sales volume and profit margins Addicions has taken a strategic step of
promotional expenditure of about £36 million in all segments to improve its
product positioning among consumers and it has also appointed 160 full-time
marketing staff to work aggressively in marketplace. The company has been
utilizing its current resources efficiently to meet its sales and profit
objectives of 10% growth in each year.
Here it
is observed that Addicions could target other potential markets which may
produce good results for company and help firm achieve its marketing and sales
objectives. As it is clear from market overview that about two third sales
belong to own labeling products so Addicion could target this market to achieve
its objectives because already Addicions is targeting all consumer segments so
promoting a new product line to its existing consumers will not be a problem
for Addicions. Moreover, Addicion’s resource allocation in all segments is also
a proof that Addicions has future plans of identifying and targeting most
potential markets in future to capture large market share. Furthermore, fashion
industry growth in UK market is paced slowly so no company can survive in
future by offering its products to existing customers only and same is true for
Addicions so, Addicions has to alter its current marketing strategies and need
to target other low competition target markets as identified in situation
analysis.
4.1: Full Coverage Strategy
Addicions
adopted market full coverage strategy to accomplish its sales and profit
objectives (Doyle & Stern, 2006). Since the company is focusing on best
customer experience by offering quality and comfortable shopping atmosphere
therefore these core values would be the strategic tools of Addicions in
future. Addicions marketing strategy was focused to compete with all market
retailers by offering best shopping experience and company beautifully designed
its stores and developed service strategies to accomplish better customer
experience. Addicions developed two market strategies for market share. For
short term purpose, Addicions adopted “Market Penetration” strategy whereas for
long term purposes “Market Development” strategy has been developed. For short
term goals, Addicions focused to penetrate in all market segments with
comparatively low price products to quickly capture required market share.
Furthermore, Addicions market penetration strategy focused on improving value
proposition in each segment to retain market captured market share for long
run. On the other side, Addicions adopted “Market Development” strategy for the
accomplishment of long term objectives and market development. To sustain
captured market share and to explore new horizons of market, Addicions
allocated its scare resources for continuous improvement in service provision
and service innovation.
Through market development strategy, Addicions focused
to capture market share in “Own Label Clothing” and other product categories
through service innovation. On the basis of analysis of consumer behaviour it
has been concluded that consumers are willing to pay high prices for quality
products of Branded Clothing, Own Label Clothing and Footwear product
categories. Parents are willing to pay high prices for branded clothing for
their children and adult women are also willing to pay highest prices for the
provision of quality, uniqueness and innovation in clothing. Moreover, it has
been concluded that adult women usually have high disposable income and they
can easily buy high price quality products. On the basis of above consumer
behaviour analysis, Market Development strategy of Addicions seems effective (Gilligan
& Wilson, 2012). Addicions will offer high quality designed products with
innovative services and shopping experience at store on comparatively high
prices to maintain and achieve company’s profit and product development
targets.
5: Control and Implementation of Strategies
The
company is aimed to achieve approximately 10% growth in sales volume and
profits each year and for the accomplishment of these targeted objectives,
Addicions developed and implemented strategies. On the basis of strategies,
performance of Addicions has been measured and discussed below. In period 8,
Addicions has successfully entered in three market segments of Children, Young
Women and Mature Women in Footwear product category. In Accessories, Addicions
has secured profitable position in Children and Mature Women market segment. On
the basis of market demand and customer needs it has been analysed that price,
quality, trend, ethics and experience are the key performance indicators.
Appropriate ratings have been given to each KPI and the performance of Aaddicions
has been assessed against each key performance indicator.
In market
segment of Children Addicions have secured 30% market share in Accessories
product and footwear product. On the basis of key performance indicators and
analysis of customer needs and company’s performance it has been analysed that
Addicions have met its objectives regarding price, quality, trend and ethics.
Addicions underperformed in customer experience which is alarming for the
company because providing best shopping experience is the Addicions core value
and part of its mission statement. In market segment of Mature Women, Addicions
have secured 41% (largest among all competitors) market share in Accessories
product. On the basis of key performance indicators and analysis of customer
needs and company’s performance it has been analysed that Addicions have met
its objectives regarding price, quality, trend and experience while Addicions has
over-performed in ethics which is good sign for the company because being
ethical in its product and market enhance the company’s reputation.
In market
segment of Mature Women, Addicions have secured 22% market share equals with
New Fair Lady in footwear product. On the basis of key performance indicators
and analysis of customer needs and company’s performance it has been analysed
that Addicions have met its objectives regarding price, quality, trend and
ethics. Addicions underperformed in customer experience which is alarming for
the company because providing best shopping experience is the Addicions core
value and part of its mission statement. In market segment of Young Women,
Addicions have secured 21% market share (largest among major competitors and
overall 2nd in the marketplace) footwear product. On the basis of
key performance indicators and analysis of customer needs and company’s
performance it has been observed that Addicions have met its objectives
regarding price, quality, ethics and experience. Addicions has underperformed
in trends which is not suitable for the company because fashion varies rapidly
and immediate response to trends are necessary for market share growth.
References
Bradford,
E., Erickson, S. and McDonald, M., (2012), Marketing
Navigation: How to Keep Your Marketing Plan on Course to Implementation
Success, Goodfellow Publishers Limited.
Brown, L.
O., (2008), Market Research and Analysis,
New York: The Ronald Press Company.
Doyle, P.
and Stern, P., (2006), Marketing Management
and Strategy, 4th ed. London: Financial Times Prentice Hall.
Drummond,
G., Ensor, J. and Ashford, R., (2010), Strategic
Marketing: Planning and Control, 3rd ed. UK: Routledge.
Ferrell,
O. C. and Hartline, M., (2012), Marketing
Strategy, 6th ed. New York: South-Western Cengage Leargning.
Gilligan,
C. and Wilson, R. M. S., (2012), Strategic Marketing Planning, UK: Routledge.
Hair, J.
F., (2006), Marketing Research: within a
Changing Information Environment, 3rd ed. New Delhi: Tata
McGraw-Hill.
Handlin,
A. (2014). 5-Step Strategic Marketing Process. [online] www.chron.com.
Available at:
http://smallbusiness.chron.com/5step-strategic-marketing-process-15753.html
[Accessed 30 Apr. 2014].
Hooley,
G. J., Piercy, N. and Nicoulaud, B., (2008), Marketing Strategy and Competitive Positioning, London: Financial
Times Prentice Hall.
Libecap,
G. D. and Thursby, M., (2008), Technological
Innovation: Generating Economic Results, UK: Emerald Group Publishing.
Lussier,
R. N., (2011), Management Fundamentals:
Concepts, Applications, Skill Development, 5th ed. New York:
South-Western Cengage Learning.
McDonald,
M. and Wilson, H., (2011), Marketing
Plans: How to Prepare Them, How to Use Them, 7th ed. London:
Butterworth-Heinemann.
Net MBA.,
(2010), Situation Analysis - 5C, [online] Available at:
http://www.netmba.com/marketing/situation/ [Accessed 29 Apr. 2014].
Steenburgh,
T. and Avery, J., (2010), Marketing Analysis Toolkit: Situation
Analysis, [online] Harvard Business Review, Available at:
http://hbr.org/product/marketing-analysis-toolkit-situation-analysis/an/510079-PDF-ENG
[Accessed 29 Apr. 2014].
0 comments:
Post a Comment