Addicions: Marketing Simulation Plan

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 2^nd 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.

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