Monthly Archives: November 2010

SWOT Analysis Nike, Inc

This SWOT analysis is about Nike.

Strengths.

  • Nike is a very competitive organization. Phil Knight (Founder and CEO) is often quoted as saying that ‘Business is war without bullets.’ Nike has a healthy dislike of is competitors. At the Atlanta Olympics, Reebok went to the expense of sponsoring the games. Nike did not. However Nike sponsored the top athletes and gained valuable coverage.
  • Nike has no factories. It does not tie up cash in buildings and manufacturing workers. This makes a very lean organization. Nike is strong at research and development, as is evidenced by its evolving and innovative product range. They then manufacture wherever they can produce high quality product at the lowest possible price. If prices rise, and products can be made more cheaply elsewhere (to the same or better specification), Nike will move production.
  • Nike is a global brand. It is the number one sports brand in the World. Its famous ‘Swoosh’ is instantly recognisable, and Phil Knight even has it tattooed on his ankle.

Weaknesses.

  • The organization does have a diversified range of sports products. However, the income of the business is still heavily dependent upon its share of the footwear market. This may leave it vulnerable if for any reason its market share erodes.
  • The retail sector is very price sensitive. Nike does have its own retailer in Nike Town. However, most of its income is derived from selling into retailers. Retailers tend to offer a very similar experience to the consumer. Can you tell one sports retailer from another? So margins tend to get squeezed as retailers try to pass some of the low price competition pressure onto Nike.

Opportunities.

  • Product development offers Nike many opportunities. The brand is fiercely defended by its owners whom truly believe that Nike is not a fashion brand. However, like it or not, consumers that wear Nike product do not always buy it to participate in sport. Some would argue that in youth culture especially, Nike is a fashion brand. This creates its own opportunities, since product could become unfashionable before it wears out i.e. consumers need to replace shoes.
  • There is also the opportunity to develop products such as sport wear, sunglasses and jewellery. Such high value items do tend to have associated with them, high profits.
  • The business could also be developed internationally, building upon its strong global brand recognition. There are many markets that have the disposable income to spend on high value sports goods. For example, emerging markets such as China and India have a new richer generation of consumers. There are also global marketing events that can be utilised to support the brand such as the World Cup (soccer) and The Olympics.

Threats.

  • Nike is exposed to the international nature of trade. It buys and sells in different currencies and so costs and margins are not stable over long periods of time. Such an exposure could mean that Nike may be manufacturing and/or selling at a loss. This is an issue that faces all global brands.
  • The market for sports shoes and garments is very competitive. The model developed by Phil Knight in his Stamford Business School days (high value branded product manufactured at a low cost) is now commonly used and to an extent is no longer a basis for sustainable competitive advantage. Competitors are developing alternative brands to take away Nike’s market share.
  • As discussed above in weaknesses, the retail sector is becoming price competitive. This ultimately means that consumers are shopping around for a better deal. So if one store charges a price for a pair of sports shoes, the consumer could go to the store along the street to compare prices for the exactly the same item, and buy the cheaper of the two. Such consumer price sensitivity is a potential external threat to Nike.

‘If you have a body, you are an athlete’ – Bill Bowerman said this a couple of decades ago. The guy was right. It defines how he viewed the world, and it defines how Nike pursues its destiny. Ours is a language of sports, a universally understood lexicon of passion and competition. A lot has happened at Nike in the 30 years.

Original Source: http://marketingteacher.com/swot/nike-swot.html

Read more about Nike here: http://www.nikebiz.com/company_overview/

 

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Filed under Case Study, Fashion, Fashion Marketing, Marketing, Marketing Mix, Research, SWOT

DIESEL, LIVE, BREATH AND WEAR PASSION

INTRODUCTION

Have you ever heard of passion in the marketing mix? How about people? Those two Ps never seem to figure alongside the famous four which you, will of course, know by heart. This case study shows that having the depth of passion and the right people are crucial missing links in binding the regular Ps together.

PRODUCT

Diesel sells nice jeans. Close, but no ‘A’. Actually, it’s not that close. The reason Diesel has grown is because it knows it is about a lot more than selling nice jeans. Diesel is a lifestyle: if that lifestyle appeals to you, you might like to buy the products. Renzo describes this as an end of the ‘violence’ towards the customer forcing them to buy and rather an involvement in the lifestyle.

The brandIt might be useful to ask a question – what actually is a brand? The answer could take a variety of routes and go on for pages but a useful way to think of a brand is as a set of promises. Those promises form the basis of the customer’s relationship with that company. In the case of Diesel those promises are very personal, very passionate.

The Diesel brand promises to entertain and to introduce customers to new, experimental experiences. Its product line now goes far beyond premium jeans and includes fragrances, sunglasses and even bike helmets.  These products complement, convey and support the promises of passion and experience made by the Diesel brand.

Being such a crucial element of its work you might imagine the product design team at Diesel to ‘plot’ in something akin to a war room, pushing little squadrons of well-dressed soldiers around with long sticks. Actually, this is where that elemental passion which created Diesel sets them apart from many others. The whole team at Diesel lives the brand. They are all incredibly passionate about their creations. So when it comes to expressing that passion, ideas come naturally. Living and breathing the set of promises the Diesel brand communicates means employees can listen to their instincts, creating products straight from within.

Diesel builds its entire existence around the passion for what it does. With a founder who sees his work as an art and not a science, the company has redefined how a brand sees and communicates with its customers since 1978. It is the Diesel story we will look at in this case study.

Diesel is a global clothing and lifestyle brand. With a history stretching back over 30 years, the company now employs some 2,200 people globally with a turnover of €1.3 billion and its products are available in more than 5,000 outlets. However, this list of numbers is far less interesting than the company, people and founder behind them. Diesel is a remarkable company with a unique mindset. A mindset which puts sales and profit second to building something special, something ‘cool’ and something which can change the world through fashion.

The story begins with a young Renzo Rosso passionate about the clothes he wears but disappointed in the options available to him in his home town Molvena, Italy. Acting on impulse, he decided to use his passion to make the clothes he wanted to wear. Renzo was drawn to the rebellious fabric of the 1960s and rock & roll: denim. It inspired him to create jeans which would allow him and others to express themselves in ways other clothing simply could not.

Proving popular, Renzo made more and more of his handcrafted creations, selling them around Italy from the back of his little van. The still-young Renzo is the proud owner and CEO of Diesel along with that impressive list of figures. That impulse and passion apparently paid off.

PROMOTION

‘Be stupid’With the launch of the recent marketing campaign around the phrase ‘Be Stupid’, Diesel took a look at what brought its current pipeline: it was Renzo Rosso, all those years ago, taking the ‘stupid’ move to make jeans he wanted to wear. Then he took the even more stupid move of trying to sell those jeans to others, believing he might not be the only fool in Molvena! As it turned out, there were quite a few more to be found and Renzo’s ‘stupid’ move ended up creating something which millions of people around the world now enjoy.

Promotion and marketing at Diesel takes a very different route to many other companies. It is always about engaging with the customer as opposed to selling at them: creating an enjoyable two-way dialogue as opposed to a hollow one-way monologue. All elements of Diesel’s promotion aim to engage the customer with the lifestyle. If they like the lifestyle, they might like the products.

For example, the Diesel team saw music as an inseparable part of that lifestyle and realised that exploring new music and new artists was all part of trying something different and experimenting with the unusual. 10 years later, Diesel:U:Music is a global music support collaborative, giving unsigned bands a place where they can be heard and an opportunity to have their talent recognised. It’s not about selling, it’s about giving people something they will enjoy and interact with.

Tied to Diesel:U:Music is an online radio station. It is another example of where Diesel unconventionality has created something which pushes conceptions and the usual ways of doing things. The radio station takes a rather unusual approach of not having a traditional play list but rather gives the choice to the resident DJ. This freedom is reflected in the eccentric mix of music which is played on the station.

Above- and below-the-lineIn promotion and marketing, we often talk about ‘above-the-line’ and ‘below-the-line’ methods of reaching consumers. Above-the-line marketing is aimed at a mass audience through media such as television or radio. Below-the-line marketing takes a more individual, targeted approach using incentives to purchase via various promotions. In this case passion again acts to blur and gel the boundaries between the two approaches. If we had to define this approach in terms of theory, we would call it ‘through-the-line’, i.e. a blend of the two.

The passion and energy embodied by the Diesel lifestyle is communicated through a mix of above-the-line and below-the-line approaches. The balance and composition of that mix is what the Diesel team hands over to their passion and feel for the company and brand. That energy guides the way this abstract theory is realised in projects such as Diesel:U:Music and the ‘Be Stupid’ campaign, which entertain and interact with their potential customers.

PLACE

Another, drier, way of describing ‘place’ in the marketing mix is ‘channel’ or distribution channel. The way a business chooses to offer its products to its customers has a huge impact on its success.

Only around 300 of the 5,000 global outlets which sell Diesel products are owned and managed by the company itself. The majority are large department stores offering many other brands or boutiques with a very specific style of their own. How do you maintain the quality of a product and its communication when dealing with so many different partners and distribution channels?

CultureThe strong culture within Diesel again holds the answer. Every employee is able to communicate the brand appropriately in their given role within the company. As such, the managers of the Diesel-branded stores know that their function is to act as a flagship. They focus on the core campaigns like ‘Be Stupid’ giving a solid focus and image for the brand. Employees in each of the stores all know the campaigns intimately and are very aware of the image they should put across to customers entering the stores.

Their retail partners such as the department stores are a crucial link in the chain. Diesel works closely with these partners to ensure they express the same level of passion when offering their products. This is done through separate and individual campaigns. These provide visitors with a unique experience which again encourages them to get involved with the Diesel lifestyle as opposed to forcing products on them.

DistributionThis approach to distribution can be seen as a mix of exclusive and selective distribution over intensive distribution. Exclusive distribution involves limiting distribution to single outlets such as the Diesel flagship stores. Selective distribution involves using a small number of retail outlets and partners to maintain the quality of presentation and communication to the customer. Intensive distribution, on the other hand, is commonly used to distribute low price or impulse goods such as sweets.

PRICE

The price of a product is so much more than a little, or rather big, number on a tag. The price of a product is the most direct and immediate tool a business can use to convey the quality of its product at the point of sale. If done right, the price reinforces the rest of the marketing, drawing in the target customers by conveying the appropriate quality.

Pricing strategiesDiesel uses a model based on premium pricing. As we have discussed, Diesel is far more a lifestyle than a clothing brand.  Through the vision and passion of Renzo Rosso, the company has created a whole new approach to engaging with its customers. The price of Diesel’s products needs to reflect the substance and value of that experience.

A strategy such as penetration pricing used by businesses making high-volume, relatively low-margin products would be inappropriate as it would undermine the quality association thus devaluing the brand and experience.

We do not pay a premium price for Diesel jeans because they are a premium quality, that is taken for granted. We pay a premium price because the jeans and the brand fit in with and even encourage a premium, dynamic lifestyle built ‘for successful living’, as Diesel would say.

The team at Diesel must be intimately in tune with that lifestyle so they can see how their diverse range of products from jeans to fragrances and even bike helmets fits within that lifestyle. That feel for what Diesel is and how we, the potential customers, interact with it allows the company to price those products in a way which complements and neatly fits into that lifestyle.

PEOPLE

Besides the fact Renzo has, let’s say, done alright for himself, he has inspired thousands of people who proudly work to build the brand through a shared passion and contagious ambition.

Looking at the structure within which all those people work can help us to understand just why they are so happy to be there. Renzo realised people and their ideas form the heart of the company. So that everyone’s voice can be heard and each person working for Diesel has an equal say, the company adopts a flat hierarchy. This means there are very few layers of management and everyone is encouraged to communicate with each other: sharing ideas, solving problems and trying to communicate that energy with people outside the company – the customers.

TeamworkWhen decisions are made in this flat hierarchy they are made as a team. The team as a whole can then track the progress of that idea and monitor the results. Feedback is important because if everything has gone to plan, the achievement has to be acknowledged so that everyone can take pride in what they have done. If something has not gone to plan, group feedback allows an evaluation of why and the ability to learn for the future.

MotivationImportantly, this acknowledgment or learning happens equally across the company so everyone is kept up to speed on the ups and downs of business. This sense of belonging both to a team but also to a particular responsibility is very important for employee motivation. The better you understand your work and your environment, the happier you are likely to be with your job. The happier you are, the less likely you are to want to leave and so this open approach has the very positive company-wide effect of high employee satisfaction and a low staff turnover. Specifically in the fashion industry this means that the people working for Diesel have a stronger sense of identity and a deeper understanding of the brand making them even better at what they do.

CONCLUSION

The marketing mix is all good and well but it doesn’t paint the full picture. To understand it we must look at the ‘touchy, feely’ elements of business which are less often discussed. Diesel has built its existence around that touchy, feely passion with every one of its 2,200 employees living the Diesel brand. Diesel is the perfect company to allow us to see how this dry theory actually works in real life: how the passion of a founder like Renzo Rosso can be communicated around a company and breathed into each and every one of its diverse products.

Diesel grew into a global household name for premium clothing but it all started from that one man wanting to do something unusual, something ‘stupid’. Stubbornly he stuck to his belief in doing the unusual and it has created a global company whose products are enjoyed by millions. More importantly, this has created a lifestyle – a whole new approach to the way we see a brand. Diesel is an experience which interacts with and entertains its customers – a far deeper relationship than most other brands.

Being driven by passion and the desire to do something special naturally ties these elements together. Understanding theory like the marketing mix in a company like Diesel can be difficult if we expect the elements of price, place, product and promotion to be separate from each other. It becomes easier if, like a magic eye picture, we look beyond the dry theory and realise all of these elements are inseparably bound together by the passion of people like Renzo Rosso who have dedicated their lives to treating their work as an artistic expression of their feelings.
Read more: http://www.thetimes100.co.uk/case-study–live-breathe-and-wear-passion–159-414-7.php#ixzz16R3XM1mV

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AIMS OF MARKETING DEPARTMENT

Marketing involves a range of processes concerned with finding out what consumers want, and then providing it for them. This involves four key elements, which are referred to as the 4P’s (the marketing mix). A useful starting point therefore is to carry out market research to find out about customer requirements in relation to the 4Ps.

Market research

There are two main types of market researchQuantitative research involves collecting a lot of information by using techniques such as questionnaires and other forms of survey. Qualitative research involves working with smaller samples of consumers, often asking them to discuss products and services while researchers take notes about what they have to say. The marketing department will usually combine both forms of research.

The marketing department will seek to make sure that the company has a marketing focus in everything that it does. It will work very closely with production to make sure that new and existing product development is tied in closely with the needs and expectations of customers.

Modern market focused organisations will seek to find out what their customers want. For example, financial service organisations will want to find out about what sort of accounts customers want to open and the standard of service they expect to get. Retailers like Argos and Homebase will seek to find out about customer preferences for store layouts and the range of goods on offer. Airlines will find out about the levels of comfort that customers desire and the special treatment that they prefer to receive.

A useful definition of marketing is the anticipation and identification of customer needs and requirements so as to be able to meet them, make a profit or achieve other key organisational objectives.

Source: Thetimes100.uk

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Marketing Techniques

marketing strategy is an overall marketing plan designed to meet the needs and requirements of customers. The plan should be based on clear objectives. A number of techniques will then be employed to make sure that the marketing plan is effectively delivered. Marketing techniques are the tools used by the marketing department. The marketing department will set out to identify the most appropriate techniques to employ in order to make profits. These marketing techniques include public relations, trade and consumer promotions, point-of-sale materials, editorial, publicity and sales literature.
Marketing techniques are employed at three stages of marketing:

Market research enables the organisation to identify the most appropriate marketing mix. The mix should consist of:

  • the right product
  • sold at the right price
  • in the right place
  • using the most suitable promotional techniques.

To create the right marketing mix, marketers have to ensure the following:

  • The product has to have the right features – for example, it must look good and work well.
  • The price must be right. Consumers will need to buy in large numbers to produce a healthy profit.
  • The goods must be in ‘the right place at the right time’. Making sure that the goods arrive when and where they are wanted is an important operation.
  • The target group needs to be aware of the existence and availability of the product through promotion. Successful promotion helps a firm to spread costs over a larger output.

Finally techniques need to be applied to monitor the success of marketing activity. For example when carrying out advertising it is helpful to track consumer awareness of the adverts and their messages. Evaluation can also take the place of other aspects of the marketing mix e.g. which distribution channels were most effective? Was the chosen price the right one? etc.

Business behaviour: marketing

Today businesses have an increasing market focus. If organisations are to serve the needs of their customers they need to be structured in such a way as to identify and meet customer requirements.

Businesses therefore need to behave in such a way that they recognise the needs of the customer.

A company prospers best when everyone in it believes that success depends on the excellence of his or her contribution. Short-term decisions made many times a day by individuals determine the quality of that day’s work.

The governing principle should be that everybody has a customer – either outside the company (the traditional ‘customer’) or inside the company (the internal customer). Both kinds of customer expect to be supplied with the product or service they need, on time and as specified.

The principle holds good for everyone in the company, whatever their level of skill and experience, whether their ‘product’ is answering a telephone in a helpful way or masterminding a major new project. It works to everyone’s benefit. It gives the individual genuine responsibility and scope for initiative and it virtually guarantees that the company’s performance will be improved.

However, individual behaviours will only match the organisation objective of being customer focused if the right sorts of structures are created. Hence the importance of developing structures such as team working and empowering employees to make decisions rather than be told what to do.

Modern companies like Travis Perkins (builders merchants), and Argos (catalogue retailer) have recognised the importance of team working in motivating employees and in providing close links to the consumer. By encouraging staff to listen to consumers these organisations are best placed to provide the products and the services that ensure ongoing business success.

Empowerment is the process of giving increased power and responsibility to employees at all levels within an organisation. It involves placing more trust in them.

Decentralisation is the process of handing down power from the corporate centre (e.g. Head Office) to the various parts of the organisation.

Advertising, promotion, packaging and branding

Advertising, promotion, packaging and branding are important marketing tools which are used to make products and services more desirable and hence increase sales and profits.

Any form of publicity is advertising. There are two main forms of advertising although in practice the two are inter-related.

The informational aspect of advertising involves providing information about products, services, or about important issues. For example, the government provides information about the dangers of cigarette smoking, which is an example of informative advertising.

Persuasive advertising goes further and uses a persuasive message, for example by:

  • showing a famous personality (e.g. Gary Lineker) using the product
  • comparing the advantages of one product with another
  • using sex appeal.

There are a number of processes involved in producing effective advertising, including:

  • identifying the most appropriate market segments to target the advertising
  • choosing the best possible media, e.g. television, radio, posters etc
  • projecting the right message in the adverts
  • getting the timing of the advertisements right
  • tracking the effectiveness of the advertising, e.g. checking to see how many people can recall the advert and its message.

Advertising is just one way of promoting a product. Promotion is the business of communicating with customers. There are a number of ways of promoting products and services, including:

  • in-store promotion e.g. giving away free samples in a supermarket
  • publicity in the media, competitions, and sponsorship
  • PR – public relations activities – i.e. presenting the public image of a company to a wide audience
  • presenting products in attractive packaging
  • creating an attractive brand for a product.

Sponsorship

Packaging typically refers to the material in which a product is packed – or more specifically, the surface design on the material. However, a wider definition includes all the various aspects of presenting a product – e.g. the shape size and appearance of the packaging, colour and design, the convenience of using the packaging etc.

A brand is a product with a unique, consistent and well recognised character. The branding of the product therefore involves projecting and developing this character. The uniqueness can come either from an actual product or from its image – usually created by its manufacturer through advertising and packaging. The consistency comes mainly from the consistence of its quality and performance, but it also reflects the consistency of the advertising and packaging. A brand is well-recognised because it has been around for a long time. It takes years to develop a brand.

Shell has spent over a hundred years developing its brand image through the well known Shell pecten. Audi is associated with its easily recognised four rings logo. McDonald’s is associated with its twin arches. Sponsorship is an important way of promoting the name of an organisation. Many sports and arts organisations rely on support from sponsors. For example Vodafone is a major sponsor of Manchester United Football Club, and Bic sponsored Martin Johnson the England World Cup rugby captain.

In return for sponsorship of a sports club or arts event the name of the sponsor will be mentioned prominently on advertising hordings, publicity materials, programmes and other literature associated with the club or event.

The term ‘above-the-line’ advertising and promotion refers to media such as TV, radio and press, for which commission is paid to an advertising agency. ‘Below-the-line’ comprises all media and promotional techniques for which fees are paid in preference to commissions – these might include exhibitions, sales literature and direct mail.

Read more: http://www.thetimes100.co.uk/theory/theory–marketing-techniques–186.php#ixzz16QqdLYpL

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ASOS, The product life cycle and online fashion

Asos Case Study

Original Source: http://www.thetimes100.co.uk/case-study–the-product-life-cycle-online-fashion–134-364-1.php#ixzz16QnxWcb9

INTRODUCTION:

ASOS.com is the UK’s market leader in online fashion retailing. It offers own-label, branded fashion and designer goods. Its headquarters are in Camden Town in North London. ASOS.com originally stood for As Seen on Screen. The company was set up in June 2000 with just two people to bring the latest fashion trends to shoppers as quickly as possible. It has rapidly grown to become the UK’s largest independent online fashion retailer. It stocks over 22,000 product styles on its website and introduces up to 1,000 new products to its ranges each week. The ASOS.com website attracts over five million visitors a month and the company currently has around 1.2 million active customers (that is, people who have bought in the last six months). It was named Online Retailer of the Year in 2008 by Retail Week Awards.

ASOS.com provides high fashion clothing for women, men and children, as well as footwear, accessories, jewellery and beauty products. It aims these primarily at a target audience of 16-34 year olds. However, as the company continues to grow and diversify its product ranges and increase awareness, it appeals to a much wider online fashion market. Over 20% of its current customer database is aged over 35. Each week ASOS.com delivers 70,000 packages to the homes of its online customers. 

ASOS.com has been able to exploit the increasing popularity of online shopping to help the business grow. According to research from IMRG UK, an organisation which tracks online sales:

  • around 50% of 16–24 year olds buy clothes online more than once a month
  • 30% of women have bought clothes online
  • the total UK online spend in 2007 was £42.0 million
  • there were 26 million UK online shoppers in 2007. 

Online shopping provides customers with the convenience of making purchases whenever and wherever they like. ASOS.com’ use of technology helps to increase sales by providing easy navigation around the website and helpful tools like the ‘catwalk’ option so items can be seen on moving models. The business also benefits from its visionary approach to traditional retailing by not having high street stores. This keeps its staffing and property costs down.

This case study shows how ASOS.com uses the product life cycle to ensure its product portfolio continues to meet the needs of its customers and provide up-to-date fashions in the fast-moving online retail industry.

THE PRODUCT LIFECYCLE

The product life cycle shows the stages a product goes through over time in relation to its sales. Whilst individual products have their own life cycles it is important also to understand wider market trends. The retail market also follows a life cycle. In the UK the total retail market is in a mature state with growth slowing down. Retailers have to compete hard, shown by declining sales in high street stores.

In contrast, the online retail industry is a young market still showing huge growth since its introduction period between 1998 and 2002. Between 2004 and 2007, total retail growth was just 4.6%, whereas online retail grew by over 130% in the same period. One of the big changes that occurred was a move by businesses from selling from a catalogue to direct selling online. This is clearly illustrated by the growing market share of ASOS.com. 

In the fashion industry there is a fairly short product life cycle because trends and tastes change regularly. For example, the ASOS.com website features a range of own-brand dresses which are a ‘must-have’ fashion item for the summer of 2009. The product life cycle for an ASOS.com own-brand dress typically follows the following sequence:

  • Introduction – The dress is made available to customers on the website. Fashion leaders adopt the new item. ASOS.com initially gives a lot of prominence to newly launched products on its website, for example, by having links directly to these items from the homepage and weekly newsletters.
  • Rapid growth – ASOS.com needs to ensure adequate stocks so as not to disappoint customers. Once the item moves into the growth stage it tends to promote itself as customers see the item in newspapers and magazines. 
  • Maturity– At this stage, ASOS.com will remind people about the product online, through for example, trend features on the website and in its newsletter. It may order more stock to ensure supply. For example, one dress from the summer 2008 collection is still selling well and has regular repeat orders.
  • Saturation – At this point, ASOS.com may decide to reduce the price to clear remaining stock. Sales provide an opportunity to make space in the warehouse for new products.
  • Decline – people become tired of the item or it is replaced by a new product. Fashion and trends have moved on.

There is a stage to the life cycle before the product is introduced – Development. In this phase, the ASOS.com buying team choose materials, styles and colours to produce a dress design. Suppliers then produce and distribute the goods to ASOS.com’s warehouse in the UK ready for introduction to the market. 

ASOS.com regularly introduces new products as customers demand the latest trends they have seen in magazines and on fashion catwalks. Introducing a new product involves considerable costs:

  • New stock needs to be purchased.
  • The website needs to be updated with pictures of the new fashionable items.
  • The ordering system needs to be updated.
  • The items need to be promoted through the website, newsletter and magazine.
  • There is the risk of an item selling poorly.

At the start of the life cycle, costs for a new product will be high whilst revenues are low. However, during the growth period revenues start to outstrip costs and contribute to the business’ profitability. The life cycle in fashion can be a matter of days. Limited 100 – a collection created in collaboration with students at London College of Fashion – sold out in five hours.

PURPOSE OF THE PRODUCT LIFCYCLE

Knowledge of how the life cycle works is particularly important for a company like ASOS.com. The fashion industry is fast-moving and the individual product life cycles may be seasonable. This means that some items will only sell well during parts of the year. In addition, the lead time on the production and buying process means that ASOS.com must plan a season ahead. Fashion designers launch their new clothes collections in the same way. So, during winter 2008, ASOS.com would already have chosen and been planning for the promotion of its summer 2009 collection.

However ASOS.com enjoys an extended product life cycle due to the fact that the business has a large international market. In the southern hemisphere the seasons are the other way round to the UK. This, combined with an increasing trend to take winter holidays in sunny countries, means that summer items, such as swimwear, sell right through the year. Other items sell at unexpected times. For example, Ugg sheepskin boots would normally be considered a winter product. However, a few years ago, celebrities wearing them at pop festivals in the summer means they now sell all year round. As an online retailer, ASOS.com is not restricted in terms of space. It can offer products at times when high street retailers have to send certain categories of goods back to the warehouse. For example, ASOS.com’s Holiday Shop performs very well at Christmas time.

Understanding the product life cycle also gives ASOS.com managers greater control.

  • They are able to predict when revenue will flow in and calculate the profitability of product lines.
  • They can plan the introduction and withdrawal of products. Some product lines will be highly seasonal. Other products such as classic blue jeans will have much longer life cycles and provide regular long-term revenue for the business. Managers therefore need to plan the appropriate type and level of promotion for different products.
  • They can support products through the entire life cycle. They can plan pricing strategies to extract as much revenue as possible at every stage. For example; promotional discounts can be used to encourage large numbers of people to purchase a new product when it is launched. Premium pricing may apply to a new limited edition dress.  Price reductions are often used at the end of the life cycle when the item is less popular and sales are declining.

PROMOTION

Promotional activity helps a business to provide potential customers with information about its products with a view to making a sale. ASOS.com is a market-orientated company. ASOS.com’s Customer Relationship Management system helps it to understand its customers and their buying patterns. This means how different age groups and most importantly, how different attitudes affect what appeals to customers and influences how they will spend their money. User information enables ASOS.com to target its promotional activity. ASOS.com gathers information about its customers and what types of fashion they like from its website registrations. For example, two women of the same age can have entirely different purchasing habits and fashion styles. This information helps ASOS.com decide where and how it will promote its products. ASOS.com’s Public Relations department will target advertising to a broad range of publications simultaneously, such as Harper’s Bazarre, Vogue, Elle, GQ or The Times newspaper. As part of online registration, customers provide email addresses. ASOS.com sends out email newsletters with updates about new products and offers twice a week to over 2.7 million customers.

By analysing a database of what its customers typically buy and how often they purchase, ASOS.com is able to target promotions directly at particular segmentsof customers. ASOS.com estimates what products will appeal to individual customers. It then targets promotions to customers on an individual basis. For example:

  • a younger customer who has in the past bought low-rise jeans may also be interested in buying a fitted leather jacket
  • a customer who has bought a dress from ASOS.com’s Black range of products may also have the spending power to buy designer shoes and handbags.

Measuring the response to promotional activity is very important. A number of key performance indicators are used to measure effectiveness. When ASOS.com sends customers emails about a new product, such as blazers, it needs to know:

  • how many of these emails are opened
  • whether they are clicked through (read to the end)
  • how many of these convert into sales.

From evaluating these figures, ASOS.com can get a picture of how many customers are exposed to this promotional method and what sales are being generated as a result. Other important measures include the number of people using and purchasing from the ASOS.com website. If use is high and growing, it shows continued growth of the market.

EXTENSION STRATEGIES

ASOS.com makes it easy for people to buy online as it has a huge range of own-brand, high street and designer labels on one website with a single basket check-out ordering service. Leading clothes designers and fashion houses choose to sell their clothes through ASOS.com because they know that this is a good way to reach a wide, international audience and generate revenue. ASOS.com is continually seeking to outperform its competitors and increase its market share. It does this by providing customers with choice, value, service and fashion credibility. It also needs to be aware of how the life cycle of its entire product range can be managed and extended to maximise revenues.

The Boston Matrix model helps ASOS.com to assess the value of product categories and plan strategies to manage them. 

  • Poor performers such as last season’s items that are now in decline or products that fail to launch are referred to as Dogs – sales are poor and profits low.
  • Question Marks are new items that have been launched and may do well.
  • Stars are the items that are growing quickly and could go on to make a lot of money.
  • Cash Cows are items which are good earners and have been so for a while. For example, basic T-shirts and ASOS.com’s own-label dresses continue to be popular year after year. These items have reached maturity and stayed there.

ASOS.com’s challenges are to:

  • convert the Question Marks and Stars into Cash Cows of the future by increasing or extending promotion
  • manage the Dogs either by removing the item and cutting costs or reducing the price to sell quickly or re-using the materials in these garments to make new ones.

The profits earned from Cash Cows can be used to develop and promote Stars and Question Marks.

CONCLUSION

Fashion is a rapidly moving market. ASOS.com demonstrates the growing trend for online shopping with increasing numbers of visitors and purchases on its website year-on-year. ASOS.com meets the needs of its target audience by providing an exciting and continually updated website with regular new fashion items. Being able to target customers through personalised customer communications is a vital aspect of its promotion strategy.

It also continues to enhance the range of product areas it offers, such as kidswear and maternity clothes, launched in 2008 and 2009 respectively. ASOS.com also continues to develop the range of services it offers, for example, its ‘Style with substance’ initiative ensures customer emails are responded to within one hour. By understanding its customers’ needs and the life cycle of its products, ASOS.com is able to provide a product offering which ensures customers keep returning to the ASOS.com website.

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Fashion Marketing: Using the Marketing Mix in the Fashion Industry

CASE STUDY, BEN SHERMAN

Original source: http://www.thetimes100.co.uk/case-study–using-marketing-mix-fashion-industry–135-327-1.php

INTRODUCTION

Ben Sherman is a globally recognised lifestyle brand. It has grown from its business beginnings in quality shirts in Brighton in 1963 and is now sold in 35 countries around the world. It has expanded into the USA, Europe, and Australasia.

In 2004, Ben Sherman was acquired by the American-based company, Oxford Industries. This group is an international apparel design, sourcing and marketing company that features a diverse portfolio of owned and licensed lifestyle brands.

Ben Sherman’s name has always been closely linked with the British music scene and with fashion. Its customers are young and at the forefront of style.

Throughout the years high profile customers include musicians, models, actors and bands, such as Blur, Oasis and the Kaiser Chiefs.

The growth of the brand can be traced through changes in musical taste and this is a key part of Ben Sherman’s marketing strategy.

As a young person reading this, you are a central market segment of Ben Sherman’s target market. A market segment is a group of people with similar needs or characteristics, such as age, gender or lifestyle. For example, you like music, you like fashion and you are willing to spend money on top brands that deliver the quality and image that you want.

As the company founder Ben Sherman said in 1963: ‘Looking good isn’t important, it’s everything.’

Ben Sherman has developed a balanced marketing mix. This is often referred to as the 4 P’s – product, price, promotion and place. By getting the mix right, the company ensures that its products reach the market segments it is aiming the brand at. This approach helps the business remain competitive and extends its market share and influence.

The marketing mix is like a cake recipe. Most cakes need the basic ingredients of eggs, flour, sugar and milk. However, a child’s birthday cake will require a different recipe to a wedding cake. The key is to combine the ingredients to get the right cake for the right occasion. The marketing mix works in exactly the same way. The key ingredients of product, price, promotion and place are all necessary for the appropriate marketing of the product. Ben Sherman chooses the right combination of each element to satisfy different customers’ needs.

PRODUCT

Ben Sherman has to decide whether to:

  • create a product and then market it to target customers (product-orientated) or
  • find out what the market wants and then provide it (market-orientated)

To achieve both, the company produces a wide product range that appeals to all its target market segments. The range includes casual clothes, formal wear, denim, footwear and lifestyle accessories, such as underwear, watches, bags, belts and fragrances.

A strong brand image ties the product range together. Each collection has an umbrella theme. In 2007, the product theme was ‘This Sporting Life’ and the marketing theme was ‘British music and style’.

Product life cycle

Ben Sherman uses major fashion shows to launch its collections to the press.

The fashion year has two cycles – the spring/summer season and the autumn/winter one. The fashion industry is highly competitive and fast-moving. Fashion products tend to have a short life cycle.

This means the time between the launch of a product and the point at which that product is ‘mature’ is very quick. Competition amongst fashion retailers forces businesses to refresh their ranges a number of times in a year. This topping up modifies the product as it reaches the maturity stage. The boost of a new product or style then extends the life of the range. Products need refreshing to avoid the dip in sales during the Saturation stage of the life cycle which could result in an early decline. The additions and changes help sales rise again, earning extra sales revenue and profit, as well as maintaining the Ben Sherman brand in the market.

PRICE

Ben Sherman has to assess which markets its products are aimed at and set a price to match.

There are a number of pricing strategies that a business can use for its products including:

  • cost based pricing – where the selling price is set to cover the cost of manufacture.
  • market orientated pricing.

Market orientated pricing covers several different approaches:

  • market penetration, where a new product is priced low to attract a high volume of sales
  • market skimming – where a new product has premium pricing to give high revenues whilst the product is unique in the market
  • premium pricing, where there is a uniqueness and exclusiveness about the product so that it can command a high price
  • economy pricing, which tends to be for no-frills, basic products, where the cost of manufacture and marketing are kept to a minimum

The price of a product relates to its perceived value. Lower priced items will expect a higher volume of sales, whilst fewer sales of luxury products may achieve the same revenue through higher pricing.

A ‘product map’ shows where products are positioned in the market.  Each product type behaves in a different way.  Customers are willing to pay more for ‘aspirational’ products, such as designer wear.  These products or brands show that those who own or wear them have a degree of success in their lives.  These brands are not price sensitive, as people are willing to pay premium prices for individuality or for the latest styles.

Low price brands often copy the market leaders and may be generic own brands, such as those produced by supermarket chains. The main purpose of price here is to indicate value for- money and such brands do not expect customers to show loyalty.

Ben Sherman produces mostly medium-price range products. Its position in the market for clothing is shown on the product map diagram. The mix of product and price is clearly evident here. These brands are identifiable by their quality and style.

Ben Sherman uses brand identity images like the plectrum logo and the Ben Sherman script label in subtle ways. Its products are good quality and individually styled and therefore the price reflects this. There is a relationship between product quality and price (revenue per sale). The pricing also impacts on the level of sales. Ben Sherman’s pricing best matches aspect B.

PLACE

This refers both to the places where Ben Sherman products may be bought and to the channels of distribution used to deliver the products to these places. Place is not always a physical building such as a retail outlet or shop, but includes any means by which the product is made available to the customer.

A business has to balance getting enough of its products to its target customers against the problems or costs of distributing them.

For a premium or luxury brand, making the products too easily available might reduce the perceived value of the brand.

This illustrates the need to select carefully how the marketing mix is put together to match the product to the needs of the target market. Ben Sherman limits where its products are sold and keeps a tight rein on how they are sold and its distribution channels. This creates a unique Ben Sherman experience wherever customers buy its products.

Distribution channels

Ben Sherman uses three traditional distribution channels. Each has distinct characteristics and different strengths and weaknesses:

  • its own stores – where the brand is strongest, but requires investment in property, stock and sales people
  • independent fashion stores – whilst offering a unique or more specialised sales channel these outlets carry limited amounts of stock. Also, the costs of processing, e.g. for delivery and administration, are relatively higher for smaller orders.
  • department stores – will buy centrally but may want discounts if they order in bulk, reducing Ben Sherman’s profitability

Ben Sherman works in close partnership with department stores, creating ‘shop-in-shops’ – a unique concept where the customer feels that they are in a Ben Sherman store. The store shares its marketing information about what types of customers are purchasing and which products are most in demand. This enables Ben Sherman and the department store to provide the relevant stock to maximise revenue.

Ben Sherman also has its own stores around the world and opens new ones each year. It has a long-term commitment to expanding globally. Although the stores represent a big investment, they are important to the company in controlling its own sales environment and increasing profit. The interiors of its flagship stores reflect British style and identity through use of antique furniture, music memorabilia, photographs and the Union Jack flag.

For a limited time in 2007, each store worldwide displayed a specially designed Gibson guitar in a dedicated window space decorated with and inspired by the Ben Sherman product, brand and music influences. Gibson is the world’s leading guitar specialist and created for Ben Sherman a set of 20 collectable limited edition guitars. Each unique guitar was then sold at auction online to raise money for charity. Ben Sherman used the guitar auction online to link the physical worldwide stores to the Internet. The company transmitted news of the auctions and bids via the Internet and gained online, national and regional press.

Ben Sherman also uses newer channels of distribution. It relaunched its website http://www.bensherman.com in February 2007 to provide a more interactive experience for customers to encourage them to spend more time on the site and shop:

  • The site provides an online ordering service.
  • It offers news updates for customers on the latest Ben Sherman products.
  • The website helps to create an online ‘community’ of people who like Ben Sherman products.
  • It gives relevant context for Ben Sherman products by providing video and music links, for example, the top 10 records of the 1970s.

This helps to build the brand philosophy and values.

The company sees its online services as particularly important in reaching customers now and in the future.

PROMOTION

The purpose of promotion is to obtain and retain customers. It covers:

  • ‘above-the-line’, which is using independent media to reach a wide audience easily, but over which the company may have limited control, for example, magazine advertising. This reaches a mass audience but can be hard to measure its impact.
  • ‘below-the-line’, which uses media over which the business has control, for example, direct mailing. This type of promotion can be more cost-effective and give more measurable response rates.

Ben Sherman uses both above-the-line and below-the-line promotion to help inform customers about its products. Through this information, it increases the customers’ desire to buy its products.

Promotional activities

Some people think of promotion as being just advertising – but advertising is only one aspect. Promotion may also include:

  • direct mail – for example, catalogues, newsletters you may receive by post or email
  • exhibitions or events – Ben Sherman has a high profile at fashion events and music events, for example, sponsoring a series of live gigs to support new British music in collaboration with with Gibson guitars and music channel MTV
  • sales promotions, such as discounts, money-off coupons or competitions
  • public relations – perhaps through press conferences or by participating in charitable events, such as the Gibson Guitar auction for Nordoff Robbins charity
  • sponsorship – Ben Sherman sponsored the ‘Best Breakthrough Artist’ category at the 2007 Q Awards
  • product placement – Ben Sherman gives clothes to famous people so that they create publicity when they wear them. This is seen as an endorsement for the product. Amy Winehouse and Ricki from the Kaiser Chiefs have been used to promote Ben Sherman products by wearing them at high profile events and featuring in the printed press
  • branding – you can see the Ben Sherman brand in the layout and decoration of its stores, its links to music, its advertising campaigns, packaging and point-of-sales displays

CONCLUSION

Ben Sherman is a brand that appeals to the youth market. Its responsiveness to changing tastes in fashion and music throughout the last fifty years has provided it with a unique heritage of quality, personality and style. This has made Ben Sherman into a great British icon, reflecting British culture as it does business across the world.

Whilst each element of the marketing mix is important in its own right, the right balance of the four elements is critical.

A business must clearly understand its target market – the customers at which it is aiming its product range – to ensure that it has the marketing mix balanced to appeal to this market.

Ben Sherman’s continuing global growth and high profile in music and fashion demonstrates that, as far as the marketing mix is concerned, it has got the balance right.

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Critical Success Factors of Fashion Marketing: A case study of Biba.

Original Source:
http://www.scitopics.com/Critical_Success_Factors_of_Fashion_Marketing_A_case_study_of_Biba.html

Glasgow Caledonian University
Last updated on 26 February 2010

Introduction

Fashion marketing, the science and art of satisfying customers’ fashion needs profitably, has been with us since time immemorial. It’s as old as marketing itself and gained prominence in the early sixties when most fashion designer outfits started to flourish. Fashion marketing is different from fashion merchandising, which is the promotion of clothes sales and the process of distribution of clothings. Fashion marketing is the process of satisfying people’s fashion needs in an environment that ensures profit. It involves, branding, marketing mix, business development, product offering etc.

Fashion marketing is now becoming notorious because fashion is a multi-billion dollar industry that has not been fully exploited. It also has to do with the third most basic thing in the heirarchy of human needs. Human beings aspire for food as the first basic need. After satisfying this need, human beings will aspire to get accommodation over his or her head. The third basic need will be clothing to protect him or her from the adverse effects of inclement weather. The fourth is transportation and the fifth welfare (health, leisure). Fortunately, fashion has to do with all the other basic needs in the modern world. A farmer needs fashion to produce food, in his house and in transport means.

Biba was a fashion outlet established as a small fashion retailer to cater for Ladies clothes in West London. Its success in satisfying the generality of the people with its clothes cutting across all classes made it popular among Londoners and the people far and near. Biba became an household name and at a time, the best thing to happen to London.

In 1970’s Biba had a monumental success story and occupied a seven-storey building on Kesington High Street, London. This legendary “Big Biba” emporium was onced hailed in the Sunday Times as “the most beautiful store in the world”. This was not a story of happy ending in 1976 as the founder walked away of the business.

This report will evaluate the challenges and opportunities of Biba fashion so as to document and recommend the critical success factors of fashion marketing. It will analyse the emergence of Biba as a fashion outlet, the stronghold and weaknesses of Biba.

The Biba Story

Biba was a fashion marketing organisation established by a Polish-born Barbara Hulanicki and rocked the city of London in 1960. Barbara is a fashion freak and started Biba from an hobby just like the House of Matilda by Matilda Marcos, the former Philipines first lady and fashionista. As a student, Barbara’s style was heavily influenced by two stars of the 1950’s – Garce Kelly and Audrey Hepburn.

Barbara Hulanicki is a style icon and developed her interest for fashion marketing from her interest in dressing well and her study of Fine Arts. People around her used to commend her dress sense and her colour combination and she decided to offer her design expertise for her clientele to generate income and to satisfy her hobby. She was a freelance fashion illustrator and columnist for Women’s Wears Daily, the Times, British Vogues, the Sunday Times and the Observer.

Biba began life as a mail order catalogue in 1964, and by 1969, the shop was the second most popular tourist spot in the capital – only the Tower of London attracted more visitors. “People would travel from all over the country every Saturday, because the fares were inexpensive”(Babara, 2009).

During its heyday, Biba was to fashion what the Beatles were to pop music. It was also a mecca for the coolest celebrities of the moment…”. Biba’s Postal Fashion Boutique was officially set up and its long evening skirts with draw-string waists sold at affordable price in the Daily Express. There were good markets for other garments too. It was Felicity Green, the Fashion Editor of the Daily Mirror who proposed to Hulanicki to design a dress for a reader’s offer. The product of this design, a pink gingham dress sold through the paper for 25 shillings, and earned £14,000-worth of orders.

The business was run from the flat of Babara Hulanicki until it was moved to a derelict former chemist on Abingdon Road, Kensington. Biba flouted convention in London fashion world by going for dull colours. Her designs were mainly funeral-like blakish-browns, dark prunes, rust and blue-berry hues. Babara wanted a colour that’s affordable to maintain, and a design not too flashy.

Business boomed at a rate unprecetented in fashion merchandising in the whole of England. Abingdon Road shop became smaller for Biba as everybody from all works of life saw it as their last destination for buying fashion products. It became a place of social interaction. Biba moved to a bigger site on Kensington High Street in 1965.

Hulanicki and her husband felt Biba could be bigger and acquired the 400,000 square foot, Art Deco Derry and Tom’s Department store on Kesington High Street in West London. Due to the huge capital outlay, Hulaniscki accepted Fraser group and Dorothy Perkins as shareholders and joint-owners of the business. The building was secured for £3.9 million. Another £1.0 million was spent to decorate the building.

Big Biba became the first new depertment store in London since the second world war. There was restaurant, shopping area, eating and drinking area, hanging out area, rooftop garden lounge etc. A whole entire floor was named the Casbah – filled with Moroccan and Turkish influenced splendour. The restaurant alone was a success. The Rainbow Room Restaurant and Concert Hall served about 1,500 meals everyday.

Fraser group and Dorothy Perkins sold their shares to British Land Company and that was the begining of the end of Biba. British Land Company was a property investor and never appreciated the intuitive and lucrative methods employed by the two previous shareholders yet they were major shareholders. Biba suffered from “Corporate Raiding” as there was disagreements on creative control and catastrophy striked.

Barbara walked away from Biba in 1976 after difficulties with her new business partners. In 1987, she and her late husband wound up in Miami, a city which captured her imagination – thanks, largely, to its once glorious Art Deco architecture, which she has helped to conserve.

Biba’s opportunity that made it a success between 1964 and 1976

Biba opportunity lied in its grotesque building made it an attraction for people. It boasted a large area pf apace for social interaction and customer sometimes had intention of meeting somebody before they ‘bumped’ into products that attracted them. The products were affordable and the designs cut across all classes of people. Biba was a one-stop shop offering different types of products for daily consumption.

The colour combination was perfect and the locaton of the outlet on Kensington High Stree, strategic. The brand were also from a designer who knew the rudiment of the business. As a fashionista, Babara knew what the people wanted.

Biba’s challenges that made it a failure in 1976

Biba refused to branch-out and reached the other areas of United Kingdom. It refused to adopt globalisation which was the phenomenong of succeeding business then. Frasers group and Dorothy Perkins saw it as a local venture and decided to sell their stake. “The emergence of global fashion has trandformed the way fashion is perceived in the contempporary world” (Azuma and Fernie, 2003). Management attitudes can decide where retailers expand.

The new partners in Biba, British Land organisation were not mindful of the contributions of Babara Hulanicki and how she worked. There was no Strategig Plan to guide the operations of the organisation.

The Critical Sucess Factors of Fashion Marketing

Zavrsnik (2007) said that fashion businesses profit a lot if they can (a) Have few middlemen between their products and the end-users (b) Buy in large volumes (c) Have a broad, in-depth knowledge of design, fashion and textiles (d) Buy the right products from the right markets (e) Being cost-conscious at every stage of production (f) Have efficient distribution means. These factors are factors of efficient production.

Zavrsnik (2007) also said that “before establishing stores in a new market, H&M conducts a thorough analysis of such factors as demographics, employment, purchasing power and purchasing behaviour. The shopping style of the catchment area of the outlet must be known as well as the population and the shopping quality. According to Mrs Sarah Brown, the wife of the British Prime Minister, at the Elle Style Award on February 22, 2010, “Fashion is an industry so well known for its creative tensions; it’s larger than-life characters; and the obsessons with each season’s collections”.

1. Marketing Mix (The seven P’s) – (a) Product (b) Price (c) Place (d) Promotion (e) People (f) Process (g) Physical environment.

2. Branding: The Biba logo played a crucial part in Biba’s success, the logo was gold and black, that reflected the growing taste in youth for art deco. Anthony Little designed the logo. Little painted the Biba sign above the shop and blacked out all the windows to create a look for Biba in the first store. The blacked out windows didn’t allow the store’s interior to receive any sunlight which was vital for the Biba’s art nouveau atmosphere.

The Biba logo was reconstructed in various ways to be appropriate for all the different products. Every product carried the Biba logo on it. The labels showing size, colour and price all resembled a similar style. Biba was the first to set a standard for brand marketing and the first high street store to create a look for itself. Everything: from clothes to food, to wallpaper, carried the logo, creating an immediately recognisable identity from any piece sold at the store.

3. The 5 m’s of organisation – (a) Management (b) Mission (c) Money (d) Manpower (e) Machineries.

4. Business Development: There should be adequate attention for business development anchored on a Strategic Plan. The roles of the employees should be evaluated and stated. Conflict resolution methods and how the company should be wound up should be in the strategic plan.

Conclusion

Biba became a success story as a result of the expertise of its founders and the hardwork of the workers. The founders in their development of Biba did not realise the importance of Strategic Plans and did not have any in place. The strategic plan sataes the job descriptions of all employees and how the company would be run. There suppose to be a clause in the deedof agreement between the partners stipulating the type of partners that can manage the company.

While some fashion outlets like John Lewis, George and Top Shop established and are still existing till today, Biba became extinct because of failure of British Land organisation to appreciate the expertise of Babara Hulanicki. She was the custodian of the designs and the person on which the whole idea lied. The company should have evolved a mission statement stating the future aspirations of the organisation.

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