Hubbery Fashions PVT LTD Market report

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As a consultant this report has been commissioned by Hubbery Fashions PVT LTD in order to inform them on the marketing issues for best practice

In the execution of the project the client (Huberry Fashions PVT LTD) has obligations and the same applies to the consultants (Zia Consultants)

Terms of reference in the implementation of the project.

Below are the terms of reference for the two parties involved in the contract

1.11 Terms of reference for Hubbery Fashions PVT LTD.

a. To cooperate with the researchers

b. Expect to provide appropriate workspace for the researchers

c. The client shall pay for the services the agreed fee of £25,000

1.12 Terms of reference for Zia Consultants

a. To conduct a professional and ethical research for the client

b. To prepare a comprehensive and analytical report which should help in decision making.

c. The consultant shall submit the report as agreed by 12th February 2010

2.0 Issues for investigation

In the brief it was clearly stated that the researchers shall consider the following issues:

How the company can develop a more marketing orientated approach to its business and design process in particular and the advantages of this.

How can the company use market segmentation, targeting and positioning more effectively.

The relevance of the product life cycle concept to the company's situation.

How the company can protect and build on its brand name and image.

Taking into consideration the current economic recession and aggressive competitors how should the company respond with regards to its future pricing strategies.

Executive summary.

Huberry fashions are a long established British manufacturer of men's and ladies fashion clothing products.

Established in the 1920's the company has built its reputation as a quality producer of raincoats, and trench coats in particular, most of which were supplied to the uk military. The company was one of the first to realise the power of publicity and branding and became synonymous with a very distinctive check design which was patented and appeared to a greater or lesser degree on all of its products and became known as the 'Huberry check'. Over the years the company diversified into a wide range of fashion clothing products including shirts, skirts, jackets, knitted garments, coats and overcoats and its original raincoats.

After nearly 90 years of successful trading, over the last three years the company has for the first time seen its sales and profits begin to decline and the situation of the company has become serious. At a recent special board meeting and based on an outside consultants report, the company noted the following major factors as possibly underpinning its recent decline.

Although very competent, the current design team have all been with the company a long time and believe that well designed good quality products virtually sell themselves. No one on the design team has any experience of marketing and there has been little or no market research input into the design process for new products.

The company's distinctive check pattern is very well known, recently it has become associated with the younger cheaper end of the fashion clothing market that often wear cheap imitations of the famous check and through their actions have begun to make the brand appear cheap and downmarket.

Much of the product range has essentially remained unchanged. Although the company has in the past built its success on the classic nature of its products many of the products even the classics, are tired and unfashionable.

The company cannot decide on which customers to target and how in the market to position their brand.

The economic and competitive environment has over the last three years become much more hostile, for example the so called credit crisis has hit companies like Huberry with its expensive luxury products and expensive prices particularly hard. There is also much more competition from competitors who have learned to use the power of branding and often had lower costs of manufacturing.

3.0 MARKETING ORIENTED APPROACH.

It is difficult to visualize a marketing scenario where customer's needs are ignored. It would be shocking to hear today what Henry ford said when offering his model T on terms like "Any customer can have a car painted in any colour that he wants so long as it's black"

3.1 PRODUCTION ORIENTED MARKETING

This approach is to focus on production. Manufactured products like cheap socks have great demand and manufacturers can sell as much as they can produce. In this scenario profit maximisation depends wholly on producing as much as possible. This was the major approach until the 1950's.

3.12 SALES ORIENTED MARKETING

This approach focuses on sales methodologies. When competitors began entering into every business, production exceeded demand. Manufacturers compete by focusing on advertising campaigns, sales promotional techniques and improved personal selling techniques. There is no major focus on customer's needs and preferences, instead the focus is on manipulating them. This was the major approach till the 1970's.

3.13 MARKET ORIENTED MARKETING

This approach focuses on the market itself. This uses qualitive market research, this is the use of in depth interviews, focus groups and projective techniques to understand the drives and motives behind consumer behaviour.

3.131 The findings from market research are used to develop products that will meet the consumer's expectations better. These products are also promoted more effectively with a better understanding of the consumer's behaviour.

3.132 Marketing orientation emphasises more on market research, products, product development are focused more on customer needs. Product warranties, after sales support are all characteristics of this approach.

3.0 ADVANTAGES OF A MARKETING ORIENTED APPROACH

The advantages of being market focused are:

An increase in profits through an increase in customer satisfaction

A better understanding of the customer's requirements

New and better opportunities from a better understanding of the target markets, customers and competitors.

Improved product and service development.

Improved levels of employee satisfaction

There are a number of influences on achieving a marketing orientation. These are being focused on your competitors, the understanding of your customers and effective internal coordination and marketing

3.1 COMPETITOR ORIENTATION

This is the development of systems and behaviours to be able to identify, evaluate and understand your competitors.

3.11 Here a structure will need to be created which will include important aspects of your competitors, their strengths and weaknesses, client/customer base, pricing strategies, branding and product or service portfolios. Once this is applied to all of your major competitors this will assist in developing the strategy process.

3.2 CUSTOMER ORIENTATION

This is the development of a clearer and more genuine understanding of what the customer/client actually require, including the buying behaviours and characteristics.

3.21 Here you will need to analyse all of the company's current customers and identify their characteristics in order to begin a segmentation process. Included in this should be some formal feedback from your customers/clients on the company's performance, all the good and bad points and what could be done better. This will enable the company to better develop current and new products that will better meet the requirements of all the existing and potential customers. This also involves developing effective solutions for dealing with the issues and complaints of the customers/clients.

3.3 INTERNAL MARKETING

A marketing department within the organisation will help interfunctional coordination where all departments within the organisation can share information and knowledge. This will for example help coordinate your sales department with the production department also helping them understand the issues and constraints of each other's roles. Internal marketing is the use of marketing communications internally to help create and communicate corporate issues and strategies.

3.31 Here you will need to educate your staff help develop their knowledge and attitude towards your products/services, the way the organisation is run and any future strategies.

4.0 MARKET SEGMENTATION

This involves identifying the types of customers that exist then selecting the group of customers that you are best off targeting and finally implementing the segmentation by focusing your product/service to that particular group and showing that you have made the choice to distinguish yourselves that way.

4.1 SEGMENTATION

This will involve identifying different kinds of customers with different needs. It is more profitable for an organisation to specialise in meeting the needs of one group of consumers over another.

The approach that the organisation needs to make is the concentrated strategy and differentiated strategy.

4.11 The concentrated strategy is to focus on one of several segments and leave the other segments to your competitors.

4.12 The differentiated strategy is to sell high priced items in advance (limited products, exclusive range) these products are usually aimed at the higher end of the market at those that can afford the price. Then different versions of the style (diffusion range) are sold to more price sensitive customers.

4.13 In segmentation there could be a large number of changing factors that can be used to differentiate consumers of your given product category. You will need to determine which factors will be most useful for you to distinguish the different groups of consumers. This is where you will be able to decide for example the factors that are relevant in separating customers who prefer to look at style vs. the customers that prefer to look at price, price sensitive customers, the willingness to pay for your brand name and heavy vs. light customers. You will then be able to put together these factors to arrive at different combinations.

4.14 The factors that can be taken into consideration in segmentation are, demographic which is considering personal statistics such as income, gender, family size, location, lifestyle, values, education and ethnicity. There are some customers that are happy to be seen as the same as others, yet there are also a segment that like to be different and want to stand out from the crowd.

4.15 Another factor when deciding on segmentation is the behaviour of consumers. There are some consumers that will be loyal to your brand.

4.16 Benefits of a product are another factor when deciding on segmentation. What are the benefits that the consumer is looking for in your product? And what are the benefits that your product will be able to offer against a rival's product.

5.0 TARGETING

This is where you will decide on whether to target one or more segments once you have segmented your market. Your choice here will be dependent on many factors. You will need to consider the segments that you have chosen and how your competitors are serving these segments. You will need to target a segment whose needs are not currently being met, as you may find it difficult to break into a segment that is already being served well. Also consider the size of the segment and if there is any scope to expand and how you may be able to expect it to expand. We also need to look at whether as a company are you strong enough to appeal to your chosen group? Your competitors may already have established a reputation.

6.0 POSITIONING

This is where you will put into practice your targeting. You will have segmented the market and then come to s decision on which segment to target. Now you will have to position yourself in your target market. You may find that you might have to reposition yourself, here you will need to change the consumer's perception of your product, this will need to be done as the present position that you are in, the brand seems to have become less attractive. Advertising and promotions will be needed for repositioning.

6.1 To be effective in repositioning you will need to have an understanding of how your brand as opposed to your competitors is seen. This will enable you to put your product up against your competitors. You will then be able to attempt to move your brand in a more positive direction by promoting selective points of your brand/product.

7.0 THE PRODUCT LIFE CYCLE

This can be described as the life of your product from design, introduction to the market, acceptance in the market, maturity and then decline. This is very relevant in the fashion clothing market as trends change quickly.

7.1 INTRODUCTION

Introducing your product to the market you will need to build product awareness and develop a market for your product/design. The impact this will have on the marketing mix is:

PRODUCT: The brand and quality is established, and patents and trademarks are obtained.

PRICE: This is set and the factors used here are weather you want to price low to build a market share or high to recover your development costs.

DISTRIBUTION: You will decide on distribution and whether you wish to be selective until your product is accepted

PROMOTION : Aimed at innovators and early adopters. You should seek to build product awareness and educate any potential customers about your product.

7.12 ACCEPTANCE (GROWTH)

At this stage you should aim to build on your brand preference and increase your market share.

PRODUCT: You should try and maintain the quality of your product at this stage, any additional features could also be added at this stage.

PRICE: You can maintain the price as demand for your product should increase with little fear of competition.

DISTRIBUTION: More distributors are added and you should see an increase in demand and acceptance of your product in the marketplace.

PROMOTION: Aim at a broader audience

7.13 MATURITY

At this stage you will see a decline in the strong growth of sales. You will find that your competitors have produced something similar. The aim here is to defend your market share whilst trying to maximise on your profit.

PRODUCT: You may want to change certain features of your product to differentiate from your competitors.

PRICE: You may have to lower your prices as new competition enters into the marketplace.

DISTRIBUTION: This may become more intensive and you may have to offer some form of incentive to encourage preference over your competitor's products.

PROMOTION: The emphasis here should be on differentiation.

7.14 DECLINE

This is where you will notice a decline in sales, you may want to maintain the product maybe adding new features. If this product has been offered as a limited design then you may be able to offer it as a diffusion range. Or you may decide to discontinue this product/design and sell the design to another firm.

8.0 BRAND NAME AND IMMAGE

The brand name 'Hubbery' is very important for the company as this is what will sell your product. This name is associated with quality and style, the hubbery check is also a part of the company and its image and people associate the check with the name. As you have put a lot of thought and money into the brand and design to be able to appeal to a target audience you will not want anyone else being associated with it and piggy backing on your reputation.

8.1 The company should ensure that the name Hubbery is registered as a trade mark. This is because Hubbery is not only the business name but also the main brand name. By registering the brand name you will you will stop others especially competitors from using your name logo or slogan.

8.2 As the check is also associated with the name Hubbery the design or pattern should be patented, this again would stop others from copying the design and selling similar products under false pretence on the market.

8.3 By registering the name Hubbery you will have the automatic right to legally stop anyone else from using this name, this is what is known as trade mark infringement. Similarly by having a patent on the Hubbery check you are able to legally stop others from using this pattern or design.

9.0 BUILDING YOUR BRAND NAME

Once you have established a brand and protected it you will need to build this brand and its value there are a number of factors that need to be considered in order to be successful, these are:

Quality

Positioning

Repositioning

Long term prospective

Internal marketing

Credibility

Communications

9.1 Quality is the most important factor when building a brand, this is one of the main customer expectations. Quality must be delivered well and be consistent.

9.11 Positioning is where the product has been placed in the market and in the minds of the target consumers. This can be achieved through brand name, brand image, standards, packaging and guarantee.

9.12 Repositioning is used when you need to or try to change your target market or if the product has come to its decline stage.

9.13 Long term perspective is looking at the brand with a view to it being a long term thing. This would be the building of customer awareness, the ability to communicate the brands message.

9.14 Internal marketing is another crucial factor to the success of a product. If the brand is marketed internally as well, as externally the whole organisation will understand the brand value and its position.

9.15 Credibility is gained from the consumers trust and belief in your brand, therefore it is important that you work towards gaining the trust in your customers.

9.16 Communications plays a key role in building your brand. The way you and your brand communicate with the market will influence customer perception and brand loyalty.

10.0 PRICING STRATEGIES

There are many ways in which you can price a product, however this is dependent on the desired outcome and situation. We could opt for either one of the pricing strategies: premium pricing, penetration pricing, economy pricing, price skimming, psychological pricing, product line pricing, optional pricing, captive pricing, bundle pricing, promotional pricing, geographical pricing and value pricing. It is important that you understand each one of these strategies so that you may apply one in a given situation.

10.1 Premium pricing is where you are able to charge a high price due to a uniqueness of your product. This is usually used where you have a competitive advantage.

10.11 Penetration pricing is used to penetrate or break into the market, the price is usually set low to allow penetration into the market and once in the price can be increased.

10.12 Economy pricing is usually a price for no frills products, products that have little money spent on the marketing and manufacturing.

10.13 Price skimming is the ability to charge a higher price due to a competitive edge. This strategy cannot be used as long term as it is not sustainable. Pricing high will attract competitors which will increase the supply therefore a fall in price.

10.14 Psychological pricing is used when the required response from the consumer is to be emotional. For example price at 99p not £1.

10.15 Product line pricing is when you have a range of products the price will reflect the benefit of a certain part of the range. For example a jacket costs £75 and the trousers cost £25 but bought as a complete set then the price is let's say £90.

10.16 Optional pricing is when you try to increase the amount of money a customer will spend once they start buying this is by introducing optional extras. For example buying a car, this comes complete with wheels and a radio but if you wanted special alloy wheels and a cd player then you would have to pay extra.

10.17 Captive pricing is used where a product has something that complements it. A higher price is charged. For example buying a razor which will need replacement blades that will only fit that particular razor.

10.18 Bundle pricing is used to combine several products and sell them as a bundle, this is also used when trying to move old or dead stock.

10.19 Promotional pricing is used to promote a new or modified product, other approaches are offers such as buy one get one free offers.

10.2 Geographical pricing is used when there are variations in price due to rarity value.

10.21 Value pricing is used on products when external factors such as a recession or competition forces you to introduce value ranges or products to retain a market share.