Collection of Style Australia Marketing - Case Study Example

COS Marketing Name Class Unit Introduction and COS background Collection of Style (COS) is a ready to wear label which was created in 2007. The company is a sister brand to H&M which is a ready to wear multinational. The company has over 40 stores worldwide and is well known for their minimalist style. This is through basing themselves as crisp and fresh style with an aim of attaining a natural look. The company has been credited for creating brands that last beyond the season. The company has their specialisation in ready to wear for men, women, and children (COS). Despite the wide array of products that COS offers, the company does not have a luxury watch category. Market plan helps a lot in coming up with a marketing strategy for a new product. This marketing plan involves introduction of a watch category in COS product line. The watch category will consist of different branded watches for various market segments. Situation Analysis COS’s current and anticipated organizational resources COS have adequate resources having been in the industry for a long time. The company has already established an extensive distribution channel across Australia and also worldwide. Being affiliated with H&M, COS has an access to expertise. The company has a well trained and experienced staff. The directors of the fashion house, Karin Gustaffson and Martin Anderson helps in choosing the cuts, lines and shapes. These resources give the company the capability to extend its product line without compromising the quality of the products which are already in the production (COS). Through including watches into their product lines COS will have expanded their market and increased their sources of revenue. The watch category will include: men’s watches, women watches, luxury brands and sport watches (IBISWorld). This will make it possible to cater for all their customer needs. Competitive environment PORTER five forces Threat of new entrants There is a high threat of new entrants in the market. The investment in the watch market does not require a lot of capital and a lot of players have already entered into it. Most of the apparel companies have been offering watches as one of their product lines. An example is Macy’s and Gucci. The increased number of manufacturing contractors has made it possible for new entrants to use reduced capital in venturing. Despite this, the cost for advertising and creating distribution channels is high (Porter). Bargaining power of the suppliers The suppliers have a low bargaining power. This is due to fact that there are a lot of suppliers with little or no differentiation (Grundy, p.220-3). Most suppliers for the watches are little differentiated from each other. With the rise of globalisation, outsourcing has become one of the most favoured methods in countries such as China. The manufacturers based on the low cost countries face a lot of competition. Textiles, leather and watch accessories are the main commodity that will be used by COS. Bargaining powers of the buyers Buyers in the industry have high bargaining powers. This is due to the abundance of retailers located in the industry. The switching cost is low in the industry based on brand preferences and prices. Due to high powers from the buyers, retailers are forced to offer what the buyers demand (Grundy, p.221). This makes it vital to make sure that the products are updated based on the current trends in the industry. Retailers differentiate themselves through prices, quality and style of the watches being offered. Also, there are huge amount of watch imitation available in the market which limits differentiation. Threat of substitutes The threat of substitutes is moderate. Uses of smartphones and imitations have affected the uptake of watches in the market. Watches in the high priced segments are used are highly appreciated (IBISWorld). When worn as fashion, watches become hard to be substituted. This makes it vital for companies to stock high quality brands. COS will have premium priced watches in their segment (Grundy, p.222). Intensity of rivalry The intensity of rivalry in the industry is high. There are a large number of retailers in the watches and jewellery sector (IBISWorld). Apparel companies such as Macy’s have introduced watches as a category in their product lines long time ago. At Macy’s the company is well stocked with high quality brands of watches and provides them in all categories. Competing with brands which have already established their identity in the watch and jewellery market makes the rivalry high. The constant change in the industry trends leads to firm to constantly review their products to appeal the customers (Grundy, p.222). SWOT analysis Strengths COS have a strong brand name. The company is well known in the fashion industry through their designs. COS have been able to establish strong distribution channels The company have adequate resources which includes personnel and finances. COS have an already established market Weakness COS is not well known in the watch market. The company have not been dealing with watches in their product lines. The company have no branded watches hence may be forced to sell the already established watch brands. Opportunities There is growth in the premium priced watch segment There is a trend in appreciation for high quality watches Internet marketing provides the company with a cheap means of advertising through viral marketing Threats The market is highly competitive with the already established brands The watch market is highly volatile due to changing trends The company will have to spend a lot of revenue to advertise the luxury watch product line Smart watches being introduced by the technology companies may lead to high competition There are a lot of small scale retailers in the market. Ansoff matrix Ansoff matrix focuses on the company present and the potential future areas of engagement in its product offering. The matrix shows four possible ways of combinations in which the business can be grown through existing or new products. Through the matrix, it becomes possible for the company to define strategies for marketing (Richardson and Carl, p.1-3). The matrix provides four courses of action that can be used when considering the marketing objectives: Selling the existing products and services to the existing market Extending the existing product line into new markets Coming up with new products or services for the existing market Developing new products and services for a new market The matrix gives four strategies which depicts the logical combinations. These are: Market penetration Product development Market development Diversification COS will be introducing new products to the existing market. This is a product development strategy where the existing market is the main target. The strategy will help in reducing the risk for the company. Watches can be easily combined with the fashion items being offered by the company (Richardson and Carl, p.1-3). Segmentation Market segmentation involves dividing the market into distinct groups (Thomson, Strickland, and John). The groups are identified through their needs, characteristics and behaviours. Market segmentation helps in developing the segment profiles (Ringland and Laurie, p.29). There are four segmentation categories: Behavioural- benefits consumers seeks and how they use the product Demographic-races, ages and ethnic backgrounds Geographic- customer location, products bought based on the locations Psychographic- how the consumers think about values, the consumer lifestyles COS will use behavioural, demographic and psychographic segmentation on their new product. Through behavioural, COS will look at the benefits sought by consumers when they buy the product. Consumers purchase the watches based on fashion and style. They are also attracted to quality and brand. Through demographic segmentation, characteristics such as age, sex, income and occupation will be looked at (Dibb). There will be watches for men, women and sports. The watches will be priced based on the category. There will be premium priced watches as well as fair priced. Through psychographic segmentation, it becomes possible to address the segment’s needs. This is through carrying out surveys and determining the needs for different segments. Consumers’ activities, interests, lifestyles and opinions will be considered in the product offer (Dibb and Lyndon, p. 612-20). Targeting Targeting will be used in determining the segments that have more potential than others. This is through looking at the segment: Size- whether the segment size is profitable enough to cover the operating costs Growth- whether the segment is growing Competitors’ penetration into the segment Segment accessibility Adequate resources to compete in the segment Whether the segment fits the firms’ objectives and mission COS will be operating in a multi-segment market. This is through targeting different consumers with their products. This will enable the company to reduce their venerability to competition. The watches will serve different consumer segments. Positioning strategies Through positioning, the products are tailored to stand out from the competitors. This helps in avoiding help to head competition with other companies (Chen and Muzaffer, p.995). The watches will be positioned as high quality and fashionable. COS will work to ensure that it is able to sell watches that are trendy. COS will use the tagline, “trendy watches” in all their advertisements. This will be able to sum up the essence of the product. The company aims to ensure that the product is positioned in a way that appeals to different customer segments. Branding strategies Brand strategy is a long term development plan based on a successful brand with an aim of attaining given goals. To come up with a branding strategy COS starts by setting the goals to be achieved. The company aims at establishing a watches product line that is unique, high quality and trendy. The company goal is to establish its watches line as the best in the industry. The company also aims at taking market share from the existing fashion retailers such as Macy’s and Gucci. The company will use variety of avenues to advertise and market their brand of watches. Through most of the watches will be bought from third party, the company will have its own branded watches. Taking the long term goals of the company will help COS in exploiting their value (Ringland and Laurie, p.41). Product strategies COS watches will give the consumers a trendy look and class. COS aims at ensuring that they are ahead of the competitors through offering watches that are unique and trendy. The watches will be offered with an aim of satisfying the needs for target customers. The product appearance, function and support services will make it more attractive to the target. The watches will have a warranty to ensure that the customers are assured of quality services and a value for their money (Naik, Kalyan and Russell, p.30) Pricing strategies Pricing strategies look at how much will be charged for the product. The watches price will be value based. This is price based on the buyers’ perception of the value of the watches, quality and prestige. Most of the watches offered will be high quality and hence will be premium priced. COS will also charge the prices based on the competing firms offering. The company will be responding to any charges in price that are made by the competitors. The company will also engage in seasonal allowances where the prices will be reduced based on seasons. This is especially during the low sales volume to entice more customers (Naik, Kalyan and Russell, p.27). Promotion strategies This refers to the selling and advertising part of marketing. Through promotion, it becomes possible to tell the consumers what the product is, how to use it and why they need it. COS will use the following channels for promotion: television, print, social media, electronic media and word of mouth. Personal selling will be used in the stores to maintain customer relationship. Through use of Facebook, instagram and twitter, COS will be able to market the watches product line. This is through posting pictures and offering in the watches section. Social media is growing at a fast rate and offers the cheapest form of advertising. It is also possible to enjoy viral marketing through use of electronic word of mouth (eWOM) (Naik, Kalyan and Russell, p.31). Distribution strategies COS have an established online shopping platform. This makes it easier to reach the potential customers. There has been an increased interest in online purchases due to convenience. The company will then use logistics services to deliver the products to the customers. COS have over 40 stores worldwide where customers can make physical purchases. The company has good distribution intensity. This is due to a large number of outlets where the consumers can make purchases (Yoo, Naveen and Sungho, p. 199-205). Recommendations Its recommendable that COS extends its product offering to include luxury watches catering for all its segments. The company should also consider targeting new market with their offering despite the risk involved. It would be advisable for COS to brand its own luxury watches and market them while offering limited third party luxury watches. The company should introduce the watches as a product line within its own segment. Through the use of social media, the company should take advantage of viral marketing. This will help a lot in selling their luxury watches. Conclusion There is a great opportunity for COS in the watches market. The company will compete with other retailers including fashion companies such as Macy’s who have a well-established watches products line. Based on situational analysis, COS will have to exploit the available opportunities and create a competitive edge in the market. The market has a high competitive rivalry. COS will use market development based on Ansoff matrix. This will involve introducing a new product to the existing market. The company positioning, targeting and segmenting will help in gaining a market share in the watches market. Branding the watches is a step that will help in attaining COS strategy in the market. The market mix strategies will help in reaching the targeted market and address their needs. The company has a well-established distribution system that will be of great help in the new product line. Through following the given recommendations, it will be possible for COS to succeed in their new watch product line. References Chen, Joseph S., and Muzaffer Uysal. "Market positioning analysis: A hybrid approach." Annals of Tourism Research 29.4 (2002): 987-1003. COS, About COS, 2015, http://www.cosstores.com/fi/About, 28 August 2015. Dibb, Sally. "Market Segmentation Success–Making it Happen!." Strategic Direction 26.9 (2010). Dibb, Sally, and Lyndon Simkin. "Market segmentation: diagnosing and treating the barriers." Industrial Marketing Management 30.8 (2001): 609-625. Grundy, Tony. "Rethinking and reinventing Michael Porter's five forces model." Strategic Change 15.5 (2006): 213-229. IBISWorld, Watch and Jewellery Retailing in Australia: Market Research Report, 2015http://www.ibisworld.com.au/industry/pets-and-pet-supplies-retailers.html, 28 August 2015. Naik, Prasad A., Kalyan Raman, and Russell S. Winer. "Planning marketing-mix strategies in the presence of interaction effects." Marketing Science 24.1 (2005): 25-34. Porter, Michael E. On competition. Harvard Business Press, 2008. Richardson, Mark, and Carl Evans. "Strategy in action: applying Ansoff's matrix." Manager: British Journal of Administrative Management 59 (2007): 1-3. Ringland, Gill, and Laurie Young. Scenarios in marketing: From vision to decision. John Wiley & Sons, 2007. Thomson, A., A. J. Strickland, and John E. Gamble. "Crafting and executing strategy." Tata McGraw Hill (2001). Yoo, Boonghee, Naveen Donthu, and Sungho Lee. "An examination of selected marketing mix elements and brand equity." Journal of the academy of marketing science 28.2 (2000): 195-211. Read More