Alae Fashion Marketing Mix Strategy - Case Study Example

DЕVЕLОРING АN EXPORT PLAN FOR ALAE FASHION by Student’s name Code+ course name Professor’s name University name City, State Date Alae Fashion Marketing Mix Strategy Marketing mix refers to the identification of the unique characteristic of the business that enhances profits in the long run(Pickton& Masterson, 2010). Further, marketing mix involves a combination of several factors, including product, place, price and promotional strategies(Pickton& Masterson, 2010). In today’s competitive market, Alae Fashion Ltd should come up with the right marketing mix that will respond to varying consumer needs in the chosen markets. For Alae Fashion Ltd to effectively establish itself in United States, it has to get right the four elements of the marketing mix commonly known as the 4Ps.The 4Ps should be integrated in such a way to support each other in order to avoid lack of coordination (Pickton& Masterson, 2010). Product Alae Fashion Ltd deals with a wide range of garments including industrial wear, protective clothing and jeans trousers. The company will thus boost its export earnings by expanding to the United States. Alae Fashion Ltd shall conduct a series of activities known as product adaptation, or modification, in order to meet the needs of the target markets. Due to the dynamic business environment, Alae Fashion Ltd shall conduct a market research investigation, in order to determine the product strategy to follow. A company may decide to sell a similar product, modify the product or develop new products. Alae Fashion Ltd aims at introducing its latest fashion trends in the US markets. In order to remain competitive, Alae Fashion Ltd will adopt a unique way of competing. The company shall adopt a multidimensional approach, in order to deliver value to the client. In the face of globalization, it is imperative for marketers to not that the clients will react to a certain brand even before it is launched (Francis, 2010). As such, companies should conduct a thorough marketing research, and also predict the emerging trends. Alae Fashion Ltd will use the product component model, in identifying the possible modes of entry into the US market. The product component model identifies the impacts of such aspects as cultural, geographic, economic and legal factors on the export market. A research, which was done by Mentzer, (2001) stated that organizations are often faced with external pressures such as a new customer demand. During turbulent times, the core competencies of a firm usually influence the organizational culture. The core competencies such as innovation play a key role in enhancing value and thus, satisfying customer needs. A sustainable competitive advantage allows the maintenance and improvement of an organization’s competitive position in the market. In order to achieve a competitive advantage in the overseas markets, Alae Fashion Ltd shall add product variations. Major product modifications may be expensive and hence requiring extra capital investment. Alae Fashion Ltd can therefore, modify such aspects as the clothing and accessories design, color and functional features, in order to capture the attention of consumers. Alae Fashion Ltd will thus, add or delete functional features depending on the US market. For instance, the company shall consider the US culture, which is mostly influenced by the weather changes, when designing clothing. Thus, the Alae Fashion marketing team shall examine the physical product, as well as, functional features when launching the product in this market. To become successful, Alae Fashion shall anchor its business strategies on the technology platform. Alae Fashion Ltd will thus develop new brands to appeal to young people between the age of 14 and 29. According to Palmer (1996), young individual provides the greatest opportunity for markets because of their explorative nature, influence and minimal resistance to new products. Notably, the youth has a strong association with fashion styles, and wooing them will enhance the company’s competitiveness in the market. Adults also provide a wider audience because of their immense purchasing powers. Unlike young transitional individuals, adults have additional buying power and influence to other adults. In addition, this market segment influences the family purchasing decisions. As such, they are expected to provide the basic needs including clothing. As such, the company will employ the state of the art design to create innovative products and acquire customers. The company will continuously create new products, in order to gain a larger share of the market. Alae designs will be driven by the desire to create a modernized and successful organization, which is result oriented. In the face of global competition, Alae Fashion Ltd shall strive to adapt to US by streamlining its processes, systems and structures. The company shall therefore, give a high priority to innovative programs. Place/Distribution Alae Fashion target clientele includes both lower and middle income group. Therefore, the company will set up its store in areas with large numbers of its target clientele. In addition, the store should be located in areas that are easily accessible to ensure that clients do not experience difficulties when going to the stores. Palmer (2012) defined distribution as the physical movement of products from the origin to destination. Thus, distribution management involves shipping, warehousing, inventory, and amortization. In the past few years, the concept of physical distribution has emerged as a distinct, identifiable function of management. In terms of transport, United States is among the nations that have good transport access across the globe. In addition, the company will use air travel in order to distribute products throughout New York. The following is the main benefits that Alae Fashion will gain by using this mode of transport; the company will be able to move goods faster from origin to destination. With the advancement in information technology, purchasing a plane ticket has become easier. A freight ticket can be purchased via internet or telephone, and Alae Fashion Ltd doesn’t have to waste much time. This will, in turn, provide Alae Fashion with a competitive edge. However, air transport is quite expensive, and therefore, Alae Fashion will seek alternative means of transport, in order to reduce expenses. Alae Fashion Ltd can use the available distribution channels to market its products throughout New York. The company can involve renowned distributors such as Cutting-Edge Retailer (New York) to promote and distribute products. The established distributors have developed a strong client base including government and corporate organizations. Promotion After companies have developed the products, they must inform potential customers about the products, in order to cut a niche in the market. Lee (2005) defined promotion as any activity meant to raise product awareness for the purposes of increasing sales. The fashion cognizant young individuals are usually early adaptors, and buy clothing and accessories regularly. Therefore, the company intends at strengthening the brand image through promotion. Alae Fashion will advertise its clothing and accessory products using the following tools; advertising, sales promotion, personal selling among others. Advertising Recent research reveals that advertising is the most often used tools of promotion. According to Hansen & Christensen (2003), advertising is any paid, form of non- personal presentation and promotion of ideas and products by a well-known sponsor. Marketers use this means, in order to seize consumer’s attention. A promoter has to pay advertising agency experts in the field of advertising. Advertising is a mass communication which is aimed at persuading a large number of potential buyers (Hansen and Christensen, 2003). Alae Fashion Ltd will achieve numerous benefits by maintaining a strict contact with the clients. The following are the main objectives of advertising; information and persuasive advertising. Information advertising enlightens the market about new products and also, proposes new uses for a product. This form of advertising also, notifies the consumers about price changes and hence, enabling them to make informed purchase decisions. Persuasive advertising, on the other hand, involves creating selective demand for a given product. In the face of global competition, Alae Fashion Ltd may convince consumers to always buy their clothing and accessories. Alae Fashion Ltd may also conduct advertising with a view of reminding consumers that they require the product in future. Setting advertising budget for Alae Fashion Normally, advertising costs vary from one organization to another. For instance, the major pharmaceutical firms across the globe spend around 15 % of their income on advertising, whilst organizations such as GM and Ford spend around 2 % (Lang, 2005). Clothing and accessories can be classified as fast moving consumer goods, and thus, the advertising budget for Alae Fashion Ltd will be around 7-10 % of sales. There are many competitors in the clothing and accessories industry, and therefore, Alae fashion needs aggressive advertising to build awareness, and persuade enthusiasts to try their products. Research has shown that acceptance of specific brands of imported clothing and accessories by American consumers is based on the initial promotional push of the country of export. Individual clothing and accessories brands introduced without a connection to the parent country are only able to compete in these markets after conducting a strong campaign to educate consumers on the superiority of the brands. Consumers across the globe recognize Australia as a producer of high quality products especially due to its finest quality of textile materials. Due to the perception of consumers regarding Australian products, the company will have a competitive edge as far as marketing and promotional activities are concerned. Alae Fashion Ltd will adopt the ‘same level as competitors approach’ while setting the advertising budget. Alae Fashion will thus examine the competitors’ activities before setting an advertising budget. However, this approach has several shortcomings, and Alae Fashion needs to be careful. For instance, it is not easy to gain correct information on rival firms’ spending. Also, there is no rationale to believe that competitors spent their advertising money wisely. Therefore, Alae Fashion Ltd shall determine the right advertising budget. As such, the marketing leaders at Alae fashion should not set the budget too high, as it will give rise to lavishness, and lesser profits. In addition, they should not set the budget too low because it will be extremely difficult to grasp consumer attention. Media Mix and Message Alae Fashion Ltd shall consider the following two factors when developing advertising strategy that is, advertising media and advertising message. With respect to the advertising message, Alae Fashion must rate the messages on exclusiveness, believability and desirability. The message must state something interesting about the clothing and accessories. It must state something special that does not apply to every clothing or accessory. Also, the message must be credible for clothing and accessories consumers to think about it, and react. Advertising media are a channel that conveys the promoters’ message to the intended audience (Murthy, 2009). It is a vehicle through which a marketer passes on his message to potential clients. Alae Fashion Ltd needs to advertise extensively in order to spur growth. The company may use E-mail marketing in order to reach a wider client base within the shortest time possible. Alae Fashion Ltd shall own a website that is branded with dark-rich colors, in order to attract prospective customers. The company will also have adequate plans of utilizing the social media advertising tools such as twitter and Facebook. Sales promotion Sales promotion is a temporary enticement, which is aimed at encouraging buyers to purchase a product. The Alae Fashion sales department must set their sales promotion objectives before settling on a particular sales promotion tool. These objectives include; consumer promotions, trade promotions and sales force. Alae’s promotion objectives are consumer promotion and trade promotions. Thus, the company aims at enhancing short term sales, as well as, increasing its market share in the long-run. In this regard, the company may use the following sales promotion tools; coupons, price of, patronage rewards, cash refunds and samples. In addition, the organization may give discounts and allowances to traders who agree to take part in an advert. Personal Selling Personal selling could be defined as the face to face contact between the marketer and prospective client (Gitman & McDaniel, 2008). Unlike other promotional approaches, this method is concerned with looking for potential purchasers, presenting the product, and obtaining an order from the client. This approach is ideal for Alae Fashion Ltd because it has the ability to command a much larger share of total sales revenue. The company will use salespersons from the home country. Salespersons from the host country are already familiar with the market, and hence an invaluable resource. Price Initially, Alae Fashion Ltd will sell its items at reduced prices. Gronroos (1989) argued that this will help in attracting customer in order to gain its clientele. However, after acquiring its market share, Alae Fashion will then apply the various pricing strategies to arrive at the right commodity prices. Moreover, it is worth noting that, products are worth as much as the clients are willing to pay. As such, some clothing and accessories will be priced according to what the client is willing to pay. Entry Strategy Various factors influence the decision on which market to enter, the entry strategy, when and to what scale. The choice is largely swayed by diverse factors such as cost implication, social-economic pressures, political and legal factors, trade barriers and firm’s strategy (Lambin, 2007). Ultimately, the goal of investing in the international market is to diversify on the market and make sustainable profits in the long run. In the expansion process to New York, Alae Fashion shall consider three options; (a) export from Australia; (b) licensing and (c) setting up a wholly owned subsidiary. Direct exports from Australia In direct exporting, Alae Fashion will be directly involved in marketing its products to the New York market. As such, it shall set up a centralized position in New York, which shall be responsible for coordinating marketing, contracting, distribution, facilitating exporting as well as pricing of clothing and accessories. This can be achieved in various ways, such as sending Alae Fashion representatives to New York, appointing local representatives/agents who will coordinate all Alae Fashion activities, utilizing independent local distributers who will purchase clothing and accessories directly from Alae Fashion Australia and distribute them in the US or creating Alae subsidiaries which shall oversee all Alae’s activities in New York. Advantages of direct exporting In direct exporting of Alae clothing and accessories, the company shall realize various advantages. These include better information feedback on the quality of services offered by Alae and areas of improvement. Secondly, direct export shall translate to more sales especially when conducted by local agents, who consumers can easily associate with. Direct exports also enhance greater control of the quality of Alae products. In addition, it enhances better protection of Alae’s intangible assets such as trademarks and goodwill in the international market. Disadvantages of direct exporting The short-run costs of implementing direct exporting are quite high and risky. Alae Fashion Ltd has to conduct thorough research on how to implement the strategy, who to appoint to distribute the pricing methodology as well as establish a reputable team that will oversee and coordinate the whole process. The process of direct importing may also be more expensive in terms of logistics involved, transport costs, insurance and licensing involved. In addition, the process is also time-consuming in terms of time spent in exporting the products, as opposed to producing and distributing the services locally. Licensing In licensing, Alae Ltd will give local firms (licensees) the rights and technological know-how on the production process and implementation of Alae products. The licensees will produce Alae products either exclusively or non-exclusively for a stipulated period, marketing of products in the region, paying of the commission and loyalty to Alae for the services produced. As such, Alae Fashion products can penetrate to New York market without Alae setting new operations there. Advantages of Licensing The cost implications in licensing are much lower. Alae can reach a wider market in New York by using the already existing infrastructures. In addition, using licensing, Alae can easily expand its market territory without incurring high costs of expansion. Disadvantages of licensing The income and profits realized from licensing other companies are lower when compared to other strategies of market entry. In addition, once you license local firms, you may loss control of production and distribution of your product, and quality of Alae products may be jeopardized. An incompetent firm can also largely ruin the reputation of Alae in the overseas market. Another problem associated with licensing is a conflict of interest; whereby the licensee may take advantage of the license in promoting his product at the expense of Alae products. Wholly owned subsidiary A wholly owned subsidiary is the third strategy which Alae can use to enter the New York market. The process involves establishing your operations and distribution in the new market. In addition, it needs extensive market surveys and studies to establish the prudence of establishing a new operation. It is, therefore, an extensive venture in the short-run, but, may ultimately be cheaper in the long-run in terms of control and quality management (Daniels, Radebaugh & Sullivan, 2004). Advantages of wholly owned subsidiary A wholly owned subsidiary has various benefits over other market entry strategies. One, Alae shall have the full control over the production and distribution process. As such, it can established strong distribution networks within and outside Australia, implying more sales and profits. In addition, the approach will ensure that the quality of products and services is maintained. As such, Alae shall have the most benefits from its operations Disadvantages of wholly owned subsidiary Wholly owned subsidiary will attract high costs, ranging from field surveys, setting up, registration, distribution and operations (McDonald, Burton & Dowling, 2002). Owing to the nature of Alae business, a wholly owned subsidiary might be expensive to in New York. Recommendation Several strategies of market entry have been proposed, notably, direct export from Australia; licensing and setting up a wholly owned subsidiary in New York. After weighing the pros and cons of each strategy, the report highly recommends licensing as the ideal strategy in penetrating the US market. Licensing is more beneficial, as opposed to the other two strategies. These include lower costs of execution, operation and licensing, ease of expansion to other markets within the region through taking advantage of the existing infrastructure and policies in New York, lower costs of logistics and operations as well as favorable social-economic, political, legal and technological environment, since the licensee will be easy to associate with in the market. References Daniels, D., Radebaugh, L. and Sullivan, D. (2004). International business: environments and operations. 10th Ed. NY: Pearson Education, Inc. Francis, C. 2010. International Business: Text and Cases. Ed: 5. New Delhi: PHI Learning Pvt. Ltd. Gitman, L. J. & McDaniel, C. D. 2008. The Future of Business: The Essentials. Ed: 4. London: Cengage Learning. Gronroos, C. 1989. Defining Marketing: A Market-Oriented Approach. European Journal of Marketing, 23 (1):52-59. Hansen, F & Christensen, L.B. 2003. Branding and Advertising. Copenhagen: Copenhagen Business School Press DK. Lang, J. 2005. Aliens and Cowboys: (Bush’s Legacy of Lies).Indiana: iUniverse. Lambin, J. (2007). Entry Strategies in Foreign Markets. In the Market-Driven Management. London: Macmillan Publishers. Lee, M .2005.Principles of Advertising: A Global Perspective. Ed: 2.London: Routledge. McDonald, F., Burton, F. and Dowling, P. 2002. International Business. NY: Cengage Learning EMEA. Mentzer, J. T. 2001. Supply Chain Management. Ed: 2.New York: SAGE. Murthy. 2009. Advertising. India: Excel Books India, 2009. Palmer, A. 2012. Introduction to Marketing: Theory and Practice. Ed: 3. Oxford: Oxford University Press. Pickton, D & Masterson, R.2010.Marketing: An Introduction .Ed:2.New York: SAGE. Read More