Marketing Strategies - FAB Super - Case Study Example

Marketing Plan Name Institution Table of Contents Table of Contents 2 Introduction 3 Situation Analysis 3 Market size 3 Consumer behaviour 3 Major competitors 4 Pestle Analysis 5 Political environment: 5 Economic environment: 5 Social environment: 6 Technological environment: 6 Legal background: 7 Environmental issues: 7 Market Segmentation 8 Behavioural: 8 Psychographic: 8 Demographic: 8 Marketing Mix 9 Place: 9 Pricing 9 Product 10 Promotion 12 Conclusion 13 Reference List 13 Introduction FAB Super is a fashion retailer that specialises in high-end women apparel. The business seeks entry into Canberra, where it targets women beyond size 16. The company’s products are imported from China and locally (Sydney). This marketing plan presents a situational analysis and marketing mix with the view of conceptualising an effective marketing strategy for entry into Canberra market. Situation Analysis Market size With a population of around 392,400 people, the Canberra market offers a potential market for FAB products. This is evident from recent statistics showing that some 38 percent of women in the cosmopolitan city are fashion enthusiasts, and will spend nearly 21 percent of their income on clothes, at least twice each month (Australian Retail 2012). It is estimated that women’s Apparel industry in the country is worth $10.2 billion. The industry is estimated to grow by 0.52 percent in 2014 due to forecasted rise in consumers’ disposable incomes by 2.4 percent (Datamonitor.com, 2014). Consumer behaviour ABS statistics indicate that the country’s three lowest income groups spend averagely $13, $20 and $41 on apparel, while the upper group use averagely $46 and $67 per week (Abs.gov.au, 2014). Still, industry experts assert that the fraction of expenses in the apparel industry has declined over the last one decade due to real price deduction connected to the trade liberalisation and emergence of mobile phones and iPads (Australian Retail 2012). The target group should therefore have low disposable income for use on apparel. Because of Australia’s casual lifestyle and modest climate, the women in Australia spend relatively less on clothing compared to other developed economies. In the fiscal year 2005/2006, the average turnover for the apparel retail stores was approximately $10.1 billion. Australia’s apparel industry has revolved around casual and relaxed appearance of the target market (Jegethesan et al, 2012). Moreover, it reflects a multicultural society. Current industry statistics showed that most Australians tend to be comfortable in casual wear and extremely innovative fashion. At the same time, some 98 percent of the customers prefer responsible shopping, while 58 percent go for brands that are perceived to act in the best interest of the society (Trendwatching.com 2014). Major competitors FAB Super Fashion anticipates a greater competition from importations. The share of imports for women apparel has tripled to 60 percent in 2013 from 18.5 percent in 1995, with about 60 percent originating from China. The worthy Canberra competitors with the potential to tense the industry include Surd Dive ‘n’ Skies, Myer Canberra, industry include Surd Dive ‘n’ Skies, Myer Canberra, SABA Canberra Civic, and Just Jeans. They control nearly 90 percent of women’s apparel market in the city because of their distinguished brands and substantial capital investment (Mody and Wheeler, 2007). Generally, the market has large entry barriers due to the high competition. The large number of suppliers also implies that suppliers have a higher bargaining power. Additionally, buyers maintain a higher bargaining power. The key implication is that FAB Super Fashion faces a major entry barrier, aggravated by its young brand and comparatively small capital investment. The company has to take to niche-marketing strategy to wade across the competitive market. Pestle Analysis Political environment: Australia operates under liberal-democracy, where the federal government has enacted liberalised trade policies targeted at opening the market to imported female apparel. This means that FAB products are exposed to competition from low-cost imported female apparel. Australia has a peaceful political environment that provides an ideal setting for FAB’s growth (Weller, 2007). Economic environment: The country witnessed a slim GDP growth. The stable economy has since 2012 (after the Great Financial Crisis) increased the overall sale of women’s wear. While the consumers and Canberra have a high disposable income, Australia faces high interest rates coupled with rising unemployment rates. The implication of this is that few people are likely to go for luxuriant and high-priced fame apparel. Hence, the Australian market is likely to have low purchasing power (Chetty, 2013). Current estimates show rising income in neighbouring East Asian and South American economies, which would provide promising market opportunities for FAB garments. Australia is also a key trading partner to developed economies, such as Japan, United States, United Kingdom and Sweden, which would offer market opportunities for FAB products. Key trading partners, such as China also present strategic markets for FAB products (Australian Retail, 2012). Social environment: According to Deloitte (2013), many Australians are eco-conscious. As a result, there is prevalent preference for environmentally friendly living. Because of the country’s extensive geographic expanse, Australia is sparsely populated. This shows that people depend greatly on technology to communicate and to do their shopping. This presents FAB with an opportunity for online marketing. Additionally, the Australia Australian is essentially a multi-ethnic and multiracial society, due to its diverse cultures and people from across the globe (McMahon 2012). On the other hand, Canberra is a metropolis with people from diverse cultures, signalling thriving market for FAB super fashion business. Hence, the Australian market presents a market for selling diverse range of women apparel. Estimates by Datamonitor Research Store indicate that some 60 percent of women in Canberra tend to follow the global fashion trends in both electronic and print media. A similar proportion of women are influenced by the fashion trends, hence tend to focus on preference, value and class in their purchasing behaviour (Patterson and Tai 2012). Technological environment: The Australian society is largely dependent on technology in virtually every sphere of life. Currently, the country is among the top most privileged countries, in terms of internet penetration. This has resulted to a flourishing e-commerce industry, currently estimated at $2.3 billion. An implication for this is that FAB has a potential to attain high response and sale through sale of products online (Australian, Retail 2012). Legal background: Australia is cited as having a comparatively business-friendly legislative framework and institutions, which make certain of safe and hassle-free business practice in the country. Foreigners looking to start a business in Australia face a small number of legal barriers. Indeed, starting a business in Australia would take a matter of just two days relative to an average of 20 days as it is in the United States or United Kingdom. This signifies a potential competitive environment for FAB as it triggers influx of foreign companies dealing in similar line of business (Harcourt, 2000). Environmental issues: The Australian industry is known for the augmented levels of consumer’s interest towards eco-friendly products. Current estimates show that more Australians are opting for products with minimal direct environmental impacts. Extensive pressures also exists prompting Australian manufacturers and retailers to conform to EU directives on climate change, through compliance with set emission standards. Such pressures indicated that FAB has to come up with better manufacturing and supply chains strategies with minimal greenhouse gas emissions (Baker, 1998). Market Segmentation FAB’s target group has no colour barriers as customers originate from diverse ethnic and cultural backgrounds. The FAB target customer comprises an all-rounded woman capable of fitting in any environment and who is ready to pay a premium price for high-end apparel (Dolnicar, 2008). Behavioural: Some 70 Australian upper class segments prefer high-end unique apparel, to set them apart from the middle- and lower-class economic groups (Jegethesan et al 2012). This raises the potential for FAB to draw in an estimated 40 percent of the upper-class income group in the initial two years. Psychographic: FAB targets highborn women with a high sense of taste, style, and fashion. Current estimates indicate that most women in Canberra prefer high-end fashion and high-end fashion (Jegethesan et al 2012). Demographic: FAB targets the aristocratic women earning averagely $412, 000 each year. In Canberra, the upper-class women make up some 43 % percent of the entire resident population of women (Patterson, 2012). Marketing Mix Place: The company will be situated at Akuna Avenue in Canberra City. The place offers a strategic position as the company will be neighboured by ultra-modern shopping arcades, frequented by classy and elegant women. The company also seeks to venture into online retailing to take advantage of the ubiquitous nature of the internet. This is expected to reach out to women across Australia, looking to place orders for fancy wear (Baker, 1998). Since FAB seeks to build an image as a high-end women fashion retailer, the interior design of the store will appeal to the women. It will use decors that appeal to women with pink leather furniture, mirrors and colourful carpet. The Shop will also contain playing facilities for the kids to play safely while waiting for their parents to shop. The company will also concentrate on marketing strategies that target young mothers who come to the shop with kids, by investing in children toys, playing facilities and clothing services tailored to the children. Pricing The company’s major competitors such as Myer and SABA currently use pricing strategies, to stay competitive. However, while FAB will also seek to be a price leader, it will offer additional yet softer strategies, such as offering after sale services, such as doorstep delivery. Price constitutes quantity of money charged for services or goods (Watershoot & charged Van Den Bulte 1992). A business’ pricing strategy must ensure the correct position of its services and products within the market (Kotler 2003). Additionally, the strategy should propose a price that encompasses the profit margin and depend on current competition, competitor products and customer demand. FAB will make use of a pricing strategy, which is in line with the suggestion provided by Kotler (2003).  The pricing system of the company is founded on the competitive pricing model to make sure that products and services remain affordable, as well as relatively competitive to the prices of the competitor. Even though the pricing strategy of the company depends on the present price range within the market and those provided by competitors, the company attempts to make sure it provides affordable prices that draw clients in Canberra to produce substantial returns (Baker, 1998). Even though the company recognizes that pricing is its most powerful factor that influences customers and makes sure the company stays profitable, the company has placed policies in place to assist the management to fix optimum prices that are customer friendly. Therefore, the pricing is strategic and is meant to generally influence organisational performance, as well as competition within the market (McMahon, 2012). The prices of the products and services are created to satisfy the demands of all clients, which even though geographically separated, become united by the products and services of the company. The strategies allow the company to apply higher pricing in markets it considers economically better, and to compensate for the lower rates it charges within Canberra, whose average economic and income levels are lower (Ko et al 2007). Product FAB will use differential strategies to set itself apart from its competitors in Canberra. In packing its clothing, the company will use elegant and shiny packages that appeal to classy women. Compatible with the mission of ensuring global reach, the strategy will entail investing in apparel that exceeds the preferences and demands of upper-class women in Canberra. In regards to FAB Super Fashion, the concept of product denotes the high-end women apparel. Rafiq and Ahmed (1995) suggests that an important factor a business should focus on in creating an effective marketing mix is gaining knowledge on the target market, in addition to the competitors within the targeted market. The businesses may afterwards make use of the knowledge it has gained to draw customers. Indeed, the marketing strategy for FAB Super Fashion would be incomplete without the component of ‘product’ (Bhardwaj & Fairhurst, 2009), FAB seeks to provide a diverse range of women clothing to maintain and attract a diverse customer base. To make sure that it serves a variety of customer demands, the company blends its clothing services with products. In addition, FAB believes that although the female customers may be discriminated by class and prices, it will have to provide quality services to attract and sustain their goodwill. Therefore, the diverse multicultural women in Canberra offer FAB an important market base. The company believes that since they opt for the glamour connected with elegant shopping -- although not the whole target group can meet the luxury expense -- the company offers a range of women clothing, though within the premium price range. The company has concentrated its marketing strategies on women by stressing on making its premises appear classy, as well as offering ultra-hype styling at the Canberra outlet. Promotion According to Kotler (2003), promotion is the channel for conveyance of commodities to the places where the consumers can easily access them. The company will use a strategic marketing plan for its apparel in order to meet the diverse demands in Canberra. The targeted women consist of stylish upper-class women. This implies that the company will participate in fashion exhibitions in trade fairs. The company also seeks to market itself using the print media and flashy fashion magazines, as many of the upper class women tend to keep up with the trend through magazines, the internet, and newspapers. In its advertisements campaigns, the company will send out the message that women clothing products and services are no longer secondary demands. Instead, they are basic needs that each woman is entitled to (Belch & Belch, 2003). In Canberra, FAB is aware of its diverse customer-base, which is made up of Americans, Chinese, Africans, English, Irish, Italians, Jews, and the Aboriginal Australians. To keep up with the diverse customer backgrounds, FAB seeks to invest in recurrent research and development to keep at par with the changing trends and tastes. The company will also keep up with training of its employees on multicultural aspects to ensure that they have the proficiency to handle diverse customers (Shen et al, 2013). The company will also insistently reiterate sensitivity to racism, and adhere to the beauty concepts derived from each culture in Canberra, through incessant market surveys. FAB will also seek to exemplify itself through corporate involvement in social causes, such as campaigning for environmental sustainability through selling of eco-friendly shoes and wear. In due course, the eco-friendly wear may convert into a must buy item for high-end women who are also social activists or those promoting the idea of environmental sustainability (Shen et al, 2013). Conclusion FAB Super is a fashion retailer that specialises in high-end women apparel. The business seeks entry into Canberra, where it targets women beyond size 16. However, the Canberra market has large entry barriers due to the high competition. The large number of suppliers also implies that suppliers have a higher bargaining power. Additionally, buyers maintain a higher bargaining power. The company has to take to niche-marketing strategy to wade across the competitive market. FAB will therefore use differential strategies to set itself apart from its competitors in Canberra. FAB seeks to provide a diverse range of women clothing to maintain and attract a diverse customer base. 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