Uniqlo Product Target Segment Analysis - Case Study Example

Uniqlo Product Target Segment Analysis Student’s Name Institution Table of Contents Executive Summary.................................................................................................................3 A. Introduction..................................................................................................................4 B. Background Information.............................................................................................4 C. Micro-Environment Analysis......................................................................................5 D. Macro-Environment.....................................................................................................6 E. Competitors...................................................................................................................6 F. Product..........................................................................................................................7 G. Target Market..............................................................................................................8 H. Evaluation of Offer......................................................................................................8 I. Recommendations........................................................................................................8 J. Conclusion.....................................................................................................................9 References...............................................................................................................................10 Executive Summary Uniqlo offers fast-fashion clothing lines to its ready customers in Australia. Recently, the firm offered a limited offer for its Women UV Cut Crew Neck Cardigan. Distinctive evaluation of the offer has noted that it is able to meet the customers’ immediate needs of safety and esteem. Safety needs because it offers protection from UV rays and esteem needs because it offers a unique and distinctive design that can only be enjoyed by a few people. The product competes with two clothing lines from H&M and Cotton On but it enjoys a competitive advantage because it is made up of 100% cotton material. It is recommended that Uniqlo provide after sale services for the clothes purchased after few months in order to increase durability and utility levels. It is also recommended that the company cut down on the current prize being charged on the product to increase sales. K. Introduction The focus of this report is to analyse special clothing brand from Uniqlo and determine its suitability within a specific target market in the Australian apparel industry. The report will ensure to analyse the existing target markets for the knitwear product at hand: Women UV Cut Crew Neck Cardigan, and whether it can successfully penetrate other viable markets. It is assumed that most of the product sales are entirely dependent on the middle-class consumers in Australia. It is also assumed that the product is afforded by the aforementioned group due to its current pricing strategy. The only limitation in the report rests with limited knowledge on efficient pricing of the product in relation to other international and local brands of the same nature. Uniqlo was established in 1984 in Hiroshima, Japan and has continued to expand its immediate operations from family business setting to global sensation that compete successfully within the retail apparel sector worldwide. In the early 1990s, the firm transitioned successfully from being a mere reseller of other international clothing brands and solely focused on the production and distribution of its brand clothing line (Uniqlo, 2015). Currently, the giant retailer boasts of 30,448 full time employees that work in stores located in more than 16 countries with Australia being one of them. L. Background Information Uniqlo Australia operates under the clothing retailing industry. The industry generates at least $19B in total revenues each year and enjoys an annual growth rate of 3.3%. Presently, it has employed more than 122,266 employees with more than 12,785 businesses constituting the overall sector (IBISWorld, 2015). However, it can be noted that this industry has continued to face intensive levels of challenges that emanate from such aspects as poor consumer spending patterns, intense levels of competition as well as experienced significant rent costs for stores thereby affecting the total revenues and profits posted within a given year. The increase in annual growth rate is highly associated with most of the businesses embracing online sales platforms as opposed to overdependence on bricks-and-mortar retailing (IBISWorld, 2015). Poor consumer spending habits are associated with the higher economic uncertainties that has been experienced within the past 5or years. The future of the industry is deemed to be favourable especially with the improvements being witnessed the local economic situation that is expected to contribute to at least 2.7% in revenue growth for the next 2 or so years (IBISWorld, 2015). It thus goes without saying that the industry is set to reap big in the next coming operational periods. The three major players that enjoys significant market percentages include; Country Road, Premier Investments and Specialty Fashion Group. M. Micro-Environment Analysis Organisation Uniqlo is the mainstay of Fast Retailing Group. The firm offers three kinds of products that include; women, men and kids wear with each of them having been diversified into different types of clothing; casual and official wears (Uniqlo, 2015). It is Japanese-owned and offers casual wears at different price levels. It enjoys a great price advantage and competitive edge especially because it has been able to formulate Specialty stores retailer of Private label Apparel (SPA) business model that operates all phases of a business, which is from design stage to production and final sales. The firm has over the years used the SPA business model as a way of differentiating itself from its immediate competitors (Uniqlo, 2015). It is important to note that the firm also takes to source denim of specific spinning standards as well as dyeing requirements in order to satisfy both the local and international market demand. In the present scenarios, and due to the slowing economic progress, Australian-based potential consumers have ensured to reduce their spending rates and patterns as they continue to be cautious. In fact, they are now opting for value-based products that can be availed in reasonable and affordable prices (Uniqlo, 2015). Due to its SPA business model, the form enjoys a clear advantage within this underlying economic downturn. Just recently, Uniqlo added a second centre n Macquarie Centre in North Ryde, Sydney with a second Victorian store expected for opening later in the year at Chadstone (Uniqlo Second Sydney Store, 2014). Customers The firm operates 8 stores across Australia and specifically, in New South Wales where it operates 4 stores; Queensland where it operates a single store at Indooroopilly; and Victoria where it operates 4 more stores. Since the company operates under a SPA business model, it offers its products at very reasonable prices and a significant portion of its sales revenues comes from its already set loyal customer-base. The company caters for the needs of customers portraying a versatile degree of lifestyle. Products are sold to customers directly through the brick-and-mortar stores as well as through the online platform. Uniqlo does not accommodate any form of intermediaries in its business model since they target at understanding and forming personal relationships with their customers. In fact, the firm opted to adopt an English-Only Labels in Australia in order to cut down on the possibility of embracing resellers in the supply chains (Battersby, 2015). N. Macro-Environment Economic Factors The past decade has seen a significant effect on the global economic prowess with Australia included. As a result of this, there has been a resultant reduction in the level of consumption of clothing products by households with more becoming wary of the economic downturn. This has prompted a reduced revenue growth in the industry. It is important to note that the slow global economic growth has resulted to household decreasing their respective disposable income (Fast Retailing Co., Ltd, 2014). On a positive note, the current measures put up by the different government agencies have provided a positive outlook in the future of this factor as a whole. Political Factor The clothing & apparel industry enjoys a positive operational environment in Australia due to the friendly measures put in place to ensure easier operations of both local and international-based clothing brands (Fast Retailing Co., Ltd, 2015). There is little or no interference on this sector by the Australian political class, which has ensured that international brands as H&M and others are attracted to this market and open numerous stores for that matter. O. Competitors Competitor 1: Cotton On Cotton On is a well-known Australian clothing retail chain that offers unique brands fashion-loving customers. It operates in more than 12 countries and employs 17,000 people in both the Australian and international markets (Cotton On, 2015). Some of the firm’s unique brands include; Rubi Shoes that involves shoes, bags and jewellery: T-bar, which is mainly composed of customised print t-shorts as well as Supre’ and Free brands. Competing Offer: OT Urban Waterfall Cardigan The product sales at AUD $15 and it is offered as an urban waterfall cardigan with a related fit that features a waterfall in the front opening. It has a straight back. It is composed of the following materials; 67% viscose: 30% polyester and: 3% elastene (Cotton On, 2015). Competitor 2: H&M H&M is a Swedish-based international retail-clothing firm that is fully engaged in fast-fashion clothing for adults, teenagers and kids. The multinational has operations in more than 61 countries with an approximate of 3,700 stores and has employed more than 132,000 staffing personnel (H&M, 2015). Some of the most notable brands associated with this company include; COS(Collection of Style), which is basically an up-market brand that is offered at a slightly higher price level; FaBric Scandinavien AB, which is made up of Cheap Monday, Monki and Weekday brands (H&M, 2015). Competing Offer: Fine-Knit Cardi The product sales at AUD $19.95 with sizes ranging between XS-XL with a 3/4 length sleeves that is sawn in turn-ups at both the cuffs and does not have any buttons. Both the front and back is straight in detail (H&M, 2015). The product is made up of the following materials; 60% viscose and 40% cotton (H&M, 2015). P. Product The product under analysis is the Women UV Cut Crew Neck Cardigan that sales at AUD $29.90 and made up of 100% cotton. Women UV Cut Crew Neck Cardigan is a specialty product because it requires a higher degree of customer thought and effort (Winzar, 1992). This is because the product is designed in a way that protects the customers’ skin from possible dangerous UV rays. Subsequently, the product is far much expensive to its immediate rivals due to the fact that it made up of 100% cotton. It is sold on a personal selling basis hence a specialty product. Three Levels of Product Core Benefit: The product is being offered at a “limited offer” placement to the loyal customers who are ready to part with a premium price in order to enjoy the features of the cloth at hand. The offer is also meant to substantiate or rather test the level of the customers that are ready for specialty products for future product-designed for this category. Real: The quality of the product is top notch since it is made up of 100% cotton material, which is a very expensive raw material to come by. In fact, the overall cotton composition of the product fairly explains its premium price. The product features have been designed in a way that allows for protection of the wearer from possible effects of UV rays. It thus means that the product is mainly offered to the people that fairly-sensitive to skin protection. Augmented: apart from the product being placed as a “limited offer” item, the potential customers will likely enjoy a significant cut in its prize of AUD$ 10. They are also likely to enjoy the fact that they possess unique products that cannot be found anywhere else. Q. Target Market Women UV Cut Crew Neck Cardigan is best suited for the working-class young-adult urbanites that want to look good while at the same time ensure to maintain a supple skin without sun-burns. This segment is set to include young women aged between 24and 35 old and should fall within the young-adult group of life cycle. Since the price of the product is slightly higher, this group should be working and earning a figure of not less than AUD $40,000 per annum. They should be young-adult professionals working full-time and it should be assumed that this targeted segment is mostly situated within the different suburbs of the key Australian cities. The group seeks to enjoy the products’ durability, stylish design, uniqueness and comfort. The fundamental needs of this segment involve safety and esteem needs. Safety needs because they are sensitive to ensure that their skin is protected from the harmful UV rays while working and esteem needs because the limited product placement is unique and is thus distinctively designed from other rival products in the market. R. Evaluation of Offer The key needs of the target segment, who mostly are young-adult urbanites and are earning more than AUD $45,000 per annum, are safety and esteem needs. The 100% cotton manufactured product is able to meet the safety need because it protects the wearers from UV rays. The esteem needs are met when the segment assured of limited offer so that they will be the first and last owners of the design. S. Recommendations First, the company should seek to improve the product through provision of after sale service especially mending any torn cloth purchased within some few months of purchase to ensure that customers enjoy its utility on a maximum level. Secondly, the prize of the product should be cut down by at least 5% to ensure that more customers will be able to purchase it in mass within the period allocated for the offer. T. Conclusion To sum up the discussion above, Uniqlo product line on offer is seen to target young-adult women urbanites that enjoy a financial freedom to purchase the specialty product at hand. Despite there being other rival products in the market from H&M and Cotton On, the company should seek to cut down on its prize and introduce after sale services that fairly conform to the limited offer at hand. References Battersby, L. (2015). The downside to globalisation no one warned us about. Canberra Times. Retrieved on December 8, 2015 from http://www.canberratimes.com.au/victoria/the-downside-to-globalisation-no-one-warned-us-about-20151119-gl0zsd.html?skin=text-only Cotton On. (2015).OT Urban Waterfall Cardi. Retrieved from http://cottonon.com/AU/p/cotton-on-women/ot-urban-waterfall-cardi/2024544602931.html#pmax=20&prefn1=countrySpecificMarkets&pmin=0&sz=26&prefv1=AU&start=1 Fast Retailing Co., Ltd. (2015). Fast Retailing Co., Ltd. MarketLine Company Profile, 1-21. Fast Retailing Co., Ltd. (2014). Industry Ranking. Assessed on December 8, 2015 from http://www.fastretailing.com/eng/ir/direction/position.html H&M. (2015). Fine-knit cardigan. Retrieved from http://www.hm.com/au/product/24792?article=24792-A IBISWorld. (2015). Clothing retailing in Australia: Market Research Report. Retrieved on December 8, 2015 from http://www.ibisworld.com.au/industry/default.aspx?indid=407 Uniqlo Second Sydney Store. (2014). New Zealand Apparel, 47(7), 6. Uniqlo. (2015). Women UV cut crew neck cardigan. Retrieved from http://www.uniqlo.com/au/store/women-uv-cut-crew-neck-cardigan-1379430032.html Winzar, H. F. (1992). Product Classifications and Marketing Strategy. Journal of Marketing Management, 8(3), 259-268. Read More