SWOT Analysis

Explain Marketing Evaluation Using PEST Analysis?

One of the biggest leaps Andrew Ramroop, the owner of Maurice Sedwell made was entering a new market in the US. Maurice Sedwell, originally based in UK experienced a huge business growth in UK and all over the world, which helped the business develop and improve worldwide. From the inputs received from Andrew Ramroop we thought of starting our own business on luxurious fashion accessories in UK. In this context, SWOT analysis of the business is done that is defined as analyzing the internal and external market factors of the company. It is used to analyze the internal market factors of Maurice Sedwell, which involves its weakness and strength. In addition, the external market factors involve the threats and opportunities of the tailoring industry of UK (Campbell, Edgar and Stonehouse, 2011).

Poor R&D- The thing that the business lacks is proper research and development, which may result in growth of its competitors by better and innovative marketing techniques.

Increasing staff turnover- The tailoring business does encounter a high employee turnover and our company is no exception.

Online reach- Being a new company we are still waiting to enter the online market. Thus, it is needed for us to develop our online presence and develop entity’s value (Chevalier-Roignant and Trigeorgis, 2011).

Company Size- Our company, is able to become a strong brand globally within a short period of time, so our company size is quite large. This will help the company get more resources and use it explore new and potential markets, overcome stiff competition and maintain long term sustainability.

Cost Benefits- We are successful in cutting down its costs, which helps the company in maintaining higher profits. Low cost approach will help us cut down its price and get an edge over our rivals.

Customer Loyalty- Our company, is successful in maintaining a steady and healthy relationship with its customers and also keeps on targeting newer customer bases which helps in improving the customer loyalty (Createadvantage.com, 2015).

Economic Vulnerability- The global economy is quite vulnerable, which means that poor economy can hurt the fashion clothing industry and affect its potential customer base adversely. This could make a short run negative impact on our business and subtract our market value.

Currency Volatility- The revenues and costs of the business changes rapidly due to the sudden change in the foreign exchange rate or change in currencies.

Rising Competition- The level of competition in the fashion industry of UK is getting intense since 2014, this may affect our business because in a highly competitive market competitors are always introducing superior products (Laursen, 2011).

Market Segments- The market of the fashion industry in UK is fragmented into different market segments as per the demographic and geographic factors. This will help us expand our business and improve our market share. Since we enjoy certain cost benefits over our competitors so it will help us explore the segmented UK market better.

Online marketability- At present we lack proper reach in the online fashion market but our expertise and skills will help us expand our business in the online market in coming years. Using the online market will help us reach more to a wider audience at a comparatively low expense.

Weaknesses

Financial Advantage- The financial advantage of our company is measured from its financial statements. This will help us analyze our leverage position and expand our business in new markets.

Innovative methods- With the change in technology we will use more innovative ways to produce the best product for our customers at the most affordable prices (Luther, 2011).

In order to evaluate the UK market potential this includes an identified shortlist of markets and selecting the best market. The market analysis of UK fashion industry is done by using the PEST analysis, which are-

Political Factors- The political factors in UK is quite stable but there is certain political concern, which may affect the fashion industry. The political concerns mainly include the exploitation of labour, which is mainly available to the country from the developing countries. Moreover, the globalized trading policies, increase in price competition between companies and between countries have adversely affected the labour chain. Due to which several labour and trade unions are restricting the operations of the fashion companies. However, in recent times this issue has been overcome largely but not completely (Reuvid, 2011).

Economic Factors- Due to the increase in VAT and customer’s inclination more to the cheap imported products, the domestic companies have suffered a decline in their business. This impact the UK economy negatively, which has been resulted from the customer shift in choice more towards imported products which are cheaper in price as compared to the domestic products. However, with customer awareness programs the fashion clothing company are able to maintain strong customer base and long-term sustainability. In coming years it is believed that the fashion industry in UK will flourish and with new legal rules and regulations the domestic company will get a safer environment to trade their products (Vitale, Giglierano and Pfoertsch, 2011).

Social Factors- The dress code in UK varies with its style and diverse population which includes vintage looks, night dressing, office style and casual style. This will help in encouraging the consumption of the fashion products and help the companies, wholesalers and retailers to determine the apparel types. Moreover people belonging to different age, gender and culture are also influenced and based on their choice and preference are provided with apparels and clothing within their budget.

Technological Factors- The country being a developed one enjoys certain technological advantage, which will help the fashion industry to improve their production process. This will help our company use the technology, use it to our benefits, and provide a new and developed service to our customers through our retailers. In this context, we need to improve our R&D department and undertake detailed market research and understand all the market factors and avail the benefits of the UK fashion market (Winer and Dhar, 2011).

Analysis on the   international luxury product   market indicates that the sector is experiencing high growth.  The    market    trend indicates that Chinese luxury product market is growing    at   a   rapid    rate.   As   stated    by Atsmon, Dixit & Wu, (2015)   the Chinese luxury market accounts for almost 20% of the whole industry (Wu and Lin, 2014; Mckinsey.com, 2015). It   is evident that entering   into Chinese market will enable the   organization to   enhance its profitability. It is recommended    that at    the    first stage    of   overseas   expansion, the   new organization should enter into Chinese    market.

Strengths

As    stated    by Al Badi,( 2014) profitability of an   organization is   dependent on the condition   of    market. Analysis on    the condition of Chinese market indicates    that customers of   the country show   interest to purchase luxurious products. Income of Chinese people is increasing significantly.    As an impact,   the customers   are    also tending to spend more on luxurious products. Cain, (2014) stated      that   the   consumers   are   showing   a   change in their attitude.   As more people are becoming      interested    to lead   luxurious    lives, their spending on such products is also   increasing.      Discussion on    the economical condition    of Chinese   population indicates that   the     people     who    belong to the upper middle class are   increasing   their expenses on luxurious    products.     As    availability of   luxurious products   in Chinese   markets     is   increasing, rate of consumption    is also    increasing.    Dasic, (2014)   opined     that     changes    in     nature    of   Chinese consumers   is creating new opportunities for    the organizations which   operate     in   Chinese    market. Analysis on the choice of customers   also indicates that    the consumers   prefer to buy   products   offered   by internationally    known brands.  However     the    design and craftsman ship   of   the   products    is also    emphasized    equally. As    the   new   organization is going to    sell luxurious   products of good quality  ,   expanding   business   in China   will  be     profitable   for    the   organization. (Refer   to appendix 4)

Figure 1: Porter’s five forces for Chinese retail market

Analysis on the Chinese retail   market indicates that   the market is   highly   competitive.   As  growth  rate of    the  market  is  quite  high ,  several  organizations    are  giving  importance  to  enter  into   the  market.  It indicates that several new entrants may be present in Chinese      luxurious   product   market.  However   the   Government gives   importance of growth of local industry.  As an impact, entering into   Chinese market is    more difficult   than other markets. Strict    government   policies   also   may reduce   threats of   new entrants   in this market.

The Chinese fashion industry is already occupied by several large  multinational brands   such  as  Zara, H&M, Holister  along    with   the  Chinese   clothing  brands  such  as  Boseidang,  Trand  and Youngor Group (Ferrell, 2014). Being new the market, Maurice Sedwell may face difficulties   for   attracting   the   potential   customers.

As several multinational as well as local brands are present in Chinese fashion market, bargaining power of consumers is also high. The organizations operating in this market faces   difficulties to retain customers. Due to   presence of lots of substitutes   power of suppliers    in this market is also high. The analysis indicates that competitive rivalry   is quite high in   fashion market of China. However demand of European fashion products is also increasing in the country. It reflects that Maurice Sedwell can get new business opportunities after entering China.

As the size of luxury fashion accessories market is increasing worldwide, expanding   business activities outside UK will be effective to enhance profit of the organization. However needs of the customers can vary according to their cultural background (Ferrell, 2014).It is evident that      requirements of customers need to be analyzed before development of marketing strategies. It   is planned   that at   primary stage of   business   expansion, the   products   will be   launched     in   markets of China.    

Threats

Analysis on the luxury fashion accessories market of China indicates that it can be considered as   one of the largest markets of such products. However the market is also experiencing high   growth rate. Analysis on activities of customers in Chinese fashion accessories market also reflects that consumption of such products is dependent on    the income of consumers.  From   the analysis it   is evident that the consumers with   high   economic level   and   lower middle   class are showing less interest   to purchase   luxurious products. However it is also evident that    consumption of luxury products has been increased    significantly in   last   few   years.   It   is   expected    that the   growth    rate   will continue in 2015 also.  (Refer   to Appendix 1).   

As stated by (Hanic and Domazet, 2012) the organizations   need   to identify the most profitable   group of consumers     in order to enhance growth of business.  Analysis on   the Chinese consumers   indicates   that the number of people in   upper middles class is increasing. These people are also showing interest to     increase consumption of luxurious    products. Apart from this, the wealthy people   also account for  significant portion  of  the total   population  It  is  evident  that launching  products for  consumers of  upper   middle    class  and    high   income  group will   be   beneficial for   enhancing    profit.( Refer   to Appendix 2)

The organizations need   to adopt suitable strategies as    per   requirements of   the consumer (Teimourpour and Heidarzadeh Hanzaee, 2014).      In case   of   the new   luxury -product business, the   expansion strategies need to be    developed   in such way so that number of customers can be increased effectively. The decision for positioning   in market is developed using Bowman’s strategy clock.  It   is   decided   that the organization    will   follow increased price/ standard product strategy for    expending their   business in China. As   the organization is comparatively new, perceived value   of   the   products   to   consumers may not be high. However   the consumers will   be   provided   with   products of high   standard. Price of the   products can be increased later to increase profitability. 

As the   nature of consumers   of UK   and   China    is highly   different, management   of    the    new   organization needs to develop new strategies for marketing mix for consumers of China (Tracy, 2014).      Changes in marketing mix strategies will enable    the   management to meet requirements       of consumers     more   effectively (Wood, 2012).   

Product: Analysis on the nature of consumers in China indicates that demand of the products such as accessories, hand bags and women’s clothes is high. It   indicates that selling   such    products in China will   be profitable   for the organization. Analysis on the nature of consumers    in China also indicates that the customers   tend   to buy   products from internationally    known     brands.  However the customers    are also   attracted    by innovative   designs of   products.       On basis of  the  analysis  ,   it  is  evident      that   we  need  to   sell      trendy products  of  good    quality  to  consumers    of  China.

Price:  As   our   organization is comparatively new   to market, it is expected that   perceived value   of    the   products offered   by   our   organization   will   be   less.  Initially price   of   the   products will be kept low   to   attract   consumers. Later    the   prices    will   be increased.  

Opportunities

Place and process:  At   the first stage    of business   expansion,   we are planning   to sell   our    products   using online shopping   portals. As availability of   internet   is   increasing   in   China, the strategy of online selling    will   enable the   organization   to reach the large number   of consumers   in   urban areas. If the   products are accepted   by consumers,   then   new   stores will be   opened   in   the country.

Promotion: In case   of     promotion   also,    online media    will be   used   extensively.  The social networking sites   will   be   used for   informing customers about   the products offered    by our   organization.   Using social networking sites will   also   be effective to get   feedback    on our new products (Wu and Chen, 2014). However the   traditional marketing channels such as advertisements      on TV and magazine will    also    be used.

People:  Apart from   offering   customers   with standard   products, we   will also ensure     that   people who are responsible for delivery of products and services are able to meet     requirements of consumers.   We   will    give   importance   on hiring     local people    for    product and service delivery    in China.

Physical Evidence:    In    China, we    will   give    importance   on   providing   promotional   offers for the   new   products.  It   will enable us    to inform   consumers    about   new    products    introduced   by   us.  It   will   also   be effective to get   feedback on our new    products.

Conclusion:

Analysis    made   in   this   report    on    the condition of Chinese market   of   luxurious    indicates    that   people   of   are showing   interest to purchase luxurious products.        As income of Chinese people is increasing significantly, the customers are also showing interest   to spend more on luxurious products.  Analysis   on    the economical condition of Chinese    society reflects   that   the people who are belonging to the upper middle class are giving   importance   on     increasing their expenses on luxurious    products.     As    availability of   luxurious products   in Chinese   markets is   increasing, rate of consumption    is also    increasing.    On basis    of    the    findings     obtained   from     the     report   it is evident that launching products for consumers of upper   middle    class and    high   income group will   be   beneficial for   enhancing    profit. In   China   the organization   is going   to   follow increased price/ standard product strategy to expend their   business. As   the organization is comparatively new, perceived value of the   products   to   consumers may not be high. As the   nature of consumers   of UK   and   China    is highly   different, management   of    the    new   organization needs to develop new strategies for marketing mix for consumers of China.      From   the analysis made   in   this    report    ,   it is    reflected     that     management    needs to     offer    trendy products of good quality to consumers of China. Discussion   on   the pricing strategy    indicates     that initially price   of   the   products will be kept low but   later prices    will   be increased.  Implementation of     the strategy of online selling    will be beneficial      for       the   organization for selling   products     to the large number   of consumers   in   urban areas.

References

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