Fruit of the Loom - Research Proposal Example

?A Brief of Company & Product Fruit of the Loom is an American company and a subsidiary of Berkshire Hathaway- owned by Warren Buffet. Founded in 1851 by Robert Knight, firm is engaged into the manufacturing of clothing specially underwear, socks and other consumer clothing items. The main focus of the business is on producing consumer clothing of wide range catering to the needs from children to senior citizens. The overall business model of the firm is based upon selling its merchandize to chain stores and other outlets which than sell out the products of the company to the general public. The overall product range of the firm is really diverse and includes underwear as well as designer socks aimed at mass market accessed through these superstores and other chain stores. Fruit of the Loom does not sell directly to its customers through its own outlets. Firm also sells designer socks and sell them in different varieties aimed at different target customers. The overall range of socks includes designer socks for men, women, boys, girls as well as toddlers. This diversified range of products therefore caters to different needs of the customers while at the same time provides essential utility. The different ranges according to gender however are further divided into suitable categories such as “Everyday Basics”, “Stays Back”, “Odor Special”, “Sport Stretch”.1 The range of designer socks therefore covers almost every market segment and is rightly placed in the market to cater to the needs of mass market while at the same time offer designer looks and utilities. Environmental Scanning The overall market structure of the industry suggests that it is a fragmented industry with smaller and larger players in the market. Though the market for designers’ socks is typically specific with high brand preferences however, the fragmented nature of the industry permits other non-manufactures as significant players in the market too. Superstores such as Wal-Mart, Macey’s, Sears also have their own range of socks which are pitched as designer socks. Economic Factors The current state of world economy suggests that consumer confidence is relatively low due to uncertainty associated with the economy. Overall economic growth is slow and unemployment level is high indicating that consumers may prefer to hold their current consumption to save for future. Such situation therefore may indicate that overall demand for designer socks may be low as consumers may not be willing to spend on high priced items. Social & demographic factors Designer clothing always suggest prestige and honor and those who use such type of clothing often attempt to build such image. As such designer products are often used by the consumers falling in high income earning groups. Technological trends Technology is shifting towards making designer socks fit to different needs of the consumers. Add-ons such as ankle support, no-fading of colors, odor-control technology etc are some of the key technological changes which will further create niches in the market. Firms focusing on offering such technological add-ons therefore can certainly be dominating in the market. Regulatory issues Regulatory issues may come in the form of health related regulations which may force firms to adapt certain technologies and practices which can reduce the health risk associated with the use of such products. Further, issues like improper labor standards, child labor as well as unhygienic conditions in countries from where raw material is imported can create significant challenges for the firms to deal with. Five Forces Analysis Threat of new entrants Though the overall cost of entry may be not be relatively high however, it may be relatively difficult for newcomers to dominate a market which is full of already established players in the market. Though consumers may prefer a certain image or attachment with a designer brand however an innovative product by a new entrant can disrupt the market. As such the overall threat of new entrants may be moderately high. Suppliers’ Power Since the input used in the manufacturing of designer socks is not often specialized in nature therefore suppliers may have relatively low power. Further, bulk purchases made by bigger designers and brands may reduce the chances of higher supplier power. The Threat of Substitutes Since there are no close substitutes for socks therefore the overall threat of substitutes may be relatively low. What is critical however that the generic brands of socks may be more appealing to the mass market due to their overall utility to mass market at prices which may be affordable. The use of better technology however can help firms to introduce substitutes thus creating more risks for the existing players and increasing the overall competitiveness of the industry. Buyers’ Power There are two important elements in terms of assessing buyers’ power in the market. First, the overall switching cost is low as designer socks are relatively low priced as compared to other clothing items therefore consumers can easily make a switch to new brand. Secondly, since designer socks create an associated image of prestige and honor therefore users may be locked in by offering an experience of prestige and uniqueness. If buyers perceive that due to low switching cost, they can shift to other brands, buyers may command higher bargaining power however, if the brand is strong enough to create emotional attachment than overall buyers’ power may be relatively low. (Husic & Cicic, 2009) Industry Competitiveness The above analysis indicates that industry is relatively competitive with many designer socks brands sold through different channels. The presence of large and smaller players therefore may not allow one player to dominate the industry. Further, the low switching cost associated with the use of designer socks may give buyers a considerable power in terms of determining which brand to use. In such scenario, overall response of existing players may be in favor of buyers and firms may be willing to accommodate to the wishes of the buyers. Suppliers hold relatively low power with no input specialization thus making industry less reliant on them. Technology can prove one of the critical factors in determining industry position of the firms. Generic Strategies Fruit of the Loom clearly use differentiation strategy as its key strategy to dominate designer socks market. Based on utilizing its traditional superiority in underwear segment of the market, firm seems to capitalize on this image. Firm differentiate its products in terms of quality as well as the features by offering a range of products. Considering the traditional quality offered by Fruit of the Loom, designer socks carry same image of high quality products. Further, firm has differentiated its products by adding more functionality in order to expand their use. For example, it has created a range of designer socks which are aimed to all segments of the market i.e. men, women & children. Further differentiation has been made to include different varieties such as odor control, sports, Arch Support, exercise related socks etc add more diversification to the available ranges of designer socks of the firm. This strategy seems to be sustainable because Fruit of Loom is one of the oldest players in the market and have sustained different market conditions. Further, its networking and alliances with major chain stores provide it proven partners with large chunk of market to serve. Firm has been successful in leveraging these alliances to sell out its products and as such seems to have exercised differentiation strategy to its advantage. This also provides firm a differentiation in terms of availability of its products and thus making it one of the easily accessible designer brands of socks. Bibliography Husic, M., & Cicic, M. (2009). Luxury consumption factors. Journal of Fashion Marketing and Management,, 13(2), 231 - 245. Read More