Marketing Attractiveness of Easy Group - Case Study Example

The easy Group is the private investment vehicle of Stelios, the serial entrepreneur. The easy Group is the owner of the easy brand and licenses it to all of the easy branded businesses, including easy Jet, the airline Stelios started in 1995 and in which he remains the largest single shareholder. easy Group is based in the Rotunda in Camden Town, London, United Kingdom although it is registered in Jersey easy Group acquired various businesses and has continued diversification. The easy brand currently operates more than a dozen industries mainly in travel, leisure, telecoms and personal finance. It owns brands like easy Car, easy Money, easy Internet caf, easy Cinema, easy Pizza, easy Cruise, easy Mobile, easy Watch, easy Hotels, and easy Jobs etc. This strategy was called "diversification within diversification". This means that the company's individual business units become recession proofed by moving into as many diversified fields as possible, while enhancing the financial strength of the company. The Company follows the "easy" format of taking away the frills in something to make it cheaper overall. In the last few years the company has started to franchise the businesses to expand, and cut down costs. The easy Group profits by either selling shares in the businesses or by licensing or franchising the brand to reputable partners. Mission statement: The mission is to manage and extend Europes leading value brand to more products and service, whilst creating real wealth for all stockholders Vision: The Easy Group will develop Europes leading value brand into a global force. We will paint the world orange! Objective: To launch new easy Products for a low price with a good quality which are called easy Clothes Product: The new range of product developed by easy Group is easy Clothes. The product/price matrix of the range is as given below: Easy Shirt Easy Pullover Easy Jeans 4 ES1 EP1 EJ1 18 ES2 EP2 EJ2 75 ES3 EP3 EJ3 easy Clothes has a range of apparels to cater to the taste and pockets of the young generation as well as the busy professionals. The easy Shirt comes in the price range 4, 18 and 75pounds. The high priced range is wrinkle free. The pullover also comes in three price range and the high priced one would cater to the older generation which prefers extremely soft clothes. Jeans also has three versions with the expensive one being more rugged. The low priced version of clothes would cater to the lower income group which is highly price sensitive. The market attractiveness could be analysed using Porter's model and the internal analysis could be done by value chain analysis. The market attractiveness varies with the market size, annual market growth rate, profit margins etc.The use of Porter's Five Forces mainly focuses on the industry structure analysis in the organisations external environment. It reveals the source of competition in an industry and external influence including the threats and opportunities of the industry that organisation has to face to obtain competitive advantage. Porter defines the rivalry of the organisation in relation to the industry where high rivalry leads to low profits. The threats from new entrants are heights of the barriers in place to stop them and define the profitability of the industry. Threats from substitutes is the threat by others to copy the product so the margin for guaranteed profit goes low and customers are more prone to change. The bargaining power of buyers depends on the price of the product and the leverage the customer possesses. Similarly the power of the suppliers is determined by how much the buyer needs the product and how much they are willing to pay. easyClothes is a company dealing with apparels. This industry is very competitive. There are some brands driven by quality and some only by price. Different companies have different target segments.easybusiness has been successful in creating a brand name in the market which caters to the price and brand/quality sensitive customers. Core Competence Matrix: - Easybusiness Threshold Resources Unique Resources Website/internet online service Warehouse Facilities Supplier who produce products under acceptable conditions. Products Brand Marketing/Finance Good Website Management Customer Service Direct Sales Development Inventory Management Online sales Manage Procurement/ Cost Reduction Threshold competences Core Competences Value Chain can be applied here.It is an effective tool to understand, at a high level, how each of internal business activities adds value to organisations by dividing a business into strategically relevant activities. And it enables senior executive to identify the source of competitive advantage by performing these activities in a cost-effective way or better than its competitors. Value Chain highlights the explorations of internal analysis of a chain of business activities. It explores the role and contribution of organisation's resources corresponding to primary and support activities in a cost-effective way to gain cost advantage. One straightforward implementation of the Value Chain is the SIPOC analysis. This takes the Value Chain as: Suppliers - Inputs - Process - Outputs - Customers to evaluate how organisations generate revenues and controls costs while enhancing the customer satisfaction. The core competence matrix analysis indicates that easyGroup apart from having the threshold resources and competences has developed a core competence to manage the supply chain and use measures to control the cost. By managing the supply chain, the company would be able to bring new products faster than the competitors. By developing a control on cost, distribution the company can extend the same saving to the end customer and still be profitable and be viable for its suppliers. The company has been able to manage this chain effectively and reduce the divide between demand and supply and maintain a substantial inventory to cater to the market demands. Having a quality control on both ensures that the promised quality is maintained hence it elevates the brand image of the company in the apparel market. A positive brand image is a unique resource that the group has and all its businesses benefit from it. It is looked upon as a reliable brand which can deliver quality according to the price charged. This creates a great sense of confidence in its prospective customers. It indicates that easyGroup has the core competence to produce apparels to cater every market segment. Once the value chain is established, other business analysis tool such as SWOT analysis, Marketing Mix can be applied to each stage and to each functional group contributing to the value. To create competitive advantage for an organisation Porter identified three strategies, Cost Leadership, Differentiation and Focus or Niche. The proper generic strategy will position the firm to leverage its strengths and defend against the adverse effects of the five forces. Cost Leadership involves having low profit margins and selling lots of units of a product this way, essentially undercutting the competition. Differentiation is when organisations make products or services different from everyone else. The focus or niche strategy was to target a gap in the market where an exclusive product or service would fit in and succeed. In case of easy Clothes, the market has low barriers to entry and exit, bargaining power of buyers and suppliers is considerable. It seems to be an attractive market to enter. Easy Clothes would follow the cost leadership strategy with the objective of catering to a broader segment with its wide range of clothes. The value clothing market in UK is worth 7.8bn in 2006, nearly a quarter of the total clothing market. Virtually all the growth in the clothing market is being produced by value retailers - other growth is at the expense of weaker operators and those that have left the market. The clothing market has gone through a process of price correction and the gap between the value sector and middle market has narrowed increasing the pressure on value retailers - particularly the smaller ones who do not have the benefit of scale. The value model is evolving - the price-led model has moved on and successful value retailers, producing strong sales densities and operating margins are those with scale, that have introduced a greater fashion element to their ranges, as well as stretching their range and price architectures upward with more exclusive, limited ranges. The middle retailers like Monsoon, Laura Ashley, Marks and Spencer and others are feeling the pinch, but the sales in low cost UK shops and supermarkets such as Asda (George brand), Tesco (Florence and Fred), TK Maxx, Peacocks, Primark and New Look are all flourishing. Compared to the turn of the century in 2000 the low cost sector has jumped a massive 5% to account now for some 20% of the UK clothing market. The merging of fashion and image creates the look, but consumers are bloated by luxury and now expect nothing less than luxury when they even seek ordinary. High street retail by necessity has risen to the challenge and consequently it is the middle section of retailers who are losing ground as consumers opt for cheap and cheerful or top end designer goods Competition for children wear market is strong among Asda, Tesco, Next, and Woolworths. Other substantial players include Primark, New Look, BHS and Peacocks By its very nature there is an element of throwaway fashion in the purchase of a garment for a child who as we know grows rapidly. So purchasing for children at low cost and then the child wearing it a lot when new, to a couple of weeks later moving onto a fresh fashion item is important to fashion aware children too. As the generation is becoming busier day by day, the wrinkle free versions of clothes would save their ironing time. Also there is a whole range of dark coloured clothes for kids, which would not get dirty soon even if they play in parks etc. Copying the look and styling of one celebrity is now outmoded. The look to achieve is the look of individuality and this is being achieved by mixing high and low end clothing in the same outfit.easy Cloth would be able to encash on this new trend. Balanced scorecard The balanced scorecard is an incredibly useful strategic planning tool developed by Dr. Robert Kaplan and David Norton of the Harvard Business School in the early 1990s..It is a management system that maps an organisation's strategic objectives into performance metrics in four perspectives: financial, internal processes, customers and learning and growth. These perspectives provide relevant feedback as to how well the strategic plan is executing so that adjustments can be made as necessary. A clear strength of the Balanced Scorecard is that of being an easily understood concept. It summarizes in a single, succinct document, four different perspectives on the company's performance. Viewing the strategy from the four different perspectives, and identifying by links between them, clearly illustrated the causal relationship between the fulfilments of customers and employees expectations and those of shareholders. The balanced scorecard shows a strategy from four different, but interconnected perspectives * Financial: How to measure and evaluate financial performance Do our metrics send the right message (i.e. speak the language) of our stakeholders * Internal business processes: At what business processes must we excel * Customers: How do we appear to our customers * Learning and growth: How will we sustain our ability to change and improve Ultimately, the scorecard process breaks the strategic plan into manageable pieces while at the same time providing measures to communicate the progress of the goal achievement to upper management. Easy Clothes 1. BALANCED SCORECARD - FINANCE The financial perspective addresses the question of how shareholders view the firm and which financial goals are desired from the shareholders perspective. Objective Measure To keep the cost low and to be the cost leader in the market Check the unit cost, and check our market share To reduce cost by 2 % within 2 years Check the unit cost To satisfy our shareholders Check the price of the shares, check the dividends pay out To gain a high profitability Annual output, return on equity. While top level objectives are expressed in terms of growth and profitability, these goals get translated into more concrete terms as they progress down the organisation. For example, increased profitability might get translated into lower unit costs which might further be translated into better handling of equipments on the manufacturing facility. 2. BALANCED SCORECARD - CUSTOMER The customer perspective addresses the question of how the firm is viewed by its customers and how well the firm is serving its targeted customers in order to meet the financial objectives. Generally customers view the firm in terms of time, quality, performance and cost. OBJECTIVE MEASURE To achieve 99% customer satisfaction Check the customer purchase habit To increase awareness to 40% by 2008 "Easy Clothes" By segment % Business % Marketing research satisfaction Responsive supply On time delivery. The customer purchase habits need to be measured if easy Clothes want to know whether they are satisfied with the product or not as only satisfied customers would make repeat purchases. If the delivery of the goods is on time, it indicates the responsive supply chain system. The cross docking system will be used to ensure goods are continuously delivered to stores within 48 hours and often without having to inventory them. . 3. BALANCED SCORECARD - BUSINESS PROCESSES Internal business processes addresses the question of which processes are most critical for satisfying the customers and shareholders. OBJECTIVE MEASURE To keep our delivery simple for the costumer Average time taken for customer to receive complete orders Manufacturing excellence Cycle time, yield Manufacturing excellence could be measured with the least number of defects in the finished goods. Managing the supply chain would enable the company to introduce new trends earlier than the competitors. 4. BALANCED SCORECARD - LEARNING AND GROWTH Learning and growth metrics address the question of how the firm must learn, improve and innovate in order to meet its objectives. Much of this perspective is employee centred. OBJECTIVE MEASURE To train and develop all the team leaders Employee retention rates Job sharing to increase their general knowledge Check their general knowledge To reduce cost of recruiting Cost analysis Training new staff Retaining staff, low attrition rates. So the Balanced Scorecard emphasises teamwork in nurturing employee's commitment to deliver results that are consistent with longer-term goals and organisational strategy. As implied by the balanced scorecard , easyCloth is a lean enterprise. Two important characteristics of a lean enterprise are customer focus and employee empowerment. The customer is the driving force behind lean, which suggests that customer-focused measures should be an integral part of any performance system. In a similar vein, lean enterprises empower their employees to make operational decisions. The employees are trained to uncover and correct errors as well as find continuous improvement opportunities. Measuring employee performance should also be a prominent aspect of any performance system in a lean enterprise. Benchmarking Benchmarking is a process used in management and particularly strategic management, in which organisations evaluate various aspects of their processes in relation to best practice, usually within their own sector. This then allows organisations to develop plans on how to adopt such best practice, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organisations continually seek to challenge their practices.Benchmarking is one of the most effective means to identify improvements which can make a significant difference to organisations. Advantages of benchmarking Benchmarking is a powerful management tool because it overcomes "paradigm blindness." Paradigm Blindness can be summed up as the mode of thinking, "The way we do it is the best because this is the way we've always done it." Benchmarking opens organisations to new methods, ideas and tools to improve their effectiveness. It helps crack through resistance to change by demonstrating other methods of solving problems than the one currently employed, and demonstrating that they work, because they are being used by others. Types of Benchmarking Strategic Benchmarking: Aimed at improving a company's overall performance by studying the long term strategies that helped the best practice companies to succeed. It involves examining the core competencies and innovation strategies of such organisation. Competitive or Performance Benchmarking: Used by companies to compare their positions with respect to the performance characteristics of their key products and services. Process Benchmarking: Used by companies to improve specific key processes and operations with the help the help of best practice organisations involved in performing similar work. Functional benchmarking:Used by companies to improve their processes by benchmarking with other companies from different sector. Internal Benchmarking: This involves benchmarking against its own units or branches located at different location. International Benchmarking:Involves benchmarking against companies outside the country. Easy Clothes will follow the following types of benchmarking Within own Industry: easyclothes against Primark Performance Benchmarking: Primark thrives because of its speed at turning out designs inspired by the catwalk and red carpet. It takes on average just six weeks for an item to go from concept stage into the shops, irrespective of whether it's a Kate Moss style waist coat or a Sienna Miller boho style skirt As for cost, the volume of turnover means the company can negotiate cheap prices from its manufactures in China and Eastern Europe and takes a smaller profit margin per item than some other high street stores. Primark offers latest fashion clothes at very low price they have an offer of a variety of clothes. The profitability of Primark is high. The Benchmarking is the easy Clothes against Primark strategy to introduce their fashion very quickly for acceptable price. easy Clothes need to design a system that would ensure introduction of fashionable clothes earlier than its competitors. Within own organisation: easy Clothes against EasyJet Internal benchmarking: EasyJet has the lowest operating costs among any European scheduled passenger airline. The benchmarking is the operating costs of easy Clothes against the operating costs of EasyJet. easyJet has a higher turnover, leading it to be "Europe's number one low cost airline". Easyclothes has to strive to keep its cost as low as possible by using economies of scale. Outside own Industry: easy Clothes against Dell Functional Benchmarking: The Benchmarking is the supplying of easy Clothes to the whole world against Dell supply chain management. Dell is very strong in supplying computers all over the world. Easy clothes could adjust its inventory management by assessing the market demand and adjusting its production accordingly as this would reduce the cost of warehouses and also it would be easy to bring new range of clothes faster than the competitors who have more stocks.It could also implement Dell's strategy of direct selling to the stores thereby reducing the middlemen margins.. Key Success Factors Branding: easy Group has followed the strategy of Brand Stretching. This gives an advantage to easy Clothes as there is no need to build a brand image as easy Group has already developed a name in the market and has its set of loyal customers. This way easy Clothes will have the advantage of those customers becoming the early purchasers of this new product of easy Group. A strong brand will provide a reassurance that can have an enormous impact when a buyer has to choose between two objectively fairly similar offers. Lower prices while maintaining the quality would be the unique selling proposition for easyClothes. Cross docking: easy Clothes will have a unique cross-docking inventory system. Cross docking will enable it to achieve economies of scale which reduces its costs of sales. With this system, goods are continuously delivered to stores within 48 hours and often without having to inventory them. A company owned transportation system would assist easyClothes in shipping goods from warehouse to store in less than 48 hours. This would allow it to replenish the shelves 4 times faster than its competition. easyClothes will negotiate the best prices from its vendors and expects commitments of quality merchandise Online availability : With more and more people turning tech savvy and busy, the online availability of the clothes would be an advantage for Easycloth. Also Internet image planning advice pages, female forums and also image makeover television shows like What Not to wear have educated women into clearing out their wardrobes more frequently, all in an effort to hopefully look younger by thinking and dressing more youthfully. This leads to more frequent apparel shopping. Conclusion The ever-changing market presents continuing challenges to retailers. First and foremost, retailers must recognize the strong implications of a 'buyers' market'. Customers are being offered a wide choice of shopping experiences, but no one operation can capture them all. Therefore, it is incumbent upon management to define their target market and direct their energies toward solving that specific market's problems. Technology, demographics, consumer attitudes, and the advent of a global economy are all conspiring to rewrite the rules for success. Success in the next decade will depend upon the level of understanding retailers have about the new values, expectations, and needs of the customer. easyClothes will try to meet the ever changing demands of its broad segment by proper planning and implementation. Bibliography Kotler P. 1994, Marketing Management, 8th ed., Prentice Hall ,N.J. USA. Robson, W. 1998 , Strategic Management and Information Systems, 2nd ed., Pitman Publishing. Robert S. Kaplan and David P. Norton, "Why Does Business Need a Balanced Scorecard" Journal of Cost Management, May/June 1997, pp. 5-10. B. Douglas Clinton, Sally A. Webber, and John M. 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