Reasons for the Success of Reiss Clothing and Ovation Incentives - Case Study Example

 Reasons for the Success of Reiss Clothing and Ovation Incentives Company backgrounds The small-sized enterprise is an organisation sustaining limited volumes of employees, usually fewer than 100, and financing for the company is generally loaned by a single individual or just a small group of investors. The medium-sized enterprise has more available resources to compete over broader market environments and has employee volumes exceeding 100, but not those typical with larger organisations in the UK. Having offered a definition of these two business types, the clothing retailer Reiss and a marketing firm Ovation Incentives were chosen because of their innovations in marketing, service provision and product varieties. They are being highlighted for their excellence in differentiation through unique quality-focused strategies. This is how business success is measured when working competitively against similar industry players. Success as an SME means being able to compete in diverse market environments where there is the possibility of larger and or like competitors. Both companies excel in these competitive efforts. Reiss is a medium-sized retail clothing store operating in the United Kingdom that offers medium-priced fashions for both men and women. This company offers products that are traditional in both colour and style, however upgraded with more contemporary product features that fit the consumer demand for target groups between 18 and 35. Reiss’ product line is both hip and professional and the business experiences regular profit and growth because of its total business strategy. “Reiss has made its mark in the UK and is now planting their first seed (expansion) into the United States” (yourlatv.com, 2008, p.1). This is a company with international expansion as a business strategy. Ovation Incentives is a small-sized organisation that offers incentives rewards and prize vouchers to different companies across the UK looking for better methods to motivate their internal staff or management leaders. Ovation Incentives operates primarily in the business-to-business marketplace and is essentially an outsourcing agent that provides human resources benefit incentives programmes to put this strain away from client industries. Success in business and marketing research Business philosophy represents the specific business values the organisation holds and the mission which details how to reach specific short- and long-term goals. Reiss’ business philosophy “centres on creating and producing directional, design-led menswear, womenswear and accessories. Reiss prides itself with an uncompromising commitment to delivering innovative, original products combining exceptional design, quality and value” (reiss.co.uk, 2009, p.1). Though this business does not rely on a value proposition in order to meet Reiss’ promises to customers, the company recognises what customers actually want and then streamline their supply chain to meet these demands. Reiss has fashion and fabric buyers who look for stylish, modern and sophisticated blends to give their product a competitive edge and make it stand out in consumers’ minds. For example, the company has used music superstar Beyonce to promote the company (reiss.co.uk, 2009), a celebrity with a rather good international reputation, to deliver perceptions of quality, design and value. Linking the business’ philosophy with efforts to boost visibility through celebrity endorsement is one method that gives this company success among competition. Ovation Incentives’ business philosophy is to “motivate and inspire staff, third party distributors, or customers to reach and exceed company targets” (ovationincentives.co.uk, 2007). The company follows this philosophy by conducting research about what drives employee motivations, or working with partners who perform these types of research studies, to provide the most quality and relevant reward options. The company recognises that workers want to be recognised for their contributions to meeting corporate success, therefore establishing this human resources-focused business allows companies to outsource incentives and rewards creation to Ovation Incentives. The company creates voucher codes that are electronically stored and linked to specific products or services. The client organisation simply needs to deliver these codes and allow the employee to access the prize database and select their merchandise. By partnering with many well-known companies such as Pizza Hut, Marriott, The Gap and even bungee jumping organisations (ovationincentives.co.uk, 2007), it shows the diverse incentives available to better meet motivational needs. Neither Reiss nor Ovation Incentives is a publicly-traded organisation (they are private businesses), therefore many of their internal efforts are not promoted, leaving gaps in research about how the companies conduct their marketing research efforts. However, Reiss recognises the importance of conducting focus groups or interviews to find out what buyers actually want. “People are much more discerning now and there is a lot of competition out there. You have to keep a brand moving all the time and we took the view that a brand has to be aspirational” (telegraph.co.uk, 2006, p.2). Reiss regularly scans the consumer environment and conducts research about their buying habits and their views about the business’ brand and reputation in order to provide more relevant fashion merchandise. Reiss even partnered with a company called Agency Pod1 who is an expert in surveying shoppers about their experiences (Marketing Week, 2009). Without this research, they could easily be outperformed by more research-focused retail competition. Ovation Incentives conducts similar research about buyer beliefs and values. Outsourcing Outsourcing is the process of externalising a function of the business that was once internalised. For instance, a company may identify a cost-savings opportunity by having a secondary firm handle support for information technology. Having offered this definition, there is no evidence that either organisation outsources a great deal of internal functions. Reiss has a well-developed supply chain that is coordinated at the internal level and the information technology support team is also internally-staffed. Ovation Incentives, as an outsourcing partner by design, and because of their small size and staffing needs, make outsourcing unnecessary to achieve cost reduction. The only evidence of outsourcing is at Ovation Incentives in areas of information technology support and development, as the company was highlighted in a case study involving the need to outsource email services at Ovation by switching to a product and service called E-mail Center Pro (Grey, 2009). This is likely to improve costs of supporting small-scale IT software and improve business communications internally and externally. Investment Investment is the process of devoting business resources toward a specific goal. For example, if the company is looking to expand its market reach, it might invest in a bricks-and-mortar retail outlet in a foreign country. Reiss, as a fashion retailer and business willing to invest in success, recognises that “the attractiveness of print advertising design seems to be more important than detailed information included in advertisements” (Hsu and Mo, 2009, p.66). Reiss must invest a modest amount of finances into creating advertising that fits the needs and beliefs of their target customers and ensure that the images are more interesting than the ad copy. In order to promote the company, investment into appropriate advertising that has value to the customer gives Reiss more visibility and links the store to specific target group values. Ovation Incentives invests in a quality electronic information systems package that allows Ovation and other partners to access a broad database of product incentives. “Armed with their own specific voucher code or algorithm, recipients log onto the website and click on a tailored ‘redeem your voucher’ image” (ovationincentives.co.uk, 2007, p.1). Heavier financial investment into quality electronic systems that gives instant access to customers is necessary for this business to achieve its goal of providing hassle-free and easy-to-use gift incentives. This avoids the client from having to store physical certificates or even concern themselves with managing the database of different incentives voucher codes. Innovation Innovation is the process of developing new and unique products or services which no other company can match. New ideas create new methods of doing business, sometimes creating positive process improvements at the internal level. Both companies are regular innovators and look for new and interesting ways to change how they conduct business. Small- to medium-sized enterprises have a vulnerability in their market position “that comes from a range of issues related to market reach, resources, competencies and low-cost competition” (Hawkins, 2007, p.14). Basically, both companies, because of their size, have risks of being outperformed by larger competition with better resources and ability to reach more customers through marketing. Ovation Incentives innovates by developing new and interesting partnerships with a wide variety of different industry representatives to come up with motivational rewards that are unique and unlike those in competitive incentives companies. This can be seen with new rewards that include even outrageous events such as hot-air ballooning (ovationincentives.co.uk). Reiss’ largest innovation is being focused on upgrading their lead time between purchase of product and final delivery of product to store shelves. This builds happier customers and improves the business’ image by having a more diverse product line. Management and product Management is the activity of planning, scheduling, coordinating and controlling the activities of employees in an organisation. In relation to management staffing, “SMEs make up 99 percent of UK businesses and employ 59 percent of the private sector workforce and are critical to the economy” (Column, 2008, p.18). This is why recruiting top talent is necessary in both Reiss and Ovation Incentives. Reiss seems to have a management hierarchy that is top-down, where decision-making is made at the top layers and then it trickles down throughout the lower-levels of the business. This centralised type of business gives it higher control and the ability to coordinate the efforts of different worker divisions or job activities, from administrative to sales floor associates. Ovation Incentives, being a business that understands how to motivate, has a more liberal, decentralised management hierarchy where decision-making is made in all layers of the company. Says Jonathan Grey, owner of Ovation Incentives, “Regular communication to staff will help maintain interest and keep staff stimulated” (O’Reilly, 2006, p.29). Ovation Incentives seems to have a more horizontal organisational structure that supports autonomy in job role where employees are given considerable value and development to reach personal and business goals. As a company which sells motivational tools to other businesses, it would only make sense that Ovation Incentives is top-notch in providing the same motivational environment to its own employees. Product is the actual good which is produced by a business and sold to buyers of different demographics. In terms of product, Reiss relies on successful products that meet buyer demands and needs in order to remain profitable. This is a very product-focused business. The company must always review its supply chain, purchasing and retail models and then make adjustments whenever inefficiencies are noticed or when the product is losing lead time for delivery to stores. Reiss must ensure product is in-line with buyer expectations and is always refreshed to give variety and extra value. Ovation Incentives is more relationship-focused and relies on strong business-to-business ties with many other companies who have partnered for incentives programmes, such as Pizza Hut or The Gap. Ovation Incentives does not necessarily rely on the virtues of the product itself, but on how these relationships are built with the customers who buy the electronic vouchers. Quality for this organisation is how well they act professionally and can deliver its services and products without hassle or problems electronically. Though the variety and quality of products must fit the profile of the reward recipient, Ovation Incentives is more strongly tied to relationship marketing than product itself to remain competitive. Strategy, sustainability of products, and diversification Business strategy involves conducting analyses of how similar industries provide products and services and then determining whether the business could successfully compete in this environment. Development of short- and long-term business goals and using internal resources to reach this goal defines strategy. Reiss’ business strategy is to expand the company from just the UK marketplace into North America and other points in Europe. The company has a well-developed supply chain in the UK and can use these advantages to work out efficient and cost-conscious new distribution methods to reach these international clients. This continuous-improvement business is looking for new market opportunities because the domestic sales environment is very saturated with competitors in retail. Ovation Incentives has a different business strategy, using reputation as a competitive tool in a marketplace with very little competition. The company recently won the Motivation Award 2007 for Best International Programme for easyJet In-flight rewards programme (ovationincentives.co.uk). The company relies on its strong relationship and awards ties with large and reputable businesses to expand their brand and their presence both online and with customers face-to-face. Promoting these awards is reputational-marketing. The basic business strategy is to aggressively pursue clients looking to outsource human resources rewards to an expert business. The product life cycle is the time in which a product remains relevant to consumers. The product moves through a series of launch, growth, maturity and eventual decline. For some products, this could be as little as a few weeks or as long as several decades (or more). Sustainability is closely tied with life cycle as it is about ensuring that a specific product or strategy can be supported as long as needed by corporate goal-setting. Reiss’ products have a very limited product life cycle, that is the driver behind their innovations and ongoing improvements in purchasing and supply chain. Fashion clothing is only relevant for a short period of time, sometimes just a month or so, therefore this is a dynamic, trend-oriented environment driven by changes to buyer preferences in fad fashions. New fabrics and designs are constantly considered and manufactured to keep the business’ brand name from being stale in consumer groups. Fortunately for Ovation Incentives, the life cycle of many of their reward incentives are long-lasting, as demand for pizza and other restaurant or recreational environments will continue to be in demand. By expanding the diversity of reward products offered, Ovation Incentives can prolong the life cycle of its rewards virtually indefinitely by constantly having new offerings to show their commitment to value and variety. By conducting research on buyer needs or client needs, the life cycle can be manipulated to Ovation’s advantage, unlike Reiss. Diversification involves incorporating new business practices, superimposed onto the existing business model, to give the business a better position financially or through marketing. Unfortunately, both companies are of too small size to consider diversification, other than expanding their current product markets through international expansion. There is no evidence that either business is considering real estate investments or community investments to broaden their business reach or portfolios. Both companies remain strongly focused on their core products or relationships in fashion retail and incentives programme sales. Neither needs diversification based on their current sales and profit success levels. It is likely that if both companies continue to achieve market success, they will consider future diversification strategies to improve profit or gain a foothold in new market environments across the world. Differentiation Differentiation is using activities, such as promotion through advertising, to set one business apart from competing businesses in the same market environment. Reiss differentiates from its competition by both price and through fashion design upgrading. Other mid-priced retailers devote a great deal of resources to catalogue distribution in order to build more consumer interest both in-store and in the online environment. Reiss offers products that are generally below mid-priced competing price structures and consistently reinforces this value-focus on its product website for online ordering. Differentiation for this business also occurs by showing youthful models with a sophisticated look in order to give the impression of upper-class merchandise for discriminating buyers. Ovation Incentives differentiates through a focus the business calls clarity, equity, simplicity and desirability (ovationincentives.co.uk). Especially in terms of desirability, Ovation looks for product rewards that are superior to other competitive offerings. In order to accomplish this, however, Ovation Incentives’ leadership must pursue alliances and agreements with different partners who have products that would be in high demand at client organisations. When the customer browses the many different types of rewards and partnered businesses available, the business is instantly differentiated through its volume of offerings and interesting lifestyle choices the company provides. Being small-sized, Ovation cannot afford to differentiate through promotional materials as this would be too costly and would require distribution to too many niche markets. Growth for both companies Both Reiss and Ovation Incentives provide innovation in their product and service offerings that have given both companies very positive growth potential. Reiss recognises the needs of its clients and looks for ways to exceed these needs by offering better and more trendy fashion products. This is done through business organisation, strategic planning and making use of advertising and promotion to build buyer interest and loyalty. Ovation Incentives will likely experience future growth by remaining focused on building more positive customer relationships and aggressively looking for innovation in rewards voucher product offerings. Both companies are forward-thinking businesses that recognise that future trends in customer needs or buying behaviours will impact their sales and reputation successes. Therefore, it is important for both Reiss and Ovation to focus on their core products and business strategies and make sure they are at peak performance and profit potential before exploring diversification. Growth in fashion and growth in human resources gives both of these businesses opportunities to gain more customers and improve their overall success in their unique markets. Ovation Incentives, even more than Reiss that must operate in very competitive regions, has even more growth potential as companies look to outsource some of their human resources activities to businesses that can take this burden off of internal staff. Ovation could even outperform Reiss in terms of profit if the business continues to provide vouchers that make customers feel satisfied and appreciated. Word-of-mouth in this industry is likely strong and can give Ovation Incentives a competitive edge by staying focused on providing value and diverse options. Conclusion Reiss and Ovation Incentives are able to be categorised as successes due to their ability to differentiate the business and experience growth and/or awards in their individual industries. Success is measured by having the ability to incorporate all elements of business strategy, including marketing, innovation, investment, and ensuring that the product remains viable in the buyer markets. Both businesses are likely to experience further growth since they are able to satisfy customers and remain identifiable by their unique product- or service-related competencies. References Column, Lex. 2008. UK bank lending. London, November 26, p.18. Hawkins, D. 2007. SMES: Harness their benefits. Supply Management, London. 12(11), pp.14-16. Hsu, J. and Mo, R. 2009. Consumer responses to incomplete information in print apparel advertising. Journal of Fashion Marketing and Management, Bradford. 13(1), p.66. Marketing Week. 2009. Online research: Case Study – Fashion brands and online research. London, Jun 4, p.26. O’Reilly, G. 2006. The cost of reward for SMEs. Promotions & Incentives, London. September, pp.29-31. Ovationincentives.co.uk. 2007. 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