Trend Analysis for Junk Underjeans - Case Study Example

July 16, Louise Lai CEO 110 East Ninth Street Suite B1255 Junk Underjeans Los Angeles, CA 90079 RE: Opportunity/Trend Analysis Letter Dear Ms. Lai: Trend analysis within the context of a business environment is a way to monitor the current and future performance and is a useful tool of assessment before making an investment in a given company or stock (Zahorsky, 2010). This letter will focus on the opportunity/trend that are favorable Junk Underjeans and will make recommendations that will be helpful for the organization. JUNK UNDERJEANS: A primary research of the company led to the discovery of several notable and useful information and insights about it. Junk Underjeans produces a unique line of men’s undergarments with the latest and hottest trends made from the highest quality fabrics and materials (Junkunderjeans, 2010). The distribution method adopted by the company is completely based on wholesaling. The Junk Underjeans designs are credited to Mr. Sean Gregg who is the main fashion designer. The different styles and collections such as the ‘rebel’, ‘urban’ and ‘sleek’ have captured the interest and excitement of straight and gay guys that comprise the main target markets of the company. The promotional strategies of Underjeans, such as tradeshows, fashion shows, magazine advertisements, online blogs, and company website (Junkunderjeans, 2010) are appropriate methods of informing the potential customers about the latest products and fashions available from Underjeans. OPPORTUNITY/TRENDS: The most in-demand business today, according to the American Apparel and Footwear Association, is the apparel manufacturing in which “sales for the year 2000 reached $315 billion, representing a 90% growth from its 1990 levels” (Fulbright, 2009). Starting up a new business requires a sound understanding of the market and its needs, but it also requires a passion and dedication from the owners that goes beyond simply making profit. The business may be focused on selling just one product line, especially if that product is doing well in the market. However, opportunities/trends should also be given consideration if the company wants to remain viable in the long term. At times, organizations are so caught up in their own day to day management of affairs that they fail to take notice of opportunities that market trends may offer them (Khoo, 2010). There is always a potential for growth and expansion based on the changing trends. It entails that just because Junk Underjeans is producing undergarments for men at the moment, it should be heading that way in the future also. Junk Underjeans has already proven its success in capturing the attention of men, and it has established a name for itself in the market. Now is the time to use these advantages to attract women customers by offering a new product line of women undergarments. Investment in manufacturing women’s undergarment is a good opportunity as indicated by market trends for the coming years (Conelly, 2009). As to product/services share, women’s and girl’s underwear and briefs have the biggest share when compared to men’s and boy’s underwear, foundations garments or infant wear and sleepwear (IBIS World Report, 2009). It is a good time for the Junk Underjeans to capture the opportunity and reflect on the idea of including the women’s undergarments in their business. It not only makes good sense to expand into the women’s market, but it is also the right time to enter this market as the trends forecast a healthy growth in the coming future (Khoo, 2010). OPPORTUNITY/TRENDS’S SIGNIFICANCE: There is no doubt that the Underjeans’ product have gained a wide acceptance by men that comprise your target market, however the opportunity that the demand for women’s undergarments is increasing should also be not set aside. Underjeans’s main problem is searching for new buyers to increase the sales, and as such, this problem can be solved by the tapping into the demand from the female undergarment markets. If Junk Underjeans wants to be more profitable, it is essential that it invests in new products for new target markets and gain additional profit for itself. Although it is a crucial and strategic step for any business to take, expansion is desirable when the trends forecast show a promising future for sales. For Underjeans, the foray into the women’s market is beneficial as the latest trends from across the globe are favorable (IRUE, 2010). In India, which is considered to be one of the most promising markets of the world, 700 million women spend 7% of their budget for underwear (IBIS World Report, 2009). Women in Britain spend more than 20,000 pounds on underwear. A survey from Jockey (an underwear manufacturer) revealed that women are spending around 17 times as much as men are on underwear (Johnson, 2006). The same survey showed that 82% of the women want to have a variety of underwear because they considered it as a luxury and a treat for themselves. On the other hand, there are only 7% of men who consider the same because underwear for them is a functional product and that is why they prefer to stick to one type. In US, lingerie products for women dominate with a market share of 83 % (The US Womens Underwear Market, 2003). Women’s underwear is highly competitive in the market in terms of pricing. According to Fashion Life, underwear for women contributes 17% on clothing sales compared to 9 % from men (GfK Retail and Technology, 2009) (see chart 1). Chart 1 Source: GfK Retail and Technology, 2009 Also, according to a survey on internet searches, undergarments, both for men and women are found to be among the top 30 buyer-searching keywords (Doctock, 2010). This is again a good sign for Junk Underjeans to take an interest in expanding to include the female customers. In addition to the market potential as shown above, the strengths and weaknesses of Underjeans will reveal how Underjeans can take advantage of the opportunities. SWOT Analysis. Strengths: Junk Underjeans is an international company manufacturing men’s undergarments priced affordable prices. It allows online marketing and advertising through its company website. It already has a well established distribution and sales network and advertising and promotion mechanism. It also has a market reputation for quality and meeting the customer’s needs. Weaknesses: It focuses only on men as its target market and it lacks competitive strategies to produce different lines and ranges of products for both for men and women. Opportunities: As can be seen from the previous sections, there is opportunity to diversify the market with new products for women to meet the increasing demand of women’s undergarments. Threats: There is a high competitive threat as there are several undergarment manufacturers already established in the female undergarment market. The Underjeans’ product therefore should be unique and differentiated from the other manufacturers. RECOMMENDATIONS: Introducing a new image for the brand is a big task for the business and the following recommendations may be helpful for Underjeans in making the right decisions. Junk Underjeans is already aware of competition as it has long been in the same market. Most of the competitors like Calvin Klein, Andrew Christian, Ginch Gonch and others are now also catering for both men and women. Underjeans needs to enter the women’s undergarments not because its competitors are doing it but to use its competitive advantages and capture the additional market. There is a need for the company to become competitor-oriented, and focus on competitive strategies to surpass competitive threats (Kotelnikov, 2010). Entering the market with a new product line is a crucial step for the business for there are many things to consider. Before entering the market, the company should investigate the intensity of the competition. It requires going to the market and observing, finding out everything about the competitors, and checking on how they produce and market women’s undergarments. It is best to personally investigate the competition instead of simply relying on market reports (Parker, 2009). For this, Underjeans may try to put itself as a customer and talk to salespersons of the other companies and ask them basic questions about the product. International and successful manufacturers are a good source of information and may provide right guidance on how to deal with competition. To enter the market with the best product, Junk Underjeans also needs to have a business plan that will be followed by building a sales team. The team must be composed of knowledgeable, field expert, who are talented and enthusiastic people. Once the initial plan has been developed, the company should research the emerging markets and focus on specific potential countries for sales - like China, India, Europe or others. Also, the company should consider how to physicallu reach its target market by having a plan for operations and logistics, the risks involved and financing needed. Sales of women undergarments have doubled over the last 10 years (HighBeam Business, 2010). It is too big an opportunity and may prove catastrophic if Junk Underjeans lets it pass by. Sincerely, Ophaphan Wangmontri (Professional Title/Position) Works Cited Conelly, J. (2009). ‘Wholesale Business – Selling Undergarments can be a Great Option’. Ezine Articles. 14 July 2010. Retrieved from http://ezinearticles.com/?Wholesale-Business---Selling-Undergarments-Can-Be-a-Great-Option&id=3147335. Retrieved on 14 July 23, 2010 Docstoc. (2010). ‘Underwear Industry Report’. Retrieved from http://www.docstoc.com/docs/9967387/Underwear-Industry-Report. Retrieved 15 July 2010. Fulbright, J. (2009) ‘Starting a Clothing Line Business’. Power Home Biz.com. Retrieved from http://www.powerhomebiz.com/vol66/clothing.htm. Retrieved on 16 July 2010. GfK Retail and Technology. (2009). ‘Diverse Structures Dominate German Fashion Markets.’ Retrieved from http://www.gfkrt.com/news_events/market_news/single_sites/003799/index.en.html. Retrieved on 19 July 2010. HighBeam Business. (2010). ‘Women’s, Misses’, Children’s, and Infants’ Underwear and Nightwear.’ Retrieved from http://business.highbeam.com/industry-reports/textiles/women-s-misses-children-s-infants-underwear-nightwear. Retrieved on 15 July 2010. IBIS World Report, (2009). ‘Sleepwear, Underwear and Infant Clothing Manufacturing in Australia’. Retrieved from http://www.ibisworld.com.au/industry/ default.aspx?indid=140. Retrieved on 14 July 2010 IRUE (National center of marketing and price study). (2010). ‘Survey of underwear market in India.’ Retrieved from Read More