Tods Luxury Shoes - Case Study Example

Tod’s Luxury Shoes Question 1 - Strategy Question All businesses need to work upon their growth strategies once they have passed through the initial stages of settling down the business. The businesses can apply a number of strategies for the purpose of growing themselves. Business growth can be achieved through outsourcing some departments to countries where manufacturing is done in a cheap way (Megicks 2001). Implementing growth strategies in a business is highly important for ensuring the survival of that business and also for focusing on the economic well being of the same. There are a number of growth strategies that can be applied to the business such as the following: 1. Penetrate your existing market. Working upon gaining new customers is extremely important for all businesses. Attractive marketing campaigns can allow the business to cater towards new customers and convince them in trying out Tod’s luxury shoes. The present customer base for Tod’s luxury shoes can be also an excellent source for increasing the sales of the business and motivating customers to buy more shoe products from Tod’s outlet. This strategy is a cost effective way, as convincing satisfied customers to increase sales is easier through special sales and discount schemes. Persuading the existing customers by introducing loyalty cards for premium customers is also an attractive way of penetrating the existing market so that they buy more shoe products from the outlet. 2. Ask for referrals. One of the most important growth strategies is to attract new customers towards the business. Targeting the market segments which can be potential buyers of the products is extremely necessary to cater to if one wants to grow their business widely. Enquiring present customers regarding referrals can be a good option in this case as Tod’s outlets are providing luxury shoes for them. The existing customers possess the purchasing power for buying luxury shoes and they may be having such social gatherings where they may know many people who possess similar purchasing power. Since the current customers are satisfied with the products they can refer this to their family and friends which is bound to increase the customer base for the organisation. Tod’s luxury shoes can ask their present customers for referrals and in return offer them discounts on every successful referral. This may increase the interest level of the customers providing successful referrals for the outlet. 3. Innovate your product or service For growing the business at a constant pace, the business needs innovation in their products and services at a constant mode. Innovation is an extremely important element in business growth strategies. Innovation in products and services portrays a new and fresh look and attracts the customers instigating them to buy the new, innovated product (Dahlen et al 2009). Tod’s luxury shoe business can focus on the designs of its shoes and bring innovation in the designs, colour contrasts, making shoes comfortable along with other such types of innovations that can allow its business to grow. 4. Extend your market reach New market locations can be approached by the businesses where there are huge potentials of making loyal customers for the organisation. New stores or kiosks can be incepted in new towns for attracting new customers for the products. Increasing market presence in new towns can be a wise move by Tod’s luxury shoes outlet if the market research depicts that these new towns possess the potential for the sales of such fashion related products. Online websites can be formed as well by the businesses; this virtual way of developing an online store website can be a very good option for growing most types of businesses. If the owner of Tod’s luxury shoes develops a website, it can prove to be highly convenient for his customers to check the latest products and designs available in the outlets. Also the discounts and promotional offers can be viewed by many of the potential customers and non potential customers may get attracted by viewing the offers on promotions and discounts. Targeted advertising is also a good approach for expanding to wider market areas. New market identification may require extensive research and once a new market is identified, proper advertising needs to be done to create awareness and attractiveness for potential buyers to come and buy the products (Clow et al 2007). 5. Focus on a niche market Focusing on a niche market for luxury products allows the organization to increase their sales rapidly since when focusing on the niche market, the products are made according to the requirements of the customers. Since the outlets of Tod’s luxury shoes are being catered towards the high class market, it needs to find out all the niche areas where there are strong demands of high class fashion related products so that the business can grow profitably and successfully. 6. Franchising Franchising is another good option for increasing the growth potential of the business. Tod’s luxury shoes’ owner can work upon franchising their outlets to other countries so that the business can start growing at a global level. Tod’s luxury shoe business has focused upon quality in manufacturing its products since the start and the owner is not willing to compromise on this by manufacturing products in countries where cheap labour is available. This shows that such quality products can be catered towards all new markets where there is a high purchasing power with the consumers and where fashion related products are acknowledged by many. Tod’s owner needs to work upon strategies for franchising the products to other countries as the case study depicts that Italian products are considered as high quality as well as trendy. References Megicks, P. (2001), “Competitive strategy types in the UK independent retail sector”, Journal of Strategic Marketing, Vol. 9, pp. 315-28. Clow, Kenneth E. & Baack, Donald (2007). Integrated Advertising, Promotion, and Marketing Communications 3rd edition. Pearson Education. Dahlén, Micael, Lange, Fredrik Smith, Terry (2009). Marketing Communications: A Brand Narrative Approach. John Wiley and Sons. Question 3 - Marketing Question The products that are reaching the maturity stage of the product life cycle for Tod’s portfolio of products are shoes and handbags. Tod’s can focus on the following two strategies to reap higher benefits from its business. a) Extending the product line Product line extensions are applied on products that have successfully achieved a strong brand name in the market and the company has introduced new product lines under the same category of products for attracting more customers. Brand extension is required for certain products so that the new types of looks in them can appeal the customers to a better extent. As we can depict from the case, that the shoes and hand bags need brand extension so that its product value remains in the market on a long term basis. The different types of strategies for extending the product line that can be applied by the businesses are; by extending the product line through stretching the up-market as well as the down market. Up Market Stretch Up market product line extension focuses on catering to the higher end of the market, this gives the business more potential for growth along with the ability to attain higher profit margins. Tod’s luxury shoes already cater to the high end markets and it needs to constantly cater towards the upper class market so that higher profits can be attained. It has a strong traditional way of conducting business that has set its mark in the upper class market and many famous popular figures have been observed using Tod’s luxury products. Down Market Stretch Down market stretch focuses on the lower end and the middle class markets. This may not be applicable for Tod’s luxury shoes as it only caters towards the upper class market segment. Therefore, going downwards may not work for them unless they bring their prices down and this would not be a very wise option at all since it will damage the top class reputation built by Tod’s luxury shoes. Advantages of Brand extension The advantages of extending the product line or brand extension in other words are as follows (Kotler et al 2008): The brand image of the organisation increases Acceptance of the new product in the market takes place easily No risks are usually associated in the customers’ minds as they are already aware of the organisation as well as the brand New brand costs are saved Consumers are provided with variety in new product lines Efficiency in new product development is present With product line extensions, the parent brand develops stronger brand image New customers are developed in the customer base with the product line extensions Brand New products in the product line allow customers to associate those products with the original brand The advantages of brand extension show extremely positive signs for Tod’s luxury shoes to succeed by extending its product line. Variety and innovation are required for retaining the interest of all customers. Disadvantages of product line extension Product line extensions in markets that are totally new or unrelated may have the risk of non-reliability for the organisation. Unrelated markets may cause doubts and uncertainties in the consumers’ minds and may therefore damage product credibility. Slight chances are present of damaging the brand image of the parent product while the product line is being extended. Product line extensions need to possess some type of competitive advantage over other popular brands and if this is not the case; there are high chances that the product will fail in the market. Customer switching is one thing that cannot be stopped by organisations if their customers find any fault in the product or in the services while buying the product. The owner of Tod’s luxury shoes needs to conduct a thorough market research before the launching products of in the new market as immense amount of time and money will be invested in product launches in such markets. b) Seeking a new market for the product The case depicts that Tod’s outlets are present in other countries such as China. China usually is considered a commercial hub and therefore majority of the outlets are present in China. However, if the owner focuses on seeking new markets for the Italian outlet, there are high chances that the owner may achieve success. Many developed countries prefer fashion related products especially their younger generation. Targeting such new markets will allow the organisation to expand at a global level and also develop new customer markets in new areas (Parker and Byrom 2000). This task may require some investment at the start but gradually they would be able to make fair grounds in these new market areas for their fashion related products of shoes and hand bags. The shoe market is wide-ranging and consists of wide varieties of ranges that are appealing to both the young as well as the old. Some go for classy looks in shoes and some prefer their shoes to be more comfortable. Focusing on developing new markets for the products will allow the market share of this fashion related outlet to increase at a good pace (Fill 2008). Advantages of entering new markets The profit level of the organisation would increase in new markets Customer base would be spread across wider regions Knowledge and potential level of new markets can be known The global image of the organisations can increase to a large extent New markets can generate new ideas for innovation for the organisation Business competition can be diversified in new markets Risks can also be diversified when catering towards new markets The advantages show that moving into new markets can be a viable option for Tod’s luxury shoes as they may be able to attain the highest market share since their sales and customer base would be increasing while expanding in these new places. Disadvantages of New markets There may be a risk of failure while catering to the new markets The potential level of the market may be overestimated resulting in heavy losses to be borne by SME’s Lack of qualified staff may be present to launch proper operations in the new market area for the organisation The disadvantages of venturing into the new markets depict that Tod’s luxury shoes may be involved in high risks while they plan to enter these new markets without having conducted a thorough market potential research in all such areas. References Fill, Chris (2008). Marketing Communications: Engagement, Strategies and Practice. 4th edition. London: Prentice Hall. Kotler, Philip and Armstrong, Gary (2008). Principles of Marketing. 12th edition. India. Pearson Education. Parker, C. and Byrom, J. (2000), Towards a Healthy High Street – Training the Independent Retailer, The Manchester Metropolitan University, Manchester. Question 4 - HRM Question Tod’s luxury shoes’ owner needs to be advised upon the importance of managing human resources in the organisation. Managing human resources can be quite a critical function for any business. If Tod’s owner is planning to improve the quality of his workforce, then he most definitely needs to focus upon the development of such policies for managing the human resources as well so as to avoid all types of problems in the business. In the era of such cut throat competition between businesses, all commercial concerns need to have some sort of competitive advantage over other firms. Developing strong human resource policies can allow organisations to have a strong competitive edge in the market over other companies. All the human resources of the organisation need to be clear upon their job roles and the owner needs to ensure that the human resources department is provided with all the necessary resources to conduct the work operations promptly and effectively. The concept of Human Resource Management is one of the recent new concepts regarding how the employees should be dealt with at the workplace. There are many different roads that are taken for achieving success; HRM is one of the roads that are developing strong and competitive theories for allowing organizations to face success (Pinnington and Edwards 2000). The importance of HRM is not realised strongly by all big and small organisations. Many organisations do not value the importance of HRM. Recent trends for multinationals and other organisations depict that HRM has played an important role for them in attaining success and also concentrating on other important activities as well since the human resources are managed by the HRM department of the organisation (Fabi et al 2009). It has been observed that large organisations, Tesco for example (Storey 2001), are at the top for implementing the Human Resource practices but little implementation has been observed from SME’s. The most common assumption that has been given for the non-implementation by SME’s is that the environments of SMEs do not have constriction in developments of management approaches (Harney and Dundon 2006). Guest (1987), suggested in his model that flexibility, quality, and strategic integration are highly achievable in the small organisations and communication is one of the main aspects that are easily applied successfully in small organisation as compared to large organisations where communication have higher chances of being misinterpreted. Family businesses and other small businesses do not usually focus much on the human resource departments. Tod’s owner needs to understand that being in a family related business does not mean that the implementation of human resource department can be ignored. Qualified human resource managers have the ability to constantly monitor and evaluate the performance of human resources in the firm. Performances and effort of human resources is directly related to the success and failure of the organisation. Human resources are the main assets that perform the actual role of the organisation for the organisation to achieve its goal. Constant performance appraisals and reviews by the human resource department allow the employees to remain motivated at work. Good performance reviews motivates employees to work harder and with dedication. Also human resource department looks after training issues for employees in areas where they lack expertise to function on their job roles effectively. Tod’s luxury shoes is a family owned business and the owner believes in working the traditional way rather than the managerial way may cause difficulties at the initial stages for the owner to accept the importance of implementing human resource department in the firm. Nevertheless, the importance of human resource management cannot be ignored under any circumstances by the owner of the family owned business. Times are changing and competition is getting fiercer, it is always wise for businesses to adopt the latest benchmarked practices so that the business can run successfully. Tod’s luxury shoes are a fashion retail outlet and therefore needs to make sure that its employees are providing the required customer services for their valuable customers. Any drawbacks in customer services at any point of time can act as a triggering point for the outlet to lose its valuable customer due to unsatisfactory customer services. Therefore the proper implementation if human resource management can allow the management to focus on the employees in performing their job roles at the optimum level. Though it is an occasional practice for SME’s to implement Human Resource departments in their organization but those that do gain the benefits and advantages. Those that don’t need to bear other additional costs that they don’t realize at the initial stages but have to face their long term impacts on the organisation. SME’s consider HRM as an expense to the organisation rather than an investment. HRM should be considered as an investment by the SME’s, every organisation needs to implement the human resource policies and procedures to have effective and efficient work processes being implemented in their organisation. For SME’s, the implementation of HRM has been one of the most hot debates since a long time (Fabi et al 2009). It has been usually observed that only large organisations focus their attention towards implementing HRM, the importance of HRM practices usually bypasses the SME sector in most of the cases because they think that heavy costs are associated with this department. Personnel management was an older term used to manage the administrative work for employees. HRM covers many functions for the organisation for maintaining a healthy and competitive workforce in the organisation from the initial stages of recruiting and hiring the firm till the tenure of the employee in the organisation. The owner of Tod’s luxury shoes, Diego Della Valle needs to realize that HRM plays an important role in the success and quality improvement are as for the organisation. Improvement and change at constant pace is required for firms to succeed and HRM ensures that latest trainings for running businesses successfully are provided to employees so that they remain competitive in the fashion retail industry of shoes and hand bags. References Fabi, Bruno, Raymond, Louis, Lacoursière, Richard (2009) "Strategic alignment of HRM practices in manufacturing SMEs: a Gestalts perspective", Journal of Small Business and Enterprise Development, Vol. 16 Issue: 1, pp.7 – 25. Guest, D. (1991).Personnel management: the end of orthodoxy? British Journal of Industrial Relations. Vol. 29-2. Harney, Brian and Dundon, Tony (2006) Capturing complexity: developing an integrated approach to analysing HRM in SMEs. Human Resource Management Journal, 16 (1). pp. 48-73. Pinnington, A. and Edwards, T. (2000). Introduction to Human Resource Management. Oxford University Press. Oxford. Storey, J. (2001). Human Resource Management: A Critical Text. Thompson Learning, London Read More