Business Strategy Embraced By Ted Backer - Essay Example

Evaluation of Ted Baker Business Strategy Table of Contents Introduction 2 The strategic position of Ted Baker 3 Analysis of Ted Baker’s strategic direction 6 The organisation’s strategy in terms of SAFS framework 9 Conclusion and recommendation 10 References 11 Executive Summary This paper evaluates the business strategy embraced by Ted Backer and recommends the improvements that need to be taken by the brand to remain relevant in a competitive market. As brand, Ted Baker deals in a number of collections that includes Menswear, Womenswear and Childrenswear. The brand began its operations in the UK, but has expanded to other parts of the world. The strategy direction taken by the brand seems different from those adopted by competitors. For instance, Ted Baker does not rely on either public relations or advertising, but use unconventional approaches to improve its sales. This paper outlines some of the unconventional approaches used by the brand to improve its sales. Other than the unconventional approaches as part of the brand’s strategic direction, an analysis of the firm’s strategy using models such as Ansoff and BCG is important in terms of determing the ideal marketing strategy for the brand. In essence, the evaluation of the firm’s strategy is important because it allows for the identification of the existing gaps that may pose a risk for the brand’s business in the market. As such, recommendation on improvements plays a role in ensuring the brand maintains its market share. For instance, it is recommendable for the brand to use other approaches other than the unconventional approaches to improve its business. A good example involves taking advantage of latest technological advancement to improve production. Introduction The managing director of the company, Ray Kelvin begun in 1988 with a store situated in Glasgow. He further expanded his business to other places such as Manchester and Nottingham. In 1990, the company opened a new store in Convent Garden and the director acquired the entire company from by buying the shares of part owners known as Goldberg and Sons. This saw the introduction of Ted Baker Woman in 1995 and as a clothing retail company, Ted Baker is listed on the London Stock Exchange. In addition, the company also has stores in other parts of Europe, Asia and the Middle East while, its flagship store in the United States was opened in New York’s Fifth Avenue. The Ted Baker’s brand has developed steadily since starting its operations within the United Kingdom. At present, Ted Baker has expanded globally by relying on its three key distribution channels that include retail, wholesale and licensing. The company use their own outlets and other licensed retail outlets, and partners in recognised department stores across Europe, Asia, Australia and the United States. In essence, the company’s aim involves becoming a leader in designer lifestyle brand (Callan 2006, p.25). The strategic position of Ted Baker As part of considering the expansion of its collection, the company offers a wide range of collections that include Menswear, Women’s wear, Childrenswear, Footwear, Watches and Fragrance and Skin wear. The company on a continual basis to ensure that they are up to date with the current trends and able to meet the customer demand often reviews these collections. Further, the company looks at opportunities that can be utilised to expand the company’s collections and to enhance its offers. As a strategy, the company also focuses on a controlled distribution by relying on its three channels that includes retail, wholesale and licensing. Other than controlling its distribution, Ted Baker also looks at every opportunity by determining whether they are appropriate for the brand and able to deliver margin led growth (Urry 2009, p.19). In addition, the firm engages in a careful review of the existing and emerging international markets. This allows the firm to manage its growth in the existing markets and to consider expanding to new territories. The company also emphasises on design, quality of product and a focus on detail, which is achieved through passion, commitment and the dedication of the firm’s workers, and other partners working with the company. At the company, the approach used for marketing has never changed since the inception of Ted Baker. The marketing strategy appears to focus on word of mouth and the reliance on unconventional approaches to marketing (Kipphoff 2003, p.23). In essence, Ted Baker is among one of the only firms that has gained international status in terms of designer label without engaging in advertising campaign. The company does not advocate for advertising, but does everything that is needed to support its various collections in a cohesive and quicker manner (Kipphoff 2003, p.23). The techniques common with the Ted Baker brand include the use of witty, eclectic and engaging in window display. As a technique, the firm also engages in amusing in-store giveaways and carrying out one off unique events and undertaking digital initiatives. The company’s director, Ray Kelvin does not embrace marketing, public relations or advertising and this has enabled the company to avoid hefty budget for marketing. At present, the number of stores that the firm manages globally stands at 300 with plans to expand further in the Middle East cities that include, Abu Dhabi and Dubai (O’Doherty 2007, p.20). In most instances, the sales of the Ted Baker brand is often boosted by the positive remarks from international customers who are attracted to the quality of apparel from the firm. Over the years, the brand has managed to position itself within the accessible luxury segment by offering affordable prices ranging from 30 to 500pounds. This means that every customer regardless of economic status can access products from Ted Baker. As a strategy, the brand is also targeting the young customers who are fashion enthusiasts and with a preference for good quality apparel and other accessories. In essence, the marketing strategy embraced by Ted Baker is interesting in the sense that, its unconventional approach forces the company to emphasis on quality as a way of maintaining its luxury status (Bergstrom 2005, p.27). The digital initiatives that the brand relies on includes Facebook where the brands presents its accessible attitude. Other than relying on Facebook, the brand also engaging in different events and advertising itself in glossy magazines to enhance its position within the high-end fashion arena. The company also has a differentiation strategy that makes it unique from competitors. Such strategy includes organizing events every week to promote its luxury products. The company also engages customers in a courtesy manner and this ensures that the brand retain its customer base. The digital initiative by the brand also plays a role in increasing interest to the brand like for instance, increasing the number of followers on Facebook (Thompson 2012, p.1). As strategy, the brand also focuses on bringing the fun spirit closer to the customers. The company also use special occasions and the public holidays to improve its sales. This includes taking advantage of such occasions like Valentine’s Day, Mother’s day or Father’s day. During these special occasions, the brand engages in suggesting perfect gifts for the intended special person. This allows customers to choose from a wide range of the brand’s products. Innovativeness is another strategy that the brand emphasises in improving the sales volume of products. Innovativeness involves a focus on improving the brand’s design, coming up with activities that attract more customers like for instance, Life music performance during the store opening and in other events organised by the firm. This marketing mix ensures the brand remains a leader in the market (Kasmira 2014, p.12). Analysis of Ted Baker’s strategic direction Since Ted Baker deals in a variety of product line, the choice of targeted market is important in determining what products should be produced the most. In this sense, the brand can rely on Ansoff model to develop its strategic direction. Ted Baker deals in a variety of collections and this means that the strategy that the brand embraces should be reliable in terms of ensuring the brand meets its sales target. In selling products, the brand has three main channels of distribution that include retail, wholesale and licensing, which needs to be operated efficiently to ensure the brand meets its targets in terms of market and sales (Gerry, Richard & Kevan 2011, p.458). While relying on the Ansoff model in developing a strategic position, the brand needs to focus attention on market penetration. Ted Baker intends to achieve growth with the products it makes for the identified market segments and improve its market share in apparel and other accessories. However, this is not simple because of competitors dealing in the same products. As such, the brand needs to identify its market carefully to avoid losses resulting from a poor decision with regard to market choice (Moussetis 2011, p.105). On another note, a focus by the brand on market penetration as a strategy is ideal because it leverages the brand’s available resources and capabilities. While the brand started in the UK, it has managed to expand in other parts of the world that include Europe, Asia, Middle East and the United States. This allows the brand to attract new customers and in this sense international customers to add on its base of local customers. The products that the brand engages in allows it room for expansion since there are untapped market globally thus; the firm has an opportunity to penetrate growing markets such as the Middle East. As such, market penetration presents Ted Baker with an opportunity to increase its market share and this improves the brand’s growth globally. However, while penetrating to other market segments, Ted Baker has to realise the limits that comes with such an initiative. This involves the risks of market saturation because of the involvement of other companies in the same product. As such, Ted Baker needs to come up with unique strategies that ensures it remains relevant in the various market segments it operates (Moussetis 2011, p.108). With regard to market development as depicted in the Ansoff model, a firm needs to seek growth by exploring new market segment. While Ted Baker deals in various collections that include Menswear, Womenswear, Childswear and other accessories, expanding to new markets is essential in enhancing a firm’s growth. To this end, Ted Baker can take advantage of its distribution channels to expand to new markets. As a strategy, Ted Baker has ventured in new markets and geographical regions that include the United States and parts of Middle East such as Abu Dhabi (Richard 2012, p.607). Establishing new markets is vital for Ted Baker when the brand’s core competencies are associated with specific products other than experience with a particular market segment. Ted Baker emphasise quality and detail in the products they make, which gives the brand an upper hand in the markets that the brand ventures. However, the firms also have to deal with the risks associated with venturing into a new market. Such risks involve how the customers will receive the products and whether there are other similar products in the market. This may lead to a situation whereby the customers may go for the company that offer cheaper price. This may not be good business for Ted Baker especially when other companies are selling their products at cheaper prices. Ted Baker believes in quality products and a market that is flood with cheap product is a risk for Ted Baker that deals in quality products (Moussetis 2011, p.111). Concerning product development, new products developed by the brand should relate to what is demanded by customers in the existing market segments. As a strategy, a focus on product development is ideal when the company’s strength is associated with specific customers and specific product. Ted Baker as a brand is known to attract celebrities and other personalities with a knack for fashion. The youth are also known to appreciate quality and fashionable products and as such, Ted Baker’s product development often target customers with preference for fashion and quality product. This allows the brand to improve its strength because of developing new products that targets the identified and existing customers. Diversification on the other hand, can be viewed as a major strength of Ted Baker. The firm deals in a variety of collections and can develop new products that commensurate with the demands of a newly identified market. However, there are often drawbacks associated with diversification because it requires product and market development, which in most cases may not be part of the firm’s core competencies. Conversely, diversification makes sense where the identified risks are compensated by a high sales volume. Additional benefits associated with diversification include the potential of gaining an upper hand in a particular market segment and being able to minimise the overall risks anticipated by the firm (Moussetis 2011, p.115). Further, analysing the strategic direction of Ted Baker using the BCG model is important in understanding the firm’s potential in terms of profits and growth. In this regard, the moment that the firm divide its products in to four segments that includes “cash cow”, “stars,” “dogs”, or “problem children”, it can establish a market strategy to facilitate “cash cows”, improve market share, and in this sense the “stars” while eliminating “dogs” thus; keeping a check on the “problem child”. As a result of the divisions, the amount realised by the “cash cows” can be channelled to improving marketing and production efforts associated with the “star’ products; thus, improving the “experience curve’ for such products and improving market share (Betts & Taran 2011, p.4). In essence, the BCG model is can be used to analyse the strategy direction of Ted Baker in that, the brand can examine its competitors by looking at the products to determine whether the potential to establish market share warranties the costs. However, this model may only work in certain situations; it ensures that the firm can assess its offerings with regard to products to promote and the ones to eliminate. As strategy, when Ted Baker combines this model (BCG) with other models available in the market assist in having a broader view with regard to how marketing efforts associated with a specific product can impact on a the firm’s overall cash flow (Betts & Taran 2011, p.5). The organisation’s strategy in terms of SAFS framework The strategy applied by Ted Baker is suitable in terms of meeting its goals in that, the strategy of dealing in different collections ensures that the brand diversifies its products with regard to customer preference; As such, this strategy works because it ensure that the products the brand is dealing with can meet different taste and preference of customers. With regard to feasibility, the strategy direction by Ted Backer can work because, there is commitment coming from team members and partners of the brand. This ensures that any strategy adopted by the brand achieves its goal. Acceptability on its part relates to the focus that the brand give to the identified stakeholders. This includes meeting expectations through sales returns and customer satisfaction. The expectations of stakeholders are often high and as such, the firm needs to come up with a strategy to improve its sales and to ensure that the customer demand are met accordingly. In order for the firm to evaluate acceptability, there is need to rely on such tools as stakeholder mapping and what if analysis. On the other hand, sustainability involves how the firm is able to retain the market share of the products it makes regardless of operating in a competitive marketing. Among the strategies to ensure the firm maintain its market share involves coming up with a differentiation strategy (Stacey 2011, p.315). Conclusion and recommendation While the Ted Baker brand has progressed over the years as a leader in apparel and other accessories, it is also important for the firm to consider current trends in the market. The brand continues to market its products without the reliance on advertisement and this in the end may affect negatively on its business. This is because advertisement is becoming more important in marketing products especially with the advancement of technology. This has led to cheaper means of advertising products other than the mainstream advertising platforms. As such, the brand needs to adapt to new tactics as a way of remaining relevant in a competitive market. References Bergstrom, R 2005, Successful US expansion lifts Ted Baker, Financial Times, London. Betts, S., & Taran, Z 2011, ‘Brands, Rents and the BCG matrix: A portfolio approach to brand maintenance, Allied Academies International Conference. Academy of Marketing Studies. Proceedings Vol. 8, no.1, pp. 1-6. Callan, E 2006, Ted Baker looks to build a global brand GENERAL RETAILERS, Financial Times, London. Gerry, J., Richard, W., & Kevan, S 2011. Exploring Strategy Text & Cases Plus My Strategy Lab and The Strategy Experience Simulation, Prentice Hall, New Jersey. Kasmira, J 2014,Ted Baker sales rise as overseas growth pays off, City A.M, London. Kipphoff, J 2003, Ted Baker on track for global aspirations, Financial Times, London. Moussetis, R 2011, Ansoff revisited, Journal of Management History, Vol. 17, no. 1, pp. 102- 225. O’Doherty, J 2007, Ted Baker lifted by global advance, Financial Times, London. Richard, L 2012, Strategic Management, Prentice Hall, New Jersey. Stacey, R 2011, Strategic Management and Organisational Dynamics: The challenge of complexity to ways of thinking about organisations (6th Edition), Prentice Hall, New Jersey. Thompson, J 2012, Tough stance: Ted Baker's strong performance, Tribune Business News, Washington. Urry, M 2009, Small and friendly and guarded by a big red lobster: The Ted Baker fashion house keeps tight control of its brand, Financial Times, London. Read More