Challenges Warby Parker Facing - Case Study Example

What are the marketing challenges facing Warby Parker in the future and what advice would you give the company on how to face them? Warby Parker is a US based eyeglass manufacturing and marketing company, founded in the year 2010, by David Gilboa, Neil Blumenthal, Andrew Hunt and Jeffrey Raider. In a short span of time, the company has already achieved appreciation from customers regarding the quality and affordability of the products. Even so, like any other firm, Warby Parker is also facing certain business challenges. The key marketing challenges faced by the firm are inability to tap new customers and failure to forecast the future. In order to overcome these problems, the company has been strongly recommended to use various communication tools (integrated marketing communication), periodic market research, and consumer survey and modify existing policies. It is hoped that application of the aforementioned strategies will help the company to become more efficient and ensure sustainability. Table of Contents Table of Contents 3 Introduction 4 Warby Parker: A Brief Overview 4 Eye Wear Industry Facts 5 Discussion 5 Challenges 6 Reaching New Customers: A Key Challenge for Warby Parker 6 Analysis of the Existing Strategies 8 Recommendations 9 Conclusion 12 Reference List 13 Introduction This study seeks to investigate the eyewear industry of US, with the focus on Warby Parker. The aim will be to identify challenges that are faced by the firm in the current context and also, to evaluate magnitude of the challenges. The issue to be identified is related with the market efforts of the firm. On the basis of the findings of the analysis, this study will recommend the most appropriate solutions. So, before proceeding further into the study, a brief overview of the company as well as a brief description of the industry, in which it operates, will be provided. This will help the reader in understanding the scenario in a better manner. Warby Parker: A Brief Overview Warby Parker is a US based sunglass and eyeglass manufacturing and marketing company and had been founded in the year 2010 by David Gilboa, Andrew Hunt, Neil Blumenthal and Jeffrey Raider. The company basically markets its products through online stores and has only few showrooms in the US. Some of the key variants of the company are "Beckett" glasses, "Downing" glasses, and "Fillmore" glasses (warbyparker, 2014). Apart from that, the company also sells prescription lenses. The USP (Unique Selling Proposition) of the company lies in designs of the frame. Majority of the players operating in this industry have their own styles and contemporary framing, but Warby Parker believes in rejuvenating the essence of tradition. The glass frames of the company are inspired from traditional frameworks and reflect vintage style. In the opening year, the total sales volume was 20,000 eye glasses; whereas, this figure reached 100,000 in the year 2012 thereby reflecting a steady growth. Furthermore, reports have suggested that in the year 2013, the sales volume had touched 125,000 pieces. This strategy has significantly paid off for the company, but as far as business expansion is concerned, the requirement of a physical store for increased visibility is of paramount importance. Eye Wear Industry Facts The eyewear industry in US is booming and data have shown that it is a multi-billion dollar market. The industry is dominated by two of the most renowned players, namely Essilor International SA (EI) and Luxottica Group SpA (LUX). Initially, the online penetration level was low, but with passage of time, online penetration level has been seen to grow constantly (Shapiro, 2002, p.66; Ranchhod, 2007, p.15). While the navigation for online space was on; in the year 2009, Luxottica Group SpA (LUX) entered into a treaty with world’s largest online retailer of optical products, Vision Direct. Soon after that, in the year 2010, after launch of Warby Parker, Essilor International SA (EI), another major player of the industry, had acquired most of its stake, which used to operate with FramesDirect.com. Luxottica Group SpA (LUX) was the market leader with a whooping share of 29.9% and was the second largest company, in terms of wholesaling. The presence of several other local players makes the industry more competitive (Paley, 2002, p.17). Hence, it is obvious from the above facts and figures that in order to compete in this industry, a start-up firm has to put in strong efforts in creating a position for itself. In the next section, the study would discuss about Warby Parker so as to evaluate the challenges being faced by the firm currently. Discussion The company has completed four years of business with significant growth rate and has been able to manage good reputation in the market place. Within a short span of time, Warby Parker has been able to double the workforce and success of the company can be attributed to innovation. The industry is primarily driven by innovation and the culture of the company has been developed in such a manner that it supports the desired culture. Warby Parker has adopted a business model, which is highly stakeholder-centric. The mission to combine the social and business goals was to a large extent fulfilled by this activity. The customers were also benefitted by this approach as they are endowed with fashionable, quality, trendy and affordable eyewear. Apart from that, the company has taken several steps in order to ensure greater level of awareness. Some of the initiatives are donating to the global community via sustainable channels (“one pair of glasses per every pair sold”); inspiring employee by promoting a fun culture; and preserving the environment by reducing carbon footprint (Paul, 2008, p.15-21). Challenges The case has made it evident that the company, after completion of the third year of operation, is being faced with numerous challenges. Analyzing the present scenario, it has been observed that the issues still persist and need to be rectified for a better future. Some of the major challenges being experienced by the firm are managing the culture of the company, lack of investors, reaching new customers and inability to forecast the future. The problems or challenges identified above are mostly generalized business problems and appears in various domains of business management. However, the aim of this project is to identify and evaluate the marketing challenges that are faced by Warby Parker. In-depth analysis has shown that the major marketing problem for the company is failure to reach new customers as well as to forecast future trends (Lewis, 2011,p.13). Hence, special attention needs to be given in these two aspects. These are the major problems faced by Warby Parker in the field of marketing. Thus, recommendations to the company will be provided on the same basis. Prior to recognizing the issues faced by the company, it is essential to discuss the issue in detail for the purpose of gaining a clear understanding and the same is carried out in the next section. The major issue identified is reaching new customers and the same is discussed below in details. Reaching New Customers: A Key Challenge for Warby Parker This is one of the major issues for the firm. Although the current intensity of this problem is not the same as it was in the start-up days, yet it continues to remain a major growth obstacle for the firm. A survey carried out suggested that most of the website visitors have become aware of this company through a family member, colleague or a friend (Agarwal, Erramilli and Dev, 2003). In addition to that, online blogs and print media are two other sources of information. Even so, due to lack of integrated marketing communication, the company has been failing to tap new customers. Studies carried out by eminent scholars have shown that targeting new segment of customers is a challenge for many organizations (Love and Bullen, 2009). As the market continues to grow, the need of targeting new customers becomes important for the company to ensure long term sustainability (Afuah, 1998, p.14-16). Catering to a new customer base is not only essential for a new company but is equally important for the companies doing business since many years. For example, renowned companies such as Vodafone, Apple, Starbucks, Wal-Mart continuously seeks attainment of new customer base for the purpose of continuing the growth process. This is because a company failing to tap new customer segment would slowly lose its market presence and will eventually collapse (Christensen and Raynor, 2003, p.36-48). Some of the other advantages of attaining new customers are that a company gets new revenue stream and can widen their business. The word-of-mouth promotion comes into play and it provides great results. As a result of that companies actively new customer base. Ironically, industry experts have highlighted that the cost, a company needs to incur for the purpose of attaining a new customer is more than the cost required to cater to an existing customer. Thus, an existing customer offers more value to a firm. However, Christensen and Raynor (2003) emphasized that although it is true that putting extra efforts in servicing an existing customer is a wise decision but for the long run and growth of the firm attainment of new customers is extremely important (p.14). Echoing the same Aswathappa (2010) articulates that a company should always try to tap new customers as this will mitigate the risks and lowers the intensity of the impact on the company due to customer switching (p.281). In the context of Warby Parker, the company is not able to target new customers due to lack of physical presence. The company only uses few promotional channels and that is one of the major causes for their failure to target new customers. The company is also failing to tap new segments of customers and lack of proper communication can be one of the core reasons here. On the other hand, the established players of the industry already have established physical outlets and penetrating the online market. This offers them with greater scope and opportunity. Nowadays, customers are behind the products that reflects innovation and uniqueness. In the similar way, eyewear industry is driven by innovation and hence Warby Parker needs bring innovation for remaining consistent with the requirements. The company used to have a tradition that supported creativity and innovation, but with the course of time, culture of the company had been slowly changing and is becoming difficult to manage by the authorities. Warby Parker is also unable to forecast the future to a certain extent. In this rapidly competitive environment, companies across the globe are seeking ways to mitigate the future risks (Pavitt, 2005, p.3). As a result of that, various preventive measures are undertaken by the firms. Proper forecasting of the future will help the company to devise the most relevant strategies, which can in turn aid them in the process of growth and development. Most importantly, a company succeeding in forecasting the future will be able to get deeper insights into the customer trends and thus can devise strategies that allow them to tap new bases of customers. Dalal (2007) has stated that most companies’ success depends upon their ability to tap new customers in a cost effective way (p.17). Echoing the same, Dlabay and Scott (2010) have stated that predicting the market allows a company to understand and prefigure the possible requirement of resources required to target new segments (p.11-14). Besides that, forecasting also makes the company aware of the possible changes that they might need in the future. Hence, forecasting is definitely a key requirement of the companies when intending to tap new customers. Hence, from the above discussion, it is evident that the company is facing the challenge of failing to tap new customers. Hence, before recommending any solution to the company, the current strategies of the company needs to be evaluated and on the basis of the identified gaps suitable strategies will be recommended. Analysis of the Existing Strategies The analysis of the case has shown that Warby Parker is facing various challenges related to marketing. For example, their problems lies in the inability of the firm to forecast the future, lack of integrated marketing communication and failure to tap new customer segment. Although it seems that the problems discussed are from different domains, but, in reality, rectification or modification of the strategies at the root level would obviously allow the company to get rid of all challenges. A brief description of the existing strategies of the firm will be presented in this segment as it will help in evaluating and contrasting the current market trends with activities undertaken by the firm. The four pillars of the company are aesthetics (Warby Parker is a fashion brand); price (the company aims to offer products at an affordable price); social mission (the company would be donating one pair of glass to underprivileged population of the society for every pair sold from the retail outlets); and customer experience (the company desires to offer free shipping, free returns and other customer-friendly policies) (Berger, 2011, p.70). The company functions on grounds of these four underlying principles. Since the company is involved in online retailing, their main aim was to develop the online marketing communication. Thus, in order to facilitate and boost online sales, Warby Parker had taken various innovative alternatives. One of the major issues or challenges for the firm, in this context, was that most of the customers were unfamiliar with online buying of eyewear. Even so, in order to surmount these issues, customer-centric policies were developed. The aim was to generate a sense of trust among consumers and increase their loyalty towards the company. In addition, the company was aware that if they succeeded to satisfy potential customers, it will result in repeat purchase and the same can even become a word-of-mouth promoter for the company (Berger, 2011). Hence, significance of customer satisfaction was paramount. Some of the customer-friendly policies devised by the firm are 30 day free shipping, free return policy, trailing option (home try-on), free or add on products as well as easy payment options, to name a few (p.6). Recommendations The study has identified the problems in the form of failure to tape new customer segments, which is often dubbed as one of the key requirements of the company and now recommendations will be provided, in order to enable the company to get rid of this problem. The analysis has shown various gaps from the part of the company and the same has been identified after the in-depth analysis of existing strategies of the firm. It can be also affirmed that the inability of the company to tap new customers is due to the gap of required practise and current practise of the company. Hence, on the basis of that following are the recommendations: - Market Forecasting and Using integrated marketing Communication: - The Company is strongly recommended to make use of various marketing communication tools. The application of such tools will allow the firm to channelize organizational messages in a better manner (Agarwal, Erramilli and Dev, 2003; Anderson, Grude and Haug, 2009, p.1-2). Apart from that, the company will be able convey their messages to each of the intended customer groups. For example, the old generation can be targeted by using traditional promotional techniques, such as, television advertisement or newspapers; whereas, social media can be used to target the newer generations (Baker and Sinkula, 2002). Hence, the company will be able to maintain comprehensiveness in the promotional aspect. Forecasting will be easy if they carry out periodic market survey (Bryman, 2008, p.3). With proper forecasting, Warby Parker will be able to predict future market trends. Another necessity of forecasting, as highlighted by Somekh and Lewin (2004, p.113), is that a company would be able to get deeper insights into the market and can even predict the possible market size, which will help them to manage the inventory and production of the eyewear (Coombs and Hull, 1998, p.65). Thus, Warby Parker is strongly urged to carry out periodic market research activities as this will allow them to remain aware of the market trends as well as assist them in the process of market forecasting (Balmer and Gray, 2003). In this intensely competitive environment, a company needs to have an edge over the rivals, so as to function efficiently and ensure a longer presence in the market (Blaxter, Hughes and Tight, 2006, p.14). In the dynamic and complex context, the notion of Integrated Marketing Communications (IMC) has been quite useful for catering to each segment of customers (Brown and Eisenhard, 1995). According to Larson and Gray (2006), integrated marketing communication is the application of all available disciplines of communication, so that the combination results into comprehensive outcome (p.55). According to Hage (1999) a company involved in online business should ensure that it has a physical presence as well and this can be achieved only with application of proper marketing strategies (Forrester, 2000). In the context of Warby Parker, the company principally operates through online stores and as a result of that, awareness among the people about existence of the firm in the marketplace is significantly low. Corporate communication and marketing are probably the two key elements, which allow organizations to remain connected with their target audience. Nonetheless, at the same time, it is also necessary, on part of the company, to properly identify the channel of communication for getting the desired results. A greater variety of promotional and communication tools, coupled with contemporary array of on and off line media and channels, can be effectively useful in targeting and conveying messages of the company to a wider segment of customers. Traditionally, the theory of marketing and communication has distinguished communication tools in the form of below the line and above the line techniques. Above the line relates to conventional or mass media; whereas, below the line communication refers to non-conventional forms of communication (Mumford, 2011, p.16). Considering the present scenario, the concept of ‘line’ mentioned above is highly irrelevant and its practice can lead the company towards uncoordinated implementation. This in turn can lead to contradictory communications. However, according to Smith and Munn (2006), unavailability of strategic appreciation of marketing communication is noticeable among companies in this industry and can act as a key obstacle towards achievement of the desired synergies (p.6). This will help to leverage their relations with stakeholders, in the context of financial performance and brand equity (Slater and Narver, 1995, p.8). Therefore, integrated marketing communication will allow the firm to target new customer. It is hoped that proper communication and marketing coupled with periodic market researcher activities for better forecasting will allow the company to target a wider customer base. Regarding the time frame, the company can initiate and implement the process in the following manner. (Author’s Creation) Conclusion The aim of this study was to study the marketing challenges that are faced by Warby Parker. In order to identify these, the study has mainly considered secondary sources of data. The comprehensive analysis of the case and secondary data has shown that key marketing challenges, being faced by the firm, are inability to tap new customers and failure to forecast the future. In order to overcome these issues, the company has been strongly recommended to use various communication tools (integrated marketing communication), periodic market research, and consumer survey as well as to modify the existing policies. Reference List Afuah, A., 1998. Innovation management: strategies, implementation & profits. Oxford: Oxford University Press. Agarwal, S., Erramilli, M. K. and Dev, C., 2003. Market orientation and performance in service firms: role of innovation. Journal of Services Marketing, 17, pp. 68-82. Anderson, E. S., Grude, K. V., and Haug, T., 2009. Goal Directed Project Management: Effective Techniques and Strategies. 4th ed. London: Kogan Page Publishers. Aswathappa, K., 2010. International Business. 4th ed. New Delhi: Tata McGraw-Hill Education. Baker, W. E. and Sinkula, J. M., 2002. Market orientation, learning orientation and product innovation: delving into the organization’s black box. Journal of Market-focused Management, 5 (1), pp. 5-23. Balmer, J.M.T. and Gray, E.R., 2003. Corporate brands: what are they? What of them? European Journal of Marketing, 37(8), pp. 972–97. Berger, A., 2011. Global Corporate Strategy - Honda Case Study. Munich: GRIN Verlag. Blaxter, L., Hughes, C. and Tight, M., 2006. How to Research. 3rd ed. New York: McGraw-Hill International. Brown, S. L. and Eisenhard, K. M., 1995. Product development: past research, present findings, and future directions. Academy of Management Review, 20 (2), pp. 343-378. Bryman, A., 2008. Social Research Methods. 3rd ed. Oxford: Oxford University Press. Christensen, C. M. and Raynor, M. E., 2003. The Innovators Solution. Harvard: Harvard Business Press. Coombs, R. and Hull, R., 1998. Knowledge management practices and path-dependency in innovation. Research Policy, 27 (3), pp. 237-253. Dalal, S., 2007. Creativity & Innovation in Business. New Delhi: Creativity Innovation eBook. Dlabay, L. R. and Scott, J. C., 2010. International Business. 4th ed. Connecticut: Cengage Learning. Forrester, R. H., 2000. Capturing learning & applying knowledge: an investigation of the use of innovation teams in Japanese & American automotive firms. Journal of Business Research, 47 (1), pp. 35-45. Hage, J., 1999. Organizational innovation & organizational change. Annual Review of Sociology, 25, pp. 597-622. Larson, E. W. and Gray, C. F., 2006. Project Management: The Managerial Process. 3rd ed. New York: McGraw-Hill Education. Lewis, L. K., 2011. Organizational Change: Creating Change through Strategic Communication. New Jersey: John Wiley & Sons. Love, P. and Bullen, A., 2009. Toward the sustainable adaptation of existing facilities. Facilities, 27 9/10, 357-67. Mumford, M., 2011. H&book of Organizational Creativity. Waltham: Academic Press. Paley, N., 2002. Marketing for the Nonmarketing Executive: An Integrated Resource Management Guide for the 21st Century. Florida: CRC Press. Paul, J., 2008. International Business. 4th ed. New Delhi: PHI Learning Pvt. Ltd Pavitt, K., 2005. The Oxford Handbook of Innovation. Oxford: Oxford University Press. Ranchhod, A., 2007. Marketing strategies: A contemporary approach. 2nd ed. Harlow: FT Prentice Hall. Shapiro, S. M., 2002. 24/7 innovation: A blueprint for surviving & thriving in an age of change. New York: McGraw Hill. Slater, S. F. and Narver, J. C., 1995. Market orientation and the learning organization. Journal of Marketing, 59 (3), pp. 63-74. Smith, C., and Munn, G., 2006. How to maintain a competitive edge. PPI, 42(12), pp. 19-28. Somekh, B. and Lewin, C., 2004. Research methods in the social sciences. California: SAGE. Warbyparker, 2014. A new concept in eyewear. [online] Available at: < http://www.warbyparker.com/our-story> [Accessed 26 February 2014. Read More