Variety of Marketing Strategies - Case Study Example

Table of Contents Executive Summary 2 introduction 3 PART A: Marketing Strategy 3 Brief of Women’s Secret, Baby Phat and SM Shoemart 4 The marketing strategies 4 Points of comparison 5 1.Ease in doing business 5 2.Services, quality and convenience 5 Describing competitive advantage of each company 7 Future of these stores 9 PART B: Microfinancing 10 Definition of Microfinance 10 History of Microfinancing 10 Types of business 11 The key micro-lenders in the world 12 Expectations of borrowers from the microcredit organizations 12 Does this type of financing helps these businesses in the long run? 13 PART C: Investing in UAE Start-Ups 14 Conclusion 17 references and Bibliography 19 MEED. “Dubai makes the UK”s top ten markets. Middle East business Opportunity. 02 March 2006. [on line] 02 March 2006. 20 May 2009 20 Executive Summary Entrepreneurship in this study is analyzed in three different scenarios; the entrepreneurs in retail sales, entrepreneurs using microcredit financing and entrepreneurs in foreign investments. First part deals on marketing strategies of three types of stores, one is a big department store, and two are smaller ones. This study analyzed how these stores applied marketing strategies to reach and sell to customers. Two small stores are concentrated on specialty items, sells at fashion houses and boutiques at the mall aside from using internet to reach worldwide market, while one uses its bigness to attract a large number of walk in customers. Second part discusses the impact of microfinancing to the entrepreneurs of the poor sector. The history of microfinance has been covered. It also showed expected outcome of the borrowers, lenders and the government in the project. The study answered the question of whether micro-finance loans can lift up the poverty of the poor. Part 3 is a study on foreign direct investments in the United Arab Emirates (UAE). Study showed there are opportunities opened for entrepreneurship in Dubai and Abu Dhabi. Abu Dhabi and Dubai are the most progressive emirates in UAE and has an amazing consumer purchasing power that can support foreign investment. The study also touches the foreign investors, expected outcome of investment and business environment as well as barriers to entry. introduction Entrepreneurship is a kind of business structure that is involved in a buying and selling process of commodities and services at a certain profit. Later on economists expanded this definition to include the process of bringing together the factors of production. Entrepreneurship therefore is a business segment that stimulates economic growth and employment. In the developing world, which is a part of this paper, entrepreneurship is one way of income growth and poverty reduction. In order to pursue this, necessary support from the government and private sources is the essential strategy for economic development. Entrepreneurship is based on innovation. It may be about a new product, market strategy change, or technological changes. This business set up is usually established by an entrepreneur. An entrepreneur is someone who sees a market opportunity and has the motivation, drive and ability to use resources in meeting them. An entrepreneur must be skilled, innovative, risk taker, confident and results oriented. He assumes all the responsibilities in the management of the business. PART A: Marketing Strategy Marketing strategies are used differently by stores, particularly the small and big ones. This portion of the study looks at the marketing strategies of Shoe Mart, a big department store and two smaller stores, the Baby Phat and Women’s Secret. The marketing strategies being used by these three stores are explained in the subsequent discussions. Brief description of Women’s Secret, Baby Phat and SM Shoemart Women’s Secret is a leading Spanish brand name of lingerie, swimwear and underwear and casual wear for women. The company has been established in 1993. Women’s Secret always comes up with new design, concept and innovative styles. Baby Phat is a baby idea of Kim Somora Jones, a noted fashion model. She put up this company in 1993 and decided to fill up the gap of high end and hip hop style of fashion market of women. Kim Somora uses high fashion elegance in the design of her clothes wear and has placed a premium cost on her product wears (Sojones). SM Shoemart is a big department store specializing on retail sales. Its advertising campaign is “We have it all for you”. This is true, since everything that you could think of falls into one large roof. SM Shoemart is the largest department store in the Philippines and the biggest retail dealer. It has a chain of department stores all over the country. The marketing strategies Marketing strategy is defined as the “set of specific ideas and actions that outline and guide decisions on the best or chosen way to create, distribute, promote, and price a product or service” (Dolack, Dave). The three stores covered by the study have their own marketing strategies. Shoe Mart uses walk in shoppers’ strategy. Shoe Mart has strategically established chain of department stores and uses this approach in all of their stores. Baby Phat is a specialty store designed for women that sells products at Macys, Marshalls and from its own boutiques in the malls. It also uses online system ordering. Like Baby Phat, Women’s Secret sells specially designed clothing products through online system, and from its fashion houses found in 40 countries worldwide. Apart from the above strategies, their specialty is further enhanced by a brand strategy for their products and line of women’s wear. A Brand name and recall sets them apart from competitors. Contrary, SM Shoemart brand is not made for a particular brand but a name for the department store. Points of comparison 1. Ease in doing business Shopping around the spacious department store like Shoe Mart is an easy way to do business. Everything is available, and arrangement is classified into sections. There is variety of items to choose from. It is easier to do business with Baby Phat and Women’s Secret because of its specialty item which are concentrated on their own brands. The products are focused and will not require a lot of time for shopping. 2. Services, quality and convenience A fair rating guideline has been established in handling comparison according to GOOD, BETTER AND BEST category of service, quality and convenience from among the 3 stores. Services: SM uses customized service. There is one or two designated sales person for every area. Customers are free to choose on items, and then call the sales person for help in ordering. They serve only when called. I consider service only as good because of waiting time due to number of customers a sales person is attending to. Baby Phat and Women’s Secret stores are only small stores located in big malls. I rate their service as better because sales people are readily available to help customers on their need for the products. They also offer suggestions for other items offered in the store. Quality of service: Baby Phat’s and Women’s Secret’s quality of service are better than SM because it gives more personalized attention to customers. SM Shoemart is only rated good because of distracted attention to customers. Convenience: For convenience, SM is best as everything is available, sectionalized and arranged. Women’s Secret and Baby Phat are rated only as good because of limited store space that tends to cram all their items and displays. 3. Helpfulness and friendliness of salespeople SM Shoemart. Rating for SM is only good because they are helpful but not friendly. Salespersons are helpful, in the sense that they attend to customers order at once. They need to be helpful as it is one of their sales duties to attend to customers needs fast. Baby Phat and Women’s Store. Small stores are more friendly and helpful owing to the size of their stores. They offer suggestions and keep to your side to wait on customers needs. I find male sales persons attending to personal underwear of women In Women’s Secret Dubai store rather embarrassing. Dubai, in spite of having modern environment still holds on to the conservative culture. 4. Were transactions handled professionally and courteously? SM Shoemart. Courteousness in Shoe Mart seems only to be superficial, as they recite their “Thank you, Sir/Mam, Please come back again, or good morning sir/mam” words of greeting. I could not rate it is as professionalism as it is part of their training, and every sales person welcomes you that way. Women’s Secret. Transactions are handled professionally as fitting, style and appropriateness of the clothes to the customer is tried. Sales persons are trained to check whether the design would look good when customer tries it on. It is a signature fashion design and should bear professionalism of the store. Baby Phat. Courteousness is more present in Baby Phat’s sales people as customers fit sizes of their products. They do not laugh on the imperfections of the body such as bulges and fats and they have been trained on this aspect. 5. Rating the business appearance of the stores. SM Shoe Mart’s business appearance rating is best, Women’s Secret is better and Baby Phat is good. Best for SM because of its sectionalized arrangement, theme appearance, decorations and cleanliness. Better for Women’s Secret because of its fashion appeal to women, especially for those with an eye for beauty and style. It feels magical that when you are in store, you would also feel pretty and wants to be fashionable. Best for Baby Phat because their products displays looked crammed up since it has limited store space. Describing competitive advantage of each company Competitive advantage has been defined as “an advantage over competitors gained by offering costumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices” (tutor2u,). The three stores have their own competitive advantages. These advantages have been classified by Michael Porters as the four strategies of business activities. He divided these activities as “narrow against broad and the extent to which a business seeks to differentiate its products.” (tutor2u). The chart below describes Porters four “generic” business strategies. Source: tutor2u We have two categories of stores, the big and small. In the chart above, the competitive advantage of SM is that it is focused on a broader range of market and industry segments. As a department store, it can carry much range of products that can attract all types of customers. It has an advantage in cost leadership because as a big department store, it can avail of big discounts from mass purchases. As such SM has an advantage of buying at lower prices that can add up to its profit. The competitive advantage of Baby Phat is that it is focused on a narrow scope of business and differentiates its product on cost. Baby Phat attaches a premium price for its product and establishes a high end position in the marked. Baby Phat is high end fashion clothing exclusively designed by a well known fashion designer. The designer and fashion model has an established name in the industry and her fashion designs can command a high price (Sojones). Baby Phat has a narrow market differentiated by a high taste for fashion clothing of customers and high cost does not matter. In the same thing, Women’s Secret has focused on the narrow scope of women’s market. It has a narrow market designed to attract the female costumers. It is highly differentiated as their products consist of lingerie, swim suits and under wears. It has created a position in the market, so that if you say lingerie, it must be one of those Women’s Secrets. Both Baby Phat and Women’s Secret have a competitive advantage over SM because of its on line service order system that can reach across border countries. The fast IT technology and transport system has mobilized this approach of ordering system that many customers find on line ordering more convenient than going to department stores. Future of these stores Each business has a future scenario. In the clothing industry where Baby Phat and Women’s Secret belong, the information revolution will bring them closer to the world. The fast information technology will play an important role in the exchanges of ideas and ordering system with their supply chain. Both companies should look on the future of online ordering and should put emphasis on the network of transport and delivery system. Their kind of business is unpredictable and is subject to competition and the ever changing taste of their customers. For this reason, they should look on the future by giving real value service in order to survive the hard competition of the industry. For department stores, Wal-Mart is still the number one department stores in the world. SM Shoemart Department store is not included in the financial listing of Yahoo Finance as leaders in the retail sales (Yahoo Finance). However, it is a leader of the retail industry in the Philippines. Its scope of sale is limited only in the Philippine area (ShopNZip). At this point and in the near future, it will remain to be a leader in the industry. PART B: Microfinancing Definition of Microfinance Microfinance loans are very small loans given to poor people to help them become self employed or to start their own business. It is described as a type of banking service provided to the low income individuals or groups or those unemployed who have no other sources of financial services (Answer.com). History of Microfinancing There are some issues as to the exact date of the start of microcredit financing. The study prepared by Microfinance.com. said that in mid 1800s two organizations were already concerned about getting people out of poverty. In 1864 the Village Bank in Germany founded by Fredrich Wilhelm Raifeisen had reached 2 million rural farmers by the year 1901. It had also proven two things that financial services can be extended to poor people, and the poor people have the pay back morality. During the period 1900 to 1906, Microfinance.com said that there is another organization in Quebec who was also concerned about poverty. The Cause Populaire movement founded by Alphone and Dorimene Desjardins risked their private assets because they were very sure about the lending concept. According to this report, it was only after the World War II that the concept had created a big impact. There is no further follow up on what happened to this afterwards. Microfinance today is linked to the success of microcredit lending in Bangladesh which was started by Professor Yumus in 1976. According to Investopedia, Professor Yumus, an Economics Professor, loaned a group of women $27 to finance their own small business. Record said that this group of women was able to pay back their loans and at the same time maintain the business. This lending started the microfinance in Bangladesh which came to be known as the Grameen Bank (Answers.com). Types of business Microfinance business provides small business capitals to entrepreneurs, self employed borrowers and to use these loans to expand their business. The Grameen Bank gave priority for women borrowers because of proven success of repayments of loan. According to Kiva report, micro loans are accessed through women, they are made responsible for repayment, maintaining a savings account and providing an insurance coverage, in order to make a strong household and a community (Kiv.org). Picture at left is a microcredit borrower of Kiva. org. She is one of those beneficiaries of the loan program. In the report of KIVA, because of the loan program, their status in life has improved. They became more assertive and confident. In regions where women’s mobility is restricted, they become better negotiators in public area and more noticeable. Not all microfinance businesses lend money. There are institutions who lend materials to poor people to be used in business. Non government organizations and charitable institutions extend this kind of assistance but it is very limited. For example, Microfilm.com said wool instead of money, is spun into yarn and made into clothing (VAOPS). The key micro-lenders in the world In 2002, Grameen Bank maintains its position of being the strongest financial institution in microfinance lending (BBC News). According to the World Bank, there are 7,000 microfinance institutions all over the world that have extended assistance to more than 16 million poor borrowers. The importance of microcredit assistance is enhanced by the Economic and social Council of the United Nations. The year 2005 was declared International year of Microcredit, and a call for financial institutions to respond to the need to “fuel the strong entrepreneurial spirit of the poor people around the world.” I found an interesting website of a different kind of micro lending; The Kiva lending to the working poor. It has a mission to connect people through lending to improve poverty. Kiva is the first micro lending that uses website to connect lenders and borrowers and empowers lenders to choose unique entrepreneurs around the globe. The entrepreneur’s profiles are posted in the Kiva website and lenders select someone to lend to. Loan periods are from 6 to 12 months, and lenders receive e-mails to track payments. Then, when lenders get back their money, they can again lend to someone who is in need. The usual amount of loans extended by lenders is $25 for each borrower. Kiva has extended loans to the poor entrepreneurs in Asia, South America and Africa. So far, according to their statistics, there is no default in repayment of loans (Kiva). Expectations of borrowers from the microcredit organizations The microcredit lenders extend loans to the poor sector of business owners. Most of these owners have no idea of the concept of microcredit lending and how will it work for them. Some business owners lack proper education for business. A microcredit lender serves a given area in the community or a particular group Lenders provide “business training, mentoring, peer exchanges, networking opportunities, advices and technical support” (VOAP). Usually, a micro-credit lender serves a particular geographic area or community, or a particular group. The loans are under $25,000 and for entrepreneurs who have not been able to secure financing through traditional lenders. The purpose of these loans is to finance very small businesses either to finance working capital or to buy assets for your organization. These loans can come with technical support such as business training, mentoring, peer exchanges and/or networking opportunities in conjunction with their loans. Does this type of financing helps these businesses in the long run? The amount of loan under this program is small and would amount to a few thousand dollars. This amount, to me, is not sufficient to lift out a person from poverty; but it provides an opportunity for the less fortunate to help themselves. They will not be lifted from absolute poverty but it will be a start of financial independence. I believe it will help business in the long run. The stories of success of recipients of microfinance loans from KIVA.org, a non-government organization (NGO) microfinance institution attested that their lives have improved. Loans starting from $25 from KIVA were used to put up a bakery, expand stores, used for farming, and many others. KIVA has a website where lenders could post the amount they would contribute or lend to members of KIVA (Kiva.org) Kiva- loans that change lives. I also think that the success of any attempt along this concept will depend on he borrower himself. It will take a big amount of discipline, commitment and inspiration to succeed. A lot of help from microcredit lenders are available and success will depend on the borrower’s end. PART C: Investing in UAE Start-Ups Background  Reports confirmed that UAE has become the leader of attracting foreign investments. It has attracted $12 billion worth of investments in 2005, a growth of more than 40% from 2004. (Mena) The attention of foreign investment to UAE is due to economic liberalization policies imposed by the UAE government. Owing to this economic development, some foreign countries are encouraged to invest in Dubai and Abu Dhabi, two progressive emirates of UAE. This includes foreign countries like United States, Japan, Germany and U.K. Government officials from the Department of Economic Planning Development of Abu Dhabi and Dubai said that they receive visits from global investors weekly who showed great interest for investing. For the first four months of 2008, the emirates have received 1,179 businessmen as compared to 704 of 2007. It said they have also received more business delegations of “sincere investors” and trade officials during this year. DED said that more investors are encouraged to come to their country because of the falling cost, particularly on the real estate sector. Moreover, DED has plans to improve their competitiveness by reducing the cost of doing business and cost of living in the country. It has also adopted a zero tax policy to attract more investors. The foreign investors Among the companies that have showed interest in investment to UAE the following have already established their businesses in this country. There are about 500 German companies operating in the UAE, and 150 of these are in Abu Dhabi, 250 are in Dubai and the rest are in the Northern Emirates. (DAAD Information Centre. 2007) The Dept. of Trade and Industry of UK confirms Dubai as its 10th largest export market in 2004. UK exports to Dubai in 2005, according to this report, increased by 134% with a total value of £4.76 billion. Total exports to UAE in 2005 rose to 106 percent. On the other hand, the two way trade between UK and UAE also increased to £6.99 billion in 2005 from £3.8 billion in 2004. (MEED, 2006) Japan, according to Goliath Knowledge (2006) has over 100 companies in Jebel Ali Free Zone authority Other foreign companies operating in this zone inclues Samsung (ROK), Pioneer (Japan), Geneal Motors, IBM, Mobil and Toys “R” us (US), and Ericsson (Sweden). (Encyclopedia of the Nations) Projected Outcome The business activities available for foreign investment in Dubai are from various business sectors. It includes trade; transport and distribution; manufacturing and processing and setting up of regional offices. .The Dubai market The attractiveness of Dubai investment owes it to several factors discussed in Dubai Means Business Report. According to this report, the most important aspect considered by foreign investors is the significant characteristics of the market. It is a large market, growing, prosperous, and diversified accessible market. Other things pointed out in this report say Dubai domestic importation reaches $17 billion annually. It is also the entry for regional market importation accounting to more than $150 million annually for the 1.4 billion population of the emirate. It is a growing market since their importations have doubled since 1989. The liberalization policy of the government expects to attract more investors that would further increase the importations. The Business Environment Dubai, due to its vast resources, has the ability to offer the highest international standards of infrastructure and services, efficiency, quality and services. Some of the benefits of their system include: Free enterprise system. Highly developed transport infrastructure. State-of-the-art telecommunications Sophisticated financial and services sector. Top international exhibition and conference venue High quality office and residential accommodation. Reliable power, utilities etc. First class hotels, hospitals, schools, shops etc. Cosmopolitan lifestyle Source: Dubai means business. http://www.dubaibusinessminds.com/artman/publish/article_26.shtml Aside from infrastructure, cost advantages not available in the international market are offered to overseas companies setting up in Dubai. These include no corporate taxes, no income taxes, no foreign exchange controls and no trade barriers. It has established competitive import duties, labor costs, energy costs and real estate costs. Obstacles to foreign investment All UAE emirates are raring to have foreign investments. However there are certain government policies that set the barrier for investments. The Dubai business Director, cited the federal requirement that says foreign investments “must be on a joint venture basis with the local partner owning at least 51% of the venture”. This requirement exempts those companies located in the free trade zones. Another thing that tends to slow down investment is the high cost of realty property and high cost of standard of living Conclusion The marketing strategies of big and small companies in this study cannot be compared with each other. The three companies have used three different approaches and each strategy provides a competitive advantage over the other. For instance, differentiation of market is well defined for the three stores. SM intends to reach customers in all walks of life; Baby Phat focuses on high end fashionable people, while Women’s Secret is designed to women’s every day wear. The online system of ordering is a competitive advantage over SM as Baby Phat and Women’s Secret can reach customers across the border because of fast IT technology. However, it has some inconveniences on customers. In order to survive stiff competition of the industry, they should think of providing more value service to customers, adapt to the ever changing customers changing behavior patterns and to recognize the importance of the information technology. The emergence of microcredit finance for entrepreneurs of the poor sector can improve their financial dependence because of small income from their business. But this will not lift them from poverty. Microcredit has supported million people who started business in many parts of the world. However, there is lack of sufficient data to assert the impact of credit utilization to lives of entrepreneurs. In some instances, there is doubt whether microcredit lenders are charitable institutions or are they just like any banking institutions that just reduce their rate of interest to attract more borrowers. In UAE, foreign direct investments have contributed to the progress of its economy. Giant nations have invested in several industry sectors of Abu Dhabi, Dubai and the other emirates. UAE has benefited from bilateral agreements from these countries and have doubled exports and imports. The investment packages not available in other international market have attracted foreign investors to UAE. However, certain economic policies of the government must be restructured particularly the business ownership provisions outside of the economic zones. Entrepreneurship has been covered in three aspects of the study. I have presented differences of strategies of small and big companies. Second, the entrepreneurship of poor sector as they respond to credit. Third, entrepreneurship under a foreign investment package. In all the examples cited, setting up of goals, establishing appropriate marketing strategies and financing are the specific tools to guarantee successful outcome of any endeavor. references and Bibliography Answers.com ‘Micro credit’. [on line] n.d. 15 May 2009. BBC News. “Grameen Bank in strongest position ever” [on line] 12 March 2002. 15 May 2009.\ DAAD. “About Abu Dhabi gemany relationship”. IC Gulf Region in Abu dhabi. [on line] 08 Jun 2006. 20 May 2009 Dolack, Dave. “Marketing, an Introduction” [on line] 2007. 15 May 2009. Dubai Mall. “Women’s Secret. Shop”.[on line] n.d. 15 May 2009 Dubai Business Minds. “Dubai means business” [on line] 28 July 2004. 20 May 2009. Encyclopedia of nations. “Foreign investment” n.d. [on line] 19 May 2009 http://www.nationsencyclopedia.com/Asia-and-Oceania/United-Arab-Emirates-FOREIGN-INVESTMENT.html Goliath Business Knowledge. Japan has over 100 companies in Jebel Ali free zone. [on line] 05 Feb. 2008. 20 May 2009 Investopedia. “Definition – Microfinance” [on line] 15 May 2009 MEED. “Dubai makes the UK”s top ten markets. Middle East business Opportunity. 02 March 2006. [on line] 02 March 2006. 20 May 2009 Mena.fn.com. UAE top Investment hub. [on line] 27 Feb. 2009. 20 May 2009. http://www.menafn.com/qn_news_story_s.asp?StoryId=1093144360 Kiva.org. “Micro finance”. [on line] n.d. 15 May 2009 ShopNZip. “Department Stores - SM Shoemart Department Store”. [on line] n.d. 15 May 2009< www.shopnzip.com/product_info.php?products_id=418 - 17k > Sojones. “Baby Phat”. [on line] n.d. 14 May 2009 http://www.sojones.com/hiphop-clothing/baby-phat/> tutor2u “Strategic competitive advantage”. [on line] n.d. 15 May 2009 Read More