How to Bring Back Lost Customers - Coursework Example

Contents Contents Introduction 2 Why and How will Initial create a better consumer database? 3 Initial and the mission to bring back the lost customers. 5 A Sample Letter to Prompt Response from Lapsed Customers 7 References 8 Bibliography 9 Introduction The current global financial meltdown has impacted business activities worldwide. While emerging economies like China, India, Brazil and Russia has more or less managed to mellow down the impact of the meltdown, the western economies have been the worst hit. There has been a marked change in the perceptions about the sales of consumer products across the markets, especially in the apparel industry. In textiles and clothing exports touched US$185.1 billion in China last year, revealing a growth rate decline from 10.7% to 8.2% from the year earlier, according to General Administration of Customs, Chinese Government(Growth of Chinese textile exports slows to 8.2% in 2008, 2009). The western consumer has changed his spending habits – there has been a shift from the luxury goods to the medium and low end merchandise. This has acted as a stimulus to the clothing industry in Hong Kong and China, which are known worldwide for the inexpensive line of clothing that they manufacture. They now have the opportunity to enter into the mature western markets which have previously ignored them. Market statistics are also showing that the western markets are realizing the cost advantage that these companies can offer – the custom office in mainland China received 18,902 export customs declarations in 2009, up 11.4% year on year, from Yiwu, a Hong Kong clothing hub known for its inexpensive line of clothes (Pan S., 2009). The industry has also adopted several measures to increase efficiency – the alternative it has chosen over standard cost cutting techniques like lay offs to ride over the crisis. Companies have adopted the one – piece flow approach, which focuses on producing only the necessary quantity with the minimum input of resources as against a divisional approach which required each worker to specialize in one section of the garment manufacturing process. The activities in the manufacturing side of the garment industry have had an impact on the fashion side as well. Fashion in Hong Kong has received world wide acclaim. Initial Fashion started out in 2000 as a single store in the suburbs and is presently constituted of 11 stores, the company is considering to venture out to Japan. The major differentiating factor about Initial Fashion is the way it has tried to remain from the band wagon – the organization has never taken the help of any supermodels or celebrity endorsements. The Tsim Sha Tsui concept store has a hair salon and café which are crowd pullers in their own right. The company has imported styles from different foreign brands like Penkov, Crash and Burn, and accessories brand Torai du Monde. The main focus of the group has been to promote aethecism, an intangible, along with its product lines. Why and How will Initial create a better consumer database? The management of Initial Fashion must modify and enhance the existing databases that they have so as to face the challenges better. The organization has to realize that the customers are not buying products – they are in fact purchasing solutions to their problems. The databases should, therefore clearly reflect the issues that concern a customer when he or she is approaching Initial Fashion to fulfill his or her specific requirements. Initial fashion has to drastically alter it business perspective – it has to graduate from being a manufacturer to being a solutions provider. This shift in the business attitude needs to be reflected in the consumer database too. The improved database should have to be a real-time customer relationship database – it should help the organizations incorporate the changes in the specifications of the garments as soon as a change in the demand schedule and pattern is noticed. Fashion trends have extremely short shelf-life, and hence the company has to be extremely agile to change its product lines in accordance to prevailing, or expected fashion lines. The database should also allow Initial Fashion to segment its business so as to locate the most profitable segment for the organization. The database should also help the organization to analyse the results and findings from the company’s customer loyalty programs and promotional campaigns. One of the most important goals of the company should be to store as much data as possible. The company will have to focus on storing all possible information related to the purchase pattern of the consumers. This can be done effectively by maintaining the profiles of the different consumer groups, differing according to their age, preference and other parameters. Once the company has stored considerable amount of data about a sufficiently large number of consumers over an extended period of time, it can use data analytics concepts to derive meaningful business intelligence from raw data. Consumers who are frequent purchasers can be targeted; data pertaining to their purchases may be stored in a form which can be retrieved instantly the next time he or she approaches the store. This may be facilitated by a check in at the time of entry, customers getting urged at the entry to swipe in their loyalty cards to ensure prompt attention and service from the attendants. Relevant storage of data also facilitates a time series and regression analysis pertaining to purchase. The organization may however face a bigger challenge while classifying the data. Initial Fashion has a dedicated yet growing clientele, so it will be a daunting process to maintain the purchase data of all the customers over a relatively bigger timeframe. For this the company may resort to a coding scheme, with different colour codes for different age cohorts (Cohort-Group, Definition of, n.d.), as members of a particular cohort care expected to have similar tastes and preferences. Initial Fashion will have to be sensitive about the customer feedback about their previous purchases. When the company is evaluating consumers’ dissatisfactions with apparel that they have bought there will be are several commonly occurring observations. The first may be an overwhelming criticism about how the garments “fit”. This issue is faced by almost every retailer in one form or the other. A very important correction can be done about the measurement which will take care of the problem associated with the mass produced garments as against customized offerings (Istook S. L., 2000). This will involve the maintaining a separate data field about a consumer which mentions any previous instances that the concerned person had to complain about the fittings of the offerings. The new database management practices will come with significant cost overheads. The organization needs to maintain IT support for maintaining mailing lists, and personnel for sending out e mails so as to solicit information from clients and letting them know about the newest offers. A major concern concerning the database will be the accuracy and relevancy of the information. This will require investments into the frequent up gradation of the database and setting up of an Enterprise Resources Planning platform. Data collected from all the sources need to be collated together – there might be instances that a customer’s second purchase will not be from the same Initial Fashion store. The ERP systems will also ensure connectivity between the different retail outlets, the warehouse, the production facility and the central office so that they can share information effectively and ensure customer satisfaction. One of the consumer groups which are prime customers of the apparel and decorative items of Initial Fashion are young, working females. The company can incorporate certain changes into their databases so that they can effectively serve this sub section well in the future. Each customer at Initial Fashion may be initially mailed about promotions of launches of newer lines. This effectiveness of this measure can be seen by the number of referrals who turn up. The customers purchases once entered in to the database, along with the feedbacks will serve as long term assets for the company. The company can continuously remind these customers about new product launches though regular and electronic medium. Initial and the mission to bring back the lost customers. Initial Fashion has the choice of both the offline and the online media to build a promotional strategy. While the offline route has distinct cost and monetary benefits, it will be focusing on a considerably smaller section of the entire prospect pool for the organization. The effectiveness of the initiatives can be measured directly – it will show in the sales figures/ footfall numbers in the time after the promotional activity. There would be subtle underlying benefits of the promotion – it will help create a direct contact with the end customer, thereby giving scope to word of mouth activities for the organisation. Consumers will also be benefitted from a direct marketing initiative –they will invariably receive commercial messages which have been modified for their profile, hence adding to the convenience level (Nash E. L., 2000). The strategic planning process will comprise of the company considering the steps like Situation Analysis, Objectives, Strategy, Tactics, Action and Control (Cupman J. & Hague P., 2008). Situation Analysis: Initial Fashion by itself is still a marginal player in the fashion industry in Hong Kong. With just 11 operational stores, the company is far from being a trendsetter or a market leader in its segment. The company, Initial Fashion, can realize a larger market for itself. The company is not represented well on the internet; the official website of the company is resource heavy and takes a lot of time to open up. Additionally, the website is totally Flash based, and is not optimised for Internet search engines like Google. There are also no provisions for online viewing of the available material in a conventional way, subsequent materials appear in a form of a slideshow. The website does not have a free flowing and soothing user experience, and also does not encourage online shopping. Objectives: This is the most crucial phase for the company. The company should aim to cater to the online population in a short time frame. With Internet penetration reaching almost saturation levels, it has become the most critical source of information for a large number of buyers. However, developing a strong Internet presence is a time consuming effort and two years would be a reasonable time frame. It should also aim to increase footfall in the stores by a margin of 50%. The company will also have to target at becoming a major player worldwide with a growing preference among the youth in the developed countries. Specific schemes will have to be initiated lapsed customers. Strategies: The organization has a choice of several strategies. The company can go for both organic and inorganic routes of growth to increase the number of stores. Online promotion can be outsourced to specialist organisations – creation of online communities, an interactive website where customers can voice their opinion, seek clarifications and give feedbacks, should be top priorities for the company. Customers who have made previous purchases at the stores, but have not turned up again need to be contacted again, as they present dual opportunities – repeat prospects and valuable feedbacks about the product and services of Initial Fashion. Tactics: Offline promotional techniques like in improving store customer service will have to supplement the online strategies like creating blogs and forums. The company may also want to increase its visibility by participating in fashion shows. Action: The database of the company has to be consulted to identify the customers who have made previous purchases with the company. A direct mail will be sent to the client offering certain benefits to the customer. Initially 10% of the database should be targeted. The critical success factor for the campaign would be to get an enquiry call back from at least 25% of the targeted customers. Control: The progress of the campaign has to be tracked by effective measurement, monitoring, reviewing, updating and modifying. Measurement and monitoring of the marketing plan can be done by in store and online counters. The campaign should be modified by introducing newer benefits for the remaining members in the database. Constant contact has to be maintained with the prospects and the company should be ready to offer a flexible, customized benefits. A Sample Letter to Prompt Response from Lapsed Customers Ms. Vanessa Hudgens, 117 /615 N 10TH ST SUITE 100 P O BO X 842020 300 E Main St. Rm 1121 Memphis TN 38166-1121 Dear Miss Hudgens, It has been quite some time since your last visit at Initial Fashion. We hope that it was nothing we did at Initial Fashion that is keeping you from visiting us at our stores. In case there is something you would like to share about our services we are unaware of ourselves, please let us know and we will sincerely try to live up to the high standards we set for ourselves. In the mean while I would like to inform you about certain fabulous promotional activities we are conducting in the stores. I found out that you had purchased a Black Giolitette Hurrie trouser the last time you had come to us. I will be delighted to inform you that we are having Giolitette Hurrie in store once again this 5th of June 2009. Moreover we would be offering you a discount of 10% for any purchases that you would be doing the next time you come around. Let us strive to provide to give you the ultimate in fashion every time. If there is anything you would like to know about, please feel free to contact me, I will give you my immediate attention. Sincerely, Len Kurosawa BRANCH MANAGER, Initial Fashion Style House Causeway Bay References Pan S., 2009, Benefits from market "trade downs”, [Online] Available: http://www.hktdc.com/info/mi/a/imn/en/1X00QWA2/1/International-Market-News/Benefits-from-market--trade-downs-.htm [21 May2009] Growth of Chinese textile exports slows to 8.2% in 2008, 2009, [Online] Available: http://www.fashion.tid.gov.hk/english/knowing/reports/know_rep_tre.html [21 May2009] Cohort-Group, Definition of, No Date, [Online] Available: http://wfnetwork.bc.edu/glossary_entry.php?term=Cohort-Group,%20Definition%20of&area=All [21 May2009] Istook S. L., 2000, RAPID PROTOTYPING IN THE TEXTILE & APPAREL INDUSTRY: A PILOT PROJECT, [Online] Available: http://www.tx.ncsu.edu/jtatm/volume1issue1/Articles/Istook/fulleditistook.pdf [21 May2009] Nash E. 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