E-Business Analysis - Report Example

E-Business Analysis Executive Summary The advent of internet in the daily lives of people has changed the way of living and also the process of doingbusiness. The progress of technology in the communication sector has also affected the performance of the fashion industry in a significant manner. The internet has revolutionized the way in which the people look at the fashion world. The fashion industry is characterized by uncertainty and there exists no dominant player in the industry. The trend in the fashion industry changes at a very fast rate and thus the competition in this industry is immense. In order to compete in this industry, the fashion brands must employ the appropriate segmentation, targeting and positioning strategy in their business. The purpose of the report is to analyze the business strategies of two competing e-businesses to understand the importance of applying the suitable marketing strategy. Table of Contents Introduction 4 Part A 4 Role of Internet in the Fashion Industry 4 Part B 5 Christian Dior and ASOS plc 5 Segmentation, Targeting and Positioning 11 Comparison of STP Strategies of Christian Dior and ASOS plc 11 Conclusion 13 Reference List 14 Introduction The fashion industry is one of the world’s largest industries (Deloitte, 2013). It is the most dynamic industries as fashion products are characterized by very short product life cycles. Global fashion brands are concentrating on the change in fashion week rather than the traditional two main seasons. The global growth of the sector is concentrated around the continuous introduction of new range of products and brands to enhance product sales and growth in the industry. The global per capita consumption of fibre has increased by 20% in real terms in 2012(Deloitte, 2013). This indicates that consumers are responsive to frequent introduction of new brands and products. The phenomenon of increase in the consumption of fibre has been termed as “Fast Fashion” (Deloitte, 2013). It is defined as a particular pattern of production and consumption in which the products are manufactured, consumed and disposed off very fast. Part A Role of Internet in the Fashion Industry The internet has contributed to the development of the concept of fast fashion as it helps in the live streaming of fashion shows and advertisements in the social media. The availability of the latest fashion on the e-commerce sites of the fashion brands has made them accessible to the customers even before they reach the stores. The advantages of E-commerce have been explored by the fashion industry at a slow rate. Through the internet, products of the luxury brand are made available to larger sections of the people all around the world. Earlier, it was only accessible to the elite groups in the operational location of the brand who can afford them but with the help of the internet and the online shopping platforms the reach of the brands have been spread to all people who have access to the internet (Deloitte, 2013). Earlier, people use to go through the fashion magazines in order to know about the latest fashion but now in the age of development of information and communication technology, people can access them quickly and easily. E- Businesses are experiencing a boom nowadays as business gain more profit by entering into markets which are not accessible to them before. It also reduces the cost of opening additional stores for expanding their market, saves cost of hiring and training sales persons as products are displayed on the websites of the respective brands (Deloitte, 2013). The consumers can choose the desired products surfing the websites and place their order and make their payment through the internet. Consumers also prefer shopping through the internet as it saves time and costs of travelling to the stores. With time, the number of internet users and the extent of use of internet users have increased due to the progress in information technology and developments in the consumer electronics sector. Thus, internet has changed the way the fashion industry used to operate. It has also made fashion available to the common people as low cost producers imitate the designs of the luxury brands and make them available to the low-end stores. The small producers need to imitate the fashion and made them available to the customers before the trend vanishes and a new trend emerges in the industry (Deloitte, 2013). Part B Christian Dior and ASOS plc French fashion label Christian Dior and UK based online retail Fashion Company, ASOS Plc. (As Seen On Screen Holdings plc.) are two competitors in the fashion industry in the world. The fashion industry is an emerging sector with no single dominant market player and is facing intense competition in the recent times as fashion brands are going global with the presence of international brand all over the world. The fashion industry has many segments and different fashion brands target different segments and position their products according to different approaches. It has been observed that the luxury fashion brands were reluctant in opening up to the internet but the rapid rise of mobile and e-business in the fashion industry has compelled them to concentrate more on the opportunities related to mobile and internet shopping (Christian Dior, 2015). Christian Dior Christian Dior, commonly known as Dior, is one of the largest luxury goods brand in the world founded by French designer Christian Dior in 1946 and headquartered in Paris, France (Christian Dior, 2015).Though Dior is generally associated with women clothing, the company also has its range of products for men and kids. Apart from ready-to-wear clothing, Dior also produces leader goods, perfumes, accessories, jewellery, wines and spirits, cosmetics, timepieces other luxury goods. Thus the market for Dior products can be segmented on the demographics of gender and age as it has separate range of products for the women and men, and also for adults and kids. It also targets the higher income group and the elite classes in the society who have the required purchasing power to use the luxury goods which Dior offers. The market for Dior is also segmented by the consumer behaviour and geographical location. Dior reaches out to its customers through its retail stores and also through the online stores. Thus it divides the consumers into local consumers who have access to its retail stores and online shoppers. Through its online store, it serves customers worldwide (Christian Dior, 2015). Dior targets more than one segments of the fashion industry and produces a large range of products to satisfy the needs of all the targeted segments. Thus the fashion brand uses differentiated targeting in its marketing strategy. Dior positions its products based on the product quality, customer benefits, cultural symbols and competition approach. The products offered by Dior are luxury goods and thus are generally highly priced to give a signal to the customers that its products are of extreme high quality. Dior focuses on customer benefits as it is famous for its haute couture which is creating clothes tailored according to the individual measurements and preferences. The fashion brand competes with its strong competitors by expanding their business worldwide and introducing fresh fashion keeping pace with the “Fast Fashion” concept (Deloitte, 2013). Figure 1: Revenue of Dior from Different Product Ranges in 2014 (Source: Author’s Creation) From Figure 1, it can be observed that a large portion of the revenue of Dior comes from the product range of fashion and leather goods followed by selective retailing, wines and spirits and perfumes and cosmetics (Christian Dior, 2014). Figure 2: Revenue of Dior in 2013-2014 (Source: Author’s creation) It is observed from Figure 2, that the revenue from fashion and leather goods and selective retailing has increased significantly from 2013 to 2014, while the revenue from wines and spirits have decreased (Christian Dior, 2014). Figure 3: Profit of Dior in Different Product Ranges (2013-2014) (Source: Author’s creation) Figure 3 shows that profit of Dior has decreased from 2013 to 2014 in most of the product ranges except the fashion and leather goods range and the Christian Dior Couture (Christian Dior, 2014). In October, 2013, Dior has unveiled its redesigned website where it has preferred heritage than E-commerce. Thus it has positioned its products based on cultural symbols. Dior has emphasized on the online shopping experience of the customers by allowing them to enter the world of Dior in the form of a magazine with images and stories from the past. The company has preferred a more attractive and interesting website than a functional website. It has focused on establishing a connection with customers rather than increasing the profit margin. Though the redesigned website offers a rich experience, it is difficult to navigate through it and find the desired products (Christian Dior, 2015). ASOS plc. ASOS plc is an online retail company based on UK and headquartered in London. It was established in 2000 (ASOS plc, 2015b). It is a global fashion destination for young adults and offers a wide range of products ranging from clothing to accessories and footwear for men and women. ASOS plc is the world’s second most visited fashion website in the world. In the last few years, it has focused on expanding its business worldwide and improving the simplicity of their websites to offer easy accessibility. It has launched ASOS sites in different languages to break the barrier of language in spreading their business. In 2010, the enterprise has launched American, German and French ASOS websites and again in 2011 it has launched Australian, Spanish and Italian websites and with the launch of Chinese Language site in 2013, it has a total of nine language websites. In 2004, ASOS has introduced its own label for women and in 2007 it has launched its own range of clothing for men (ASOS plc, 2015e). In order to compete with already well established fashion brands with online stores, it has started exploring the opportunity of the mobile shopping through the launch of ASOS Mobile in 2010 (ASOS plc, 2015b). To keep up with technological progress in the electronics communication sector and the rising popularity of the social media, it has also introduced applications for the iPad and the iPhone and had launched ASOS Facebook Shop (ASOS plc, 2015b). Figure 4: Performance of ASOS plc. (2012-2014) (Source: ASOS plc, 2015d) Figure 4 shows that the revenue and gross profit of ASOS plc. has increased over the years (ASOS plc, 2015d).This indicates that the segmentation, targeting and positioning strategy and the market mix applied to each segment has proved to be successful as its net earnings continues to rise. It is found that the profit before tax has fallen in 2014 due to difficult international trade environment. The year of 2014 has been a tough period for the company as the main UK distribution facility of the company had caught fire in June 2014 and also due to depressing external environment. The market for ASOS plc has been segmented by the demographics of age and gender and by geographical factors. ASOS plc offers a huge range of products for only young men and women in their twenties. Its business is spread all over the world with a huge number of international offices. It only targets the online shoppers as it is an only online retail company. Also, ASOS plc targets the middle income groups of customers. They keep the prices affordable as they target the young population. The fashion brand has captured the attention of the online shoppers by offering easy accessibility, competitive prices and interesting offers along with quick and reliable delivery system. It always ensures to offer the latest fashions and trends to match the expectations of the customers (ASOS plc, 2015a). Segmentation, Targeting and Positioning Segmentation is the process of dividing the customer into groups which have same basic needs or will respond similarly to a particular marketing action. The market can be segmented based on the demographics (age, gender, purchasing power, education and cultural background), psychographics (lifestyle, social status, personality, opinions and attitudes), customer behavior (online shoppers, brand preference, previous purchases) and geographical location (country, city, province etc.). The segments should be definable, profitable and accessible (SmallBizConnect, 2015). After segmenting the market, the company evaluates the economic and potential appeal of each segment and then chooses to target specific segment or segments (Blythe et.al, 2005).Targeting can be of three types: mass or undifferentiated targeting, differentiated targeting and concentrated or niche marketing. Undifferentiated marketing strategy emphasizes on producing a single product and marketing it into all the segments. Several products are produced and they are priced, promoted and distributed in differentiated targeting to satisfy the needs of small segments. Niche marking is the strategy adopted for catering to the needs of a single market segment (Boone and Kurtz, 2011).Positioning is developing or altering the brand or product image in the minds of the customers applying various marketing mixes in different targeted segments. Marketing mix is the business strategy which involves price, product, place and promotion (Sengupta, 2005). Comparison of STP Strategies of Christian Dior and ASOS plc The segmentation, targeting and positioning strategy of the two competing e-businesses in the fashion industry, Christian Dior and ASOS plc, are observed to be significantly different from each other. Dior caters to all the segments of customers like men and women, adults and kids, retail shoppers and online shoppers, local and international customers but ASOS plc only focuses on young adults and only on online shoppers worldwide. Thus, Dior practices differentiated marketing strategy while ASOS plc applies the niche marketing strategy by catering to the needs of only a particular segment of young adults. Dior positions its products based on the price quality approach while ASOS plc positions its products based on customer needs. Dior caters to the needs of the elite class while the products of ASOS plc are affordable to all middle and lower income groups. ASOS targets the young adults and thus keeps its price range low so that the young people with low income can afford them. Dior emphasizes on enhancing the customer experience related to the cultural aspects of the company, while, ASOS plc focus on developing a functional website which offers easy navigation through the site and gives easy access to the desired products. Dior concentrates on a huge range of products while ASOS plc specializes in women clothing (Christian Dior, 2015; ASOS plc, 2015d). Dior is a world renowned fashion brand for luxury goods and thus it concentrates more on providing enriching experience than on increasing the profit margin. Dior has accessed the internet for spreading its business over the world much slowly than the other online fashion websites like ASOS plc. The advancement in the communication technology has revolutionized the fashion industry in a significant way. ASOS plc, compared to Dior is new to the fashion industry but the reach of the company is much more than Dior in the current times. ASOS plc only targets the young and employ successful marketing mix only to that segment. ASOS aims to be the leading fashion destination in the world and thus operates through the three pillars of providing the most engaging experience, truly global and highly efficient retailing (ASOS plc, 2015c). Marketing Mix Product: Dior manufactures high quality lifestyle products, whereas, ASOS concentrates mainly on clothing and other accessories. Price: Dior serves the premium customers and thus its products are considered as luxury goods. ASOS targets the young adults segment and thus offers the latest fashion at affordable price. Promotion: Dior does not focus much on increasing the profit margin and thus mainly emphasizes on offering customers a rich experience and satisfaction through its personalized products. ASOS on the other hand prefers to maintain a functional and accessible website. Place: Dior serves both local customers according to their needs and serves people worldwide through its online store, but, ASOS is an only online fashion destination and it operates through its international offices. Conclusion The internet has changed the way in which the fashion industry used to operate. It has significantly affected the perception of fashion in the mind of the common people. Earlier, only the elite class had easy access to the latest fashion trend in the world but nowadays, everyone who has access to the internet can follow the trends in the fashion world. The global growth in the fashion industry is concentrated on the creation of new fashion brands and introduction of new ranges of product within a very short period of time. In this environment of intense competition, fashion houses must employ the right segmentation, targeting and positioning strategy and also the appropriate marketing mix in the targeted segments in order to retain market share and also to survive in the industry. The fashion industry is characterized by high uncertainty and there exists no dominant market player in the industry. From the above discussion it can be concluded that though the revenue of Dior increased from 2013 to 2014, its profit margin has decreased over the same period. This indicates that the fashion brand needs to employ more effective marketing strategy for future expansion. On the other hand, ASOS plc applies a more productive marketing strategy and expanded its business all over the world in the short span of 15 years. Reference List ASOS plc, 2015a. Ambition and Strategy. [online] Available at: < http://www.asosplc.com/our-ambition-and-strategy.aspx > [Accessed 22 May 2015]. ASOS plc, 2015b. Info Pages. [online] Available at: < http://www.asos.com/infopages/pgeaboutus.aspx?r=2 > [Accessed 22 May 2015]. ASOS plc, 2015c. Investors. [online] Available at: < http://www.asosplc.com/investors/2014-year-in-review.aspx > [Accessed 22 May 2015]. ASOS plc, 2015d. Basics. [online] Available at: < http://www.asosplc.com/the-basics.aspx#section3 > [Accessed 22 May 2015]. ASOS plc, 2015e. Our Story. [online] Available at: < http://www.asosplc.com/our-story.aspx > [Accessed 22 May 2015]. Blythe, J., Coxhead, H., Lashwood, M., Partridge, L., Reed, P. and Simms, H., 2005. Strategic marketing. Buckinghamshire: Select Knowledge Limited. Boone, L. and Kurtz, D., 2011. Contemporary marketing. Boston: Cengage Learning. Christian Dior, 2014. Interim Financial Report. [online] Available at: < http://www.dior-finance.com/ManagedDocument/en-US/Interim-Financial-report-Dior.pdf > [Accessed 22 May 2015]. Christian Dior, 2015. Home. [online] Available at: < http://www.dior.com/home/en_int > [Accessed 22 May 2015]. Deloitte, 2013. Fashioning Sustainability 2013. [online] Available at: < https://www2.deloitte.com/content/dam/Deloitte/dk/Documents/strategy/Deloitte-Fashioning-Sustainability-2013.pdf > [Accessed 22 May 2015]. Sengupta, S., 2005. Brand positioning: Strategies for competitive advantage. Noida:Tata McGraw-Hill Education. SmallBizConnect, 2015. Market Analysis. [online] Available at: < http://toolkit.smallbiz.nsw.gov.au/part/3/10/49 > [Accessed 22 May 2015]. Read More