Fashion Company BCBG Marketing Strategies - Case Study Example

Fashion Company BCBG About the Company The BCBG acronym stands for ‘Bon Chic, Bon Genre which means ‘good style, good attitude. Since its formation in 1989 in Los Angeles in the USA, the BCBG Group has grown through ages to become a global fashion house comprising a portfolio of more than twenty brands. Max Azria, the founder and CEO of the fashion company, renders his skills in design as the creative officer to the enterprise. By the year 2006, BCBG Group occupied more than 550 boutiques around the world, an indication of its exponential growth in the realization of its vision and business objectives (Benbow-Pfalzgraf 36). The company’s collections are also sold in major departmental and specialty stores worldwide such as the Harvey Nichols in UK, Saks Fifth Avenue, Lane Crawford in Hong Kong and Takashimaya Stores in Singapore. The California-based company today makes sales of its ready-to-wear apparel in over 175 BCBG boutiques across the US and with retail operations in other countries. Such countries include Russia, Canada, Chile, Japan, China and Venezuela among several other countries in Europe, and the Middle East. Thesis Statement The success of a company in achieving its long-term goals and vision depends on how well the company makes a balance between its internal and external resources and various business strategies. The success and remarkable expansion and growth of BCBG Group cannot be attributed to one effective strategy. Instead, a combination of forces coupled with the right management skills are behind the company’s success. The products of BCBG Fashion Company like those of any other enterprise would be useless if they did not reach the target customers in the right form, manner and time (Bender and Greenwald 29). To ensure that their various brands are well positioned in the minds of their target customers, the company uses various marketing, promotional and pricing strategies. The uniquely made names that surface to meet the particular needs of different market niches have given the company a commendable competitive advantage in the industry. BCBG maintains several Apparel product lines and licensing agreements that help determine what, when, how and where the company produces and offers for sale. Its production planning and global sourcing strategies coupled with the quality control techniques and procedures have been paramount in the creation and delivery of the right customer value. The essay endeavors to analyze critically each of the mentioned business processes and strategies and to determine their individual effectiveness and contribution to the overall business goals of BCBG Company. Marketing Strategies Despite the prevailing economic conditions in the world, BCBGs multi-brand approach has seen them remain well positioned in various markets resulting in their consistent success. The company is known for its more than twenty superior brands that are sold in the Groups boutiques and specialty and departmental stores all over the world. The expensive brands of the company give it a wider coverage and an increasingly high market share in fashion and design. Among the key brands produced and sold by BCBG, include the BCBGMAXAZRIA, Max Azria, the Herve Leger and BCBG Generation (Han 37). All of these brands comprise clothing accessories and collections for both men and women that meet varied customer needs and lifestyles. The vast brands of the company that has persistently been expanded over the years are meant to ensure that BCBG reaches its new apparel categories. The famous BCBG Generation brought into the market an intimate collection for fall 2013 accompanied by a collection of swimwear that is sold through BCBG Generation stores. The launch of the BCBG Generation came after the signing of a new licensing agreement between Trimera Group, the licensee for swimwear and the company. To expand its reach to distinct price points and enjoy a broader market share, the company has embarked on several acquisitions and partnerships for particular brands. In 2009, the company under a partnership with Miley Cyrus produced the Miley and Max Azria collection that features tops, bottoms, dresses and rompers that cost less than $20 a piece to buy. However, due to the disappointment of exclusive sale of the brand through Wal-Mart, the company discontinued the brand (Hoffmann and Coste-Manière 116). The market for the businesss products includes people of both genders and with coverage among the children, youth and the adults as advocated for by various brands. However, the company is committed to designing and marketing apparel for the sophisticated woman. The primary target market for BCBG, therefore, is the young professional woman. The companys high fashion level line is tailored to meet the needs of women of the age between 18 and 35 years. These targeted women are majorly those that earn at least $50,000 and more. The products of the company are meant to fit women across a broad range of careers. In terms of psychographics, the target markets perception of the quality and value of the products has served a role in making them form the judgment about the products superiority. The purchase behavior of the target market is quite high relative to the products offered by major competitors. BCBGs collections include men wear as well. Casual outfits, suits, and a line of footwear are available for male customers over a broad range of age and income. Promotional Strategies The companys success is attributable to Max Azrias strong marketing skills that engage some promotional strategies. To promote the products of BCBG, Max Azria embarks on extensive campaigns that involve the best-known models, master stylists and highly skilled photographers. It is in these campaigns that the companys brands and any new developments are exposed to the prospective customers (Daft 165). Product campaigns are not only conducted in the US but all over the Group’s coverage worldwide. Campaigns are a means of positioning their products and creating awareness among their customers worldwide. They are regularly conducted to ensure that the companys products are well known to their clients. The models engaged in these campaigns include Karen Elson, Eva Herzigova, and Jessica Stam alongside world-renowned photographers such as Paolo Roversi and Patrick Demarchelier. The Groups clothing frequently appears on famous publications such as Vanity Fair and the Vogue. Online sites including the iFashion Network and Style.com are also fundamentally used. The use of publications ensures that the company has a catalog that displays the brands of the company in an attractive manner that reaches a broad group of readers in the world (Dillon, 88). The displays in the publications include images of high quality and the celebrities, aspects that attract the targeted young women. The aesthetical presentation of BCBGs products in famous fashion magazines and other business publications has been an effective promotional tool. Further, the companys genre is mostly available on commercials and billboards as spread out in the main cities locally and globally. BCBGs promotional strategy aims at attaining the maximum exposure of the label to the potential business customers. To achieve this objective, stars like Uma Thurman, Sharon Stone, Ashley Jude, Beyoncé, Minnie Driver and Calista Flockhart among many others wear the company’s designs. Very many young women that associate with these celebrities end up buying BCBG products to imitate them. The CEOs strong marketing sense has made him offer designer styles at relatively affordable prices making the fashions available at the disposal of every current and prospective buyer. The New York Fashion Week creates a forum where the collections of BCBG are displayed and made available to the customer. Like any other company in the 21st century, BCBG values its customer base reached through the social media. Different media used include Facebook Groups, Twitter and What Sapp Groups to reach the modern customers that comprise mainly the young people of the digital age (Dillon 89). The customer groups available on these different media participate in promotional activities for commissions, discounts and free samples offered by the company. Managing customer relationships is an important priority for the companys endeavor to maintain a loyal customer base. To support its customer loyalty programs and management of the operations at the stores, the company licensed its Portfolio CRM, POS and BOS that are Java-based for the efficient administration of all customer information. Further management of clients that make purchases online is accomplished through the management of the customers data for mobile commerce and online shopping via the leveraged SAP retail solutions. An initiative to manage the strategic merchandise resulted to the licensing of the Advanced Planning program (Rafinejad 126). All programs that are run by the company are focused on retaining customer information and acquiring customer feedback as a means to improving the products to meet their specific needs. Customer Relationship Management has become a fundamental focus for any business organization in the highly competitive business environment. Every organization seeks to retain and serve a reliable customer base. Such can only be achieved through proper management and building of lasting customer and public relations as in the case of BCBG Fashion Company. Licensing Agreements The company undertakes several licensing and contractual agreements that are aimed at making acquisitions, collectively creating brands and leasing some brand rights for specified periods to franchisees. Many of the licenses are made for distributing and marketing companies that market and distribute BCBG’s products at a fair share of the profits based on the contractual agreements (Rosen 277). In its latest agreement, the group has declared its license agreement with the Timera Group. In the particulars of the contract, Timera Group is to distribute and market BCBGs swimwear across the globe covering the BCBG Generations and BCBG Max Aria Group lines. Timera Group, a leading company in the swimming industry, has been selected to produce and develop the companys branded line of swim products. To meet the requirements of quality and the target customer specifications, the swimwear of the company has been infused with a blend of the contemporary, classic and aesthetic appeal. The license permits Timera Group to manufacture and supply the products to the companys retail stores, specialty and Departmental stores as well as e-commerce stores that are available for the online customers. Back in 2003, BCBG entered into a licensing agreement with the Phillis-Van Heusen Corporation to produce and distribute neckwear and dress shirts under the former’s brand. Phillis-Van Heusen is one of the leading shirt manufacturing, apparel and footwear company globally (Rosen 269). To expand its Omni-Channel strategy, BCBG holds an expanded relationship with Demand Wear Digital Store. The three months agreements with the Demand Wear Digital Store, one of the largest digital stores globally, the company was to equip BCBG’s stores with digital solutions. A long-term Franchise Agreement exists between BCBG and Reliance Brands Company. Under this franchise agreement, Reliance Brands endeavors to open the BCBG Generation young label stores and for the larger label in India. As a company, BCBG uses the licensing and franchise agreements to grant permission to other firms to manufacture, supply and market products using the brand of BCBG. Upon the selection of enterprises, BCBG prioritizes the leaders in the industry to ensure that several aspects of the brand and companys profitability are not compromised. The average agreements with the majority of the companies cover a standard duration of ten years under contractual arrangements that are renewable (Sterlacci and Arbuckle 205). The licensee mainly compensates the fashion company under these contracts through established profit-sharing mechanisms and the payment of royalties. The determination of the production capacities by BCBG are based on the customer base served by license agreements compared to the total market share. The licensing and sub-letting of the companys brand helps increase its competitiveness by ensuring that competitors promote BCBGs brand. Apparel Product Lines and Price Ranges Pertaining the diversity of product available for the company, it is worth noting that there are adequate product lines at the company that fundamentally help serve the customer base effectively. The diverse pricing strategies adopted by the company reflect the companys different clients. Averagely higher prices are charged for the majority of the apparel for the target customers that aim at reaching people of the high-income class (Sterlacci, Arbuckle and Sterlacci 203). The BCBG Generation line of products is specifically tailored to meet the needs of the youth customers that are not financially well off and hence cost little. The product lines and the pricing strategies of the company are balanced to ensure that BCBGs different products serve the needs of low, middle and high-income classes of people. The price ranges for the BCBG Max Azria brand are relatively more costly compared to that of the young generation. The least selling item in this category costs between $168 and $198. However, the products tailored for the youth cost lower than $150. Besides the primary product lines, the company does not undertake any other complementary manufacturing except that done under the license and franchise agreements. Global Sourcing Strategies BCBG largely uses the global sourcing strategy to manufacture the majority of its apparel. Under this strategy, the company engages the development of products in countries like China, Venezuela, and India. However, it is observable that many of the products are sourced from China (Hoffmann and Coste-Manière 135). According to the information obtained from Jessica, an assistant at one of the BCBG stores, much of the production and finishing of the companys products are done in China. China is preferred for various reasons that include cheap labor in the production process and lesser taxation rates compared to those in the US and many other European countries. Global sourcing in India is conducted currently under the license agreement with Reliance Brands Company while many other agreements in other countries aim at expanding this strategy. To ensure that the brand quality is maintained and reflected in the final product, all the work of designing products is performed at the central offices in California. Companies based in other countries that obtain rights to manufacture using the brand use a ready-made design that meets the requirements of the license. Brand rights are exclusively controlled by BCBG and allocate representatives to the manufacturing zones in foreign countries to oversee the processes (Bender and Greenwald 91). Manufactured goods such as those made in China are distributed to Departmental, rental and specialty stores of the licensing company around the globe. Delivery of these products can be done at the stores in the US, those in China, Europe and Middle East using the shortest routes after a thorough inspection by BCBG quality control officials. The distribution of these products is entirely performed by the licensing company. Production Planning and Strategies In its production planning and strategies, BCBG aims at optimizing the production costs of the apparel in line with the goals of maximizing shareholder value and profitability. The reduced costs of production help the company to make more revenues in excess of the costs as dictated by various economic conditions. At BCBG, preference is given to the strategy where the corporation uses a full-package service with the contractors providing supplies, trims and fabrics only (Benbow-Pfalzgraf 47). However, under the Global sourcing strategy, the company provides the fabrics, patterns and trims while the manufacturing contractors provide labor. The use of a mixed strategy in the production of apparel is determined by the profitability of each mean and its adherence to the overall production objectives of the company. Production of clothing under the franchise and license agreements as practiced by BCBG has proven highly profitable. The myriad advantages conferred by these production strategies include the avoidance of many costs and as a result boosting the profits of the company (Daft 168). The company under these arrangements is relieved of labor and legal fees that claim much of the benefits. However, despite the many advantages that accrue from contractual production agreements, a slight compromise on the quality and standards of the contracting company can have long-term detrimental effects. Any customer perception of compromised quality and failure to tailor the products to customer needs can lead to the loss of clients. Quality Control Procedures Despite the focus on creating superior value for the customers, companies are compelled to meet specific international and national standards. Such measures include the requirements of the ISO on quality and the national standards and regulating institutions including the Department of Justice that ensure products are of the right quality and price. Through the differentiation strategy of competition in today’s highly competitive global market, many companies have resulted in investments on quality to serve particular customer niches. BCBG makes no compromise on quality (Han 52). To ensure that quality in the processes and the final products is guaranteed, a substantial body of quality personnel in the company heads the quality department. These employees are specifically meant to ensure quality assurance to the final consumers that are the pride of the enterprise. The focus on quality begins with the people contracted to do the work of branding, designing, manufacturing and packaging. BCBG employees and trains qualified personnel in its commitment to staying ahead of competitors through the production of superior products (Han 54). Benchmarks between the quality of the competing products and those of the company are periodically undertaken with the aim of making improvements. The quality assurance department situated at every major branch inspects the functioning of the processes to identify any faults that may need rectification. A company Policy on quality that is documented and available at every office and department of the company communicates the companys quality direction to the employees and customers. The enterprise takes pride in its commitment to adherence to the ISO 9001:2008 certification that lays emphasis on quality. The importance of always delivering quality has been inculcated into the company’s culture to ensure that the employees are kept aware of the unacceptable compromise on quality. The superior brand quality of BCBG has been built over the years through continuous improvements in the production, marketing, promotional, planning and licensing processes. The companys primary focus on the brands aesthetics and style have made significant contributions to quality improvements and maintenance in the spirit of making better what is available today. An innovative culture that promotes creativity has been developed by the highly creative CEO Max Azria among other talented workers (Rosen 296). The continued leadership of the company emanates from its inspiring vision and passion for quality. To protect their brands, the corporate office is tasked with the duty of guarding the service, reputation, consistency and product quality to ensure that they remain relevant amid evolving markets. Through quality, the vitality and integrity of the BCBG brands are guaranteed. Conclusion The BCBG Group continues to lead in terms of market share in the clothing industry because of its balanced application of various strategies to its business model. The superiority of its marketing and promotional techniques that involve campaigns, the use of celebrities, the print and electronic media, the social media, commercials and billboards guarantee its success. The global outsourcing strategies and licensing agreements are made to ensure that the productivity and profitability of the company are maintained high. Good customer relationship management that focuses on retaining customers by building lasting relationships together with the focus on quality have helped consumer confidence in the products of the company. The business environment keeps changing and so do customer needs. BCBG frequently adjusts to these changes and has, as a result, remained at the top of the competition. Works Cited Benbow-Pfalzgraf, Taryn. Contemporary Fashion. Detroit: St. James Press, 2002. Print. Bender, Daniel E, and Richard A Greenwald. Sweatshop USA. New York: Routledge, 2003. Print. Daft, Richard L. Management. 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