Market Analysis of Pacific Garment Plc - Case Study Example

Executive Summary Function of branding has reached a sophisticated state today where it encompasses the activities of the whole organization and act with the objective of delivering a package of rand value to the consumer. These values are communicated through the brand massages and an equity for the brand is developed which creates and affinity and long term relationship between the brand and the consumer which provides the companies with an advantage over the others. When companies find themselves loosing their foot hold in the market, the key issue needing attention is how successful is their branding is. Pacific Garment Plc. (PGP)which is a midscale clothing manufacturer of youth casual ware has identified the need for a brand repositioning in view of the changing customer profiles of the new generation of consumers presented by Gen Y that has now entered the PGP target market segment of 14-22 year age. The report provides a market analysis, customer profile analysis and proposal for change for revamping the X-oduz brand with the hope of building a strong brand equity. 1. Introduction Pacific Garment Plc (PGP) is an Australian clothing manufacturing company which is currently experiencing declining market share. The company has realized the need for repositioning its brand and conveying a new identity to its key target market segments. The need for developing the brand equity of the X-oduz brand is set as one of the main marketing objectives for the business and this change proposal provides recommendations for recreating, repositioning and building the X-oduz brand in view of the different customer profile of the generation-Y consumers who are now moving through the company’s main target age group of 14- 22 year age bracket. 2. Company Overview Pacific Garments PLC (PGP) is a mid size clothing company operating in the heavily competitive youth clothes segment in the Australian market. The company’s main line of business consist of casual ware for the teen and early twenties age group, marketed under the X-oduz brand. The company has been manufacturing and marketing to this segment for the past 35 years and have been steadily increasing its market share until 2001. Since then PGP has experienced declining sales and market share. There have been no internal changes which can be attributed to the drop in sales. A market research commissioned indicated that the consumer needs of the marketing segment which PGP is catering to have changed over the decades in which PGP has been marketing under the brand X-oduz although there have been no major brand changes or revamps to cater to such changing needs. 3. Market Analysis 3.1 Australian Apparel Industry As per industry reports, the total output worth of the Australian apparel, textile and footwear (referred to as TCF industry) is US$4.75 billion and employs over 87,000 people. The market growth has been constant as Australia has continued to record stable annual economic growth rates in the region of 4% (The Australia Apparel Market Research Report, 2008). The industry is made up mainly of specialized manufacturers concentrating on different product categories. For example, Seduce offers 20-40 age groups with casual and elegant ware. Seafolly is concentrating on designer swimwear. Rooperz offers leather garments. Ellen, Karmel Wilkinson, Burlock, Do Clothing, EmCom etc. are few of the key operators in the T-shirt and casual ware segment. The industry is fairly fragmented with a large number of medium scale manufacturers catering to the overall market. The manufacturers use their own boutiques as well as appointed stockiest and large retailers as their distribution channels depending upon the type of apparel being offered. 3.2 Market Size of the Y Generation Australian markets are experiencing marked changes in its customer profiles and behavior patterns as a result of the so called new generation Y consumers come in to full purchasing power. Currently it is estimated that a total of 4.2 million Y generation consumers in Australian population accounting for a 20.5% of overall population (Australia's Generations, 2007). While debated as to exact time frame, Y generation are taken as those who have been born in the period of 1980- 1994 for the purpose of this proposal making the oldest Gen Y’s 29 and the youngest aged 15 years. Table 1 below provides a breakdown of the Australian population and the significant place taken up by the Y generation. Table 1 - Australia's Generations - The Definitive Classification 4. Customer Segments Since successful marketing involves understanding, anticipating and identifying the customer and their needs and meeting them successfully with solutions, PGP too needs to reevaluate their new generation of customers who has moved in to their target segment. PGP has been marketing its products to the 14-22 age bracket with a single brand name X-oduz. The apparel range contains of casual wear for both male and females. The company markets one of the widest product portfolios contained within a single Australian apparel brand. Unlike in more mature market segments, this target market lacked brand loyalty factor based merely on the brand identity. The new generation of consumers seems to have exacerbated this problem for PGP marketing. Following analysis profiles the generation Y consumers of the PGP target market. With 1 in 5 Australians being a Gen Y, the need to understand this new consumer better and reposition the PGP products to meet their needs is a priority. 4.1 Generation Y Profile This is the most formally educated of all generations to date with over 77% of year 10 students completing year 12. Almost half of those who are completing year 12 are enrolling for university studies while a quarter is studying for TAFE qualifications. This means, this customer segment will have to be dealt with a greater sophistication (Generation Y profile, 2007). They are also very significant in terms of economic spending. As young adults, this generation, armed with multiple college degrees, hold high power jobs and above average income levels. Citing fashion trends of the generation Y’s Hira (2008) fortune Magazine reporter states, “speaking of fashion, this isn’t a group you’ll catch in flannel. They’re all about quiet kitsch – a funky T-shirt under a blazer, artsy jewelry, silly socks” (Hira, 2007). This means even for jobs in corporate offices, the gen Y make use of funky casual clothing which hold significant marketing opportunities for X-odux. This consumer group is known to place more priority on quality of life, community, friends than work. Following are some of the key profile characteristics which PGP needs to consider in their repositioning strategies towards this consumer segment: Key characteristics of Gen Y consumers Gen Y is a generation of choices. They strive on choices and values it. They are Community/Social driven: be respected, included, understood and accepted Decisions based on peers, therefore peer acceptance, word of mouth and peer pressure are key factors in purchase decisions. High disposable income (no financial commitments) Top 3 leisure activities being: go to a party, listen to radio, go to a movie Communicating mainly through SMS and web Easily bored (less consumerism, more engagement and stimulation) No job or brand loyalty Appearance and image conscious, Materialistic Demand rationale behind any request Techno Savvy Very education-minded Concerned about environment Multi-taskers and fast thinkers Creative and independent thinkers Financially smart A survey by Roy Morgan-Australia indicated that compared to the past generation X, generation Y consumers “enjoy clothes shopping” (Gen Y 55%, Baby Boomers 34%), “will buy a product because of the label” (Gen Y 34%, Baby Boomers 18%). Figure 1 below indicates a comparison of the survey results of the gen X vs., gen Y. Figure 1 – Generational Attitudes towards Shopping (Source: Roy Morgan Research 12 months to June 2009)   5. Findings of Brand Audit A brand audit carried out in order to establish the current status and health of the X-oduz brand and its equity within the targeted customer segment revealed the following issues related to PGP marketing strategy: A recent market research carried out by PGP advertising agents revealed that the Top of mind brand recall rate is low although there is an awareness of the X-oduz brand. The brand identity probing revealed a customer perception of a laid back and somewhat uncool image for X-oduz mainly due to the lack of change and dynamism associated. Gen Y is known for their preference of strong brands and as such the need for correcting this aspect is a top priority for PGP. Focused group studies and in-depth interviews revealed that the customer’s need for choice in terms of number of collections for the year was not met by X-oduz brand. The brand logo of X-oduz with a funky character standing in X status with a big thumbs up had high recognition factor and in fact high acceptance. Almost 2 out of 10 youths interviewed in the brand survey possessed caps with X-oduz logo prominently displayed on it. Consumers’ need for opportunities for active involvement in their chosen brand activities were not met by X-oduz. Newer more cool brands such as Enxata, and Gravity, sponsored youth concerts and interactive club events which allowed for brand relationship building. Analysis of the distribution channel sales trends indicated a sharp trend towards increased purchases from large scale retail centers vs. small scale boutique shops. A sharp increase in online shopping activities has been observed in which the company offered a selected range of merchandise such as X-oduz caps and X-oduz key tags, mugs. PGP has not so far put in much effort in to its website which had been launched few years back. The website is only updated monthly. Probing in to customer perceptions of the prices of the PGP products revealed that customers felt that that although the product quality was high the product lacked the image they sought to justify the premium prices charged by PGP. PGP pricing structure had a high percentage margin offered to the boutique style stockiest. This was done with the hope of creating a sales push. Although the margins offered to the large scale retailers such as department stores were not as high, the need for maintaining price parity between distribution channels prompted PGP to retain the same retail pricing for all channels. This meant that X-oduz clothing were higher priced compared to most competition in the department stores. With the purchasing preference shifting to this channel, the need for price competitiveness has been highlighted. 6. Proposed Brand Repositioning Strategy In view of these key findings, PGP is recommended to implement a brand repositioning program in which the following changes are proposed. These proposals take in to consideration the effective components of effective brand creation and development as well as the steps required in building brand equity. 6.1 Recreating Brand essence of X-oduz Brand essence or the core promise of the brand and is the most important component in the branding strategy (Armstrong & Kotler 2001). When X-oduz brand essence is considered, it has traditionally focused on quality. However, X-oduz lacked an element of coolness which is important to the Y generation customers. It was even important to the preceding X generation up to a certain degree. Therefore the new repositioning should incorporate this element in to its new identity. The new X-oduz image should stand for casual ware that fits the cool and sensible lifestyle of the Y generation youths of the day. 6.2 Creating New Brand Meaning By recreating the brand essence, a new meaning for the brand should be unearthed and conveyed to the consumers. As per Tylor et.al 2004, “creating brand meaning involves establishing a brand image—what the brand is characterized by and should stand for in the minds of customers”. This is a result of both the customer’s own experience of using the product and the company’s marketing efforts in conveying this new meaning. It is recommended that a combination of functional performance related aspects as well as abstract imagery be used in creating and conveying a new meaning for the X-oduz brand is utilized in the new change program. In line with the new brand essence, the products have to deliver clothing for cool and sensible lifestyle of the youths. For the Y generation, quality of life, bonding with environment, outdoor life, relaxing with family and friends etc. is what is cool. They are sensible and therefore will not go for clothing that lacks practicality and incompatibility with their lifestyle and activities. This is why the functionality of X-oduz must be geared towards various cool lifestyle activities of this customer group. The imagery has to be used as a supplementary strategy to reiterate the same brand identity. For instance, introduction of outdoor clothing ranges in fabrics that are water resistant, heat protective, crumple free etc. with special pockets, and other special features suited for these activities is recommended. 6.3 Recreating X-oduz Brand Identity Identity is another major component which contributes to an effective and successful branding strategy. Macrae & Uncles (1997) cites the importance of signs and symbols which are unique and striking that can attract and remain at the top of consumers mind. Such imagery should prompt the consumer to recognize the brand easily and differentiate it from the rest. The brand audit indicated that the X-oduz brand logo has favorable recognition but lacks a high top of mind recall rate. For successful brand identity to be created, both the breath and depth of the brand awareness has to be achieved. This needs appropriate brand imagery and message conveyed in right dose at right time and place. The new brand identity must be aligned with the proposed new brand meaning and contain the new brand essence. Following are proposed in recreating the X-oduz brand identity Introduce sub brands under X-oduz to recognize different lifestyle activities such as X-oduz relax, X-oduz-Nature, X-oduz Surf, X-oduz-Green, X-Cool Corporate etc Communicate a brand message which establish the “cool” identity of X-oduz brand and how it matches the cool and relaxed quality of life styles led by the Y generation consumer. This is to be achieved through a series of creative messages that show these youths and a “slice of their life” stories depicting life with friends, life outdoors, life in the beach, life trekking and hiking all with family and friends. The clothing should be a part of their life. Not a hard sell. A proposed brand massage can be “X-oduz – life is out there .. let’s enjoy!” Create a link between X-oduz brand and conservation of nature. This can be through a series of long term programs including sponsorship of wildlife conservation facilities, active campaigning for environmental conservation, use of environmental friendly material, staying off raw material that destroys animals such as animal skins, ivory, silk etc. This is targeted to appeal the sensible and environmental conscious nature of the Y generation consumers. Launch promotional campaign with high frequency and high reach to achieve a high level of top of mind awareness and recall rate for the brand name. Link X-oduz with fitness and wellness. Y generation is one of the most health conscious of all youth generations and place priority on going to gym and keeping fit. These logos, brand messages and imagery should all be present in all promotional material including Point Of Purchase (POP) material, merchandising, the clothing itself and in all marketing communications. Even the company stationary and other symbols and communications must incorporate the series of new sub brands as well as the linkage to environmental conservation. 6.4 Bringing out the Brand Heritage Brand heritage too is a component of effective branding strategy which can be leveraged to enhance the consumer relationship. In the case of the Y generation consumers who lacks much brand loyalty, the heritage factor should not highlight the years of experience or the history itself. Research of Roy Morgan Surveys indicated that gen Y are less interested in the Australian origin than their previous generation of gen X (58% vs., 79%) (Roy Morgan Survey, 2009). Therefore, it is advisable that this aspect of brand building is not highlighted for the X-oduz brand but linkages to community and environment as a whole is taken in to the heritage aspects. 6.5 Future Innovations for the Brand Keeping the brand fresh and dynamic is essential element of the branding strategy. This is often done with innovative new changes that allows for fresh brand news and face lifts to imagery and symbols. One of PGP’s main problems currently is the lack of brand dynamism. With the new generation of consumers who crave change and novelty on a constant basis, following are proposed for X-oduz brand revamping strategy Introduce logo variations of X symbol already there being combined with the brand variant. For example, X-oduz green will carry an imagery of X-green logo in to the garments. This can be embossed, embroidered or attached as leather affixes in discreet but noticeable manner. Plan for 12 new mini collections within the 4 main seasons instead of the 3 collections being introduced currently for a year. This will keep the brand and the collections fresh and innovative. The launches of the collections should be hyped up and presented with collaborations of cool youth events that can be linked to some of the lifestyle activities of the consumer. A surfing championship, a hill climbing competition, beach volleyball, cool summer camping etc can be organized as both brand promotion events as well as consumer interaction programs. The launch of new sub brands should be kept energized with special promotions for each category. For example, X-wild sub brand can go on a Safari campaign to South Africa etc. Keep introducing new material and functional features to various cloth lines and create awareness of these new brand activities. 6.6 Leveraging X-oduz brand Currently, PGP has not acted on the potential of leveraging the X-oduz brand equity through connections of umbrella and banner branding. This brand with the newly created image and identity can be extended to a variety of related and complementary product portfolios. It is recommended that the following proposals are evaluated for potential and incorporated as a part of the change strategy. Introduction of “X-Ax” accessory range including sunglasses, belts, caps, head bands, sports accessories etc. Launching a new swimwear line as X-O2 Launching a casual footwear range under the umbrella brand X-foot Launching X-Gym range of clothing geared towards fitness and wellness activities 7. Media Choices for the Brand Revamping Campaign Having proposed the brand repositioning strategies, promotional elements play a key role in making these proposed strategies effective. The new brand essence, the image and the identity has to be conveyed and established in the minds of the customer through a mix of promotional and communication tools that can reach the target audience effectively (Belch & Belch, 2004). It is important at this stage to note that Y generation consumers do not have much high regard for hard line promotional messages nor are they influenced greatly by media image of a product. Therefore, the selection of media has to be done with careful consideration of the uniqueness of the customer profile. Following media proposals are made to convey the new brand changes being implemented at PGP and to convey the revamped X-oduz brand massage. Revamp the company website and make it more interactive. Allow for a customer registration portal where they can become X-oduz club members. This can be a long term customer relationship building strategy for the brand. Let there be a forum in which the members can share their ideas, suggestions or feedback. Give opportunities for taking part in X-oduz product development and with the environmental conservation drives. Advertise in online youth sites as face book, You tube, etc. Invest in text message advertising. Hot news of X-oduz as well as promotional info can be communicated to target consumers in the age bracket by tying up with mobile service providers High frequency TV advertising at national level coverage within the first three months of the brand repositioning in order to communicate and increase awareness. Radio ads in Youth channels spread across the entire year to maintain brand presence as listening to radio is one of the top 3 pass times of the Y generation. Trailer Advertisements in all cinemas as going to movies is one of the top 3 pass times of the target audience. Sponsorships of beach carnivals, surf championships, trekking and hiking events, youth camps etc with heavy below the line advertising as banners, bill boards etc. being present at these events. Promotions to take place in conjunction with the events and to be combined with introducing monthly new collections. Organizing an X-oduz rally in support of wild life conservation where members of X-oduz club as well as friends and family are invited to take part. Attractive gifts such as X-oduz ware for a life time which can be tantalizing to this hard to bait consumer segment. Brand messages to be prominently displayed at all Point of Purchase locations for brand reminding purposes. It is hoped that with this media choices X-oduz will be able to convey the brand massage effectively and memorably to the target audience. 8. Support components for Brand Change In addition to above components of effective branding strategy following are some of the critical elements which PGP needs to look in to and develop in order to make this change proposal a success. 8.1 Strategic Vision and Branding The changes proposed for X-oduz brand is monumental. It is not likely that a total brand revamp can be achieved through small tweaks and turns at tactical level. Therefore, to implement a brand revamp strategy, total commitment and support at strategic management level is essential. The top management must understand and be in total agreement with the proposed changes. 8.2 Integration with Overall Business Vision The proposed changes should be well aligned with the strategic vision of the company. Then only will PGP be able to achieve a complete cohesion in its interdepartmental activities which will all be gearing towards delivering the brand promise being made though he new brand repositioning campaign. It is only with cohesion and collaboration across departments that the brand value promised to the consumer can be delivered. For example, to add novelty and dynamism to the X-oduz brand, it is proposed to introduce new collections on a monthly basis. Such changes will involve extra collaborations between product development, marketing, finance, sourcing and production departments if this brand promise were to be delivered. Furthermore, new brand imagery, brand messages and brand linkages should be fully present and supported by all activities of the overall company operations. 8.3 Business Process Reengineering Those companies that succeed in delivering unparallel customer value have streamlined their business processes to perform each segment of the value chain efficiently and effectively (Macrae & Uncles, 1997). PGP too will need to reinvent its entire business process in order to be geared at delivering the dynamism, coolness, innovation, punctuality and sensibility being promised to the consumer. Departments such as IT has to gear up to the increased role which the IT and interactive web site as well as online sales store has to play within the new brand strategy. By considering these additional but critical areas which support the brand change process, PGP can develop and execute effectively the proposed changes that can add value to its customers and create lasting relationships based on differentiated customer value that results in customer loyalty. 9. Managing Brand Equity of X-oduz The ultimate objective of a successful brand repositioning is to hope for a high level of brand equity for X-oduz. Taylor et. al. (2004) identified benefits of brand equity to include “greater customer loyalty and less vulnerability to competitive marketing actions and marketing crises” (Taylor et al 2004). Therefore, by achieving a high level of equity for the brand, PGP will be in a position to recover from its current adverse position. The steps of creating brand equity involves creating a brand identity, a brand meaning, brand responses and brand relationships. The brand change strategies outlined has included the first two steps of the brand equity building process, namely the building brand identity and brand meaning. The third step involves eliciting a favorable brand response for X-oduz. Brand responses encompass what the customer thinks or feels about the brand and its activities. Responses such as brand judgments can be on quality, credibility, considerations and superiority of the brand. By combining all efforts of the organization in to sincerely delivering what the company promises, PGP has a good chance of evoking a warm affinity with the consumers. Such brand responses results in customers going in for repeat purchases, being satisfied with the product, feeling a strong link and bond with the brand (Knox 2007). . Last step of developing strong brand equity for X-oduz is to develop the customer relationship with the brand. Once the branding reaches this stage, the customer identifies with the brand and finds that they are “in synch” with what the brand represents (Taylor et.al. 2004). Strong brand relationship can lead to sense of community and affinity with other brand users and finally a stage of active engagement with the brand by seeking information, sharing inputs and ideas and actively promoting the brand. These needs has been taken in to account when brand proposals were being made such as establishing an X-oduz membership club and having an interactive web site for communications and relationship building. However, the biggest determinant of brand relationship will be the customer satisfaction and the delivery of the brand promise to the customer. 10. Conclusion Branding no longer represents merely the glamour and hype of mass media advertisements. Good branding encompass the whole organization and its activities and drives it towards delivering customer value. This value is promised in its differentiated forms to the customer through the brand identities, meaning and conveyed through a host of media and promotional means. Through successful completion of establishing a brand identity and meaning, the brand equity building process can reach the important stage of gaining a brand response. Based on the customer experience in such a brand response, the brand relationships are formed and sustained. This process has been taken in to consideration when formulating this change proposal and the recommendations to recreate the X-oduz brand and build its equity. It is hoped that with these changes in place, PGP can recover from its current adverse position and forge ahead successfully in catering to the gen Y customer who are the most influential and affluent of customer generation the world will see for decades to come. References Armstrong, G. & Kotler, P. 2000, Marketing: An Introduction, 5th ed, Person Education Inc, Singapore. “Australia's Generations - The Definitive Classification” (2007) Retrieved 28.08.2009 from http://www.mccrindle.com.au/fastfacts.htm Belch, G. E. & Belch, M. A. 2004, Advertising & Promotion: An Integrated Marketing communication perspective, Irwin, Illinois. Generation Y profile (2007). Queensland Tourism Industry Council. Retrieved on 05.09.2009 from www.qtic.com.au/files/generation_y_profile.pdf “Gen Y tops in Consumer Confidence; Sportsgirl tops among Gen Y; Myer still has a way to go” (2009) Roy Morgan Research. Article No. 927 Retrieved on 29.08.2009 from Gen http://www.roymorgan.com/news/press-releases/2009/927/ Hira, N.A. (2007) Attracting the twentysomething worker Fortune writer-reporter. May 15 . retrieved on 08.08.2009 from http://money.cnn.com/magazines/fortune/fortune_archive/2007/05/28/100033934/index2.htm Knox, S. (2007) “Positioning and branding your organisation”Journal of Product & Brand Management Vol. 13 - 2 pp: 105-115 Macrae, C. & Uncles, M. D. (1997) Rethinking brand management: the role of “brand chartering” Taylor, S. A., Blair, K.C. & Goodwin,S. (2004) The importance of brand equity to customer loyalty The Australia Apparel Market Research Report, (2008) Retrieved on 25.08.2009 from http://www.infomat.com/fido/getpublication.fcn?&type=research&SearchString=apparel&id=737870ST0000872&start=2&tr=17 Brand Repositioning Proposal X-oduz Apparel – Pacific Garments Plc. Prepared By Submitted on : Course Module : Table of Content Content Page Executive Summary 1. Introduction 01 2. Company Overview 01 3. Market Analysis 01 3.1 Australian Apparel Industry 01 4. Customer Segments 02 4.1 Generation Y Profile 03 5. Findings of Brand Audit 04 6. Proposed Brand Repositioning Strategy 06 6.2 Creating New Brand Meaning 06 6.2 Creating New Brand Meaning 06 6.3 Recreating X-oduz Brand Identity 07 6.4 Bringing out the Brand Heritage 08 6.5 Future Innovations for the Brand 08 6.6 Leveraging X-oduz brand 09 7. Media Choices for the Brand Revamping Campaign 09 8. Support components for Brand Change 10 8.1 Strategic Vision and Branding 11 8.2 Integration with Overall Business Vision 11 8.3 Business Process Reengineering 11 9. Managing Brand Equity of X-oduz 12 10. Conclusion 12 11. References 14 Read More