Global Marketing Plan for Uniqlo Company - Case Study Example

GLОBАL МАRKЕTING РLАN FОR uniQlo company STUDENT NAME AFFILIATE INSTITUTION DATE Executive summary UNIQLO which is a leading casual cloth company in Japan is planning to venture into Brazilian market which has been rated as the biggest apparel market in the world due to its large composition of youthful population with extra cash to spend in fashion and trendy apparels. To gain entry into the Brazilian expanded and competitive apparel market with well-established competitor like Marisa and Lojas Renner, the company would adopt various promotional mix which include advertising through the various advertising media, establish a public relation department that ensure complete customer issues are attended to promptly and sponsor various local events, personal selling and sales promotion to boost the image of UNIQLO as a company and its products. The company would employ various entry strategies into the Brazilian market which include merger, joint venture and acquisition of local industries. The marketing plan is to covers a period of three years to be able to achieves its full stipulated objectives Table of Contents GLОBАL МАRKЕTING РLАN FОR uniQlo company 1 STUDENT NAME 1 AFFILIATE INSTITUTION 1 DATE 1 Executive summary 2 Introduction 1 Company background 1 Current business situation 2 Market share 4 Marketing Objectives 5 Mission and Aim 5 Goals 6 Purpose 6 Objectives 6 Target Market 7 THE BRAZILIAN MARKET 7 Geographic locations/demographics/transportation 7 Market size 8 Product composition 9 Government participation in the marketplace 9 Situational analysis 10 SWOT analysis 10 Strength 10 Weakness 11 Opportunity 12 Threats 12 Entry Mode Strategy 12 Product adaptation, or modification 13 Promotion mix 14 Advertising 14 Public relations & sponsorship 16 Personal selling 16 Sales promotion 16 Product Distribution 17 Packaging 18 Channel of distributions 18 Pricing strategy 19 Terms of sale 20 Methods of payment 20 Cash-in-Advance 20 Letters of credit 20 Conclusion 21 References 22 Executive summary ii Introduction 1 Current business situation 1 Market share 3 Marketing Objectives 4 Mission and Aim 4 Goals 4 Purpose 4 Objectives 4 Target Market 5 THE BRAZILIAN MARKET 5 Geographic locations/demographics/transportation 5 Market size 5 Product composition 6 Government participation in the marketplace 6 Situational analysis 7 Swot analysis 7 Strength 7 Weakness 8 Opportunity 8 Threats 9 Entry Mode Strategy 9 Product adaptation, or modification 10 Promotion mix 10 Advertising 11 Public relations & sponsorship 12 Personal selling 12 Sales promotion 12 Product Distribution 13 Packaging 14 Channel of distributions 14 Pricing strategy 15 Terms of sale 15 Methods of payment 16 Cash-in-Advance 16 Letters of credit 16 Conclusion 16 References 17 Introduction In the modern business environment business, small and large wishing to expand their operations to new markets have to layer done strategies on how to enter and establish its presence in the market. All this strategies are stipulated in a marketing plan. This market plan is for UNIQLO Company for use on its plans to enter new Brazilian apparel market. The market plan outlines the purpose and objectives of the market plan, customer research, competitor analysis, market entry strategies to be applied by UNIQLO and finally the recommendation and conclusion of the plan. Company background UNIQLO was initially part of Fast Retailing Co. Ltd, in 1984 Fast Retailing Co. Ltd established a casual clothing store in Japan that was named Unique Clothing Warehouse that was shortened to UNIQLO. Since then UNIQLO grew to be an international leading fashion clothes retail company (uniqlo.com, 2010). UNIQLO specializes in fast fashion, i.e., clothing that is fashion-forward, moderately priced and constantly changing in style and color (Plunkett 2008).This specialization is in line with the company’s brand message to inspire the universe to dress casually (UNIQLO 2011). Inspite of having its main footing in Japan the company have expanded its operations and products to several countries in the globe and its vision is to reach all the continents including Africa. The company started its expansion program by establishing its main stores in the oversees stores since 2009 to major cities across all the continents of the world (Plunkett 2008) . Current business situation UNIQLO is unmatched by any other textile company or apparel company in its home country Japan. UNIQLO is officially Japan’s leading clothing retail chain [Jim12]. It currently has 845 stores in Japan and 292 stores in other markets overseas (USA, UK, China, Thailand, France, Hong Kong, Japan, Korea, Malaysia, Philippines, Russia, Singapore and Taiwan). The company’s financial condition is at excellence condition and according to the financial results posted in the fast retailing website, the group financial performance for September through November 2012, the consolidated sales recorded a rise of 16.7% to 318.1 billion Japanese Yen, while its operating income expanded 16.9% to ¥ 56.9, on the other hand the ordinary income increased 23.4% to ¥ 59.7 billion and net income increased by an impressive 23.5% to ¥ 38.4 billion (www.fastretailing.com, 2013) Consolidated Business Performance Adopted from: (www.fastretailing.com, 2013) Performance by Group Operation Adopted from: (www.fastretailing.com, 2013) Market share The company has established its footing in Japan and is the leading fast-fashion clothing company in Japan. In the global market, the company has a strategic plan of increasing its market share to the rest of the world and to fulfill its goal UNIQLO started with establishing stores in major cities of the world such as London, Shangai, Paris, Hong Kong, Singapore, Malaysia, Seoul, and New York (Plunkett 2008). The company’s mission is to establish more stores in all the major cities in the world such as in North America, Africa, Asia and Europe. The table below shows the Worldwide Apparel Specialty Stores as per the company’s market capitalization Marketing Objectives Mission and Aim The company’s mission and vision is to always avail to its customers all over the globe fashionable casual cloths, exceptionally high quality on an affordable and competitive pricing [Our10]. Goals To expand its distribution stores to south America starting with Brazil Increase its revenue through increased sales by 7% annually and reduce its recurrent expenses by 5% annually Be the leading casual cloth retailer worldwide by 2015. Purpose To assessment the Brazilian apparel market in order to devices effective and efficient strategies for successful entry and compete with the existing established clothing companies from within and international. Objectives The objectives of this plan is to: i. study the target market to establish the current prevailing conditions and potentials ii. investigate the fashion trend iii. Find out who the competitors’ are and their marketing strategies iv. Identify the target audience and Segment the market v. Develop effective market entry strategy Target Market THE BRAZILIAN MARKET Geographic locations/demographics/transportation Brazil is a large country with an area of 8,511,965 km2 and a population of 194,463,000 according to Euromonitor International (2011). Brazilian annual population growth was 0.87 per cent while females comprised 50.8 percent of the population (Trading Economics 2012). The country’s consumer expenditure increased from US$ 1,455,808.6 in 2011 to US$ 1,516,970.3 while annual disposable income grew from US$ 1,552,364.5 to US$ 1,622,826.6 in the same period (Euromonitor International 2011). Although transport is good in some areas [for instance there were 18,275 mile of railroad, 1,071,821 mile of highway roads, an a vast waterway system by 2006 (Adekola & Sergi 2007, p. 189)], the average transport infrastructure is rated 3.8 out of 7 on the World Economic Forum survey, below the world average of 4.3 (Nexus Infrastructure 2011, p. 3). The communication system is good and Brazil is the seventh country worldwide in Internet usage with 10,098,000 Internet users as of June 2009 (Internet World Stats 2012). As mentioned above, apparel shoppers, mostly youths, prefer clothing brands endorsed by local celebrities. Market size The apparel market in Brazil has recorded a positive growth of approximately 7 percent since 2008 which was estimated at over US$37 billion[eur12]. According to euromonitor.com (2012) the appeal market would continue the positive growth due to improved purchasing power and increased disposable income which make customers turn to high-valued products that are icons of high status (euromonitor.com, 2012) Brazilian population according to McKinsey report have shown high spending in fashion clothing compared to any other citizens in the world. According to the McKinsey Report of 2006, Brazilian buyers are “fond of shopping for clothes” while 79 per cent of respondents from the country “look forward to shopping for clothes” compared to 26 per cent and 27 per cent of the respondents from China and Russia respectively (Grail Research 2009, p. 18). Through the research, there is a clear indication that already the population are really spend and others who are not economically able to spend now due to lack of money are yearning to spend on clothes once they get money or once they get an opportunity to do so. The market is looking good now but much better in future. The young population which is the main target market is also a key driver for this market given that about 60 per cent of the Brazilian populations are people under 29 years. Product composition UNIQLO’s major competitors are Marisa and Lojas Renner.These brand names are Portuguese-oriented in tandem with the South American culture. Even the companies’ websites are available in Portuguese although a user can translate them to English. This means that UNIQLO also has to show its online presence by availing its web pages in the Portuguese language. Both Marisa and Lojas Renner have products for a wide range of age groups; UNIQLO will therefore have a competitive advantage if it focuses on providing products for youths – who form the larger segment of the population. Besides focusing on the youth the company could venture into producing baby products as this will assist the company to create loyal customers at the tender age all the way to grown-ups. Brazilian parents have strong attachment to their kids and thus capturing the heart of the kids is capturing the hearts of the parents too. Government participation in the marketplace Brazil is a mixture of government control and free market (Adekola & Sergi 2007, p. 189). The government agencies that govern and regulate the apparel and fashion industry in Brazil are ABRAVEST (Brazilian Government Association) and ABIT (Brazilian Textile and Apparel Industry Association) (Cultural Exchange; Rupp 2012). In particular, ABIT’s goals are to facilitate viable development of the apparel markets in Brazil by collaborating with the government agencies and private sector to ensure that they promote and raise the awareness on the people pertaining to the textile industry. Depending on the product, the organizations involved in licensing for the apparel industry are ANVISA - Brazilian Health Surveillance Agency; DECEX - Foreign Trade Operations Department; MAPA - Ministry of Agriculture; IBAMA - Brazilian Institute of the Environment and Renewable Natural Resources; and MEX - Ministry of Defence (Office of Textiles and Apparel (OTEXA) 2012). There are also requirements to label products in accordance with MERCOSUR (Common Market of the South) requirements (OTEXA 2012). Situational analysis SWOT analysis Strength UNIQLO is presently rated as the best casual wear brand in Japan because of the quality of its products attracting many customers. This could possible help to boost the image of the company in Brazil as customers want to be associated with famous global brands which UNIQLO measure up to. It also has retail outlets at many countries making the company to supply its products in large quantity. This also will help cut cost of transportation and consequently a ripple effect to customer: low priced products. It offers variety of affordable high quality clothing for both male and female and thus enhancing the productivity and development of the company because it has a wide range of products which are on high demand in market. The quality of the products has attracted many customers as it is the best as compared to others from different companies. Due to high profit making the company has managed to come up with huge quantity of products. The company has quality management for its staff, goods and services.the prices of their goods are affordable to many customers because it is low enough for the customer to afford and low enough to be profitable for the company. There is reliable productivity and creativity for every new season due to high demand of the products in the market. The Asian measurement and cutting are good enough to be admired by many potential customers as they are fashionable enough. The company also has highly qualified staff that conduct market research, research on new and cheaper technologies for manufacturing quality and cheap products in the market. Weakness The products are still new and many people are not aware of in Malaysia because it was recently introduced thus still new to people in that region. UNIQLO has one store thus the supply is still poor as it needs many retail outlets to reach many potential customers. The variety of the products are based on four seasons thus when the market demand is low other products many not be produced due lack of enough space in the stores which brings the company down as the business will slow down. The cost of products might be high due import tax as the producing firm has not yet been established in the region. Also the currency change makes it to be expensive. Opportunity The growing apparel market in Brazil and the fashionable growing population of youths may enhance the growth of the business in Brazilian market. The enhancement and pervasive nature of information communication technology have enhanced the speed at which information are disseminated in the rest of the world, thus this provide the company a better platform on how to spread the fame built by the company in its home country to the rest of the world. The positive Economy growth and liberalization of culture contribute to the high demands of consumer market. Threats The difficult of penetrating the market in Brazil due to established competitors such as Marisa and Lojas Renner. The products are shipped from other countries like China, USA, Japan. In the event of a political, economic or legal disagreement between the countries of a major natural disaster the supply of the products might be disrupted and will significantly affect sales and supply reliability. Entry Mode Strategy Brazil is known for its growing population of young generation and growing middle class citizen yearning to expend on clothing presents exciting opportunities for the growth of apparel market [Bot04]. The possible market entry strategies for the Brazilian market include acquisitions or mergers, forming franchises, and joint venture partnerships (Bhatia 2008, p. 71). Acquisition is possible; because there are many small apparel retailers in Brazil which can be acquired as a starting point for UNIQLO’s operations in Brazil. This acquisition can be full acquisition or partial acquisition. In partial acquisitions the company would acquire part of the existing company and both companies would make agreement on how the company would be managed and how the profit and losses would be shared among the two companies. In the full acquisition UNIQLO would acquire full ownership of the company Mergers with renowned firms are also possible although the disadvantage of this arrangement is that it will leave UNIQLO without the requisite knowledge to operate in the new market. UNIQLO can also use franchises in Brazil to sell its products and pay them a commission or franchise fees. The advantage of adopting a franchise scenario is that franchisees generally possess a better knowledge of the local market than the franchiser (Gauzente & Dumoulin 2010, p. 256). In this case, UNIQLO will not be exposed to the challenges of entering the Brazilian market on its own. A joint venture will also present similar advantages. Product adaptation, or modification To live up to the needs of the internal customers the company has to adapt its products to the needs and desires of the international market (SmallBizConnect, 2012). The company would not go the direction other companies took which somehow failed terribly, the mistake of taking to the international market the products which were received overwhelmingly in the local with an assumption the same would happen in the international market (Botha et al., 2004). To catch the attention of the customers the core products would be adapted to the international market. This may include identifying the key issues and topical issues in Brazil and printing T-Shirts that capture the issues at hand. The company would print T-shirts featuring the Brazilian celebrities, images of prominent historical features in Brazil. Clothing that tell the Brazilian stories. The other products like jeans and jackets would not change much. But might be modified slightly to accommodate the climatic conditions in Brazil. The local history would be studied extensively to discover the Brazilian Costumes and tastes. Since some logos, colors and packaging applied in some other countries might be offensive thus customers might shy away from such products, consequently might great a general negative perception on whole of the company’s products. Promotion mix The company would use explore a number of promotion strategies Advertising Since a high percentage of the population in Brazil are the youths which form also are the target population, the advertising and promotion campaign will be skewed towards the use of media since it’s the most and widely used by the target population. In this campaign the company would mostly use the TV, social media and internet viral advertising. According to Shimp (2008, p. 379), no other medium can reach consumers simultaneously through auditory and visual senses than television. Television is significant as a means of reaching the target population because it can be used to demonstrate the product in use, it has an unparalleled intrusion value, it can be used to reach the consumer one on one, and it has the ability to provide entertainment and generate excitement (Shimp 2008, p. 379). Millions and millions of people have access to the internet consequently internet advertising has recently become an effective method of advertising compared to the television. Unlike television where commercials forcibly interrupt viewing, Internet viewers can control what they want to see, and can therefore click on an ad to view more information (Stafford & Faber 2005, p. 106). In the internet the company would utilize the pay per click advertising which will ensure that advertising cost is proportionate to the number of users viewing the ad. Google adwords advertising and utilization of the various social media advertising such as in the following social sites: Google plus, Facebook, twitter, YouTube among other social sites (Botha et al., 2004) The company would also place adverts in the Magazines and Trade Journals. Furthermore the outdoor advertising which include adverts in the buses and cabs, and billboards placed at strategic locations in Brazil (Agnew, 1938). Public relations & sponsorship Public relation as a means of building the company’s image would involve managing the company’s relation with the customers, suppliers, local communities among other parties interacting with the company directly or indirectly. This would involve setting up a public relation department who would be task with ensuring the customers are attended to accordingly and any issue arising is sorted immediately (DuquesneUniversity, 2013). The main objective of the this strategy is to achieve favorable publicity, build the company’s image and its product reputation especially amongst the potential customers and establish an effective correspondence with the customers and other stakeholders (Riley, 2012) The company would also participate in sponsoring events such as sports and other charity this would help build the brand awareness and make customers own up the product thus creating customer loyalty. Personal selling The company would place sales persons in all the major stores in Brazil who would be in a position to persuade the customers to buy the product. Internet chats and direct telephone calls could be done to selected customers informing them of the latest fashion (Riley, 2012). Sales promotion This is a short term promotional strategy to attract customers to buy the company’s products. Several strategies would be used to promote the sales of the products at the begin (Riley, 2012). a) Money off coupons: coupons would be placed in the national newspapers and magazine. Customers would be required to cut the coupons and come with them to the store and they would purchase the company’s products at a discounted price. b) Competition: when a customer purchases the company’s product he/she is allowed to take part in a given competition that give him/her a chance to win a prize c) Free gifts: gift free gifts to customers who purchase the company’s product d) Loyalty cards: the customer would be provided with the loyalty cards that earn them more points every time they purchase the company’s product which later can redeem the points for cash or a product. Product Distribution Since transport can be a major challenge, UNIQLO will launch its operations in major cities such as Sao Paulo, Rio de Janeiro, Salvador and Brasilia. Since these cities are on the coast line transportation of products from New York through the sea to the various ports in Brazil is cheaper (Riley, 2012). Since New York based factory is large enough to produce enough cloths to supply to Brazil before the establishment of a local industry in Brazil. Products with special orders would be ferried by the airplane from any part of the world where UNIQLO have established companies. From the port the products would be distribute via the railway connecting the major cities in Brazil. Trucks would be used to distribute the products to the various distribution centers in the selected cities in Brazil. Packaging The company’s products would be imported in bulk to the selected cities. Once in the city the products are packaged in bundles which would then be supplied to various outlet stores who would package the products in small UNIQLO branded boxes. Products also have to be labelled in compliance with MERCOSUR requirements. Channel of distributions The company will have its own distribution units or franchises in some cities and consider venture partnerships with local representative firms and distributors in order to access areas which cannot be accessed at the start of the market entry. The company is considering partnering with the major supermarkets such as Extra Barra, Extra Supermercado, Temperos e Doces Asmar, Bar e Padaria do Berreco among other major stores and boutiques selling products directly to the customers. Nonetheless, any contract should include terms that allow for local production and distribution whether through a new plant, acquisition or joint venture (Landmann & Di Si 2010, p. 2). In addition, UNIQLO envision expanding online sales by presenting custom-made product line through the Internet, thus differentiating Internet offerings and specialty ship offerings. Over time UNIQLO would place place internet kiosks at some of the more profitable store outlets so consumers could order customized products form the stores. Regardless of its expansion plans, UNIQLO fully intends to monitor and maintain strong relationships with distribution channel members Pricing strategy In order to achieve a sizeable market share in the introductory stage, UNIQLO needs to adopt the strategy of keeping prices lower than the competition in the Brazilian market. According to Paul (2008, p. 223-224), such a move will often result in an instant acceptance of the company’s products from customers of competitive products and the firm will be able to penetrate the price conscious segment of the market immediately. The company would use the penetration pricing strategy in the initial phase as this would encourage more customers to consume the product. This would involve reducing the cost of the products lower than normal market price until the objective of reaching more customers is achieved (Smith, 2011). Once the objective is achieved the company can increase the price and adopt the various pricing strategies which may include cost based pricing; the cost of products are set taking into consideration the gross cost of the product, or competitor based pricing which involves setting prices based on the competitor prices (NetMBA.com, 2010). Price discounts strategies would be administered such as trade discounts to the retailers who purchase in large quantities, seasonal discounts, cash discounts, and promotional discount (Riley, 2012). Terms of sale The company would be flexible enough to agree on the various terms of sale which include Ex works, free on Board, Free Alongside Ship, Cost and Freight among other terms agreed upon between the company and the buyer or supplier (ForeignTradeOn-Line, 2009). Methods of payment Payment has been a major issue which may delay the operation of the business. Most importers and stores would wish to delay payment of goods even after goods have been delivered to enable them resale the product before paying the suppliers. To avoid this situation in this new market the UNIQLO would have to carefully select a convenience method that is most favorable for both the supplier (UNIQLO) and the buyers (U.S.DepartmentOfCommerce, 2012). The following would be used as a method of payment: Cash-in-Advance With this method the company would reduce the credit risks since the buyer owns the product after making payments for the product this method would be accepted for infrequent suppliers. Letters of credit This method is the most encouraged method since the bank commits itself on behalf of the importer provided the terms and condition for payment are met. The letter of credit give confidence to the buyer that the goods ordered would be delivered since payments are effected once the buyer acknowledges the receipt of goods (U.S.DepartmentOfCommerce, 2012). Conclusion The apparel market in Brazilian present a great opportunity for UNIQLO because of the large population size the vibrant economy. Due to Brazil growing economy, middle class population are also on the rise. This middle class population comprising mostly of young population have a great yearning to spend on new consumers products on offer in the market. Young people form a large section of the population and these are a good target for the market entry strategy. Reaching the target population can be done through TV and the Internet given that many people have access to the Internet. Since transport can be a challenge due to the huge size of Brazil, it is recommended that UNIQLO’s establishes its operations in the main cities at the start then later enter into the offshore cities. Finally, to effectively conquer the existing competitors in the market and establishing its footing in Brazillian apparel market, UNIQLO have myriads of strategies that they can adopt to successful enter the market, this include acquisitions and mergers, franchising and joint venture partnerships References Jim12: , (Riley, 2012), Our10: , (uniqlo.com, 2010), eur12: , (euromonitor.com, 2012), Bot04: , (Botha et al., 2004), Read More