UNIQLO's Challenges in the New Market, Promotion and Distribution Plan - Case Study Example

Executive Summary This report is based on UNIQLO’s marketing plan. An marketing plan is important for any brand before it enters anew market. Even though UNIQLO is an international brand name it required an ample amount promotion as it was entering anew market. The major marketing objective will be to convince the population, and especially the young people, to try the new and foreign brand being introduced in Brazil and to promote the brand in such manner that it achieves competitive advantage in the market For this purpose expected profits and sales were also sought out, promotion, pricing and distribution strategies were also recommended. With out a doubt UNIQLO is a famous brand name and any market competitors could face fierce competition against it, Developing а Marketing Plan For A Company Introduction Company background UNIQLO is a trendy clothing operator headquartered in Japan, having been established in 1984. The company’s name stands for Unique Clothing warehouse and reflects the fact that much of each store’s stock is kept on the floor where customers are able to interact with it. It specialises in fast fashion, i.e., clothing that is fashion-forward, moderately priced and constantly changing in style and colour (Plunkett 2008) This specialisation is in line with the company’s brand message that “UNIQLO is a modern Japanese company that inspires the world to dress casual” (UNIQLO 2011). Company Analysis UNIQLO is officially Japan’s leading clothing retail chain. 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). Consolidated sales of the company increased 13.2% year on year (to August 2012) to ¥ 928.6 billion, while its operating income expanded 8.7% to ¥ 126.4 billion and net income increased by an impressive 31.8% to ¥ 71.6 billion. The UNIQLO brand is known for its strong visual identity and international market presence as seen above, which gives it a strong competitive advantage (Kaputa 2012, p. 87). The Product .With over 60 per cent of the country’s population aged below 29 years, the market has grown 7%, (Thomas White International 2012). Therefore, how the UNIQLO brand will be perceived will determine how the brand is accepted by the population. The major challenge will be to convince the population, and especially the young people, to try the new and foreign brand being introduced in Brazil Marketing Objectives Specific Marketing Objectives The major marketing objective will be to convince the population, and especially the young people, to try the new and foreign brand being introduced in Brazil. To promote the brand in such manner that it achieves competitive advantage in the market Target Markets The target market is the young population. Youth has been selected as the target market as about 60 per cent of the population is people less than 29 years. Thus, the brand would have a better opportunity in gaining a competitive edge in the market. This may be due to the fact that the selected target market is the dominate segment of fashion market. Expected sales (Result Summary 2013) Expected profits Consolidated sales are forecast to top one trillion yen for the first time, with sales of ¥ 1.069.0trln (+15.1% year on year), operating income ¥ 147.5bln (+16.6%), ordinary income ¥ 146.5bln (+17.0%) and net income ¥ 87.0bln (+21.4%). (Result Summary 2013) Pricing, Gross Margin Targets 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 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. A key determinant in any market is the pricing, which must be competitive with other imported products. The price range is a primary factor as the product currently sits in the development stage of the product life cycle (Brooks & Weatherston 1997). There are numerous competitors, so the ability to charge higher prices is quite less. Being a fairly novel product, many people may willing to pay high prices for an familiar product (Hooley etal 2008). But it is to be kept in mind that the price must not be too high it should be affordable, The retail price for the clothing must cover all the costs incurred for production of the product. Apart from this the price has to be competitive so that the customers can comfortably make it a part of the monthly clothing purchases. Market Penetration and Coverage UNIQLO should keep in mind that market penetration in Brazil may be a little difficult. Brazil has always been a challenging market for a companies like UNIQLO due to the fact that weather is entirely different from those in their main location where their trends start from which is mostly the northern hemisphere consumption bases. Suppose if a retailer can use it’s European spring collection and introduce it in Brazil further along the year. However it may not be possible as Brazilians are extremely fashion conscious and do not appreciate the hand-me-down strategy and this is where UNIQLO may face difficulty. 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. 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 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. Market Penetration Target It may be noted that UNIQLO may have to face numerous competitors in their market segment. As here many diverse submarkets of the kind of clothing, UNIQLO will introduce are present however they can introduce their collection at most well known apparel trade event (Cateora & Graham 1999) it consists of eight areas where UNIQLO can introduce and exhibit their collection Overall Marketing Strategy The marketing strategy may be based on a two-stage venture (Clow etal 2009). UNIQLO primary goal is to sell clothing to consumers. For this they have to invest all their energy and resources in getting their clothing line to stores and open outlets which may help them to not only to o increase sales in their own outlets but other stores where customers can purchase their product. The goal is to have the quantified goals and measured quantified results match. It is extremely rare for this to occur since there are so many factors that can influence the outcome of a marketing plan (Lamb etal, 2000). This is why the comparison of the quantified goals and the measured quantified results is so important. Using the comparison will allow for the identification of any deviations from the established goals as well as the assisting in the determination of the deviations cause. After identifying the deviation(s) and the cause(s), a course of action can be developed to correct the deviations. The quantified goal may be considered as a standard to determine the growth of the product. The measured results consist of the data collected through various means and were evaluated to determine definite performance of the strategy being implemented . This data can come from sales, customer satisfaction, and Return on Investment (ROI), to name just a few (Stanton etal, 2000). The data that will be used by UNIQLO for determining the success of the marketing plan. It will come from a sales analysis, a customer satisfaction analysis, and a profitability analysis. Using the data from the three data points will allow UNIQLO to determine if they have met the established quantified goals. The sales analysis date will determine if the services being offered are wanted by the consumer. There is an option in this analysis to analyze consumer demographics to determine if the product should be offered in all locations or if the services should be offered in specific locations (summer, 2003). The frequency of the individual consumer's use of the product will also be measured to establish the level of repeat customers. The customer satisfaction analysis will be less quantitative as it will be dependent on the customers' willingness to respond to a satisfaction survey. Comparing the number of responses to the number of individual customers will allow for a more realistic data set. It will be important to collect specific data on why the customer was satisfied or dissatisfied with the services (McColl &Keil, 1999). The profitability analysis will allow UNIQLO to determine if they were accurate in their estimate of sales compared to the cost of the service. The data will show the comparison of the advertising costs of reaching the consumer with the service with the number of services being purchased. Once the data has been collected and analyzed, UNIQLO can then make any necessary adjustments to the marketing plan to reach the established goals. The adjustments can range anywhere from increased advertisement to removing additional services. The determination on what course of action to take cannot be made until there is data to compare. Consumers UNIQLO utilizes a diverse mix in methods of out reach direct to their end-user consumers. They from before have a fairly good idea of their target market i.e. The target market is the young population less then 29 years of age. In the past few years UNIQLO has introduced new trends and are still noting that the market is changing at a rapid rate. After noting the momentum and customer behaviour UNIQLO can be comfortable with the fact that despite their pervious successes and product line along with their brand will definitely survive the competitive market. There is an intense customer-driven demand. UNIQLO is using a chess based strategy in which they can easily predict where their market will be. As they have full knowledge of their customers they seem to belief that the effective manner in which to reach their consumers is promotion through events. UNIQLO had a lot of imprints of their brand logos on event flyers, posters. From the countless even they have been involved in and will also have to be in the future they have been successful in attaining quite a large number of sales in different geographic regions with excellent outcomes(Keller 1998).They may be successful in selling substantial quantity at events. Overall Market Penetration Strategy The suitable manner in which to achieve market share is by acquiring clientele who are already searching for a brand to narrate this EDM culture (Kerin etal 2009). a new method by which they can acquire maximum market share from their competitors in the same area is by the product extension . Product adaptation or modification UNIQLO will also have to be careful regarding the positioning of the product. The company will have to start constantly considering the fact how they can be positioned in the hearts and minds of their customers (Baker 2000). They will have to find answers to what to people think about UNIQLO. do they consider them reliable?. Apart from this they will also have to analyze what positioning do they have in the country they want to introduce their brand, in regard to particular words the customers utilize while describing UNIQLO and their products. Market Growth Matrix UNIQLO can utilize the strategy of frequent product development, market expansion along with introducing a diverse range of products. With their different variety of imaginative new products in incubation and development they have already taken over the present market. Market development as a method for product development is being utilized by organizations into new markets with existing products (Lamb etal 2000). Another part of the matrix being utilized is diversification includes new markets and new products. Communications Outreach is carried out via many ways UNIQLO most preferred way to communicate may be to spend time with their customers via telephone and then mail furthermore email. Events, of every kind mostly concerts of exhibitions, maybe the preferred approach to communicate consumers at the same time. (Perreault & McCarthy 2006) UNIQLO already utilizes public relation at present in-house and communicate to different electronic as well as media print to keep them updated regarding the news of their products. This strategy is to create another brand with similar product core but for different segmentation and positioning. Multibrand strategy will let UNIQLO remain in the finest niche market with pricing strategy and also get some market share from the lower price products that have been dominated by other local competitors. The above mentioned strategy does have its set backs as it will need a huge investment when it comes to research and development. Apart from this the marketing mix is also very costly, as mainly UNIQLO is focusing on a new market with a special zest and unusual packaging. The principal can repeat its market entry strategy that was conducted before entering the market, which was conducting comprehensive and careful marketing research before launching a new product and brand (Ellwood 2002). The challenges in this strategy are to make a product that will not cannibalize the other products. This factor is the most important for the product and is going to be thoroughly covered. The profile of the product will already be slightly established due to the familiarity projected by the other brands amongst people. Furthermore, the entire fashion concept of UNIQLO needs to also be acknowledged during the promotion campaign. This is an advantage as consumers consider them to be a trustworthy and highly regarded supplier of apparel and other fashion products It is appropriate for the launch of the product to be around a date which is an national holiday with weekly sales. Sales tend to introduce a lot of different clothing. The sales would have different kinds of their newest clothing line made. This would be a way of introducing UNIQLO in an innovative manner. Thus, this would even create new segment for marketing the clothing. The organization also intends to become in alliance with the other stores. Sponsorship or co-promotion will help to increase awareness (Terpstra & Sarathy 2001). Campaigns will be targeted at the people of the country, but in particular, the 25 to 29 year age group. In market promotions, TV and print advertising will be utilized as well as advertising on buses to ensure an extensive reach. The clothing will be sold to retail shopping centers, clothing stores and other super departmental stores. Sales Strategies UNIQLO already utilizes a number of different sales and marketing strategies. The most vital goal of their chosen strategies is customer satisfaction whilst making revenue for UNIQLO and their investors. The main objective of UNIQLO’s business is keeping the customers especially the youth happy. Their sales strategy is completely based on market dominance with several supporting strategies to assist UNIQLO in acquiring their goal Promotion Strategy UNIQLO’s brand is a competitive advantage, due to the fact that it has a well-known marketing strategy which heavily depends on famous people, market specific advertising, product promotion, along with "gifts" that have established UNIQLO’s existence in the famous industry (Quester etal 2004). UNIQLO realizes that every person is different. It had to change it’s positioning strategy in order to win against it’s competitors. The company had to establish it’s image as being a top class fashion company which fulfils the needs of the segment. Keeping this in mind it based it’s positioning on an image which appreciates the different qualities that build consumer’s personality. Their exclusive points of view, their own personal chic and their extraordinary talents along with accomplishments (Davies 1998). UNIQLO appreciates this individuality, their authenticity as well as the nerve to do the impossible. The company considers them as being imaginative and unique. For this reason it has introduced many different unique and innovative clothing in their fashion and apparel segment. It is good that they prefer to use a multiple-brand strategy for attaining good growth in a lot of different market segments (Blythe 2001). Every ten years or so, consumers get bored with the status quo. People change, tastes change, trends change. Without much warning, a fundamental market shift occurs (Brassington & Pettitt 2000). UNIQLO has built a diversified portfolio of apparel and fashion products that may allow them to capitalize on the opportunity. Advertising UNIQLO may utilize print media and electronic media for the in order to primarily promote their products. Push Strategy UNIQLO can give an incentive of commission to its sales force and thus motivates its sales persons to push the product towards the customer's .The greater the push situation created, the greater will be the firms sales and greater would be the effort of sales people to communicate the product to final. consumer. Pull Strategy UNIQLO can provide several sales promotion incentives like a free gift to its consumers who in turn may pull the product from the firm directly or through its sales people. Though UNIQLO acquired a very in aggressive advertising approach towards the launch of the product in the present market, it is proposed that UNIQLO should exercise aggressive advertising by: Informative Advertising: Using electronic and print media to promote the basic technological aspect of the line of clothing. Despite the fact that the clothing is treated as a normal fashion product in the market, but it differs from all others due the additional innovation. Magazines and Newsletters Fashion magazines and newsletters may be an appropriate method as they have far reaching effects with penetrate through the targeted market (Brassington & Pettitt 2000).  This print media a medium which has a long effect as well.  Their most loyal readers pass them along to other people who may turn into potential customers. E-Mail UNIQLO’s e-mail campaign will help in growing their marketing reach along with visibility with minimum resource allowance.  Due to the fact that UNIQLO’s develops its customer database, the most effective utilization of this method is that helps in keeping present customers update regarding their products and can even get feedback receiving old ones as well as future customers through e-mail and other electronic medias (Perreault & McCarthy 2009).  An extremely important benefit is given under: Great Direct Response Vehicle:  If the consumer is getting the e-mail, the consumer has already shown the interest in the material they receiving (Fill 2002). Media UNIQLO may initially utilize a well planed local media campaign, for which the utilization of radio and television, may serve as important mediums (Brooks & Weatherston 1997).  This campaign may start by using a Who Are We statement as well as be aided via other advertisements that emphasize on UNIQLO’s marketing message to customers of informal and creative apparel. Radio:  An advantage UNIQLO will have using the Radio is using capability to carry a marketing message to a particular class of people.  It is also convenient, free, and extremely reachable (Fill 2002). UNIQLO’s radio campaigns comprise of advertising with two of most well known radio stations in the Country. Television:  People’s most favourite pass time is watching TV, most because of its picture and sound inimitability, creates awareness, concern, and aspiration (McColl-Kennedy & Kiel 1999).  Executed appropriately, UNIQLO’s television campaign can add stature and glamour to the UNIQLO’s marketing message. Trade Fairs  Due to these trade show involvement, UNIQLO can increase its prospect to learn, develop, and bond with possible customers as well as other businesses of the industry (Clow etal 2009). 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). nternet advertising and promotion will also be used. The advantage of Internet advertising is that 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). Distribution Strategy The main distribution channel which is being currently utilized is physical outlets and catalogues. The unbelievable achievement attainted via other industries by utilizing Internet e-commerce is not very common in the apparel industry (Summer 2003).  UNIQLO has a number of possible means of penetrating the present market.  They can follow the strategies as given under: 1. 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. 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) 2. Exhibit their products at trade shows or appoint a sales representative. 3. They may even distribute their products to famous clothing stores which carry multitude of top products. UNIQLO may begin with the first two options, and distribute their products to famous clothing stores which carry multitude of top products only if the growth and sales of their product fall.    This may be appropriate as it may provide them with time to market, minimize the requirements funds, and swift entrée to reputable distribution channels. Sales Strategy UNIQLO’s sales team will be responsible for the over all sales in every sector.  The team may help in developing relations with distribution retail outlets as well as their own. The success of UNIQLO depends entirely on it’s distribution.  UNIQLO can only be successful if they make use of their before mentioned retail distribution channels as given under: Personal retail outlets Apparel Specialty Stores Boutique Clothing Stores Internet Stores Differences may be present in the distribution mix for men and women apparel.  Catalogues is also an important way of distribution. UNIQLO’s Consumers who do not have enough time to shop, this offers a more suitable and satisfying option.  UNIQLO may even utilize the internet as distribution channel. They can introduce their products on different websites as well as their own. They can not only invite customers to their retail stores to purchase the product but also can sell them on their own or other websites (Summer 2003).  Budget In the light of UNIQLO continuing focus on planning marketing strategies to reach objectives, the most sensible approach to budgeting promotion expenditures is the task method (Perreault & McCarthy, 2006). Since, UNIQLO a fairly well known company that is expanding ,they can base on their advertising/marketing budget on their future results instead of their past performance. Activity Cost ($) % of Total Cost Target advertising          1,500,000 30% Campaign 750,000 15% Sponsorship 500,000 10% Retail outlets 500,000 10% TV advertisements 1,500,000 30% Advertising on buses 250,000 5% TOTAL          5,000,000 100% Conclusion UNIQLO may face a few challenges in the new market, but it may have an advantage as it can be successful when it comes to youth clothing. It’s entry in the market can be successful if it follows the above given promotion plan and distribution plan. UNIQLO should maintain their quality for long term sustainability in the market. To capture the major market share, the company may introduce different promotions at different occasions. UNIQLO is supposed to position their brand so that they can directly target customers who give importance to something unique, by a goal of expanding the market ahead of the young target market and re-emphasizing UNIQLO images as being a company that offers more then just ordinary clothing . As per the above discussion, the latest promotion, plan to promote UNIQLO as the product for consumers who appreciate flair and innovation in clothing and not just one for people who want ordinary clothing for every day utilization . 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