Sass & Bide: Strategic Marketing Plan - Case Study Example

Sass & Bide: Strategic Marketing Plan Executive Summary Sass & Bide, a company manufacturing clothes for women and children, was established in 1999 by Heidi Middleton and Jane Clarke who were former accounting graduates. Its headquarters are situated in Sydney, Australia with outlets in Wellington and Melbourne (Sass & Bide, 2013). The company has been concentrating on the local Australian market with the aim of making quality and trendy products that meet the demands of low, as well as high income earners. However, it has intentions of expanding the business to other neighboring countries before venturing into the US and Europe markets. This report provides a hierarchy of strategic marketing plan for Sass & Bide that includes the product life cycle, new market entry, pioneer or follower strategies, growth strategies, shake- out, mature and declining strategies, new economy markets, organizational structures, marketing plans, marketing metrics and marketing audit. A product life cycle is uncertain, and there might be a rise in the sale of product models within a certain period of time that might start declining at the end of the period. Therefore, it is important for producers to predict such trends, costs to be incurred in the future and make the necessary changes (Xie & Simon, 2006). Table of Contents 1.0 Introduction 3 2.1 Product Life Cycle 4 3.1 New Market Entry 5 4.1 Pioneer Strategies 6 5.1 Growth Strategies 7 6.1 Shake- out, Mature and Declining Strategies 8 7.1 New Economy Markets 10 8.1 Organizational Structures 11 9.1 Marketing Plans 11 9.2 SWOT Analysis 12 9.2.1 Strengths 12 9.2.2 Weaknesses 12 9.2.3 Opportunities 13 9.2.4 Threats 14 10.1 Marketing Metrics and Marketing Audit 14 Conclusion 17 References 20 Appendices 23 Appendix 1: Strategic Purchasing, Selection Criteria by Suppliers and Management Practices for Supplier Relationship 23 Appendix 2: Growth Strategies 24 Appendix 3: Strategic Implications of the Product Life Cycle 25 Appendix 4: SWOT Analysis 26 1.0 Introduction Sass & Bide, a company manufacturing clothes for women and children, was established in 1999 by Heidi Middleton and Jane Clarke who were former accounting graduates. Its headquarters are situated in Sydney Australia with outlets in Wellington and Melbourne (Sass & Bide, 2013). The company has been concentrating on the local Australian market with the aim of making quality and trendy products that meet the demands of low, middle, as well as high income earners. However, it has intentions of expanding the business to neighboring countries such as New Zealand and Indonesia among others. Also, the company plans on venturing into the European or the US markets later to compete with the famous designer brands (Sass & Bide, 2013). On the contrary, companies face different challenges in their operations right from production to the time products get to retailers. The greatest challenge is competition from companies manufacturing similar products. This is triggered by factors such as technological innovation, diverse demands in the market, eased barriers that encourage new ventures and increase in population that raises the demand for clothes. Therefore, the establishment of a differential advantage through production of unique products will allow companies to provide a unique experience to its customers. Achievement of the company objectives will be possible through the use of a strategic plan. This report will provide a discussion on the hierarchy of strategic marketing plan for Sass & Bide that includes the product life cycle, new market entry, pioneer or follower strategies, growth strategies, shake- out, mature and declining strategies, new economy markets, organizational structures, marketing plans, marketing metrics and marketing audit. 2.1 Product Life Cycle Product life cycle refers to the stages through which products go through from the time they are introduced in the market, through growth, maturity and their decline (Doha, Das & Pagell, 2013). Manufacturers of Sass & Bide are expected to predict costs to be incurred in the future regarding changes in production, distribution and sales (Xie & Simon, 2006). This is because the life cycle of products especially in the fashion industry is uncertain. There might be instances of a rise in the sale of clothes within a certain period of time and a decline towards the end. Therefore, it is important for producers to be in a position to predict such trends and make the necessary changes. Also, when new models of clothes are developed, risks and resulting impacts should be assessed (Xie & Simon, 2006). In addition, a relationship has been established by Sass & Bide between purchasing practices and the life cycle of products (Doha, Das & Pagell, 2013). Different purchasing practices should be used by the company during different stages of the product life cycle to maintain high sales of products and for profit maximization. In addition, the product life cycle should be used by Sass & Bide in making decisions regarding their brands of clothes and related services that match requirements of customers as well as the necessary changes to be made on the products. According to Doha, Das & Pagell (2013), the product life cycle is also a fundamental variable used in determining the appropriate strategy for the business. This is because, in the introduction stage, practices used in purchasing clothes are formative due to limited supply. A rapid expansion is recorded by in supply during the growth stage, and there is a need of continued management to stabilize supply in the maturity stage (Doha, Das & Pagell, 2013). The adoption of practices by Sass & Bide with their relationships to purchasing practices and performance are moderated by product life cycle as illustrated by Appendix 1. 3.1 New Market Entry Timing is a very important aspect to be considered by Sass & Bide for products that are introduced in the market (Dacko et al, 2008). Late entry of new clothes models in the market has the possibility of losing out on the advantages experienced by pioneer products. On the other hand, an early entry of products in the market might not have an expected take off due to lack of reception from customers. Therefore, timing should put into consideration the needs of customers that vary according to seasons and a ready market for products with high chances of profit maximization and creation of a differential advantage. In addition, pricing of products plays a significant role in new marketing entry (Shaw, 2012). Reduction of prices has implications of creating high profit margins and an above average performance might result from achieving and sustaining cost leadership. This means that low costs are valuable to marketing because they are prices below the competition and are helpful in creating a differential advantage. Looking at the same from the perspective of buyers indicate that most buyers value low prices. Therefore, this is a strategy that should be used by Sass & Bide in attracting more buyers. 4.1 Pioneer Strategies There is a growing necessity for Sass & Bide to continue developing new products so as to respond to the needs of the changing market as exemplified by Dacko et al (2008). This will allow it to experience pioneering advantages created by the competitive strategy. Companies in the fashion industry with the capability of developing new products rapidly are better placed in terms of competition compared to companies with slow product development. They have pioneer strategies with the advantage of influencing consumers into evaluating product category attributes and buying the said products as well as setting standards for trending brands (Lowe & Alpert, 2010). Sass & Bide have always come up with high quality and trendy clothes that have been introduced in the market ahead of its competitors (Sass & Bide, 2013). Their products are easily recognized and have the possibility of forming a consumer’s set, a choice made over follower products. Also, early entry of Sass & Bide in the market has a positive impact of improving the competitive position of their brands of clothes. However, in order to achieve this, intensive marketing strategies have to be used in communication, distribution and pricing to boost acceptance of the product in the market as has been confirmed by Rodriguez- Pinto, Gutierrez- Cillan & Rodriguez- Escudero (2007). The strategy of full scale launch of products is a large entry in the market and helps in improving the competitive position of products. This should be adopted by Sass & Bide while opening outlets in other countries because it is also effective in the introduction and communication of products, in the market. According to Rodriguez- Pinto, Gutierrez- Cillan & Rodriguez- Escudero (2007) pioneer strategies for entry into the market require pumping of incentives into marketing of products to boost performance. The possession of adequate resources creates a competitive advantage in innovation and creation of new products. An early entry of the products in the market creates share rewards that will not require additional investments. On the contrary, lack of resources in pioneer strategies will require substantial economic effort from the company for further improvement of the products. This will put the company in a vulnerable position of trying to protect its position in the market that might be beaten easily by follower strategies. It is for this reason that Sass & Bide has used adequate resources to invest in the company (Sass & Bide, 2013). However, according to Rodriguez- Pinto, Gutierrez- Cillan & Rodriguez- Escudero (2007), managers should remember that advantages associated with pioneer strategies do not apply everywhere. They should also consider scale and timing for entry as well as other factors such as financial resources to be used in planning the launch of new products in the market as well as the will and ability are required for success. 5.1 Growth Strategies Growth strategies are based on newness of the market and products that range from new products to those that are already in the market (Shaw, 2012). The sales of a company are increased while maintaining the original strategy for products and the market. This means that the strategy is applicable to existing or new products and markets involving an aggressive combination of elements of the marketing mix (See Appendix 2). The company would establish a differential advantage if it concentrates on being a market leader. This can be achieved through market expansion and confrontation. Sass & Bide has been concentrating on the local market in Australia, but it has plans of expanding the business to neighboring countries such as Indonesia and New Zealand among others. Afterwards, it can venture into markets in Europe and the US to compete with famous designer brands (Sass & Bide, 2013). This strategy will be helpful in expansion of the market for its products. On the other hand, the company is facing stiff competition from other strong brands such as Golden Star Clothing, Cutting Edge Clothing Manufacturers, Vervena Clothing, Hughes Clothing Company and Austral Clothes Hoist among others. In applying the confrontation strategy, the company manufactures trendy and quality clothes. However, brands with low quality should be improved for the company to offer better products with a unique experience to its customers (Liang, Cherian & Fu, 2010). Afterwards, investing in marketing of its products will be helpful in creating an awareness of the advantages the products have over other strong brands in the market. Advertising will also change consumer attitudes towards the products. 6.1 Shake- out, Mature and Declining Strategies Products go through a life cycle consisting of the shake- out, mature and declining markets (Shaw, 2012). When Sass & Bide introduces products in the market, sales are often slow as customers find out about the products while developing desire for them. The success of pioneer products then attracts competition once products are adopted by a good number of buyers. This creates competitive advantage for the company and an increase in market share. Shaw (2012), states that a rapid growth rate is created by an increase in the number of competitors in the market. The need for market expansion and increased penetration are also created by competitors. Sales in Sass & Bide get to the point of inflection shifting demand to an increase in decelerating rate that changes to buying substitutes from new purchases (Sass & Bide, 2013). The stage of competitive turbulence causes a slow rate of growth resulting from excess capacity. In approaching prospects for the market, growth of sales is slowed down and products are acquired to replace the diminishing stock. In turn, the market stabilizes and products get to the life cycle’s maturity stage. Afterwards, the Sass & Bide starts getting to the point of losing customers to new products from other companies that lead to a decline stage in sales. This stage can be avoided through harvesting or maintenance to get to another phase of growth. Harvesting refers to a reduction in expenditures on marketing mix of the company that has an impact of reducing sales by a lesser proportion and this should be adopted by Sass & Bide (Shaw, 2012). Maintenance, on the other hand, will require Sass & Bide to hold the current levels of expenditure on marketing mix at a time when the growth of sales is slow. The stages in the life cycle of a product are shown in Appendix 3. 7.1 New Economy Markets Lacy & Hayward (2011), state that globalization, advancement in technological innovation and economic downturn have an impact on new market economies. These markets contribute significantly to the global GDP that is likely to increase by the year (2030 Lacy & Hayward, 2011). The growth of the new market economies has an impact on their income, middle classes and consumption. Also, their long term trends will require innovative solutions (Murray, Syed & Roberts, 2009). In addition, new opportunities and challenges will be presented as a result of urbanization, demographic changes and the need of low carbon economies. Culture is a source of knowledge that can be used as an input into marketing decisions and research for market interactions (Holden, 2004). Emergence of digital products has strategic relevance to new market economies. Sass & Bide is no exception to this because they have created websites and social media pages used in advertising their products and services. The said websites consist of images of clothes on sale, the price tags and brand name, as well as the year of the fashion trend (Sass & Bide, 2013). This allows customers to have the convenience of selecting and buying items from online stores from the comfort of wherever they are using a credit or debit cards. Purchased products are then delivered to the address provided by customers, and this allows them to save time. In addition, technological advancement in the new market economies has made promotion of products easier and better. The internet is used in creating an awareness of what is offered by the company, and innovative equipment is used in the production of advertisement materials for Sass & Bide. 8.1 Organizational Structures Organizational structures of Sass & Bide consist of the top, middle and lower management levels that play significant roles in the management (Sass & Bide, 2013). Companies dealing with making clothes in the fashion industry have several departments with different managers that use matrix management system. This system is being used by Sass& Bide in management of individuals across several reporting lines. Sass & Bide benefit from using this system in ways such as promotion of team work among members of staff, effectiveness in execution of duties in the company, ability to provide quick response to market changes, unlocking of potential in members of staff and development of broader capabilities in people (Shepherd, 2007). In the management of specific projects within the Sass & Bide, matrix management allows choosing of individuals according to what the project requires; it allows a dynamic team to work on the problem with a different perspective on how to solve the same and ensures accountability in relation to the budget and time limit. 9.1 Marketing Plans Marketing managers of Sass & Bide take the time to analyze external and internal environments of the company for it to gain a better position in the market as exemplified by Lee & Trim (2006). This includes an analysis of cost benefits and formulation of appropriate contingency plans. A good example of the analysis conducted Sass & Bide is a SWOT analysis. However, according to Simkin (2002), managers face numerous obstacles in planning. 9.2 SWOT Analysis SWOT is an acronym for strengths, weaknesses, opportunities and threats as discusses below. Further analysis is illustrated in Appendix 4. 9.2.1 Strengths Sass & Bide have superior management of their supply chain. This ensures all their outlet stores in Australia are well stocked (Sass & Bide, 2013). In addition, this will play a great role in ensuring that the expansion of the business to the neighboring countries is successful. The strengths of Sass & Bide can be attributed to the qualified staff that has been employed in the company. Also, superior management of the supply chain will ensure a variety of trendy clothes are available in each store to meet the needs of low middle and high income customers. Sass & Bide is renowned for having a strong brand and image. This is as a result of producing high quality and trendy products. In addition, these products are pocket friendly and affordable by people from all classes in society. A high number of customers are attracted to the store because of this. In turn, high profit margins are recorded by the company because of high sales. 9.2.2 Weaknesses The cost of production in Australia is high and unfavorable to companies dealing with the production of clothes (Sass & Bide, 2013). The government regulations in place need to be amended and production costs reduced for the benefit of clothing companies. This can then be reflected in retail prices that will be reduced to attract more customers and for maximization of profits. On the other hand, clothing companies face the problem of having to deal with unscrupulous individual producing counterfeit products. A negative impression is created about the company and its products affecting the market share and the general number of sales that are made by the company. 9.2.3 Opportunities Increase in population is an opportunity for Sass& Bide because this translates into an increase in the demand for clothes. A ready market is created by the demand requiring the company to raise its production to meet the needs of customers in the available market. The company needs to make good use of this opportunity for increased returns by the company. As well, Sass & Bide has intentions of expanding the business to neighboring countries, as well as Europe and the US markets (Sass & Bide, 2013). Market expansion is an opportunity that needs to be used by the company to increase its customer base. In return, this will increase in the number of sales and establish a differential advantage compared to other local garment companies in Australia. In addition, Sass& Bide deal with the production of women and children casual wear. This is a segment of the society that spends a good amount of their income on buying clothes. On the contrary, this company does not favor men because their stores do not have clothes for men. This is because men are considered for spending a lesser amount of their income on clothes. However, clothes for men are pricy and the sale of a few items can be profitable to the company. It is for this reason that Sass& Bide is considering stocking male clothes. 9.2.4 Threats The Australian clothing industry is famed for its strong brands. This means that Sass & Bide is facing stiff competition from other companies such as Vervena Clothing, Golden Star Clothing, Cutting Edge Clothing Manufacturers, Hughes Clothing Company and Austral Clothes Hoists (Sass & Bide, 2013). Therefore, the company has to work extra hard and incur more costs to ensure it creates a differential advantage to maintain a high position in the market and to retain its customers. In addition, rapid changes in fashion pose a threat to the company that always has to be on the lookout for the needs of customers that have to be satisfied. Changes in fashion render clothes in previous trends as less appealing to customers causing a reduction in sales forcing the company to sell them at throw away prices contrary to the cost of production. 10.1 Marketing Metrics and Marketing Audit There are four major components in marketing management. They include price that has an effect on pricing decisions of products, place with significance in distribution decisions, product having an impact on feature decisions and product line, and promotion with reference to public relations and advertising decisions (Frosen et al, 2013). These processes are directly dependent on each other and require management to ensure smooth flow of information (Schwartz, 2000). Marketing metrics and audit are the tools used by Sass & Bide in the management of this information. Marketing metrics are systems using information of the company in altering or maintaining goal oriented patterns (Frosen et al, 2013). Appropriate assessment of marketing performance enhances better performance in business because feedback obtained from efforts in marketing are used in making decisions and planning. Also, marketing metrics are used in establishing the perception of customers regarding products in the market. In addition, they are used in determining how customers are influenced in choosing the products over other competitive items in the market (Rajagopal, 2008). As a result, the Smart, Measurable, Attainable, Relevant and Measurable (SMART) objectives of Sass & Bide are to expand the business to neighboring countries such as Indonesia and New Zealand among others (Sass & Bide, 2013). Afterwards, the company plans on venturing into the US and Europe markets. However, this expansion should target other cities in Australia, an objective that is likely to take 2- 3 years to be realized (Sass & Bide, 2013). Achievement of these objectives will lead to the realization of high profit margins by Sass & Bide. This is due to the fact that there will be an increase in the market share as well as an increase in the number of customers. Marketing audit, on the other hand, is used by Sass & Bide to keep track of a range of strategic orientations and evaluation of marketing performance (Da Gama, 2011). Auditing establishes when transactions begin, the continuous process of the transactions in the process of the business until when they are closed. According to Majdalawieh, Sahraoui & Barkhi (2012), auditing of the organization or company ethics ensures rules of the business are followed. Automation of the business process subjects guiding agents’ monitoring role to the system. For example, when supplies are received, or an item in the outlets is sold, the inventory is adjusted automatically avoiding the need of having to count items physically. Conclusion Sass & Bide is a clothes company in Australia dealing with the production of women and children clothing. Its focus is on meeting the needs of customers from all economic levels in society. Achieving these objectives require the use of a strategic marketing plan with a hierarchy that needs to be followed. In this regard, the life cycle of products include introduced in the market, growth, maturity and their decline. Changes in the cycle should be predicted by manufacturers in terms of production, distribution and sales. This is because the fashion industry has unpredictable changes. Timing is also an important aspect in marketing for profit maximization and creation of a differential advantage. Late entry of products in the market is likely to result into losses and losing out on the advantages experienced by pioneer products while an early entry of products in the market might not have the expected take off. More so, pricing plays a significant role in new marketing entry because reduced prices create high profit margins and an above average performance. Companies in the fashion industry with the capability of developing new products rapidly are better placed in terms of competition compared to companies with slow product development. They have pioneer strategies with the advantage of influencing consumers into evaluating product category attributes and buying the said products as well as setting standards for trending brands. However, this requires pumping of incentives into marketing of products to boost performance and managers should remember that advantages associated with pioneer strategies do not apply everywhere. Products go through a life cycle consisting of the shake- out, mature and declining markets. Introduction of products in the market experience slow sales as customers find out about the products while developing desire for them. Pioneer products then attract competition once products are adopted by a good number of buyers. The growth of the new market economies has an impact on their income, middle classes and consumption and their long term trends require innovative solutions. In addition, new opportunities and challenges are presented as a result of urbanization, demographic changes and the need of low carbon economies. Organizational structures of Sass & Bide consist of the top, middle and lower management levels that play significant roles in the management. Companies dealing with making clothes in the fashion industry have several departments with different managers that use matrix management system. In addition, marketing managers of Sass & Bide take the time to analyze external and internal environments of the company for it to gain a better position in the market. A good example of the analysis conducted Sass & Bide is a SWOT analysis. Also, there are four major components in management of marketing. They include price that has an effect on pricing decisions of products, place with significance in distribution decisions, product having an impact on feature decisions and product line, and promotion with reference to public relations and advertising decisions. These processes are directly dependent on each other and require management to ensure smooth flow of information. Marketing metrics and audit are the tools used by Sass & Bide in the management of this information References Da Gama, A. P. (2011). 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Appendices Appendix 1: Strategic Purchasing, Selection Criteria by Suppliers and Management Practices for Supplier Relationship Source: (Doha, Das, & Pagell, 2013) Appendix 2: Growth Strategies Source: (Shaw, 2012) Appendix 3: Strategic Implications of the Product Life Cycle Source: (Shaw, 2013) Appendix 4: SWOT Analysis Read More