COS Marketing Plan - Case Study Example

COS Marketing Name Class Unit Introduction COS which is an acronym for Collection of Style a fashion company created in London UK in 2007. The company is a sister brand to H&M and deals with ready to wear labels. The company have emulated a new fashion concept through producing high quality fashion for both men and women. The company first store was opened in Regent Street in London. At the moment, COS has over 40 stores worldwide. The company is well known for their minimalist style. COS have based itself as crisp and fresh style with an aim of attaining a natural look. The creative designers from the fashion house Karin Gustafson and martin Anderson helps in choosing cuts and lines. The company has been able to create a strong brand through timeless and understated collections (COS). This marketing plan analyses the introduction of a new product by COS. The company will introduce pet accessories as a new product line. Situation Analysis Pet accessories includes a variety of products such as collars, leashes, shampoo and beauty aids. There has been an emerging trend where people have been demanding for premium pet products. Fashion companies such as Gucci have already ventured into the pet accessories in their offerings (IBISWorld). Anticipated organisation resources COS has already established itself as a renowned fashion house. The company have been dealing with men, women and children fashion wear and accessories (COS). Despite this, the company have not ventured into the pet accessories market like some of the competitors. The company will have to invest in resources that will enable them to compete in the pet market category. The pet industry requires one to invest in recent trends. This includes products that appeal to the customers, displays and promotions. There is also need for experienced workforce that will help in designing the accessories. COS have an experienced pool of designers who can be of great use in designing the pet products (COS). The raw products are required in abundance in order to manufacture products that will aid in economies of scale. In order to be successful in the pet fashion industry, the operators are required to have a wide range of the most popular pet accessories. A wide variety of the products is required to attract more customers. COS will have to invest a lot of revenue in this product line to ensure that they maintain quality as they engage in economies of scale. Competitive environment Porter 5 forces analysis Threat of new entrants The pet industry has a moderate barrier to entry. The barriers to entry determine the ability of new players to enter. Higher barriers lower the chances of new entrants (Grundy, p.220). The industry consists of a lot of small players with business that employs less than ten workers. Most of the small scale industries offering pet accessories do not require a large start-up capital. Other players such as supermarkets and fashion industries such as Gucci offer the accessories as an extension of their product lines. Powers of buyers This refers to the leverage the consumers have which helps them to force the industry to provide better goods and services, improve customer service and reduce prices. Buyers of pet accessories are strong especially in large players (Grundy, p.217-221). Consumers seek to buy pet accessories at an affordable price. Customers also seek knowledge from the customer care services of these companies. The causes of strong buyers bargaining powers can be attributed to; price sensitive consumers, consumers are well informed on pet accessories and there are many alternatives. Power of the suppliers COS will only be dealing with pet accessories which include collars, shampoos and leashes. The suppliers of most of the inputs are also suppliers in other fashion lines at COS. The bargaining powers of the suppliers are moderate. There are many suppliers for the inputs. Despite this, COS have been able to maintain their loyal suppliers. The cost of switching the suppliers is moderate. Also the suppliers do not supply unique inputs (Grundy, p.218). Threat of substitutes This is based on the ability of the product to be substituted in the market (Grundy, p.222). The threat of substitutes for pet accessories is low. Collars and leaches and dog bags are becoming popular and there are very few substitutes. In most countries, dogs must have leashes and collars. These are products which are essential and cannot be replaced easily. Competition rivalry Competition rivalry determines the level of competition among the existing industries in a specific market. This helps in determining the attractiveness of the industry (Grundy, p.222). The market for the pet accessories is highly competitive. The main suppliers PetSmart and PETCO control almost half of the market. These companies also deal with pet food among other products. To survive the competition in the market, COS should depend on economies of scale, experienced workforce and quality control. The competition in the industry is based on price, variety, customer service, store location and the brand strength. Supermarkets and fashion retailers such as Gucci have already established pet accessories segments. There is also competition from e-commerce who deals with pet accessories and food (IBISWorld). Ansoff’s growth matrix Ansoff matrix helps a lot in focusing on the firm present and potential future products of areas of engagement. The matrix comes up with four ways of possible combinations of products and markets. Through the Ansoff matrix, it will be possible to determine what is to be sold and who it will be sold to. Through Ansoff matrix, the company is given four courses of action which they can consider in their marketing objectives (Richardson and Carl, p.1-3). The four course of action are: Selling existing products to the market that exists Extending the existing products into new markets Coming up with new products for the existing markets Developing new product for a new markets Through Ansoff strategy, the company will be developing new products for a new market. This is a risky strategy since the COS will be venturing into new areas in both its product and market. The main advantage is the fact that COS is implementing this strategy as a supplement to the core business. This is also form of diversification and is related to the fashion industry in which the company is operating in. this implies that the risk that is involved in venturing into the pet accessories market will be minimised. The new product will help a lot in leveraging the COS brand image (Richardson and Carl, p.1-3). SWOT analysis SWOT analysis helps in analysing the external and internal environment. This is through looking at the strengths, weakness, opportunities and threats (Valentin, p.57) Strengths COS have a strong brand name. The company have been able to create a large market share through sale of high quality fashion at affordable prices. COS have already established their distribution centres across the world. The company have 44 stores worldwide. The company have an experienced and qualified workforce. This is especially in the fashion design. COS have a strong management which is required for the company growth. Customer loyalty The company have the capability to enjoy from economies of scale Weakness The company is new in the pet accessories segment The company may suffer from high staff turnover which may reduce costs COS is not well known in the pet industry Opportunities The pet industry is growing at a fast rate with an annual growth of 2.6% (IBISWorld). There is a rising trend where pets are treated as family members and being lavished with high end services and accessories Rising disposable income among many countries will increase the expenditure on pets The number of pet owning households has been on rise Threats There is high competition from large companies specialising in pets such as PETCO and PetSmart The extension of the product lines may lead to over diversification Segmentation COS can segment the market in variety of ways. The process of identifying the most appropriate segment for the pet accessories will begin with the examination of the market. Through recognising the hierarchies in the market, it will be possible to use combination of attitudes such as quality, brand, price and service. This is due to fact that each of the combination will represent distinct demographic and psychological differences. The next step involves categorising the consumers based on their usage characteristics, demographics and psychographic. For COS, the market for pet accessories will be segmented based on geographic, demographics, bahavorial and psychological categories (Wedel and Wagner, p.32). Through demographics, COS will segment the customers based on the availability of their stores and the ability to ship the products. The company will utilise the existing distribution network. Demographic segmentation will be used to segment the customers based on age, income, education and family lifecycle. Pet products are mostly purchased by those aged between 45-55 years (IBISWorld). The income also determines the type of pet products and amount purchased. Those in the higher income bracket will purchase high cost pet products. The level of education also affects the consumer lifestyle. Most of the educated consumers are highly likely to make purchases for luxury pet products. Through bahavorial segmentation category, COS will look at attitudes, knowledge and benefits that the buyer seeks. The customer perception on COS products will play a major part in bahavorial segmentation (Wedel and Wagner, p.34). Targeting After deciding on the best way to segment the market, the next task for COS is targeting. This is a decision that involves how many and which of the segments are to be approached. To make the targeting decision, COS has looked at several factors (Wedel and Wagner, p.27-40). The factors are: Size and the potential for growth in each segment The structural attractiveness of segments Objectives and resources available The company has also looked segments profitability based on: Competitors and threat of segment rivalry Potential entrants and the available threat to mobility Substitute products Power of buyers Power of the supplier After the analysis, COS will have to use market specialisation. This is through concentrating on satisfying the pet owner needs through this product line (Wedel and Wagner, p.33). The company will use the pet accessory segment to make sure that the needs of pet owners are catered for in terms of high quality accessories. Positioning Product positioning is the battle for the mind. This is based on deciding the position which the product will occupy in the consumers mind. This is through stating to the consumer what the product means and how it differs from the competitor offerings (Chen and Muzaffer, p.991). To position the pet accessories in the market, COS will use the following factors: The product nature and its range Product quality and its perfoamcne Pricing Distribution network Advertising appeal Customer profiles Customer experiences and using the word of mouth The process of positioning will help in coming up with an image which will help the customers in a given segment to understand what the brand stands for in comparison with the competitors (Chen and Muzaffer, p.991-6). The pet accessories will be positioned as high quality and durable products at an affordable price. Branding strategies There are different types of branding problems. These can be categorised as; consumer branding, corporate branding, digital branding, global branding and branded environments. Consumer branding involves applications that are aimed at the consumers directly (Naik, Kalyan and Russell, p. 27-29). Through digital branding, the company will utilise digital media when launching and strengthening the relationship between the product and the users. The company will work to ensure that the brand of pet accessories is perceived as strong. The branding will involve keeping in tune with the customers’ needs and current trends. This will help in projecting an image that is recognisable, credible and sustainable. The steps to be followed in branding are: Product strategies Pet accessories offered by COS will offer the consumers the convenience of shopping both online and offline at affordable prices and convenience. Unlike most of the competitors, COS will be offering free delivery for the accessories. The accessories are also branded and have a warranty. The collars and bags come in different colours. The product is at the introduction stage of its lifecycle. The period will experience slow sales and growth since it’s new in the market (Naik, Kalyan and Russell, p. 28). There are several competitors in the market including large players such as PETCO. Pricing strategies The pet products will be priced based on the penetration pricing. Penetration pricing involves charging lower prices than the competitors with an aim of entering the market and gaining a share. The prices are raised later after gaining a market share (Constantinides, p.423). Through maintaining high quality pet accessories at affordable prices, the company will be able to gain a market share. To attract the price sensitive segments in the market, the company will also utilise sales promotions periodically. There will also be event discounting on pet accessories with an aim of boosting sales. Special event discounting will be used by COS as a price promotion. The company aims at gaining consumers who are price sensitive as well as those who are concerned with quality and fashion. Psychological pricing will also be used based on the consumer spending patterns. Promotion strategies COS intends to use a promotional mix made up of public relations, direct marketing advertising and sales promotions. The company also aims at using different social sites such as Facebook, instagram and twitter. This will be achieved through a team of public relations team who will be using the social sites for promoting the company (Mangold and David, p. 359-61). The company will also use incentives to encourage customers to make purchases. Promotion is all about communicating to the potential customers. This will make the consumers gain an interest in the product and give them reason to purchase it. Personal selling will be carried out in the stores with an aim of persuading the customer to buy. Relationship marketing will be used to create a long term relationship with the consumers (Naik, Kalyan and Russell, p. 27-29). Distribution strategies Distribution channels refer to the routes which the products move to reach the final consumer. Direct channel involves a route of distribution where the producer is able to sell directly to the final consumer without intermediaries. Indirect channel involves use of an intermediary to reach the final consumer (Naik, Kalyan and Russell, p. 29-32). The company will use a direct channel. COS have already established a great distribution channel for their products. The company have both online and offline presence. The online shopping platform will depend on transport means available and the location of consumer. Most of the consumers are satisfied with the convenience that is offered by the online platforms. The company has adequate outlets where the consumers can purchase the pet accessories. This will require update on the company website to include the pet accessories and prices. Recommendations It’s recommendable for COS to diversify their fashion products and open a pet accessories line. This will help in distributing the risk and increasing the market share (Ringland and Laurie). There are chances that customers buying COS fashion products will also be interested in pet accessories. The company should use penetration pricing to enter into the market since they do not have a market share in the pet industry. It is also important for the company to utilise social media so as to benefit from viral marketing. Viral marketing occurs through the electronic word of mouth (eWOM) (Mangold and David, p.360-364). Lastly, pet accessories require adequate investment in marketing communications. Conclusion COS have a great opportunity in launching the pet accessories as a product line in its fashion designs. The company have a strong brand name in the fashion industry which can help in gaining the new market. With the rising incomes and changing lifestyle, pet ownership has been on increase. There have been trends where pet are treated as family members and also bought lavish products. By stocking collars, dog bags and leaches, COS will be able to attain a market share. This diversification strategy will reduce the company risk and also increase revenue. Penetration pricing will help in entering the pet industry. Social media and eWOM will work to help in viral marketing. References Chen, Joseph S., and Muzaffer Uysal. "Market positioning analysis: A hybrid approach." 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