A Need for COS Australia to Come Up with High-Quality Products to Suit Their Customer Needs to Gain a Competitive Advantage - Example

Marketing Management Name Institution Professor Course Date Executive Summary The venture by COS into the Australian market is an exciting and probable destination for higher sales. They need to make use of the technological advancement through the use of online stores. They need to make use of the company website and other social media sites to make their products known to a wide range of audience. This report offers an overview of the environment upon which COS Australia will operate in such as the pestle analysis, SWOT analysis and the porters five forces model. Based on the findings, COS Australia needs to adopt the marketing mix strategies and thus will go a long way in assisting them and gaining a large customer base and increase their market share over the years. Table of Contents Executive Summary 2 Table of Contents 3 1. Introduction 5 Industry overview 5 2. Situation Analysis 6 I. Internal environment 6 A. Competitive environment 6 GAP 7 B. SWOT Analysis 7 II. External environment 8 A. PESTLE Analysis 8 Economic environment 9 Demographic/ social and cultural environment 9 Political and legal environment 10 Technological environment 10 B. Porter Five Forces Model 10 Power of buyers 11 Power of suppliers 11 Threat of substitutes 12 Threat of new entrants 12 Degree of rivalry 13 C. Segmentation 13 D. Target markets 13 3. Marketing Mix Strategies 14 A. Product strategies 14 B. Pricing strategies 14 C. Promotion strategies 15 D. Distribution strategies 15 References 17 1. Introduction COS is a brand for men and women who are in need of functional, modern as well a considered design. The brand offers their customers with reinvented wardrobe essentials and classics they also create fashion pieces and aim that they last beyond seasons. They ensure that they merge the traditional and new methods and techniques with the aim of coming up with timeless and understated collections. The company was launched in 2007 and after that a number of stores have been opened globally and mostly in carefully selected locations. They apply an architectural design that seeks to preserve the original features of the building while at the same time creating a welcoming and modern space (COS Official website 2015). Industry overview Australia is among the few advanced economies that were not affected adversely by the deep recession due to the global financial crisis. The fashion industry is faced by a number of challenges and the ones who are mostly affected are the independent designers, luxury boutiques and retail chains. The domestic industries in the area were faced by a number of challenges such as the competitive global pricing and manufacturing woes. Additionally, there has been arrival of other international brands such as COS, H &M, Uniqlo (Philips 2014). The consumers in Australia are now enabled in that they have a wide range of products to choose from and these retailers in the industry need to be broad minded and have unique perspectives that are appealing to the global consumers. The clothing industry in Australia have faced a number of challenging years as consumers become more cautious on their spending, high rent costs as well as intense competition and this in a way affects the profits and revenues gained by companies in the industry. However, the ever improving economic conditions and the need of unique and season less clothes have supported the growth of revenue in the industry since people are more likely to make purchases. In terms of revenue the industry makes about $19 billion and has a growth rate of 16 %to 21% (IBIS World 2015). 2. Situation Analysis I. Internal environment A. Competitive environment The clothing sector in Australia is rated as being among the most competitive industries (IBIS World 2015). This is solely based on the fact that there are a wide number of domestic players in the industry. The issue is complicated further by the presence of other international players. The arrivals of prestigious and large international retailers in the fashion industry of Australia acts as a threat to the local retailers who seems to be facing a challenge of low spending by the consumers and competition from other online stores which can be accessed from any part of world. The online stores offer a wide range of products to the consumers and thus they have a choice to choose from and choose what appeals to them. Some good examples of oversees brands that are flooding into Australia to challenge the local retailers includes brands such as TopShop, H&M, Zara and GAP (Hoy, 2014). With the large number of players in the industry the sales that will be made on the stores will reduce automatically as they try to scramble for the customers. GAP GAP is a major competitor of COS Australia. Gap inc. also known as Gap is an American multinational retailer of accessories, clothing as well as personal care products for children, women and children and they achieves these through brands such as Old Navy, Gap, intermix and Athleta. These products are available in a great number of countries globally through 3,330 stores that are operated by the company and in 400 franchise stores as well as in various e-commerce site. The original target market for the Gap was the young generation when it first opened shop and it went by the name generation gap. It first sold everything that was made by Levi Strauss & Co in every color, size, style and the size was organized based on their sizes (GAP Official Website 2015). The current marketing that is applied by Gap seeks to be appealing to a wide range of customers, the old navy brand focuses more on fashion, fun and value, the banana republic offers a sophisticated image . The company have been criticized of non-uniformity and blandness in their selling environments, they maintains that they tailors their stores so as to appeal to their unique markets by coming up with a great number of designs and formats. B. SWOT Analysis The table below shows the SWOT analysis of COS Australia Strengths Weaknesses Brand recognition through the creation of brands that exceeds seasons Increased demand for unique products Aggressive expansion into other destinations and online presence Growth opportunities challenges due to presence of new entrants in the market. Wide investment and costs in manufacturing and supply in overseas stores Wide range of resources required for expansion into other countries and shopping outlets. Opportunities Threats Increase of consumer spending on online store Franchising agreements Changing of consumer tastes and groups Increased consumer confidence Intense competition and they solve these by developing classic and unique products They can make use of loyalty programs to reward loyal customers Wide range of online stores which provides competition Declining consumer confidence Intense competition II. External environment A. PESTLE Analysis The PESTLE Analysis (Fig. 1) discusses the external environment of the country. It consists of six factors. They are the economic, political, social, legal, technological and environmental. These factors are actually beyond the organization control and changes in these factors can actually affect the strategies of an organization and the organization (Kotler 2012). Fig 1 PESTLE Analysis Economic environment The economy of Australia is seen as being an integral part of the global economy. It is an industrialized country which has a broad manufacturing sector, service sector and it is rapidly expanding in terms of technological infrastructure. With the improving economic condition of the country the consumers are likely to spend more on fashion related items that are sold at COS Australia (Homburg, C, Sabine, K & Harley 2009). Demographic/ social and cultural environment Australian has a population that exceeds 18.7 million people. A break up of the people reveals that about 22% of the people are between 0-14 years, the other 66% between the age of 15 to 64 years and the other 12% are over 65 years. This shows that the target group of COS Australia has the largest population. Political and legal environment This aspect reviews the government initiatives, laws, employment regulations and public expenditure control just to mention a few (Solis 2011). The political stability of Australia ensures that all the policies that have been made by the government are consistent. This offers a favorable environment of investment and freedom of entry to new entrants. Technological environment The Australian economy is slowly trying to keep pace with the ever changing technology. For these reason, Australia is termed as being a technologically developed country (Kotler 2012). The country has wide and improved infrastructure and communication networks that facilitates and enhance global trade. COS Australia can make use of the technological advancement to improve their manufacturing processes and enhances the quality of their products. COS Australia also needs to make use of technology to develop and improve their online stores and use of other social media sites for advertisements of their new products. By doing so, they will make their products widely known in almost all countries in the globe. B. Porter Five Forces Model The figure below shows the elements of porters five forces model and it will be discussed in reference to COS Australia Fig 2: Porter Five Forces Model Power of buyers This aspect is also described as the market of output that is the ability of the buyers to put pressure on the firm and this affects the sensitivity of the customers in any price changes. In regard to these COS Australia can reduce the power of the buyers by implementing loyalty program. The buyer power is usually high if the buyers have a number of alternatives to choose from. Buyer power is usually low if they act independently (Porter 2008). If a great number of customers collaborate and ask the company to make prices low for them and companies will have no choice due to customer’s pressure. Power of suppliers The bargaining power of the suppliers is also termed as market inputs. The supplier of components, raw materials, labor, components and services at times acts as the source of power in the firm when there are few substitutes. In regard to these COS Australia need to create lasting relationships with the suppliers and this will act as the leverage ground for the firm (Porter 2008). They can also make use of a wide range of suppliers and this will enable them to source their materials from various suppliers. By doing so, they will have a wide range of suppliers to choose from. Threat of substitutes The existence and presence of products that are outside the realm of similar product boundaries leads to a high probability that customers will switch among alternatives. The other clothing brands are likely to act as substitutes for COS Australia products. So as to curb these they need to make sure that their products are superior to those that are offered by their competitors in the industry (Porter 2008). By doing so, the customers are likely to choose COS Australia products over those of their close competitors in the industry. Threat of new entrants Every profitable market is likely to attract new firms and this will eventually result in new entrants and this will mean that there will be a reduction in profits made by the firms. At times the entry of new firms can be blocked incumbents and the abnormal profits are likely to change and trend towards the perfect competition (Porter 2008). The threat of entry in the Australian clothing industry is high. Additionally, COS Australia can also take advantage of the low level of investment that is required for the online stores. Degree of rivalry For a great number of companies operating in the modern day environment, the intensity of their rivalry is an essential determinant of the competition in their respective industry. COS Australia can make use of this element by ensuring that they gain a sustainable competitive advantage and they can achieve this through innovation of new products from time to time to meet the emerging needs of their consumers (Porter 2008). C. Segmentation Market segmentation is termed as a strategy which involves the division of the target market into smaller groups of businesses, consumers or countries that have been perceived to common interest, needs and priorities and the designing as well as implementing strategies to target the customers (Laermer 2007). For instance, there are those fashion brands which focus on sporting attire, children ware, young adults clothing and others such as COS Australia which focuses on women and men clothing. D. Target markets Every company planning into entering a specific market or sell its products have an objective in place. In regard to these, the main marketing objectives of COS Australia is to enter into the Australian market strongly and over time increase its market share by proving products that seems to be appealing to their target audience (Shimizu 2003). The target market of COS Australia when venturing into the Australian market is the young generation and adults that are both men and women. The target group that have been selected like to be modern in their clothing and they seem to be more fashion oriented and in a bid to achieve these they are in need of products that are stylish, unique as well as season-less and COS Australia can ultimately provide these kind of products (Shaw 2012). 3. Marketing Mix Strategies A. Product strategies COS Australia needs to make use of a strategy and make the clothing lines of both men and women as their core items when marketing their products in the Australia market. In regard to these COS Australia needs to differentiate between the various customers by offering unique products that are of high quality (Gupta & Lehmann 2005). Through the adoption of a product strategy COS Australia can build their customers loyalty by offering high quality products. When they do so the customers cannot find any substitute products and thus they will keep on making purchases from their stores. This will ultimately lead to higher sales as well as profits for the company. B. Pricing strategies Pricing is one of the core elements of the marketing mix since it is the only element in the marketing mix that generates turnover for a company (Shimizu 2014). The pricing strategy adopted by a company is essential for those companies that wish to achieve success and they can do this by finding the best price point where they can maximize profits and sales (Kotler & Keller 2006). COS Australia can make use of a number of pricing strategies based their marketing objectives and goals. C. Promotion strategies Promotion is another element of the marketing mix and includes aspects such as sales promotion, personal selling, advertising, publicity and direct marketing (Banting & Ross 2010). COS Australia needs to specify how much attention should be given to each of the above categories in terms of budget and money. COS Australia needs to make use of internet advertisement, newspaper and magazine adverts. After purchases have been made they should offer free items, discounts or concerts. By doing so, they will increase the sales of their products. COS Australia also need to constantly update on their website for new product offering, any offers and concerts that may be organized by the company (Ireland 2011). Through the website the consumers can gain information on the products and this will go a long way in aiding them in making their purchase decisions. They need to focus more on internet marketing since a great number of customers spend a considerable amount of time online and thus it is the most preferable way to advertise to the consumers. D. Distribution strategies This refers to the manner in which an organization distributes their services and products that they are offering to the consumers. COS Australia also need to distribute their products to the consumers at the right time as well as at the right place to make more sales and profits (Kotler, Armstrong, Cunningham, 2005). Effective and efficient distribution is crucial to the achievement of the marketing objectives of the company. If the organization underestimates the demands of the customers and they cannot get the products in time the effect on the company’s profitability will be diverse. In regard to these, COS Australia can sell directly to the consumers through their stores and they need to open more stores in almost all the geographical locations that require their presence. Conclusion Based on the discussion, COS Australia needs to come up with high quality products to suit the unique needs of their customers for them to gain a competitive advantage over its close competitors such as GAP. COS Australia need to adopt the marketing mix strategies that have been recommended above. This will go a long way in ensuring that the new product is successful and that they gain the required amounts of profits. Australia also seems to be the best location since it has favorable economic condition, political stability and advanced technology to aid in the marketing of the new products. References Banting, P & Ross, R 2010, ‘The marketing mix: A Canadian perspective’, Journal of the Academy of Marketing Science, vol. 1, no. 1. 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