Fundamentals of Customer-Focused Management - Essay Example

History of ASOS ASOS is the brainchild of Nick Robertson and the companies co-founder Quentin Griffiths. It was founded on June of 2000. Coming from a company that specialized in product placement, they worked on placing products that were seen on television and films. After a while, they concluded that the market was ready for a kind of store where people will be able to purchase items that are similar to those that were worn by celebrities ("ASOS: Unique enough to outlast competition", 2005). The basic premise of ASOS is to offer trendy clothes similar to the designer clothes of celebrities at affordable prices. The company was originally named As Seen On Screen. However, it was formally changed to ASOS in 2003. A year before they changed their name, the company aimed for the London Stock Exchange (Bhaskaran, 2005). To add to their product offering, ASOS began to sell shoes, accessories, beauty products as well as jewellery in 2004. In the same year they were named as the second online clothing store by Hitwise magazine after Next ("ASOS: Unique enough to outlast competition", 2005). Steadily, the sales of ASOS grew. Their biggest sale was recorded from November to December of 2005. This resulted to an increase in the operating profit of the company. A seventy-one point seven percent increased was noted, which resulted to 1.1M operating profit in 2004-2005. In the table below, it is noticeable that the growth of ASOS came only in the years 2004-2005 when there group operating margin was recorded at eight point two and seven point nine respectively ("ASOS: Unique enough to outlast competition", 2005). However, it was the company's belief that the sales could have been higher if only some problems were quickly resolved. One of those problems was the warehousing problem. The number of orders that flooded ASOS during the holiday season of 2004 required them to ship around 2,000 to 3,000 orders per day ("ASOS: Unique enough to outlast competition", 2005). However, their warehouse was too small to accommodate the number of orders they got for the month of December (Braatz, 2002). This brought about problems in stocking, organizing and processing items that came in large quantities in so little time. Figure 1: ASOS Financial Performance 2000-2005 ("ASOS: Unique enough to outlast competition", 2005). In addition, any of the items that ASOS were not offered during that season. After the rush of Christmas shopping subsided, many items were not sold and this resulted to a loss in full price sales opportunity. Since the items left in the warehouse ware already out of season, ASOS did not have any other choice but to offer them at discounted price early in 2005. This loss is noticeable in the table presented above. In 2004, the group-operating margin of ASOS was at eight point two percent, while its group-operating margin for the following year was only at seven point nine. ASOS Objectives Being both in the fashion and retail industry, ASOS needs to be able to meet the requirements of both industries in order to succeed. In relation to the fashion industry, ASOS must ensure that the items they are offering are in season. Being up to date, when it comes to the latest styles, is crucial for the case of ASOS. This is due to the fact that they are capitalizing on the trends that celebrities start (eMarketer, 2000). If ASOS is able to maintain this ability then the retail industry requirement can also be meet since trendy or in season clothes are more profitable than those that are not. This has been proven in the case stated earlier where ASOS had to sell out of season clothing at a discounted price. With this in mind, it is the objective of ASOS to offer and deliver the trendiest in season collection to their customers. Another objective of ASOS is to provide a pleasant online shopping experience to their customer. It is important to associate shopping with being online for ASOS' case. It is a fact that being physically involved in shopping brings about a different experience compared to shopping online. For example, ASOS.com The ASOS.com website could be improved through a variety of ways that would benefit both the company and the consumer. For example if video and audio clips were added to some pages, this could increase the interest level for the browsing customer, which could result in increased sales figures (Fellman, 2005). Customer services could be improved through the addition of a live chat service on the website, providing the opportunity for customers to interact with retail staff directly about any questions or concerns they may have about their shopping experience. Other issues that would need to be addressed within the ASOS.com website include increased contact with staff, faster processing of refunds and returns and an increase in transparency which could be achieved through more comprehensive information on the company itself. Competitor Analysis According to Proctor (2000), competition is important since it affects the success of a business venture. Proctor added that competition is more than just producing and distributing products and services that matches the needs of the consumers. Competition is about the company's capability of positioning itself in the market so that they will stand out among the rest in the perception of the consumers. In the case of ASOS, they do not have any direct competitors when it comes to clothing associated with celebrities (Hale, 1997). However, it is the case that does compete with other clothing retailing stores such as Topshop and FIgleaves.com. SWOT Strengths The strength of ASOS is its utilization of the Internet. Through the Internet, it has formed a definite market segment that is composed of mainly Internet users. A firm that limits its attention to fewer market segments can better serve those segments than those firms that influence the entire market. Moreover, its core focus, which is apparel, as worn by celebrities at affordable price gives them a marketing edge for it attracts customers right away. It also gives huge discounts and has broad category coverage. Weaknesses Online retailing in general is getting bad publicity nowadays such as poor delivery performance. Another weakness is that ASOS cannot guarantee specific product or brand presence. Internet selling is unlikely to be successful, as consumers like to try on clothes and see the quality of fabric and workmanship. Opportunities Ecommerce channels now represent 11% of the total UK retail business, and record numbers of products are being procured vie the internet (Thomson et al, 2005). People are attracted by low prices and convenience. In addition, they have integrated their everyday activities to technology and the Internet, including shopping. As the number of working women, who are ASOS core customers, continues to increase, they will not only need more clothes for work but are also more likely to be financially independent to purchase clothes. Threats Online clothing chains from overseas are successfully invading UK and at the same time, branded apparel such as Diesel, Guess and Zara are still popular among the market. Other purely online fashion etailers such as Yoox.co.uk, Brandalley.co.uk are also their main threats. Downturn in the economy could also cause buyers to cut back on overall spending. Product Strategy The product line of ASOS is defined. The company knows exactly what they want to up out in their website. As the former name of the company suggests, the product line of ASOS is composed of clothing articles as well as other fashion related items that have been seen on celebrity fashion icons or trendsetters (Hoffman and Novak, 1996). The company's decision to extend their product line to include beauty products can still be deemed as within the original intentions of the company. This is the case beauty products are now being considered by many, as a fashion must. A good skin is needed in order to make a certain look work. Since the products of the company focuses on products that must be appealing to the eye of the customers in order to be bought, visual merchandising is important in conveying the aesthetics of the products that they are offering. Customers need to see that the clothing items that are being offered in the website were indeed "as seen on screen". Like the conventional retail clothing outlets, ASOS does have a window to display their products. The pages of their website serve as the windows where their customers can see the products. However, unlike conventional retail clothing stores, ASOS do not have any mannequins to dress-up. Instead, they relay on photos to act as their online mannequins. In order to generate an almost complete picture of a dress being offered on the website, they would display multiple shots of a model wearing the same dress but with varying angles. As such, an almost 360-degree view of the dress can be generated on line. Aside from the pictures of the items being sold on the site, pictures of celebrities wearing the same styled article of clothing are being displayed next to the items (John, 2003). This acts as an assurance that the item was indeed as seen on screen. Positioning Strategy The target market segment of ASOS is as defined as their product line. They target people who are eighteen to thirty years of age and who are Internet savvy (Kiska, 2004). Based on the questionnaires prepared and used for this research, the biggest bulk of ASOS customers are eighteen to twenty-two years. This age group represents fifty-five percent of the total ASOS customers. It is followed by people who belong in the age brackets twenty-four to twenty-nine and thirty to thirty-five who twenty percent of the ASOS customer population each. Lastly, people who are thirty-six to forty-two years old complete the population representation five percent of the total. Figure 2: ASOS customer population by age groups The result of the survey concluded that ASOS targeted the right age group for the products. This is the case since the surveyed revealed that eighteen to thirty years old customers are more open to buying the products that ASOS offers. Another reason for the bulk customers on the said age bracket can be attributed to the fact that people within this age group are more adept at with using computers as well as navigating the Internet. In addition, they are also the ones who are part of the corporate world where everything is fast-paced that they do not have the time to go down town and shop for the clothes and other fashion items. It will be more convenient for them to browse ASOS' website, pick the item that they want, pay for it online and wait for it to be delivered to their specified address. This could only take a few minutes depending on the customer, if they know exactly what to buy or if they are still looking for one (Malone and Laubacher, 1998). This also suggests that working people can easily do their shopping even while in the office yet not disrupt their tasks. This means that ASOS shopping is a welcomed distraction during workdays. In fact, peak shopping times were recorded at lunchtimes and between 7pm to 9pm. In relation to gender, eighty percent of ASOS shoppers are women, while only two percent are male as shown on figure 3 below. This is still according to the survey conducted for this research. This may be the case since most of the items that are being offered online are for women. In addition, the marketing activity of ASOS focuses on disseminating information to more women than men. 500,000 emails are sent to females twice a week compared to 100,000 emails sent to males only once a week. Figure 3: ASOS customer population by gender Offer Strategy The success of ASOS is being owed to their ability to offer trendy clothes at significantly lower prices (Proctor, 2000). However, there are still other factors that need to be considered when discussing the success of ASOS as an online retail-clothing store. Aside from the price of the products, the seasonability of the products being offered is also crucial. It is a fact that the fashion industry is always on its toes when it comes to innovation. Various collections come out on a regular basis depending on the season. There are winter and summer collections as well as spring and fall collections. It is important that will be able to provide the trendiest clothes for a particular season at a relatively lower price to their market segment. This is the case since the customer base of ASOS wants to achieve a look that is the same as that of celebrities who have sponsorship to top and branded designers. Timing Strategy Based on the discussion earlier, the sales of ASOS increased significantly during the holiday season of 2004. This is the case because orders for products that will serve as gifts were in demand (Reichheld et al, 1990). In addition, a series of events take place during the holidays. Family reunions and countless parties are set to happen during this time of the year. This means that people will always be on the look out for clothes that they will be able to use during these events. However, it is also expected that during the holiday season discounts abound. This means that consumers are also on the lookout for bargain deals. In the case of ASOS, they are able to meet the needs of their customers for ideal apparel at reasonable prices. As such, during the holiday season ASOS must be able to get the word going that they will be able to provide quality yet affordable wares for the people. Convenience Online shopping is often being linked to convenience. People expect online shopping to be a breeze. They are attracted by the fact that they would be able to purchase the things that they needed without even their homes (emarketer, 2000). This is the kind of convenience that etailing is currently offering their customers almost all over the world. However, the convenience that customers are looking for do not stop there. Other considerations must be taken in order to determine if the customers are really being provided the kind of convenience that online shoppers are looking for. One of the considerations in evaluating convenience in relation to online shopping is the ease of finding the website of the company, in this case ASOS. In this aspects ASOS do not have any problems since the URL of the website is ASOS.com. Once the customer enters this URL they will automatically be directed to the ASOS online store and immediately start shopping. Once on the website, the customers will be greeted with a page that is easy to navigate. Ton the left side of the screen various categories are listed where the customers can narrow down their searches in order to easily find the clothing item that they are looking for. For comparison purposes photos of the celebrity seen wearing the original clothing item are also shown when the ASOS products are clicked. Customer Value and Benefit People will most likely buy from a friend than a salesperson. This one thing should be kept in mind by anyone who wishes to venture into the battlefield of sales. With that in mind the researcher must keep in mind that way a salesperson presents himself/herself and the products provides a lasting impact on the customer (Ross, 1999). It is often said that veteran salespeople can sense if the will be able to close the deal or not within the first 30 seconds of the conversation. When people are purchasing something they are actually taking into consideration quite a few things like family and friends. Take the case of women for example, most women especially ones with kids will check if specific brand of cereal has Recommended Daily Allowance of vitamins and nutrients that their kids needs before actually purchasing a box of cereal. People want to make sure that they are getting was would be more beneficial to them and their family and of course they want to make sure that the purchase is worth the money. This is one of the reasons why salespeople have developed a sales technique involving the features, benefits and advantages of a product or service. According to Dave Fellman (2005), The FAB formula is the idea that all products have features that creates advantages, which in turn provides benefits for the customer. This kind of product presentation makes the customer realize that the product or service being offered is of great value to them. In the case of ASOS, the benefits that they are capitalizing on is the fact that ordinary men and women have the opportunity to look like celebrities since the products that they offer are the same as the clothing of celebrities but are more affordable compared to high street fashion prices. As such, people have the chance of improving their self-esteem and boosting their self-confidence just like the celebrities who wear the original version of the clothes that ASOS is selling. References Bhaskaran, V (2005). Customer Satisfaction Surveys and Questionnaire Templates at QuestionPro. Retrieved April 21, 2006, http://www.questionpro.com/akira/showArticle.doarticleID=customersatisfaction01. Braatz, J. (2002). The Internet as a Retail Sales Tool: the Growth of Esales. Let's talk Business. October (72). eMarketer (2000). The e-holiday shopping report. Online Fellman, D. (31, March 2005). FABEA takes FAB to another level. Quick Printing. Hale, Mason (1997). E commerce Today and Tomorrow Hofmann, D.L. and Novak, T.P. (1996). Marketing in Hypermedia computer-mediated environments: conceptual foundations. Journal of arketing, Vol. 60 No. John, J 2003, Fundamentals of Customer-Focused Management: Competing through Service, Praeger: Westport, CT. Kiska, J 2004, 'Customer satisfaction pays off rewards can motivate employees to deliver top-notch customer service', HR Magazine, February. Malone, T. & Laubacher, R. (1998). The Dawn of the e-Lance Economy. Harvard Business Review, 76(5): 145-152. Nelson, J. (2000). Internet at a glance. Business 2. September 12, 2000 Proctor, T. (2000).Strategic Marketing: An Introduction. London: Routledge. Reichheld, FF & Sasser, WE Jr. (1990) 'Zero-Defections: Quality Comes to Services,' Harvard Business Review, September-October, pp. 105-111. Ross, J (1999) Total Quality Management, CRC Press: Boca Raton, FL. StatPac. (2005). Sampling Methods (online). Retrieved April 21, 2006 from http://www.statpac.com/surveys/sampling.htm. Thomson, Jennifer and Eibisch, James(2005). Responsive Retailing: IP and the High-Street Retailier. IDC Read More