Strategic Marketing Plan for the Reiss Company - Essay Example

Marketing plan The aim of the present work is to design a 3-year strategic marketing plan for the Reiss Company, using the information on its website reiss.co.uk. The strategic plan should define the main steps for the company in its desire not to keep the marketing share it possesses at present, but to enter the global market and to develop the company’s popularity through web instruments. The importance of the marketing plan for any company is in the fact, that it defines the strategic company course for the higher profits and more stable marketing position. It usually includes smaller strategies, which address the questions of pricing, budgeting, promotion and distribution of the products, as well as financial analysis, advertising and possible government and demographic changes. Any strategic marketing plan should include the two major components: the first one is how the company will behave in the competitive environment and the second one is what daily tactical operations should be involved into the strategic marketing plan implementation. The role of the strategic marketing plan for the Reiss company, as well as for any other, is to ensure the competitive and consistent approach to promoting the product (men and womenwear) ot outsell the competition. The marketing share occupied by Reiss is very competitive, and thus the development of the strategy should be very thorough. It is necessary to take into account the global challenges which require the use of web resources for the business to enter global market and global competition. However, it should be born in mind, that for making the implementation of any strategic plan real and working, it is necessary to be aware of the day-today operations needed for this strategic plan implementation. The strategy should have both the resources for its implementation and the expertise to make it successful. Reiss history ‘Reiss was an established menswear brand that had been founded and developed by David Reiss. In 1998 he recognized the opportunity in the fashion market between the high street and the international designer brands and decided to target this area. This strategy proved so successful that it was decided to fulfill the same niche in the womenswear market. Following significant investment into womenswear division, womenswear was successfully launched in 13 of the company’s 19 stores in September 2000. In the same year Reiss opened its largest store to date in Market Place, a 6000 sq ft flagship store, in Central London. This was a significant step in raising the profile and the perception of the brand. Reiss ceased wholesaling in 2001 enabling the company to have control over where the clothes are sold and also to give total commitment to the Expansion of the retail division. At the start of 2002 the company undertook a strategic review of the brand and the business. Over the following two years this defined the development of the brand and expansion of the business through new locations and moving existing stores to larger premises. The benefits of this were realized in 2003 when the company achieved commercial success with operating profit doubling and more importantly, receiving recognition from the fashion industry, by being named the Fashion retailer of the year at the British Style Awards. Trading performance continued to improve in 2003, with operating profits increasing by 35%. The New York store achieved immediate success both critically and commercially. As a result of this the medium strategy is to continue to open a limited number of stores in the UK and extend the brand by pursuing international opportunities with owned stores in primary markets and master franchises in other markets.’ (http://www.reiss.co.uk) Strategic marketing plan The process of creation of the strategic marketing plan for Reiss presupposes consideration of many factors, which are unique for this company, as well as accounting the factors which are general for many marketing strategies. Thus, it is first of all necessary to decide, what the overall objective of the 3-year strategic marketing plan is. The market share in which Reiss takes not the last place, and displays the ability to grow, is very attractive for the competitors. The share of clothing has always been very competitive and attractive for the fact, that high quality clothes for reasonable prices will always take top consumer positions, being necessary, affordable, practical and fashionable. As far as the company has been founded for wholesaling, but then it has mostly concentrated on the retailing in the area of menswear and women clothing, offering some kind of medium between fashionable clothing haute couture and affordable every day wear, it appeared to be a very successful and beneficial strategy. It is now necessary for the company to keep to the rates of growth, expand the existing business and try to enter the global market. The aim of the company is to open 250 retail stores in the US, and for that it will need this 3-year strategic plan to be developed. Out of the several possible strategies mentioned in theoretical knowledge, it will be useful to briefly look through each of them and make the correct choice. (http://reiss.co.uk) First of all, it is essential to analyze the situation of Reiss in the domestic market. It has been known that for many times world well-known brands used to collapse into the weight of ambitions and to become corporately uniform. But the company, which has been founded by David Reiss, was not only up-to-date to catch the existing marketing opportunities, but to keep to the steady strategic growth within the exact limits of the defined objectives. The key advantage of the company was its accent on eliminating the gap between retailing clothes and int5ernational branding. The present situation on the market is that Reiss owns 55 stores all over UK, as well as franchising companies in Dublin, Stockholm and New York. It is annual revenue growth was at the level of 35% through the period of 2000-2003. (http://reiss.co.uk) On the one hand, the marketing situation of Reiss is very competitive, as the steady growth, high revenues and high sales are the signs of the successful strategy. On the other hand, it is high time Reiss were entering international market, which will allow it expanding business and making the goods popular all over the world. To choose and to define the strategy which is used at present and to define the best strategy which should be used by the company to make its business global? There is a notion of the cost-leadership strategy, which is based on the idea that the goods which are produced and offered by the company are of good quality but are sold for the lower prices than those of the competitors. These low costs ultimately turn into higher profit margins due to the higher volumes of sales. ‘Some of the conditions that should exist to support a cost leadership strategy include an on-going availability of operating capital, good process engineering skills, close management of labor, products designed for ease of manufacturing and low cost distribution.’ (Proctor, 2000) Analyzing the strategy currently used by the Reiss, we here come to the conclusion that low cost distribution is the key factor to be accounted in the development of the strategic global marketing plan. For the Reiss to enter global market, it is essential to use ease of distribution all over the world, for which it will be necessary to apply thorough developed web strategy and to use customer relationship management tools to be discussed later in this work. The products, which Reiss sells, are characterized by ease of manufacturing, and thus cost leadership strategy may be applied to making the company international; though what is seen at present is that it has applied only some important factors of the cost-leadership strategy, though it has already been defined, which of these factors should be used in the development of the marketing international plan. The strategy, which is currently used by Reiss, may be described as a Differentiation strategy, as theoretically this strategy includes most of the elements used. Differentiation strategy is the one which concentrates on promoting the unique product with the emphasis on the brand image, and strong distribution network. This uniqueness should also translate to profit margins that are higher than the industry average. In addition, some of the conditions that should exist to support a differentiation strategy include strong marketing abilities, effective product engineering, creative personnel, the ability to perform basic research and a good reputation. ‘ (Stone, 2004) ‘In order to achieve the objective of a combined menswear and womenswear offer, all aspects of operation are considered. The objective of the business is to develop a global aspirational fashion led menswear/ womenswear brand with a clear identity. Key to the brand is contemporary and directional product that is designed to be individual, stylish and sexy. The Reiss clothes have a definite look, which aims to lead trends rather than follow. As Reiss clothing is not overtly branding it is important that all other aspects of the trading format compliment and enhance the brand. This includes four main areas: location, store design, marketing and store environment.’ (http://reiss.co.uk) Thus, Reiss does not use branding directly, rather in combination with the other significant factors, which make this branding even brighter and more unique. These four factors (areas) noted by Reiss, should be used in its global strategy. With the entering the global market, it is essential to keep the design, environment atmosphere, and the traditional structure of the stores abroad, which will contribute into the unique branding of the Reiss clothing without making it too overt. Reiss makes special accent on the structure of the store buildings, which should be unique as thus easily recognizable. ‘Key to the design is the ability to use various materials, lighting, textures and graphics ensuring the stores have warmth and vibrancy’. (http://reiss.co.uk) Thus, in the development of the marketing plan for entering global market, with keeping to the non-overt branding the company has to use differential model of marketing with the acquisition of the four main branding areas which it currently uses with success. Pricing Having defined already on the overall strategy, which should be used for the achievement of the global objectives of the company at the international market, it is no less essential to adopt more operational aims and goals. Pricing should be defined as a separate strategy in conjunction with the global objectives. It would be suggested, based on the current theoretical knowledge and the present situation of Reiss on the market, to use the market penetration strategy, which presupposes the use of the lower prices for acquiring the desired share of the global market. This will allow Reiss to quickly penetrate the market and make the customers familiar with the products it offers. The skimming strategy will be absolutely inappropriate for the Reiss, as it presupposes that the product which the company offers is highly differentiated and unique, and thus it may afford setting high prices for these products. However, Reiss products, though being unique, are not highly differentiated, and thus with the menswear market share being saturated and highly competitive all over the world, it won’t contribute into the expansion of the Reiss business on the global scale. However, considering the existing factors, which currently influence the business performance of Reiss, there should be also made some note about comparable pricing strategy; this strategy is beneficial for those enterprises, which are not leaders of the market, and with the ‘price expectations’ which the traditional market participants create, too low or too high prices will not bring the desired result to Reiss. With such price expectations, too low prices set by Reiss if it uses market penetration strategy, may create opposite impression about the quality of its products among consumers abroad. Though it is one of the leaders of the clothing market in the UK, the leadership in international meaning is yet to be achieved, and thus the correct pricing strategy should be chosen very thoroughly. Accounting all pro and cons discussed above, it would be more useful to use a comparable pricing strategy. The basis for this choice is as follows: 1. Reiss has been able to gain stable reputation at the UK market, and the use of the comparable prices will allow the business to gain similar reputation on the international market. 2. Comparable prices will ensure the consumers of the high quality of clothing, as making prices too low may create the impression of the product quality lower, than that of the products sold inside the UK. 3. Comparable prices will assist in keeping the profits at the stable level, without losing profits, and will finally work for Reiss in acquiring stable market share globally. The environment The growth of the company at the international level is seriously defined by the environment, thus for the strategic international market entering it is necessary to analyze the environment, with which the company will have to face on its way of implementing the global strategy. This analysis is both the part of this strategy and the outcome of this strategy, as without this analysis the strategy cannot be developed, and at the same time, the strategy itself will lead to the analysis of this environment on the constant basis for the updating and immediate reaction to the possible changes. For Reiss being the representative of the clothing industry, the main environmental factors to be taken into account are demographic and cultural; this is necessary for the determination of the central geographical areas in entering international market. Cultural trends will also define the direction, into which the Reiss’ production should work in the next three years, as well as what products will be preferable in this or that country. Cost to enter the market and profit potential In creating the strategy for Reiss when going global, it is not only important to create the strategy, but to note the main concepts and issues which should be analyzed for the successful implementation of the designed strategy. The principal factors, which should be considered here in details, are the costs of entering the global market for Reiss and the profit potential which also relates to the Reiss performance at the global market. The first factor to consider is the marketing strength of the company. For the Reiss it is admitted, that it has got high potentials for the international development, through the use of the unique strategy which does not apply overt branding, but attracts customers with its unique and affordable products. Despite the fact, though, that Reiss itself does not admit the fact of using branding techniques overtly, it is still visible that its branding displays itself through the strict standards and principles which it applies on the everyday basis for the development of the company on the national level. The marketing strength which the company possesses will allow it to enter international environment with no large costs, but only in case it keeps to the implementation of the already developed global strategy for the next three years. The access to low cost materials and effective production is also one of the factors which should be considered when developing global strategy. It is decided, that the production sites will be kept within the UK, with the global intervention including only opening the stores all over the USA and other countries. However, the issue of effective production should be kept in mind for the assurance that the USA customers will be fully satisfied in their demands without any delays in the delivery of goods, as well as with the assortment and the quality. International expansion will certainly need higher levels of production, and thus its effectiveness should be considered in relation to the Reiss’ success internationally. The experience of the company is useful for taking proper decisions in the global scale. Reiss is a fairly young company, especially for the international market. The company was started in 1998 with the idea of combining the brand with affordable retailing, and though the company has achieved much at the clothing market in the UK, and it has enough valuable knowledge to be used when making the company global; but it is also required to use the help of professional marketing specialists, thorough analysis and step-by-step development. The company has to take into account the introduction problems, which are usually described in various literary sources as ‘industry standards, unavailability of materials, poor quality control, regulatory problems and the inability to explain the benefits of the offering to the prospect’. (Nichols, 1996; Stone, 2004) It thus appears that first of all, in the creating the strategy, the company has to be able to ground the necessity of expansion to the global market, as well as to ensure the quality control with the bigger production scales, as well as servicing and goods delivery abroad. In expanding the Reiss network abroad the company’s infrastructure should not only be kept, but be closely watched for the recruitment options, organization of servicing, customer support and logistics. With the aim of opening 250 stores all over USA, it is clear that such large network will need highly qualified stuff and expertise. With the comparable pricing strategy and differential global strategy of market enter; correct infrastructure may become one of the decisive factors in making business profitable abroad. The distribution channels chosen by the Reiss at present is through the wide network of stores, each of which is designed in accordance with the strict principles, branding and for being easily recognized. However, creating new distribution channels and arranging the logistics abroad must be included into the primary actions in the desire of Reiss to open the global market for its products. ‘Potential for competitive retaliation is based on the competitors resources, commitment to the industry, cash position and predictability as well as the status of the market. The enterprises ability to construct entry barriers to competition such as the creation of high switching costs, gaining substantial benefit from economies of scale, exclusive access to or clogging of distribution channels and the ability to clearly differentiate your offering from the competition. The intensity of competitive rivalry as measured by the size and number of competitors, limitations on exiting the market, differentiation between offerings and the rapidity of market growth. The ability of the enterprise to limit suppliers bargaining power. The enterprises ability to sustain its market position is determined by the potential for competitive imitation, resistance to inflation, ability to maintain high prices, the potential for product obsolescence and the learning curve faced by the prospect. The availability of substitute solutions to the prospects need. The prospects bargaining power as measured by the ease of switching to an alternative, the cost to look at alternatives, the cost of the offering, the differentiation between your offering and the competition and the degree of the prospects need. Market potential for new products considering market growth, prospects need for your offering, the benefits of the offering, the number of barriers to immediate use, the credibility of the offering and the impact on the customers daily operations. The freedom of the enterprise to make critical business decisions without undue influence from distributors, suppliers, unions, investors and other outside influences.’ (Proctor, 2000) Customer relations management (CRM) In defining the correct CRM system for the Reiss in its attempt to enter the international market, it is useful to have a brief look at the three existing CRM systems at present, to decide which of them is the most appropriate for Reiss. Operational CRM is the system of customer relations, which presupposes management of the so-called ‘front office’ operations, among which marketing, sales and service are the principal ones. This CRM system usually performs through the creation of the history for each separate customer; each new interaction with the exact customer adds new information to his history, and with the database being accessible for all company’s customer managers, the customer does not have to repeat his history each time he constants any other manager. (Peppers, 2004) Collaborative CRM is the means of direct customer interaction. This interaction usually includes various channels, among which internet and email at present take leading positions. In relation to Reiss and its desire to enter the international market, this type of CRM could be preferable for the overall access and easy interaction with the customers all over the world. The Collaborative CRM is used for the cost-reduction as well as service improvements; with the strategic aim of Reiss to take an international market portion, the use of Collaborative CRM could lead to the improvement of the customer management without too large extra costs. The speed of reaction on the customer requests with the use of Collaborative CRM will be high, and the costs will be comparatively low. (Peppers, 2004) Analytical CRM is not only the means of customer interaction, but also the means of analyzing the customer data and has various purposes, among which may be risk assessment and fraud detection, which is very useful for the credit card transactions, if the company wants to work internationally. These systems may be used for the analysis of the customer behavior, which will be valuable information to aid the servicing and promotion of the products. (Peppers, 2004) The implementation of the CRM systems for any company and for Reiss in particular, is necessary for the better understanding of the customer preferences and requirements all over the world. In order to make the operation of the system cost-effective, it is suggested that Reiss uses collaborative CRM in its global expansion. It is understood, that the use of the analytical CRM would be a preferred option, but it should be also clear that at the moment Reiss will be entering international market, the costs of this penetration should be reduced to the maximal level, as well as the use of CRM should be optimized. Applying the collaborative CRM to the international intervention of Reiss is both cheap and effective means of customer management. Simultaneously, it should be admitted, that the bigger portion of failures related to the use of CRM systems is connected with the exaggerated expectations which these systems ultimately break. This is a simple and effective means of bringing all customer information together, and the introduction and implementation of the analytical forms of CRM may become the next step in performing customer management as soon as the international performance becomes stable and profitable. International options for expanding Reiss, based on branding Branding is the means of making Reiss’ products the best choice for the customer – the products will thus be easily recognizable and the brand will always be associated with the quality. Brand is the instrument which makes the customer understand what he buys before it is even bought, and thus for the international intervention of Reiss it is essential to make the brand known and to make branding the priority in promoting the clothing. Branding appears to be especially important for clothes’ promotion. Successful branding will be for the Reiss to show its strength all over the world market. Its strength is in trying to match the customer requirements to what Reiss offers through this brand. Though the policy of the inner branding in the UK was not to make it overt, but strict branding policy has made branding known to the public, and thus the Reiss products known to the customers for quality and good customer management and servicing. Branding is valuable for the Reiss to promote its products globally, as it is the best instrument of communicating the brand values. (Keller, 2002) However, in the aim of entering international market the company has to reconsider its branding options, making them optimal. The key areas, which should be addressed and probably reconsidered in the light of the global perspectives, are the names which are given to the brands, slogans and the use of these slogans. The brand should be associated with the way the customer management is performed and with the way the products are packaged and sold. All values and strengths of the company’s profile should be made in line with the brand it will represent abroad. The beneficial and profitable step will be also to make this brand in the line with the cultural and national peculiarities in the countries where this brand is planned to work. (Keller, 2002) One of the preferable options for Reiss to get the brand work on the international market, and to make it constantly in line with the customer requirements, is to appoint a person who will be directly responsible for branding. The recruitment and the choice of employees abroad is one of the key issues through which the brand will work, as their behavior, conduct and service is the means of creating the reputation of the brand. The employees must understand the essence of the brand and for what it stands, thus they will understand to deliver it to the customers more effectively. Branding should be discussed, changed an adjusted for the needs of the global market on the regular basis through the meetings, and through the use of the already mentioned CRM systems. On the one hand, the employees should understand the importance of the brand and their role in presenting this brand to the consumers; on the other hand, they should also understand the proper ways of delivering branding information to the management of the company for its more effective performance. Branding is the means of keeping the product on the market for a continuous period of time. That is why in branding strategies of Reiss it is also essential to perform regular review of brands, how they work abroad and what changes should be needed to make the brand work on the constant basis. Branding needs through budgeting and costs should be reviewed constantly. In branding Reiss internationally it is necessary to focus on the needs of the customers abroad, but it is also essential to know what message should be delivered to them. It is important to know that any changes in relation to brand are not negative, but are rather the proofs of the fact that branding is the strategy pearly viewed on the side of management as well as on the side of employees. (Keller, 2002) Conclusion Thus, the main conclusions as for the development of the 3-year strategic marketing plan for Reiss company are as follows: 1. The company has to closely analyze its strengths and competitive advantages as for the intervention onto the global market. 2. Reiss should adopt the strategy of differentiation, when entering the global market, as this very strategy suits the products offered by Reiss, as well as give the company an opportunity to make its branding successful through the idea that the product it offers is unique. This product is truly unique, as the idea to combine the principles of retailing clothes with the clothes of world fashion was first implemented by David Reiss making his ideas work for the customers. 3. The pricing for the international expansion will be based on the comparative strategy, which will create the reputation of the high quality of the product, in the line with the already existing products of the similar market, and thus not making company lose potential profits. 4. The company should evaluate the environment it is going to work in, including governmental issues, cultural and demographic trends. 5. It is necessary to analyze the costs which the company will carry at entering the market on the global level. These costs should be defined on the basis of the strengths, which the company has, its experience and its position on the domestic market, which is displayed as being constantly strengthened as well as rapidly developing. 6. The company should consider the implementation of the CRM model (collaborative CRM), the choice of which is based on the considerations of the global perspectives as well as the possibility for this system of customer management to deliver the necessary information about the latest trends in demand and problems with the customer servicing. 7. Branding is the means for Reiss to deliver the knowledge about the company to the customers abroad, but the strategy of branding should be constantly controlled for its correspondence with the latest cultural trends in the countries where Reiss will promote its products. It is clear, that the share of clothing, especially menswear is highly competitive at present, but with the understanding that Reiss was able to acquire leading position in this segment inside the UK, as well as opening its franchising enterprises in Dublin and Stockholm, with constantly growing annual revenues, the time has come to expand business abroad. The company has a successful website which represents the main ideas of its performance, aims, branding and successes, as well as describes the network of its stores. However, with the consideration of the global perspectives, it should be suggested that Reiss pays more attention to the possibility of developing business online; this will make it international, popular, expanded and cost-effective. With the development of the communication technologies all over the world, it has become much easier to develop world-wide businesses with the use of the net technologies, and adding the use of the CRM systems will make it even more effective. It is clear that Reiss has all possibilities to develop its business internationally; it is also understood that without implementation of the clearly defined marketing strategy these attempts may appear costly and may carry no significant results. References http://www.reiss.co.uk Keller, Kevin Lane. (2002). Strategic brand management. Pearson US. 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