New Look for Women in the UK - Essay Example

 New Look for Women in the UK Executive summary New Look is one of the largest clothing retail chains for women in the UK. It also has a line for men and children. Currently New Look exists in France, Dubai, Kuwait and Belgium also. However, since the current markets are becoming increasingly competitive, the company is planning to expand in Asian countries. New Look is exploring the possibilities of entering India with its range of women’s clothing. Porter’s Diamond Model, PEST analysis and SWOT matrix have been used to analyze the environment. Strategies have been derived using the TOWS matrix. The appendix contains references and matrixes that have been used in the plan. India is prospering economically and poses a perfect market for New Look as it has a ready market for women’s wear. Technological advancement and cheap availability of labor will enable New Look to enter the market at competitive prices. Also, currently the competition has not entered this market with full force which makes the environment more viable. However, there is cultural diversity which makes the market highly unpredictable and difficult to establish trends. Also the laws of the country are not powerful enough to control plagiarism of designs. New Look plans to launch in the country within 3 months and growth into 200 outlets within 2 years and at first importing the range and later setting up production facilities in India itself. This can be achieved by employing highly skilled set of local and foreign designers to cater to the different niches that exist in the market. Also, heavy promotion of 25 % of the total cost would build the lacking brand loyalty. Lastly marketing should be controlled by monitoring the strategies used by having an in-depth evaluation every 6 months Introduction New Look is Britain’s third largest retail of women’s fashion. With over 540 stores across UK, New Look now has about 250 stores in France with complete ownership of MIM, Belgium, Dubai and Kuwait it has revenue of 800 million pounds (2005) and employees 15000 workers1. New Look has a range for women of all ages and sizes, accessories range, a men’s range and a kid’s range. The core products however are clothing, lingerie and shoes. New look has 1000 factories in 45 countries and it caters to international market keeping the various fashion trends in mind2. The sales volume of New Look is increasing at a decreasing rate as competition in the current market increases. New Look therefore seeks to expand in a market with a big demand and where the costs would remain at a minimum to maximize profits (Doyle, 2000). Situational analysis To assess macro environment the PEST method is used. Political Environment The law for foreign investment has relaxed in India now. The environment encourages foreign investment as long as the local industries are protected. Previously foreign investment was totally banned and only local industries thrived (Doyle, 2000). Today globalization has caused India to open its borders to foreign goods. This has proved positive for chains like New Look and they are surging the Indian market. However, under Indian law, “single-brand” retailers are allowed to open Indian subsidies however they have to pass a stake of 49% to an Indian partner. This law protects the local industry (Keegan, 2004, p. 130-164). Economic Environment India is a growing market with an economic growth rate of 9.2% which is the highest since 1988. The revenues of corporate retailers in India is expected to grow 20-fold from £7bn ($14.1bn, E10.3bn) to £140bn over the coming decade. The investment rate is high. The employment rate has increased as employment opportunities are developed and there is ready availability of skilled labor (Kingfisher, 2006). Social Environment India is a multicultural nation with a population comprising of Hindus, Muslims and Sikhs who have different cultures and dress codes. Some traditionalists do not wear very revealing clothes; some do not wear western clothes at all. The majority of working women are trendy and fashion updated and follow global fashions. Materials used for manufacturing are important and leather accessories are not worn due to religious reasons especially by the Hindu majority (Dev, 2005). Waters explains that there exists a wide gap between the social classes especially the upper and the lower ones and thus the purchasing power varies. Women vary from extremely modern to extremely conservative. Technological Environment India is a fast growing economy and it is progressing in all dimensions. Technologically the country has succeeded and this has enabled the development and advancements of most industries of the country. Machinery, telecommunication, information technology and communication etc. are competitive and can match world standards (Dev, 2005) . Porter’s Diamond Model Factor conditions India has a good infrastructure and an easy availability of cheap labor. The infrastructure is developed and there is availability of raw materials and has good quality cloth. Also, the locals are skilled at stitching which makes it easier for the firm to establish factories in India (Keegan, 2004, p. 137-144). Demand conditions The consumers of women’s wear typically range from 15 onwards. They are usually working women and have a reasonable purchasing power. The consumer is seeking value for money and is price conscious who is looking for cheap fashionable clothes. She is fashion conscious and has a high fashion awareness though has a limited budget. There are different sizes in every clothing range to fit the different consumers (Doyle, 2000). European women are larger than Asian women and the size ranges vary according to the market. The consumers in the Indian market are petite and mostly belong to the middle to upper class. They are working women and are quite fashion conscious. A wide variety of clothes is worn in the target market (Porter, 1985, p. 14-30). Related and supporting industries Supplying industries are well developed. The suppliers are readily willing to supply raw material directly in India. Distribution channels are developed which will facilitate easy transportation of clothes to the different outlets (Porter, 1985, p. 12-20). Competition In the international scenario, competition is increasing in the clothes industry as branded wear is increasingly being worn. Major competitors in the industry of New Look are Mango, Diesel, Marks and Spencer and H&M who are present in India. Zara’s is expanding very fast but has not entered the Asian market with full force. Currently it is not present in India but it does have a long term plan to enter the country. There also exists a lot of local brands that excel in women’s wear like Mom and Pop’s retail store chain which is locally owned. There is also a rising trend of designers in the country. However, the quality of these local brands is not as good and the good quality products are pricy (Abell, 1980). Market size According to Dev (2005), market size for women’s clothing across the globe is huge. The demand for women’s wear is on the rise with the changing trend of the work environment and fashion consciousness. The competition in the international markets is stiff and thus firms are seeking to expand in other countries with a ready demand. India is a very viable market for expansion as the economy of India is growing magnanimously and with it the market for better quality clothes and branded wear is increasing as the purchasing power of consumers increases(Porter ,1985, p. 17-25) . Also globalization and media exposure has made the demand more intensive as the market becomes more fashion conscious. Products New Look primarily manufactures women’s wear and has lately branched out into men’s wear as well. The clothes are mainly sold under this brand. In the women’s wear line, New Look sells casual wear including dresses, shirts, t-shirts, pants, jeans, lingerie, accessories, and children wear. In the men’s wear line, New Look offers t-shirts, pants, jeans, formal and casual shirts, etc. Products of New Look come in different sizes keeping the market in mind and to reach a wider market3 . Colors, styles and cuts are market specific. Products are localized depending on the market they are being sold in to appeal to the masses and capture a larger market (Steven, 2006). SWOT ANALYSIS4 Strengths Technology The greatest strength of New Look is its sophisticated technology that enables it to design a large range of clothes specific to different markets and allow it to introduce a new range every two weeks. This would not be possible without technological excellence (Novicevic et al, 2004, p. 77). Suppliers New Look has a strong and reliable relationship with its suppliers. New Look is a member of Ethical trading Initiate which further strengthens its relations. A reliable supply is crucial for a fast paced business like New Look. Also, due to supply relations, supply can make in India as well (Novicevic et al, 2004, p. 67). Employees The management of New Look is exceptional and well trained. The workers are efficient and dedicated with key designers on the panel. This gives the products its exclusivity and at the same time the clothes can be designed according to the market (Kingfisher, 2006). Cost advantage New Look has a cost advantage in raw materials like cotton and India has a ready market for cotton products which will enable the firm to avail its cost advantage in India throughout the year which other countries do not allow due to weather issues. According to Dev (2005), the climate of India will allow the firm to sell its cotton range at competitive prices. Also, since the production is in bulk globally, New Look will be able to sell its products in India at a competitive price which will be affordable for the masses. Weaknesses Employees Research evidence shows that sales personnel of the retail stores are not helpful at times, lack knowledge of products and are not polite to customers. There is a lack of sophisticated training. Also, in India, the employees have to be trained as per global strategy of New Look (Steven, 2006). Clothes Line Most of the winter lines constitute of leather and fur which will not be acceptable in the Indian market. Also, the designers are relatively unaware of the trends and culture followed in India (Kingfisher, 2006). Weak Brand Name New Look as not as famous amongst the customers as the competitors are. This is because the consumers are exposed to the US media more than British thus are familiar with other foreign brands (Kingfisher, 2006). Opportunities Cheap Labor There is easy availability of cheap labor in India. This gives New Look a good opportunity to hire employees at a competitive price. Market There is a ready market for the products of New Look. There are foreign brands available but they are expensive and beyond the budget of the masses. This gives opportunity to New look before core competitors enter the market. Laws India has softened its regulations on foreign investors which makes business easier for New Look. Compared to other prospective countries the laws are simpler and encouraging. Technology India is technologically advanced. There is information technology is available everywhere and people are trained in the field. This will make progress easier and faster (Dev 2005). Threats Competition Local competition could pose a threat as they have very competitive prices. Also, Zara’s plans to enter India in the long run which could compete with New Look directly. This is a much more known brand. Consumer taste The population is multicultural and fashion sensitive. This will make it difficult to satisfy the masses at large. Also, the consumer tastes and preferences may change quickly due to this reason which would in turn make it difficult for New Look to keep up with the changing fashion needs of consumers. Their taste may shift away from New Look products (Dev 2005). Laws According to Kingfisher (2006) laws are weak in India and even law cannot protect the New Look products from plagiarists who try to rip designs and sell them at a cheaper rate. This is a serious issue which will make things difficult for firm when its copy is available everywhere. Objectives The long term objective of New Look is to expand globally with the intention of becoming a global chain. India is a prospective market and New Look seeks to enter the market within three months. Target market New Look will target women of age between 16 and 35 years living in Delhi and Mumbai. The target market is between the studying and working category. They will target women from the middle and upper classes who spend about Rs 3000 or more on their apparel every month. According to Dev (2005), the target market will mostly be English speaking and have a fair amount of media exposure. They either work or study and spend their leisure time going shopping or socializing and partying. Product The products to be introduced initially in the Indian market will be casual wear. The products will be the same that are introduced in UK. There will also be a few styles that will be a fusion of eastern and western wear to capture a larger market and to have a market response to the products. The products will be focused on petite women as the average Indian woman is about 5’3” and is not heavy, however, the full range of sizes will be available but not stocked in bulk (Kingfisher, 2006). Different materials ranging from cotton, jersey, silk etc will be used to manufacture the products. There will also be a large range of accessories, lingerie, and shoes for women. People The sales people interacting with the customers will be Indians demonstrate a friendly behavior and well trained. They will be on commission basis so that they are motivated to sell more. There will be more women sales personnel as Indian women are more comfortable dealing with women sales staff. The sales people have to be very friendly as they are the key people who will build brand relations with the customers and in turn be responsible for recurring customers (Kingfisher, 2006). Place The ambiance of the store has immense importance for customers especially women. The stores across India will have the same ambiance as all the global chains of New Look. The décor, layout, design and color schemes will be friendly and appealing to make customers feel comfortable. The stores will be located in the main shopping areas of the cities (Abell, 1980). Packaging The products will be packed in beautiful wraps and bags to make the customers feel good and have a sense of value for money. Packaging will be more elaborate on festive occasion to indicate a cultural understanding and fusion. Price The prices of the products will be competitive and it will serve as the competitive edge in the market so that the customers feel that they sent their money well. The market has tough competition where price is concerned. Also, since the customers are price conscious, a little rise in the prices will drift the customers to other brands. Also, the prices have to be lower so that the local brands do not become a threat to New Look. Promotion According to Dev (2005), to promote New Look heavy promotion has to be undertaken. Billboards, TV commercials, print media have to be used to reach and attract the customers. Also, advertisements can also be done via the internet to reach a wider span of customers. The promotional budget will be higher than in other countries so that the marketing entry strategy works well and customers are well informed of the brand. The promotions will be monitored and reassessed to evaluate their contributions to sales. Different promotional methods will be used simultaneously to have greater impact. Distribution The consignments will come from UK to India via sea. Some suppliers will deliver directly to India. Once they arrive, they will be transported to the different outlets within a day using train or road to carry them to the destinations (Abell, 1980). Analysis The pest analysis has proved useful as it gives a macro view of the political, social, economic and technological environment. It has enabled to identify the problems and constraints that might be faced and New Look can be prepared before hand after the analysis. The diamond model ahs enabled an analysis of the overall scenario of the market and the related business partners. The Swot analysis gave an overall picture of the strengths and weaknesses of the firm. Also, the opportunities posed by India and the prospective threats have been made visible with this analysis. Using the TOWS matrix5 6the firm has formulated strategies by matching strengths weakness opportunities and threats together so that the best use f the strengths is made of the opportunities in the countries and the weaknesses are removed utilizing opportunities. Also, threats are lowered with the strengths (Novicevic et al, 2004). Financial Budget The marketing budget for India will be 25% of the cost. This is 10% more than the normal marketing budget for other countries. This is higher in India because it’s a new market and only heavy promotion will enable New Look to capture the market as the New Look is a relatively unknown brand here. Of this budget, 50% will be spent on advertisement and the remaining on print marketing and fashion shows etc (Dev 2005). Marketing Control A through market research has to be conducted regarding the taste and preference of the target market. When the products are launched the target market has to be closely monitored every 6 months ideally and their tastes have to be recorded so that the firm has an idea about the likes and dislikes of the market. Also, there are different niches in the market and they all have to be catered to by tailoring the designs according to the local demand (Waters). Strategies/Recommendations The target market is fashion conscious. The competitive edge of New Look should be its latest trends and designs. Top designers along with a few local ones should design the lines and the clothes should be in line with the latest European trend. The firm should introduce a new batch of designs every two weeks. This can be managed by the superior information technology the firm has. Sophisticated machines can help the firm meet this target. The competitors usually sell designs that are a season old in the market. Thus although they are foreign brands, the customer are getting old designs. New Look will have a competitive edge when it gives the market the latest trends and release designs across regions (Keegan, 2004, p. 149). . In order to enter India, according to Stevens (2006), New Look can launch in joint partnership with a local firm. It can perhaps franchise its stores with India’s Planet Retail with which other stores like Marks and Spencer, Debenhams, Next, Accessories and Guess have all franchised. This will cut costs and will be a safer mode of test marketing. New Look has to test the market first which it can do by entering two major cities of the country namely Delhi and Mumbai. The firm should initially have 5 outlets with 3 in Delhi and 2 in Mumbai. When the market responds better to the brand, then slowly the outlets can be expanded in the same cities and new cities can be ventured too. This is because India is a new kind of market with different cultures and the firm does not know how the market will respond. New Look should first get manufactured products to India and then later within a year set up factories in the country and produce 100% here. This is because setting up factories initially in the country will be expensive and since the market response is not known it will not be feasible for the firm to start manufacturing here immediately. The better option is to import all products from the UK and sell them here. Once the products gain market and the firm profits, then setting up factories will be more feasible and cost effective (Waters). In the long run, New Look should think of setting up factories in India and supply globally from here as the products will be manufactured at a low cost here. This is because the raw material is very cheap especially cotton and silk. Also, the fabric industry has developed here and good quality of raw material is available. The factories are large scale and can supply in large bulk. Also, the labor here is cheap which will further help us reduce the cost (Keegan, 2004, p. 155). . As Keegan (2004) says to beat competition New Look should train the staff very well and give them refresher training every 3 months so that the employees are well informed and can help the customers as much as possible. Customers often complain of bad service in different parts of the world and now with this market New Look has to have a better sales team. New Look will launch its women’s wear first and depending on its success, it will successively launch its kids and men’s range. According to Novicevic et al. (2004), this is because women are much more fashion conscious then the men in India. Women spend a lot more on themselves thus it is wise to launch the women’s range first. Depending on its success, later on the range for kids and men can also be launched (Porter, 1985, p. 1-30). The launch has to be targeted for three months as New Look should launch before competitors like Zara’s enter the market. If this is so then New Look will have a tough time dealing with competition (Waters). To save the designs from being plagiarized New Look cannot do much as the laws of the country are not strict. As Doyle (2000) says the firm can however sue heavily if their design is copied. Also, the prices should be marked so reasonable that consumers buy the original instead of the second version due to the small price difference. The firm can use brand building and brand connection strategies so that the consumers form an attachment to the brand and buy the original instead of the copied version. It is essential to build this connect so that even with existing competition, the customers remain loyal to the brand. Appendix References www.newlook.co.uk Abell, D, 'Defining the Business: The Starting Point of Strategic Planning' (Prentice-Hall, 1980) Dev, C & Don E. Schultz,D 2005, ‘Mix into the 21st Century’, Marketing Management vol.14, no.1. Doyle, P 2000, Value based marketing, Wiley, Chichester, 2000. Keegan, W 2004, ‘Strategic marketing planning: a twenty-first century perspective’, International Marketing Review, vol.21, no.1, p. 130-164 Kingfisher 2006, ‘Guide To Indian Workplace laws and Regulations’, Viewed 22 Oct 2007, Available: http://www.kingfisher.com/managed_content/files/sr_pdf/KF_IndiaLaw.pdf Novicevic, M; Michael Harvey, M & Chad W. Autry, C 2004, ‘Dual-perspective SWOT: a synthesis of marketing intelligence and planning’, Marketing Intelligence & Planning, vol.22, no. 1, p.65-96. Porter, M 1985, ‘Competitive Advantage: Creating and sustaining superior Performance’, Free Press NY, Chapter 1, p.1-30 Stevens, L 2006, ‘In search of quality’, International Journal of Retail & Distribution Management, vol.34, no.3. Waters, S, Retail Pricing Strategies. Retrieved November 3, 2007. Available: http://retail.about.com/od/marketingsalespromotion/a/product_pricing.htm SWOT Matrix Strengths Weaknesses Technology New Look has sophisticated technology Suppliers New Look has a strong and reliable relationship with its suppliers. Employees The management of New Look is exceptional and well trained. Cost advantage New Look has a cost advantage in raw materials like cotton Employees Sales personnel of the retail stores are not helpful at times, lack knowledge of products and are not polite to customers. Clothes Line Most of the winter lines constitute of leather and fur which will not be acceptable in the Indian market. Weak Brand Name New Look as not as famous amongst the customers as the competitors are. Opportunities Threats Cheap Labor There is easy availability of cheap labor in India. Market There is a ready market for the products of New Look. Laws India has softened its regulations on foreign investors which makes business easier for New Look. Technology India is technologically advanced. Competition Competition could pose a threat as they have very competitive prices. Consumer taste The population is multicultural and fashion sensitive. This will make it difficult to satisfy the masses at large. Laws The laws are weak in India. TOWS MATRIX Strengths Weakness Technology New Look has sophisticated technology Suppliers New Look has a strong and reliable relationship with its suppliers. Employees The management of New Look is exceptional and well trained. Cost advantage New Look has a cost advantage in raw materials like cotton Employees Sales personnel of the retail stores are not helpful at times, lack knowledge of products and are not polite to customers. Clothes Line Most of the winter lines constitute of leather and fur which will not be acceptable in the Indian market. Weak Brand Name New Look as not as famous amongst the customers as the competitors are. Opportunities SO strategies WO strategies Cheap Labor There is easy availability of cheap labor in India. Market There is a ready market for the products of New Look. Laws India has softened its regulations on foreign investors which makes business easier for New Look. Technology India is technologically advanced 1.In the long run , New Look should think of setting up factories in India and supply globally from here as the products will be manufactured at a low cost here 2 New Look will launch its women’s wear first and depending on its success, it will successively launch its kids and men’s range 1.To beat competition New Look should train the staff very well and give them refresher training every 3 months 2.New Look should launch before competitors Threats ST strategies WT strategies Competition Competition could pose a threat as they have very competitive prices. Consumer taste The population is multicultural and fashion sensitive. This will make it difficult to satisfy the masses at large. Laws The laws are weak in India. 1. The target market is fashion conscious. The competitive edge of New Look should be its latest trends and designs. 1. In order to enter India, New Look can launch in joint partnership with a local firm. it can perhaps franchise its stores with India’s Planet Retail 2. New Look should first get manufactured products to India and then later within a year set up factories in the country and produce 100% here. 3. The firm can however sue heavily if their design is copied. Read More