Product Category Competition - Apparel - Essay Example

MARKETING-ANALYSIS OF PRODUCT CATEGORY Introduction An industry is defined as a group of companies providing those goods that compete with each other. The industry I have chosen for this research project is the ‘retail industry’. This industry is concerned with providing goods to consumers that are easily available at different retail outlets. Examples of companies operating in the retail industry are Wal-mart, Victoria’s Secret, eBay, American Apparel, Home Depot etc (Local 6, 2007). My product category, however, is the apparel (or clothing) category. Therefore the list of competing companies narrows down to only those who sell (sometimes even manufacture) clothes, our product category. In this paper, we will define this product category as clearly as possible and we will then examine it thoroughly. Discussion Product Category: Apparel As mentioned in the introduction section, the product category chosen is apparel. Apparel is clothing in general. This could range from t-shirts to dresses to cardigans to skirts to denim wear. Some people may even include under garments in this category but for our purpose, we will only consider outer garments or attire. We will later consider companies who make these, other products and product categories that compete with these also. Outer garments or clothing may range from casual, inexpensive t-shirts to sophisticated, costly and maybe even branded suits. Companies who sell (and/or make) casual clothing include Abercrombie and Fitch, Gap, Guess, Old Navy etc. Companies or designers who sell expensive branded clothing are Armani, Prada, Chanel, etc. There are several others that sell both types of clothing or only one of them that are not mentioned above. The point that I am trying to make is that clothes as a product category is not singular. It has many different branches, as mentioned above. We will mainly consider casual apparel retail products. Another way of further categorizing the clothes category is in terms of gender and also age. For example, some companies provide apparel for women only such as Ann Taylor. Others provide clothing for only men or most retailers sell both men and women apparel. Another sub-category of the apparel product category is clothing in terms of age, for example, Toddlers, Children, Teenagers. There are retailers that provide one of them or all of them. Some retailers may specialize in providing only apparel for new born babies, toddlers and pregnant women (maternity apparel) such as Mother Care. Product Competition There are many different retailers in the apparel retail industry in the US. According to a report by Nielsen Net Ratings, eBay clothing shoes and accessories ranks the highest in beauty slash apparel retail. For our purpose, we will consider LL Bean to rank the highest as an outer garment retailer, as identified by the report (Moskalyuk, 2008). Different products in this category competing against each other will be products made by different companies. There are numerous companies in the US making and selling apparel. These companies sell their products by creating positive brand images and by finding ways to increase brand loyalty. They market and sell their clothes by advertising them on the ramps and in magazines that are read and followed by their respective audiences. They try and compete with products by giving customers the most reasonable prices and most importantly, the best quality clothes. Apparel must also be up to date and in sync with the latest (preferably runway) trends. Some of the products competing with each other under this category are clothes made by Abercrombie and Fitch, Guess, Saks, Gap, and Old Navy. There are retailers/manufacturers such as Abercrombie and Fitch that have separate chains such as Hollister. Therefore, Abercrombie and Fitch labeled clothes will compete with the clothes by its own chain, Hollister also. Abercrombie and Fitch makes casual clothing ranging from summer t-shirts and tank tops to slightly formal shirts and dresses to winter fleece and pants to jeans. The price range is a little high (from about $50 to $80) for each item. Therefore, it is a brand for the upper-middle income group (Abercrombie and Fitch, 2008) The range of its sizes includes all sizes from extra small (size 00) to extra large. It sells clothes for men, women and children. Its distribution channel is simple, like most of the other apparel retailers’. It has a brick-and-mortar channel as well as the internet channel. This means that it sells clothes in its different outlets all across the country and also sells its products on the internet to many different countries. It website also gives the facility of locating real (brick-and-mortar) 201 Abercrombie and 450 Hollister Co. stores. Its promotional campaigns include fashion shoots in magazines (according to the latest season trends) and ramp fashion shows. The sales of A&F rise each month. They identify their target audience and sell to them. The sales for the year 2007 (ending January 2008) were 3,749,800,000. (Wright Reports, 2008). The same can be said about Guess. It allows you to choose a region on its website and it prices and arranges its products accordingly. But generally, its price range as well as the size range is same as that of Abercrombie. Guess is a strong brand and this is what gets it going along with its high-quality products and trendy designs (Guess, 2008). It also has long-term relationships with its licensees because it is a strong brand in terms of marketing and advertising. It has consistent and familiar, but innovative advertisement campaigns. Its distribution channels are its more than 747 stores worldwide and its dot-com channel for selling to more people and countries online, conveniently (Guess, 2008). Gap and Old Navy both make trendy clothes but at extremely reasonable prices. These are brands for everyone and that’s what gets them going. These along with Banana Republic and Piper lime all are brands manufactured and sold by Gap Inc. These also compete with each other. It makes clothes for men, women, girls, boys, and babies (Gap, 2008). As a promotional campaign, it relies greatly on its sales. The net sales of Gap Inc. decreased to $15.8 billion in 2007 from 15.9 billion. The net earnings in 2007 increased to $833 million (Gap Inc., 2008). Product Category Competition Clothes are worn for a number of reasons. The basic reason for wearing clothes is to use it as a means of covering the body. If apparel is viewed as this, then it can be said that footwear is a competing product category because they are also used to cover a part of the body. If clothes are viewed as a means of keeping up with style then product categories like accessories, home furnishings, footwear etc can be used to keep up with the style. All this competition is quite irrelevant because there is nothing really that actually competes with clothes as a product. It is easy to view the different functions of clothes and come up with product categories that compete with these functions. However, there is not a single product category, according to me, that competes directly with clothing. REFERENCES Americas Top Retailers Name (2008). Retrieved Sept 20, 2008, from Local 6. Web site: http://www.local6.com/money/13593477/detail.html?rss=orlpn&psp=money Moskalyuk, A. (2008) Top US apparel retailers: eBay, LL Bean, Victoria’s Secret, Zappos. Retrieved Sept 20, 2008, from ZD Net. Web site: http://blogs.zdnet.com/ITFacts/?p=13821 Abercrombie and Fitch New York (2008). Retrieved Sept 20, 2008, from Abercrombie and Fitch. Web site: http://www.abercrombie.com/anf/lifestyles/html/homepage.html?cm_ven=DOMAINS&cm_cat=REDIRECT&cm_ite=abercrombieandfitch.com About Guess (2008). Retrieved Sept 20, 2008, from Guess. Web site: http://www.guess.com/About.aspx (2008). Retrieved Sept 20, 2008, from Gap. Web site: http://www.gap.com/ Abercrombie & Fitch Co - Company Profile Snapshot (2008). Retrieved Sept 20, 2008, from Wright Reports. Web site: http://wrightreports.ecnext.com/coms2/reportdesc_COMPANY_002896207 We are Gap Inc. 2007 Annual Report (2008). Retrieved Sept 20, 2008, from Gap Inc. Web site: http://www.gapinc.com/public/documents/GPS_AR_07.pdf MARKETING-PROBLEM DEFINITION Introduction This paper will define a problem in the Apparel Retail product category. There are a number of problems that such retailers face such as competition from other retailers, raw material availability, high labor costs, and many more. In this paper we will discuss all these briefly and one (competition) in detail to illustrate a problem definition in this product category. Discussion Competition There is enough competition in the USA clothing retail industry. There are several retailers who provide clothes to men, women and children in all sizes ranging from low to high prices. This means that everything is covered by these retailers and they are expanding more each year. Therefore, there is tough competition for retailers operating in this industry. To be specific, top competing retailers in the industry are Abercrombie and Fitch, with its many chains such as Hollister Co. Other retailers are American Eagle, Gap, Guess and many more. All these try and gain market share by increasing customer and brand loyalty and to some extent, all of them are doing a good job at it. They come up with innovative promotional campaigns to draw the customers. Some, such as A&F identify the exact target audience and sell to them, such as teenagers. To make the problem worse, there is little, but still competition from other product categories. These categories include footwear, accessories, and home furnishing categories. Footwear is used as a means of covering oneself as well as a means of staying stylish, like the other two product categories. The problem becomes even worse when competition from abroad is faced. Foreign brands are increasingly trying to sell apparel in the US market because they feel that it has the largest consumer base. They are also taking advantage of the weak US dollar, which reduces the cost of their initial investment (Saranow and Hudson, 2008). These brands come with diversity and have different approaches as well as different styles. Customers, sometimes, look for this. These foreign brands also try to capture market share with their popular brand names such as Zara, Topshop, etc. Topshop will be opening its stores for the US customers in October. South Korea’s Who A.U. is trying to compete with Abercrombie and Fitch and Hollister Co. It plans to open about 450 stores in the US in the next ten years (Saranow and Hudson, 2008). Therefore, these foreign brands are a major threat to local competing companies in the US. The best way to stay on the top is to manage relationships with customers in terms of mutual benefit. They should be given clothes that give them value and this should generate profits for the retailer. These retailers can give such value to consumers by knowing them inside out and by getting a transparent, 360 degree comprehensive view of them. Other problems In this paper, I was required to examine “a definition of a problem in this category”. I have defined the problem that is most threatening for the clothing retail products, that is, competition. To give a slightly larger picture of what these companies face, I will examine more, very briefly. Clothing retailers continually face high costs and that too because of high labor wages. Wages in developed countries like the USA are much more than what the labor is paid in developing countries like Thailand, India, Pakistan, etc. For this reason, these big manufacturers and retailers try to manufacture their products in such countries and sell them back in the US market to gain on profitability. Clothing retailers also find it hard to manage their relationships with suppliers because these same big suppliers provide competitors with materials also. Therefore, it is crucial for them to manage their relationships effectively. REFERENCES Saranow, J. & Hudson, K. (2008) Apparel Retailers From Overseas Are Hitting the Malls in the U.S. Retrieved Sept 20, 2008, from University of Pennsylvania. Web site: http://bakerretail.wharton.upenn.edu/documents/ApparelRetailersFromOverseasAreHittingtheMallsintheU.doc. MARKETING-PROPOSAL FOR RESEARCHING THE PROBLEM Introduction In the preceding papers, the product category to be examined has been defined as clearly as possible. The clothing retail products are discussed thoroughly. A problem definition with this category is also given. This problem is the implication of a specific marketing decision area that will be explained by answering some research questions (Zikmund, W.G., 2000). It is important to know how to explore this problem, especially for the retailers themselves along with people studying this industry. In this paper, possible ways of researching the problem; competition will be discussed and proposed. Proposal The problems faced by the clothing retail industry revolve mainly around heavy competition from local brands. Now there is also a tendency for foreign firms to enter the US market. This further increases competition. The purpose of the study is to help firms understand what kind of and how strong a competition competing clothing retailers are facing. The level of competition is already known. The competing companies, both foreign and local are also known along with the problem background. What we need is a way of examining how to make use of all the information that is available. The most excellent way to research this problem is to get a comprehensive view of these competitors. This will be done by carrying out a full research on these companies. If the competing brands are examined properly, firms can discover their weaknesses and make comparisons with their own. On the other hand, it could also study itself thoroughly to gain an understanding about those areas in which it is better than its competitors. Understanding your own strengths and weaknesses and those of the competitors allow for easy examination of the problem. They can see just how dire the competition is and how much work is needed on their part. Another way of examining the problem is to gain an understanding of the customers. The market, and all the potential and existing profitable customers must be researched. An all round, transparent view of the customer should be available to the company. They can get this understanding by investing in and employing effective CRM systems. It is easy to see the problem when you know your customers. This is because it helps firms to see the scenario from the eyes of the customers. If they feel something is not right, an understanding of the customer will help firms to see that problem just like they see it. Conclusion In conclusion, a problem definition, specifically heavy competition, in the clothing retail industry can be examined by having an understanding of not just the competing brands but also of the customers. It is the customer who ultimately causes a problem for the firm by leaving or switching. If firms can identify this problem before the customers, by thinking like them, they will never lose customers and come under the pressures of competition. REFERENCES Zikmund, W.G., (2000). Exploring Marketing Research. Retrieved Sept 20, 2008. Web site: http://www70.homepage.villanova.edu/hae-kyong.bang/05-prob%20def%20&%20rsch%20prposal.PPT. Read More