An Australian Luxury Fashion Accessories Company - Essay Example

?Introduction During the contemporary period, it can be d that to a greater extent, the success of an organisation mainly depends on the strategyused such as the “marketing mix” which is described as a set of marketing tools that work together to affect the market place (Kotler & Armstrong, 2004). Effective use of this strategy plays a pivotal role in determining the viability of the organisation in the market place. As such, this report seeks to critically evaluate the marketing mix plan for Oroton, an Australian Luxury Fashion Accessories Company owned by OrotonGroup. The report starts by outlining the historical background of the company which will be followed by an analysis of the company’s micro and macro environments in a bit to establish the degree to which these have an impact on the operations of the organisation. The main body of the report will focus on a critical analysis of the marketing strategy used particularly the current marketing mix in order to evaluate the effectiveness of this strategy. The last part of the report will look at the recommendations section where suggestions are given in order to improve the marketing offering of the chosen product or brand. Background “OrotonGroup Limited is a retailer, wholesaler and brand manager operating in Australia and the principal activities of the Company include retailing and wholesaling of leather goods, fashion apparel and related accessories under the OROTON and POLO RALPH LAUREN labels, and licensing of the OROTON brand name.” Details about the historical background of the company can be viewed from its official website (2010), . This organisation is wholly owned subsidiary that includes OrotonGroup (Australia) Pty Limited, Polo Ralph Lauren Australia Pty Limited, OrotonGroup (New Zealand) Pty Limited, Macbray Pty Ltd, Marcs Wholesale Pty Ltd and Oroton Share Plan Company Pty Limited. The company operates approximately 60 retail stores and is listed on the Australian stock exchange. Critical analysis of Oroton’s Micro Environment According to Kotler & Armstrong (2004), the micro environment is comprised of actors close to the company such as suppliers, marketing intermediaries as well competitors while the macro environment consists of demographic, economic, technological as well as cultural factors. The first section of this analysis of the microenvironment is mainly going to look at the company’s competitive environment, its financials as well as the structure of the business. According to Ibisworld (2010), the major competitors in the luxury brands industry include Luis Vuitton Australia Pty Ltd and Proud Jewellers Pty Ltd. Competition in the market is always a threat to the other actors operating in the industry given that they will be competing for market share. Oroton does not operate in a vacuum since it can be seen that the luxury brands industry is a bit different from other conventional industries. The company’s financials show an upward trend since 2007 according to Au Stocks (2011). This can be attributed to the management strategy that was adopted after the company had witnessed a decline in the revenue generated owing to decline in business. This is a major strength for the company. The company embarked on a drive to cut costs through laying some of the workers while at the same time offering affordable luxury brands. Another important factor about Oroton’s micro environment is that its structure is a typical brick and mortar model. This model mainly relies on linking the organisation directly to the customers through personal interaction but it can be noted that the organisation has also adopted e-commerce in its marketing strategy. However, a critical analysis of the factors characterising the micro economic environment of this organisation shows that the company is better positioned to operate viably in the market given that these factors do not pose serious challenges to it. The other advantage of this company is that it does not have intermediaries in the distribution of its products. This organisation also utilises a strategy of engaging the top management, finance, research and development, purchasing, operations, and accounting in its operations and these meaningfully contribute to the performance of the organisation. Analysis of Oroton’s macro environment According to AAP (2009), the volatile macroeconomic environment around 2009 and 2010 had a bearing on the operations of the organisation as a whole though it recorded an increase in revenue generated. Since this organisation is registered on the Australian stock market, the prices of the shares are determined by the situation that will be obtaining in the market at that particular price. The profitability of the organisation also shapes the level of its performance on the stock exchange. Oroton has little power to influence the performance of the country’s economy as a whole given that there are many forces that drive the economy which cannot be influenced by individual companies. The total buying power of the customers depends on their current income, prices of products as well as savings. As such, the marketers should be aware of major trends and changes in the country’s economy as well as the changing consumer spending. It can therefore be noted that these macro environment factors play a big role in shaping the overall performance of the company as well as determining the levels of revenue generated. For instance, when there is a crisis in the economy as a whole, the company is also likely to be affected somehow in its operations. The other aspect that influences the macro environment in which Oroton is operating is related to demographics. According to its official websites, Oroton mainly targets old customers but of notable concern is the fact that demographics change. It is therefore imperative for the organisation to constantly look for new customers since the market is dynamic and cannot rely on old markets alone. It also considers its target market through factors such as sex and occupation given that the products sold are treated as prestigious. Another important trend in the macro environment of the organisation is culture. Kotler (1999) suggests that the cultural values and beliefs of the people shape their behaviour towards the way they perceive product offerings in the market. Australia and New Zealand have unique cultures and these ought to shape the way organisations design their products to satisfy the needs of the customers. A close analysis of these factors shows that Oroton should constantly put measures in place that are meant to ensure that the company is positioned to keep pace with any changes that may take place in the environment. The following factors are important in the operations of this company. Persistence of cultural values: People in a given society hold many beliefs and values and these have a high degree of persistence. Most Australians and New Zealanders believe in working, getting married, giving to charity and being honest. These shape more specific attitudes and behaviours found in their everyday life. Subcultures: Each society contains subcultures – groups of people with shared value systems based on common life experiences or situations such as Catholics, teenagers and working women. All these factors represent separate subcultures which are shared by the members of that particular society. Shifts in secondary cultural values: Cultural is dynamic and it changes constantly as a result of aspects SUCH AS popular culture, music, film, fashion and social trends. Many market research organisations, such as Morgan Research Centre, now offer ‘future forecasts’ whereby they forecast future trends in fashions based on the adoptions of the innovator segment. Lifestyle segments are beginning to become more important to marketers in urban areas since people are influenced to buy particular products by others in different organisations as well as society. Critical Analysis of Marketing Strategy: How well the firms manage their individual brands and their overall product and service offerings has a major impact on their success in the marketplace (Kotler and Armstrong, 2004). To be successful, the company must do a better job than the competitors of satisfying the target consumers. A marketing mix strategy is a viable to that can be implemented in order to ensure that the firm achieves this feat. Thus, the unique combination of the four instruments in marketing which include the product, price, place and promotion is also called the marketing mix (Strydom, 2004, p.10). However, three additional Ps namely physical evidence, processes and people have considerably gained prominence and are recognised as part of the marketing mix hence the marketing management uses these in conjunction with the above mentioned four instruments to deliver its “need-satisfying package” to the customer during the contemporary period. As such, this analysis of the marketing mix strategy seeks to establish the extent to which the organisation is doing well or badly through the utilisation of this strategy. Recommendations will be given at the end. According to studies about this company, it can be noted that the marketing mix strategy is significant in the operations of Oroton and its target market is mainly comprised of people who are conscious to brands. According to its official website, its target markets are mainly people who are conscious to prestigious brands. OrotonGroup offers core, actual as well as augmented products. Product Product is the product offered to the customers in the target market (Kotler and Armstron, 2004). Oroton offer a variety of luxury products ranging from leather goods to clothing. Some of the products offered by Oroton include wallets, handbags, belts and an assortment of other prestigious offerings that are specifically meant for leisure. Oroton’s products are perceived as prestigious and they are presented in a manner that reveals that they are of high fashion. The brand image for Oroton is highly valued especially in Australia and New Zealand and they use intangible features in marketing such as colourfully designed pictures of the products and this strategy appeals to targeted demographics. It can be noted that Oroton mainly offers prestigious products and this makes it distinct in the market since these products are primarily meant for a specific target market. It also engages in new product development as well as development of original brands. This is an effective strategy given that the organisation is better positioned to know better the needs and interests of the targeted market given that it is properly segmented. Basically, segmentation is described as the division of a heterogeneous market into fairly homogeneous subsets or segments of customers who normally have similar needs (Strydom, 2000). Oroton uses psychographic segmentation which has many benefits to the organisation and the customers. Kotler (1999) posits to the effect that psychographic segmentation deals with characteristics such as personality, attitudes, opinions as well as life styles. This kind of segmentation is ideal for a prestigious brand given that it is not meant for everyone but for the rich and affluent in most cases. Price Pricing plays a pivotal role in determining the value of the product and the way it is perceived by the consumers (Lancaster & Reynolds, 1999). Oroton uses the pricing strategy that is based on the level of competition obtaining on the ground. This is advantageous in that the organisation is better positioned to get its market share because price sensitive customers will first scan the environment for quality, prestigious products favourable prices. Oroton also uses prestigious pricing where premium prices are charged to reflect great value for the products. This is also associated with value or psychological pricing whereby the customers judge the product by its value. According to Lancaster & Reynolds (1999), high priced products are likely to be seen as valuable compared to lower priced products. Oroton also sells different products at different prices in order to meet different needs in the market depending on the demand of particular product. Whilst this is advantageous somehow, one weakness is that price fluctuation will compromise the way the product is perceived by the customers. Promotion Basically promotion is a marketing tool that is meant to appeal to the interests of the customers to buy products offered whereby incentives are given (Belch & Belch, 2008). OrotonGroup implements Integrating market communication tools in its endeavour to promote its products on the market. According to studies, OrotonGroup uses different types of promotion through different media and advertisements are used as major tools to reflect the prestige of the products. Fashion show magazines such as Marie Claire are used for placement of advertisements that are meant to appeal to older customers while television is used to attract young customers and some of these advertisements feature celebrities such as David Jones and Myers. Basically, advertisement is an effective tool for promoting a product since it is meant to raise awareness of the product among the customers as well as to persuade them to buy the products which is the essence of promoting a particular product. Promotional tools used are meant to appeal to different members of the population in the market. In as far as influencing the behaviour of the consumers towards certain products, OrotonGroup can be commended for its efforts to target different target consumers as a way of increasing market share in the fashion market. Place According to Strydom (2000), place is concerned with the actual channel of distribution of the product in the market. OrotonGroup uses its own retail outlets to distribute the product to its customers. One advantage of this strategy is that consumers increasingly identify the quality and prestige attached to the products with the organisation. OrotonGroup also distributes its products through its subsidiaries and this helps the organisation to stay in touch with its customers. This is more of selective distribution. However, as noted in the historical background of the organisation, OrotonGroup is wholly owned subsidiary that includes OrotonGroup (Australia) Pty Limited, Polo Ralph Lauren Australia Pty Limited, OrotonGroup (New Zealand) Pty Limited, Macbray Pty Ltd, Marcs Wholesale Pty Ltd and Oroton Share Plan Company Pty Limited. The company operates approximately 60 retail stores. However, considering that Australia and New Zealand are geographically expansive countries, the number of retail outlets is comparatively smaller to cover the whole market. The organisation must put efforts to penetrate new markets and can distribute its products through other reputable upmarket stores in order to maintain the expected quality standards. In this case, the major channel alternatives are based on control criteria whereby the organisation has the power to determine the channels distributed that can be implemented. Physical evidence Physical evidence is the element of the service mix which allows the consumers to make judgments about the organisation (Bateson & Hoffman, 1999). Physical evidence is an essential ingredient of the service mix given that consumers will make perceptions on the basis of what they observe about a particular product. Thus, according to AAP (2009), the growth of the organisation during the volatile period from 2007 to 2009 is testimony that it has defied all the odds and managed to realise an increase in the revenue which is testimony that its marketing strategy is effective. Whenever an organisation is able to positively attract the customers, it is better positioned to capture a huge market share given that given that the customers will develop a positive feeling towards the products offered. Processes All the processes adopted by an organisation to satisfy the needs of the customers in a satisfactory manner contribute to its strategy on marketing the products. This concept posits that the organisation should carefully select the channels of communication as well as tailor the messages to suit the needs of the customers (Kotler & Armstrong, 2004). In as far as the operations of Oroton are concerned, it can be noted that the organisation uses proper communication channels to process its information towards the fulfilment of the customers. It uses specially designed website to market a variety of the products offered. It also uses online shopping and this enables it to have feedback from the customers. People According to Au Stocks (2011), the major strategy that has contributed to the growth of this organisation is that people within and outside the company are treated as valuable assets since they are the ones who contribute to the viability of the organisation. Recruiting the right staff and training them appropriately in the delivery of their service is essential for this organisation to gain a competitive advantage. Consumers make judgments and make perceptions about the services offered on the basis of the way employees interact with them. Satisfying the needs of the employees as well as customer service are basic tenets that contribute to the overall success of the organisation. Recommendations It is recommended that OrotonGroup must focus on constantly improving quality of the products offered in order to remain competitive since there are also other competitors in the market. Product quality is one of the marketer’s major positioning tools given that quality has a direct impact on the product performance and is closely linked to customer value and satisfaction (Kotler & Armstrong, 2004). OrotonGroup offers prestigious products hence it must always strive to improve on quality in order to be better positioned to meet changing demands and tastes of the customers. It is also recommended that OrotonGroup must maintain prestigious pricing in order to remain viable. This is advantageous in that great value will be attached to the products. Since the products offered are prestigious, high prices are meant to depict more value of the product. It is also recommended that Oroton must not only target one segment of the market as noted given that particular focus is given to the older customers. Demographic segmentation will be more ideal in this case. This entails that the market is divided into groups based on demographic variables such as age, gender, family life cycle, income, education, occupation and race (Kotler & Armstrong, 2004). References AAP (Last edited 25 September, 2009). Oroton net profit jumps 16.1%, shares soar 16.8%. Retrieved from: http://www.businessspectator.com.au/bs.nsf/Article/Oroton-annual-net-profit-sjumps-161-pd20090925-W7URA?OpenDocument. AU Stocks (Last edited 23 February, 2011). Oroton Group (OR).Retrieved from http://austocks.wordpress.com/2011/02/23/oroton-group/. Billabong and Oroton, (ND). 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