Fashion Brand - FCUK - Assignment Example

Report on the Research Proposal for French Connection , (section) November 25, 2006 Abstract For many decades now, French Connection United Kingdom (FCUK) has been one of the leading fashion brands in the UK's High Street middle-market consumers and also in some other parts of Europe, the United States, and in the Asia Pacific. It is really quite surprising how a well-established company like FCUK have fallen victim to the evolving market trend of the 21st century and therefore caused them loses in terms of sales and profits this year. In this report, we will review the cause of FCUK's current financial crisis and propose methods that can help the company re-strategise their branding and market position. Brief Company History and An Overview of FCUK's Present Situation French Connection or popularly known as 'FCUK' is a fashion-led clothing retailer and wholesaler business that was founded and based in the United Kingdom. Its retail and wholesale business operates mainly in the UK, in other parts of Europe, in the U.S., and other licensed stores around the world carrying several products such as its own French Connection/FCUK brand, a designer label called Nicole Farhi, a popular UK whole sale brand called Great Plains, and the mail-order business known as Toast. Aside from their clothing lines, French Connection has also expanded its product range by producing what they call 'complimentary products' to their fashion collections. These complimentary products are in the form of eyewears and various fragrances (The Wall Street Transcript, 2004). The company was founded in 1972 by its current chairman and chief executive Stephen Marks. FCUK had eventually made its mark in the fashion industry by introducing fashionable clothes at very affordable prices catering primarily to the middle-market customers with ages ranging from 18 to 35 years old (News, 2006). For so many years, FCUK have managed to put up a competitive brand against its High Street counterparts; however, just recently, FCUK had been continuously incurring noticeable decline in its sales and profits. There were actually several reasons behind this high turnover for the company's revenues, primarily it is due to the soaring up of its prices which seems to have become quite expensive for their High Street target market to afford; another reason would be the company's effort of changing its image - trying to level it with competitors of bigger labels in an attempt to improve its market share and position thus resulting to pricing themselves out of the High Street competition; and finally, the recent advertising tactics of the company simply did not made an impact to its target market, not only in Europe but in other parts of the world as well which even contributed to driving its customers away from the brand. FCUK Current Situation Since 2002, FCUK's annual reports on its sales and profits all over the world have been progressing positively; it only means that the company has been performing well on the High Street market competition. However, due to recent events, it would really be alarming to know that the company this year has been continuously issuing warnings to investors that profits would surely be lower than expected (News, 2006). French Connection has reported a substantial pre-tax loss of 3.6 million in the first half of the year which ended on the 31st of July 2006 compared with the 5.1 million pre-tax loss it incurred the previous year; group revenues had also fallen by 6% from the previous year to 112.2 million (Interim Statement French Connection Group PLC, 2006). The problem of these declining figures originated mainly from a range of smaller problems that the company must resolve in order to hopefully gain back its losses in the future. It was found that one of the problems is that the company gravely needs to rethink of the prices it is setting on the range of their clothing lines in relation to their target market - which is the middle class High Street shoppers aged 18 to 35 years old. Another possible problem is that FCUK must have been attempting to have a change on its target market, and so by setting its prices higher than the usual, it means it is targeting the upper class buyers as well - a point which can also be considered a reason to the decline if its sales. Plus, the recent brand relaunching campaign which had a theme of 'lesbian kiss' brought a tremendous negative impact to the people which also contributed on its sales and profit decline. Resolving the Crisis In the midst of these losses that FCUK is currently experiencing, it is imperative that the company must now act quickly and efficiently to resolve this crisis that they are facing while the problem has not deepened so much yet. A reasonable process that can be undertaken to find solutions in this kind of crisis is to conduct a market research. Through this research, a thorough study and investigations will eventually be conducted so that each root problems of the crisis situation can be identified easily and remedies could be proposed in order to provide solutions to the problems. In the case of FCUK, by conducting the preliminary or primary market research, the results came out showing evidence that the company must first know or identify the perceptions of their target market's (customers') towards their company and the brands that it carries. After which, specific objectives can be deduced based from the primary research to give a much better focus to where the research's direction must go to. The three specific objectives basically focuses on the perceptions of the target market towards the company, here are the following objectives: the first objective is to identify which High Street retailers does the current target market shops and if possible, it will be more beneficial if they will state their reasons as to why they prefer to shop to other brands instead of FCUK's; the second objective is again focused upon the target market, but this time, knowing the perception of the customers as to who they think FCUK's real target market and if it is contrasting to who the company perceives as their target market; and last but not the least, the third objective certainly needs an honest answer from the respondents because in here, the researcher would want to identify the current perceptions of the company's target market towards them - their brand image and pricing most especially, and also areas as to where the target market-respondents' think on which area should the company improve. Implementing the Research There are various types of methodologies in research that could fit well in each of the objectives stated earlier, examples of the types of research methodologies that will be used for this research are questionnaires, interviews, observations, brand mapping, etc. - this is an attempt to gather the most important information which can greatly help FCUK to improve its performance in as early as possible, so they could slowly gain back their loses in terms of sales, profits, and brand image. For the first objective, since the information that the company wants to obtain was to find out if the declining sales and profit figures are the results of their target market's switching or shopping at competitor stores, questionnaires and focus groups are the tools needed to conduct this research. The research will probably be taken in two parts: first, the preliminary questionnaires that will be prepared is intended for the general public (overall customers or shoppers of FCUK to be in particular) in order to gain a useful insight on their target market's buying habits; and on the second part, upon gathering enough information needed from the preliminary questions, the researcher can now develop more specific questions and provide it again as questionnaires but now it will be conducted in focused groups - these are the more specific groups of people from the company's target market - segregating them probably into different age groups, or groups which has similar buying habits, or those groups which has similar fashion preference. After conducting the research for the first objective, a more specific conclusion can now be deduced and it will give a great help for the company on whether they should reposition their brand. For the second objective, the information that will be gathered here can help the company to give more attention to the typical age of the shoppers that goes into their stores in different branches. A fast and more direct way to approach this research is to conduct interviews, and again in the final part, it will center on the focused groups. The researcher would be interviewing FCUK store managers and employees across its different branches to find out what typical age group of their customers they usually observe going in their stores to shop; and to further supplement the research for this objective, observation could also be conducted outside the store at different times of the day in certain period of time. In this way, the company may want to consider putting on more clothing lines that will best suit the majority demand of the age group of the customers in that certain area - this could be a very big contributing factor to increase sales and profits if implemented. As for the third objective, the approach may seem to be similar with the research method for the first objective; the only difference is that the researcher now wants to get a better understanding of the views of the target market with regards to FCUK's company or brand image and most importantly, the pricing of the FCUK product lines. Questionnaires, however, will now be concerned with materials that will pertain to word associations, brand mappings, and brand personalities; because undergoing through this process, there will be a guarantee that the company will know the best positioning they must put on their brands according to consumer segments or to whom those brands may be specifically targeted. The last part of the research that must be considered is the cost and time it will take the research to complete and provide optimal solutions for FCUK to implement. In terms of cost, FCUK needs to spend a little with regards to this matter because the research materials that they will obtain will surely benefit the company in the long-run of the business, total research cost will be more or less 9000; and the time it will take the research to complete, at most 9 weeks including the research presentation to the FCUK management, is reasonable and substantial enough so that FCUK can have time to review the materials they will obtain from the research and probably implement the proposals in the coming year to strengthen its position in the fashion industry. Conclusion FCUK has been an institution in the fashion industry for several decades already and is considered as one of High Street's preferred brands altogether with its international franchises. The business was doing well, but unfortunately, when its sales and profits went downward spiral just recently, the company eventually fell victim to the evolving market trend of the society. Fashion taste and economic factors of the consumers were two of the most pivotal points which contributed to the company's 2006 high turnover. There is nothing wrong with the company's attempts on expanding the business through its product lines and upgrading the quality and social standing of their brand - a sign of growth in any businesses. However, for the meantime, the company must strive hard to survive the financial crisis it is facing so it could continue with its expansion in the future, or else, everything will be in vain. And as a means for the company to resolve the crisis it is facing, it has resorted to conduct a market research. By doing so, the company is making a good gamble, because through a market research, the time and cost that will be spent will in turn provide the company optimal solutions for its problems. And after implementing the proposed solutions, they may be able to improve their business performance and also satisfy their customer demands which can potentially increase their sales and profits in the coming years. Referencing Duncun, H. (2006) 'Lesbian kiss fails to attract UK public', Birmingham Post. 13 September [Online]. Available at: http://www.lexisnexis.com/uk/business/search/newssubmitForm.do (Accessed: 6th November 2006) French Connection, Interim Statement French Connection Group PLC (31st July 2006) Available at: http://www.frenchconnection.com/investorrelations/PDF/2007_FYH_InterimResults_Col.pdf (Accessed 15th October 2006) French Connection, Five year financial summary (2006) Available at: http://www.fcuk.com/investorrelations/ir_2.htm (Accessed 15th October 2006) Kemp, Ed. (2006) 'French Connection', Marketing. 2 August [Online]. Available at: http://proquest.umi.com/pqdwebdid=1095166991&sid=1&Fmt=3&clientId=29708&RQT=309&VName=PQD (Accessed 16th October 2006) The Wall Street Transcript (2004), French Connection Group describe their Retail and Wholesale Operations, Available at: http://www.twst.com/notes/articles/lzu027.html (Accessed on: 19th October 2006) Read More