Marketing Strategy of the Esprit Brand - Report Example

Marketing strategy of the Esprit Brand This project aims to provide a brief profile of the Esprit Brand, whilst emphasizing, analyzing and exploring the marketing policies and activities, which have contributed to the Esprit Brand success. It also outlines some successful Esprit activities and how Esprit positions itself against competitors. Finally, it explores the strengths and weaknesses of the approaches taken by a company and puts up some recommendations for onward application by the company. Introduction to useful marketing strategy: The success and failure of any company relates to its marketing strategy. If the strategy is in the lines with the company’s goals, result becomes fruitful, constructive and flourishing. But if the strategy is not meeting the goals of the company, result automatically becomes restrained and reduces the worth of that company in the market place. Marketing strategy is a method that can consent to an organization to contemplate its resources on the most favorable opportunities with the goals of escalating sales and achieving a sustainable advantage. Marketing strategy includes all vital activities in the field of marketing that compact with the scrutiny of the strategic preliminary situation of a company and thus contributes to the goals of the company and its marketing objectives (Laermer and Simmons, 2007). The aim of this paper is to illuminate various aspect of marketing strategy of ESPRIT brand. In this context, various ways in which it this company has managed to survive in the competitive environment and how it maintains a good relationship across the entire supply chain shall be analyzed. First of all a brief background to the company is given below: Background of Esprit Esprit was established way back in 1968 by Doug Tompkins and Susie Tompkins, when both started selling their clothing range from a wagon. Soon, they realized that there was a huge potential and growth in the industry. So, within the span of two years after the launch of the brand, they introduced 7 product lines. Being the pioneers in the clothing range, Esprit used the word “Quality first” as their brand marketing symbol which shows that they never compromise on Quality of their product range. This slogan of Esprit has made the company one of the most successful companies in the world. Now Esprit is covering more than 40 countries of the world with the help of more than 800 retail shops that cover more than 1 million square meters of area. In addition to Esprit Brand the group includes other sub-brands, such as “de.corp” and “edc”. Edc by Esprit is considered the largest among others (Jyske Bank, 2010). How Company can be considered successful A successful business is one in which the owners lead from the front and inspires employees of the company with their involvement in the business to make them loyal and same is true for Esprit. Here, clients always expect a lot from the company, and company’s administration considers it its responsibility to act pro-actively and give their clients what they have not expected (Aaker, 2004). It is often seen that a business collapse within 5 years from their launch. This is because of the goals that are set by the company to achieve. If the aims of the company are high enough to reach and the inputs respect to that are low the companies normally collapse. However in case of Esprit, administration keeps a balance in all the efforts that are being ingested and outputs that are being achieved. This is because in a situation where aims are low and the input that is being done is more, all the efforts go wasted and result is dreadful. Esprit also has a lot of competitors in the retail sector. Company’s competitors always try to bring something innovative and something that have not being done by any of the competitors. Any brand achieves a competitive advantage if it is capable to supply consumer with higher value services than those provided by their competitors (Posner, 2011). Esprit knows how to rank and position its self in the changing scenario and this is the reason for which the company has achieved its annual goals and targets in the previous year and expects to maintain its position in the future as well. At the same time, employees of the retail company play a pivotal role in the growth and success of the company. Sometimes only a pat at the back is required to make them loyal with the company. A recognition of their work at the company annual meeting also help in building employee’s confidence and exploring its potential. Sometimes companies announce shares for their employees so that they can take ownership in their work and company. Yearly recreational activities, yearly bonuses with respect to their work and output can also be used as a tool to keep them loyal with the company. These things are also needed because of two main factors that are: 1- Output of the company 2- Loyalty of the employees. Esprit follows all these basic factors; they kept on changing their ideology and normally bring changes after learning from their customer’s needs. They brought fresh blood and provided success feelings to their employees to make and keep them loyal (Spitzer, 1987). Analysis of organization’s successful policies Like all other organizations, Esprit has also made some policies for the development of the company in the world. They made channel policy to enhance their stores worldwide. In their annual report of 2009-2010 the chart out those stores who kept on giving losses to the company. Due to these losses Esprit became selective in opening new stores in various countries in the world. They introduced Chief retail officer, retail COO and Global expansion manager. All these three designations have been created to accelerate the retail channel expansion in the world. Furthermore, their main task is to boost up all those retail stores who are showing downward trends in sale (Spitzer, 1987). Retail channel expansion has been the core goal of the company. Company opened new stores in different countries of the world along with opening of different flagship stores in different parts of the world. Despite limited opportunities in some parts of the world, Esprit explores new horizons and new venues to enhance their brand presence and acceptance around the globe. The most important policy Esprit management adopted was to start a new campaign within the employees of the company in which a newsletter is sent to all stores via the intranet and people get recognition of their hard work they are laying in making company grow. Because of this newsletter, every employee of the company put extra effort to have their names recognized in all parts of the world and ultimately the name of the company grows. Competitive advantages of policies There are five (5) points that are being followed at Esprit while making and implementing any policy. These steps are known as stages of policy. They are: 1. Identification of the issue 2. Formulation of policy 3. Acceptance of policy 4. Implementation of policy and 5. Evaluation of policy Esprit also has done all these tasks while creating any policy. Their foremost policy is to expand their business as there is need to be done. In some countries, Esprit retail stores were not giving sales as per their set targets. They tried to identify reasons why the retail stores were not giving full support. They came to know that brand and products are not in the buying power of the company and their competitors were also struggling in those areas. They decided to close those outlets. They took the final decision after giving ample time to the management of that retail store (www.esprit.com, 2012). Leadership at Esprit is very much motivated. Managers are occasionally trained to improve their leadership qualities. They can direct their team in a manner that adds value to the company’s services (www.esprit.com, 2012). Along with this, Esprit also adopted the policy of making its employees happy and satisfied. The company knows that happy employees give rise to a successful organization therefore, it always offer them with suitable rewards, perks and promotions to enhance their productivity (www.esprit.com, 2012). Esprit also has a very good relationship with it suppliers and customers. Company’s strategy is directed toward improving communication and collaboration across the entire supply chain and it has received enormous advantages from this policy (www.esprit.com, 2012). Essentially therefore, Esprit’s competitive advantage is rooted in leadership and employee satisfaction, both of which results in effective output of work. Most often, competitors have been criticized for not meeting the demand they receive from customers. Once this happens, customers become disappointed in the need to wait long before their orders are honored. In a the case of Esprit however, because the leadership in place is centered on the provision of effective and efficient employee satisfaction, employees are always motivated to work beyond their limits to produce to meet customer demands. Indeed, the leadership and employee satisfaction competitive advantage has also translated into the production of not quantitative products but quality ones also. To this end, the quality of products also stand tall as part of the company’s competitive advantage. How the organization positions itself against competitors Esprit also has strong competitors in the market. As the company gain the success and recognition among people automatically the ratio of competitors increased. H & M (Hennes and Maurtiz), ZARA, BENNETON groups are the main potential strong competitors of Esprit Holdings. Both Esprit and BENNETION share the same time period of foundation. Esprit was founded in 1968 where as BENNETON was founded in 1965. Esprit policy was to establish their retail stores in every business hub of each country. They expanded their retail outlets with an aggressive growth and are 2nd in terms of channel outlets but they ranked 1st in terms of area covered by these retail stores. The association that has been done by Esprit has also become their strength and become a success story. They associated their brands with MTV Music Awards which is considered to be the biggest award show of Europe. This association makes the bond of music and fashion. The selection of the music industry as a promotional avenue is a move that experts have said hold the future to resurrecting the fortunes of Esprit. This is because the music industry is so much associated with fashion whereby artistes try to develop and follow their own fashion lines. Once they do, their fans and followers take after these. Therefore, by exposing itself up to the fashion world in terms of promotions, the company has put its self in a position whereby it is going to get its products closer to the people who really matter most when it comes to fashion patronage. But it would be stressed once again that this should not be enough as there remains several other areas the company can also look to in terms of target oriented promotion. The biggest strength becomes their weakness when they have to shut their business in different parts of the world as it was not showing positivity in sales. According to sources, Esprit entered Indian market after they signed a deal with Madura Fashion, subsidiary of Aditya Birla Group in 2005. Esprit is now shutting down their business in India and they have been facing a loss of 20-25 million per annum (www.economictimes.com, 2012). According to International Business Times, Esprit continued their process of closing stores. It is in line with what was committed by Esprit Management in September, 2011. Esprit spokesman Patrick Lau said that they still have been trying to find an appropriate partner to keep their presence of in North America. Esprit has struggled to keep them in the run after suffering a 98 percent drop in global earnings in 2011, whereas a 12-month period produced a total downfall of 73 percent. The U.S. and Canada subsidiaries have cost the company $206 million over four years. The company has tried to find a license partner, but with little success, and is mulling a sale of its North American operations. They also didn’t associate their brand with sports activities as done by BENNETON when they collaborate with Formula One and have made a success story for the company. The main competitors of Esprit performed well in 2012. H & M (Hennes and Mauritz), Europe’s second-largest outfits company, posted the strongest profit increase in seven quarters as sales rose in the U.S. and Asia. Their Net profit has raised 23 percent to 5.22 billion kronor or $750 million in the three months from March to May, 2012 (Lannin and Roos, 2012). While Zara opened 150 new stores in china and announced that their first quarter net profit of 2012 rose by 30 percent (Kang, 2012). Despite being a famous brand, Esprit has failed in the past few years to make prominent progress in its business and this is entirely because of company’s inability to maintain quality in its products. Esprit has been weak in the market and has done very less as compared to ZARA and H&M. Because of unexpected loss, Esprit had to close some of its stores in different parts of the world when ZARA and H&M were enjoying enormous profits and opening new sales outlets (MOR and Bye-laws, 1993). From the above discussion it is clear that Esprit only maintains a moderate position against its competitors and the company needs to improve its products to enhance business outcomes. Marketing Mix of Esprit Product The company’s major product line has been in the fashion sector. With this, Esprit has been a market leader for specific fashion products that are tagged as one of the finest quality on the market. The company has however failed to introduce new product lines in a very long time and customers seem to be developing apathy towards the same old products. Place Esprit presently operates in more than 40 countries, using as many as 400 sales outlets. This has been a marketing strategy to ensuring that products and services of the company are available, wherever the customer may be present. It is not for nothing that the company has recently introduced online sales to make its self more visible and accessible to customers. Price Pricing has not only become a marketing strategy but also a major competitive advantage for the company. In a global market where the strength of competitors cannot be underestimated in any way, Esprit is more or less forced to offer reduced pricing of products to customers a means of reaching out to as many customers as many in terms of affordability. Promotion The company keeps promoting its brand in a number of ways. The company for instance was recently associated with the MTV Music Awards. However, this has been judged by analysts as not being enough and that more needs to be done in terms of promotion. In regards to this, the company has started using new media as one of its promotional platforms. Relative strengths and weaknesses of the company Strengths: Although the company has failed to show rapid market progress in the past few years the company’ brand still has a strong image. The company has started to use different online channels and social media to sell its product and reach masses. The company’s strength in the past is still there for them and can be recovered with a little effort. Weaknesses: The company failed to introduce new designs of fashion in the peak years of 1968-80s when most of the companies were launching their new products and developing their customer base. Because of past image of the company, the management became over confident and failed to withstand new challenges. Customer’s demands are not met by the company. Previously they stopped advertisement and failed to develop good public appearance that led to weak sales in most of their outlets. Esprit needs to introduce new brands and follow the trends in the market like ZARA and other key competitors. The company can survive only if it takes into account new marketing strategies as most of its competitors are well-known and have developed a strong customer base in the last two decades. Conclusion: The policies and set of procedures implemented in any organization make the organization strong. These policies remain the backbone in the progress of the company. Companies on the other hand should remain flexible while performing or implementing these policies. If they remain rigid and harsh on the policies sometimes these biggest assets become weakness of the company. From the above discussion it is clear that Esprit has managed to survive in an ever changing business environment where competition is also strong. Some of its strategies are useful and have helped the management to make good business but still the company lacks appropriate position in the market. Other brands such as ZARA and H&M have made good profits as compared to Esprit even in the time of recession. Esprit needs to review its policies and also the quality of its products in order to emerge as the most successful brand in the world. It marketing policies should be designed in a way that not only benefit customers but at the same time bring profit for the company as well. The company should also target its customers to teach them how to act in the future. Esprit does not cater all points to keep the organization on track in reaching its target. Their foremost target is to reach the masses through their retail channel. This aggression can be seen in their number of stores that are being operational in 5 continents of the world and the total covered are they are occupying for the delivery of their products, however, it has to close many of its outlets in different parts of the world including China and India. Recommendations: Esprit’s governing body needs to hire employees that can carry their aggressive approach and designations must be created to align their aggressive approach of reaching the masses. Chief Retail Officer and Chief expansion manager can play a vital role in such designations. Esprit must also follows a little philosophy in their products i.e., to listen to the needs of the customer. They must know that their thinking and aggression is the biggest strength they have. Keeping that in mind, they should keep on creating opportunities for them which opens new era of retail operation to them. Below are some recommendations that the company can follow to achieve its financial targets. 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