Consumer demographics and psychographics - Essay Example

? CONSUMER DEMOGRAPHICS AND PSYCHOGRAPHICS Introduction Abercrombie and Fitch is a renowned company in the fashion industry. It has developed a line of brand items through concerted efforts of its designers, which have high efficiency. However, the company has no confidence with the existing marketing plan and therefore seeks to prepare a new one to be used within the succeeding three years in selling brand items from the new product line. Mission Statement The underlying mission statement reads, “We enable consumers to improve the quality and convenience of their lives by providing high-quality, innovative fashion products.” Product Product from the new line is of top quality. The production concept and prototype have indicated that new denim trousers introduced by the company through its new product line possess distinctive design features which are appealing to the potential buyers. The design features give an impression which customers tend to associate with quality and artistic elegance. These quality attributes are in line with the company’s mission. Establishment of new line, which cause reduction in production costs and improves quality, saves the customers on prices thus bringing convenience in their lives. The artistic appearance and elegance of the new product coupled with the low cost production line is as a result of innovation by the company’s designers. This is consistent with product quality, innovation and consumer convenience, which is explicitly emphasized within the company’s mission. Dibb and Simkin (2008), development of a line of new denim trousers which is anticipated to be successful, is a significant stride towards achievement to the mission. Consumer Product Classification According to the three-way Consumer Product Classification System, the company’s products can be classified as shopping products. According to Dibb and Simkin (2008), quality and design of the products gives a special psychological appeal; hence making them distinguished by the consumers from all the rest. The products have a great artistic design features and extensive testing has identified them as the most popular and comfortable pair of trousers in the industry. Target Market With the advancement in fashion dynamics, there is increased need for artistic designer clothing for casual and official occasions. From previous market survey, young generations, especially people aged between 21 and 35 years, feature as the main consumers of the company’s goods. Statistics indicate that the mentioned age group makes approximately 76% of the total consumers of brand denim products. It has been established through various demographic and economic studies that this age group comprises of low income earners. Sometimes, few people in this “techno generation” who are lucky enough to have high income usually have numerous expenditures. Most people in the generation like associating themselves with high social status despite of their strict spending principles. According to Dibb & Simkin (2008), cost reduction and quality assurance in the product targeting this group must be considered. Consumers are also sensitive to appearances and are commonly attracted to clothes which are elegant and artistic. It is therefore possible to drift them towards the new low cost products that the company is producing. Demographic studies have shown that the number of people joining this age group is increasing while those leaving it are substantially decreasing. This shows possibility of a widening market in future. Analysis of Competitive Market Environment Competitive Rivalry Fashion industry is well inhabited by manufacturing companies but few of the companies specialize in branded denim products. However, there are three established denim producers and two more others with considerably lower production capacity. Although some of these companies have managed to reduce prices of their products, it is yet to reach the extent to which the new product line of the company intends to achieve. This is because the company’s strategies usually concentrate on the economy of scale advantages rather than general efficiency of the production line. In this case, the company will gain a competitive edge as a result of combining innovation and efficiency in its production line. Threat from New Entrants Owing to the large capital requirement in the establishment of a new product line and cost of research required in production of brand clothes, there are few new entrants into the market. In this regard, the company is not at a high risk of losing its market share to new entrants. Threat from Buyers Prototype testing of the new product has shown that its attributes are quite appealing to buyers. Therefore, it is expected that more buyers will be drawn to the goods produced by the company. This reduces the risk of incurring losses as a result of withdrawal of buyers. Threat from Suppliers and Substitutes The new product line will require involvement of new suppliers to supply additional raw materials, thus putting the company at a risk of losing in case they do not find credible suppliers. With the increasing technological advancement and innovation, direct substitutes from competitors may be used to draw away potential customers. However, reduced cost of production mitigates effects of substitution as prices are influential consumer decisions. Marketing Objectives Marketing objectives of Abercrombie and Fitch will be developed from the 4ps of the marketing mix as outlined below; Product objective The main objective of the company under this category is to offer high quality products that meet consumers’ needs. The company will be in a position to spot the customers’ necessity and preference in this field and provide a very effective satisfactory solution to this necessity. Customers will be fully equipped with information through reliable channels on how to use the product, how it looks like, its name and how it is branded. The product will also contain differentiating factors from other products of competitors to enable customers spot it easily. Price objective Offering competitive prices which are affordable to all customers is our objective in this field. The company should be in a position to determine the degree to which its customers are price sensitive. This will help to determine the level at which a decrease in price will increase a market share or whether an increase of the same will be indiscernible. These two measures will help the company settle to consumer friendly prices. Discounts offered to trade customers will also make it affordable to them or other specific segments of the market, and help to counter competition from the company’s competitors. Place Objective Abercrombie and Fitch’s objective in this field is to expand the market of our product to international markets. According to Brumbaugh (2012), buyers should be in a position to know where to get our products any time a need arises. Again, through effective channels, customers should be equipped with the necessary information on what kind of stores to get the products and on the retailers part, how to access the right distribution channels. To satisfy the place objective, the company will use a sales force, attend trade fairs and make online submissions. The company should at the end come up with a more unique path to satisfy the place objective and reach international markets. Promotion objective: The main objective is to identify the best channel through which the company can get across marketing messages to its target market. Precisely, the company should be in a position to reach audience by advertising in the press, TV, Radio or in billboards. According to Ferrell (1998), other important channels that the company is looking forward to integrate include use of mail shots, public relations and the internet. Spotting the best time to promote the product will be essential and will dictate the timing of subsequent promotions. Apart from that, modes of promotion used by our competitors will be highly followed up in order to be able to make the best choice of promotional activity. Discounts and prizes will be offered in these activities to attract as large customers as possible. Marketing Strategies Marketing strategies to be employed by the company will be drawn from the four elements of the marketing mix as outlined below; Product strategies 1) At around Dec 2014, which will be the eve of the production, the company will reduce the production costs by a margin of 20%. This will allow subsequent reduction of commodity prices by a corresponding 20%; hence making subsequent products unattractive. 2) At around May 2014, the company will analyze data collected during the April 2014 promotion and establish various varying demands of customers. This will in turn help the company’s designers establish a flexible production system with at least the ability to produce three different products to meet the varying demands of buyers. 3) The company will adopt an economy of scale strategy where it will purchase its tools and components in large scale from one main source that should be willing to offer a 20% discount on every purchase made. This will take effect from as early as April 2014. Price objectives 1) Through an extensive research to be done around January and February 2014 with help from experts, the company will adopt efficient production techniques aimed at reducing the cost of production by 25% in comparison with other substituent companies. 2) At around December 2014, the company will embark on special analysis which will state the percentage income and net profit aspiration to help in setting the price of the product in accordance with the aspirations. The aspirations should leave a reasonable allowance of 5% on the product to make it cheaper. 3) At around 2014, the company will analyze the competitor’s product price and the customers perceived value and work out to price its commodity at the same margin price or slightly lower by about 1-2%. Place Objectives 1) At around December 2016, the company will carry out market research on selected countries to determine the feasibility of expansion and selling of the products in these countries. This will be determined through the evaluation of the areas that have the majority sales recorded. 2) After the company has identified the possible areas of expansion at around December 2016, it will adopt highly effective distribution systems that will include both wholesalers and retailers to ensure that the products reach the customers widely. According to Stephen (2010), this system will leave no room for cartels that cause a rise in cost of the product. 3) At around December 2016, the company will have put in place distribution strategies, intensive, selective, and exclusive distribution in a move to reach different target markets at different times. Promotion Objectives 1) At around April and December 2014, the company will be holding its promotions. These promotions will be financed by about 15% of the total profits discovered by the company. 2) At around the same period of April 2014, the company will do an analysis of all promotional activities account carried out by its competitors and sort out to get the best which will be improved to make it efficient. According to Brumbaugh (2012), this analysis will seek to know the most familiar and acceptable method to the customers. 3) 2014 being a technological year, the company will at around April and December take advantage of this and advertises through all the internet advertising platforms such as the social media and through emails. This will help be easier to know the extent to which the promotion covers geographically. Response The above outline mix is the best since it entails all useful elements in the marketing domain. It takes advantage of the current growth in technology an aspect that has great impact in the performance of a company. Moreover, the price determination strategies are fair and will give a good price figure that does not favor any side. Reference List Brumbaugh, J.E. (2012). Corporate Management Fundamentals: Volume 2: Successful Business Management. New York: John Wiley and Sons Dibb, S., & Simkin, L. (2008). Marketing planning: A workbook for marketing managers. London: South-Western Cengage Learning. Ferrell, O. C. (1998). Marketing strategy. Fort Worth, TX: Dryden Press. Stephen, K. (2010). Successful competition in companies. New York: Cengage Learning. Read More