Marketing Analysis of Vivienne Westwood - Case Study Example

Marketing Analysis on Vivienne Westwood Contents Contents 2 Report Objectives 3 Strategic Capability 3 Construction of SWOT matrix 6 Competitive Position 9 SAF 12 Comparison with current strategy 13 Conclusion 13 References 15 Report Objectives This report outlines one of the famous high end fashion brand known as Vivienne Westwood. There are various analytical tools incorporated so as to analyze strategic capabilities and competencies of the brand. The product lines, competitors, current market position, target segment, etc., has been stated in the report. Analysis has been divided into three major parts such as external and internal analysis, and competitive position. Internal analysis comprises of strengths and weakness of the brand along with its resources and competencies. External analysis encompasses industry analysis as well as prevalent opportunities and threats. Ansoff matrix serves as a tool to identify external and internal factors and this supports strategy formulation for future. The current strategy that has been adopted by Vivienne Westwood would be compared with proposed strategic options. A SFA framework is used to judge suitability, acceptability and feasibility of suggested strategies. Lastly it would highlight some recommendations for future growth and success of the brand. Strategic Capability Vivienne Westwood was founded in the year 1971. The brand started its journey with a punk style fashion. Westwood launch products are considered to be premium in the market place. Customer profile for this brand is high end customers who are more aligned towards fashionable items. Vivienne Westwood is the owner of company and even is the firm’s head designer. Brand’s image is based on her personality and ideas (Temporal, 2011).The product category ranges from shoes, clothing, bags, to accessories and perfumes. This can be further categorized under four distinct labels such as Gold Label, Man, Red Label and Anglo Mania (Kapferer, 2009). Gold Label targets those women who desire to be in upper mainline in terms of fashion. Man represents a classic design and is marketed for men who want to be fashionable. Red Label highlights segment of ready to wear which is majorly for women demanding to appear elegant but has less time. Anglo Mania classifies diffusion segment that targets women and men belonging to younger generation (Batey, 2012). The brand has overall six wholly owned stores and wide array of franchisees in New York, Manchester, Liverpool, Cardiff, Glasgow and Newcastle along with showrooms in Honolulu, Paris, Milan and Los Angeles. The major strength of Vivienne Westwood is its brand recognition and iconic status. It is a global fashion brand known for its product’s reliability and quality. Vivienne Westwood enhances its strength through online stores which have enabled them to trade with international as well as local customers (Okonkwo, 2010). Target market of the brand has been subdivided into many sections where different products are offered as per age, gender and preferences of customers. Weakness of Vivienne Westwood is that it has improper distribution channels. Less number of standalone stores across the globe makes it difficult for customers to try products. Product prices of the brand are exceptionally high in comparison to other brands (Corbellini and Saviolo, 2009).There is a particular design like punk style which is implemented in maximum designs and this reduces product sales. The internal analysis of Vivienne Westwood states that its major competencies are brand image, quality and large production capacity, and four different product lines according to customer profile. These factors have led to overall success and growth of the brand. External analysis encompasses probable opportunities and threats (Okonkwo, 2007). First main opportunity is increasing market shares of brands in UK and across the globe. Vivienne Westwood has good image in front of public which is enhanced through public fashion shows. Activities related to corporate social responsibility drives attention of people and these activities are given importance by Vivienne Westwood (Carlopio, 2010). Online shopping has shown a drastic increase in recent years serving as an opportunity for all fashion brands to display their products and reach out to large base of customers (Hitt, Duane and Hoskisson, 2012). Economic turmoil in many regions forms the major threat. This affects the operations of designer clothing industry mainly premium and luxury brands. Competition in fashion industry is increasing with passing years (Aggarwal, 2008). Alexander McQueen is becoming the strongest competitor which was based on the concept of Vivienne Westwood. Across the globe there is major growth in local brands that is acquiring market shares posing a threat for high end luxury fashion brand. PESTEL framework determines external environment of the brand. The framework encompasses factors such as political, economic, social, technological, environmental and legal. UK has various political issues and affects the brand in negative as well as positive ways. In positive context people get more indulged in market when the political conditions and spending of government is been criticized and watched (Ashworth and Kavaratzis, 2010). On the other hand negative aspect is high tax rate of the country in comparison to other European countries. VAT rate is almost 20% that increases overall product prices. Economic factor comprises of high exchange rates affecting exports of British companies such as Vivienne Westwood. Products tend to become expensive and sales decline forms the major issue with companies. Credit crisis is another economic factor gaining its importance in the recent years (Vivienne Westwood Financial Report, 2014). This crisis affects premium brand and even high street retailers. Decline in sales is a major affect of such credit crisis; however it gives an opportunity to Vivienne Westwood to influence buyers in terms of investing in its brands then to purchase products. In such a scenario people are inclined towards trusted brand and Westwood is known for its reliability and quality. Social factors affect the brand in multiple ways (Kapferer, 2008). Firstly there is an increased product demand as people in the present s scenario prefer luxury and high quality products. Thus the consumer behaviour pattern is to buy less but expensive or high ended items. Nationalism forms another social factor which makes such products gain importance amongst patriotic British. The brand has opportunity to meet demand of such customer group as it represents culture and quality (Keller, 2008). Technological factor nowadays has a great impact on all forms of business. In this case with rapid increase of Internet accessibility Vivienne Westwood possesses a large base of customers (Scholz, 2014). Its visibility has also increased through online stores which make it easier for people to shop at convenience. There are many customers who desire to buy fashionable and trendy products but are not able to purchase because of time. An online platform enables customer to view latest collection of such premium brands and even gives a chance to the company to expand its market share (Assael, 2005). Environmental factor has not affected Vivienne Westwood to a great extent. In the present scenario textile waste is a common problem. This factor can be mitigated through focusing on events related to public relations. Legal factor states the brand needs to give more attention to its product copyright. Lesser availability of shops gives birth to counterfeit products and this lessens the scope for original products or brand. Construction of SWOT matrix The key success factors of the brand have been its quality and brand recognition. Vivienne Westwood does not need to invest much in its marketing campaign as it is a well known brand. Strengths, weakness, opportunities and threats have been further illustrated in the figure below with proper ranking of factors. Strengths – S 1. Brand recognition 2. High quality and reliability 3. Increased trading through online stores 4. Well defined product lines and target market 5. Higher production capacity Weakness –W 1. Lack of distribution channels 2. High prices in comparison to other players 3. Less of innovation and more focus on particular design Opportunities-O 1. Market share increase of UK brands in home country and across the globe 2. Organization’s corporate social responsibility drives attention of customers 3. Increased trend of online activities SO – Strategies More of information sharing online and developing effective ad campaign for online stores (S1, O3). Opening up more stores across the globe (S5, O1). Organizing fashion shows and enhancing customer service and support (S2, O3). WO – Strategies More innovative collection in product range (W3, O1). Setting competitive prices for its product line (W2, O1, O3). Form franchisees and collaboration with third parties to meet high demand (W1, O1). Threats-T 1. Economic turmoil affecting premium or luxury brands 2. Intense competition in fashion industry 3. More number of local brands arising across the globe ST – Strategies Market penetration in UK markets and European countries (S1, S5, T1, T3). Focus on customer relationship management to design products as per customer preference (S2, S4, T2) WT – Strategies Benchmark with same reputation brand in industry (W2, W3, T2). The above matrix clearly states major strategic issues that are faced by Vivienne Westwood. As per its strategic capabilities the brand is always focused towards high end customers. Product quality is high but its lacks in innovative product line. Other competitors in industry manufacture unique designs at lower cost. This makes it more difficult for premium brands such as Vivienne Westwood to sustain in the competitive industry (Franzen and Moriarty, 2008). The strategic issues addressed through this matrix are its loophole in distribution channel that reduces the brand’s physical evidence. Lesser number of store results into inconvenience for customers to try out products. Online platform is not a profitable medium always as many customers have less reliability towards such online stores. In such a scenario it becomes important for companies to reach out to global market through wholly owned subsidiaries or franchisees (Hajdini, 2010).The distribution network can be different for different brands but motive remains same to increase sales. Amongst all strategic issues lack of distribution channel and less of product diversity is the major problem for Vivienne Westwood (Heding, Knudtzen and Bjerre, 2009).Its high prices are not being justified to the customer base. This in turn is decreasing its overall sales and loss of markets share. The second strategic issue been identified is growing number of local brands which is grabbing markets share of the brand (Jeffs, 2008). Product copyright is another strategic issue evolved in recent years and its advantage is explored majorly by local brands. Less number of stores had affected revenue margins of the company. There is a need to strike a balance between online stores and physical stores. Major concern of the brand has been to set its position in different markets but during this course it has failed to satisfy needs of customers in terms of new fashionable products or greater availability (Madaan, 2009). Vivienne Westwood is known for its high quality of products which has developed its brand image. However it has not been able to incorporate innovation in its processes. In fashion industry new designs and unique features forms the basis of success (Johnson, Whittington and Scholes, 2011). Often brand recognition cannot drive in higher sales in comparison to innovative product line. Rivals can only be counteracted successfully if a company meets hidden demand of customers. Though strategic issues are diverse in nature in context of premium brand Vivienne Westwood but certain core issues has been highlighted (Sekhar, 2009). The company targets different age groups with different collection but the basic punk style design remains common. This design is associated with brand identity but results into being monotonous for customers. Competitive Position The competitive position of Vivienne Westwood is based on its strategy of differentiation. Though there are less innovative products in its offerings but it has been able to segment its target market appropriately. Its competitive advantage is its brand reputation, quality and high production capacity (Cheverton, 2005). The brand has divided its target market into various segments on basis of gender and age. It has products for young generation that represent casual wearing to men and women preferring formal attire which is fashionable. High production capacity makes it easy for the brand to meet rising customer demand without any loss of market share (Chevalier and Mazzalovo, 2012). On the other hand its strong brand recognition is due to hosting public fashion shows and performing CSR activities. It tries to make common people part of the latest fashion collection. Ansoff matrix states different strategies or methods that can be adopted by a company so as to sustain in highly competitive world. The figure below represents the matrix- (Source: Neil, 2010) Market penetration strategy enables a firm to increase its sales percentage. This form of strategy encompasses low risk. Vivienne Westwood can utilize its major strengths by organizing PR events for the brand. Online store which is launched by the brand can be made more appealing with the support of ad campaign, proper layout, customer service; etc (Wheeler, 2012). This in turn would help to trigger overall sales. There is a requirement of increasing total number of stores so as to reach to more number of customers at least time. Product development strategy is incorporated by a firm when it aims to offer something new to target market (Okazaki, 2011). The method through which Vivienne Westwood can enhance its revenue margins is by providing more choices to its customers. New product developments or new innovative designs can prove to be attractive for consumer market (Sheridan, 2010). In each collection launch the company needs to include more products so that there is wide range of options for customers. Market development strategy states that same products are being offered to new markets (Proctor, 2014). This is adopted by a firm when its present market is highly saturated. Limited store problem which is a concern area for the firm can be resolved by opening new stores in completely different regions. The brand on the basis of this strategy can eliminate its weakness and expand its market share (Porter, 2008). Diversification is another form of strategy through which new products are developed and offered to new market. Vivienne Westwood can develop innovative product style so as to reach out to new group of customers (Mcfarlin and Sweeney, 2008).The company can launch new products as per seasons or festivals with stylish designs and bright or soothing colours. There are many strategic options that are available to the firm but its effectiveness depends on competencies or resources. SAF The most appropriate strategies for Vivienne Westwood are increasing store outlets, to be focused on product innovation and differentiation, to enter into completely different market with more number of stores and to incorporate extended features in its online stores so that it is attractive to customers. The strategies have been considered to be strat 1, strat 2, strat 3 and strat 4. SAF framework represents three important factors that are suitability, acceptability and feasibility of strategies. Suitability would be on the basis of issues being identified through SWOT analysis met by strategies. Acceptability factor would be justified if strategies increase profit margins, reduce risk and enhances culture Feasibility would be dependent on resources and competencies required to develop chosen strategy.   Criteria Strategies     Strat 1 Strat 2 Strat 3 Strat 4 Suitability Growth of market share by 15% in next 5 years 3 4 1 2   Profitability optimization for expansion and new product development 2 3 2 3 Feasibility Sufficient financial resources 3 3 3 4   Sufficient skilled workforce 3 2 2 2   Appropriate production capacity 4 4 4 4 Acceptability ROI in less than 4 years 2 3 2 3   ROCE improved to about 20% in next 5 years 3 3 1 3   Positive reaction of stakeholders 2 5 2 4   Total 22 27 17 25 (Figure 1) The strategies have been evaluated on a ranking scale ranging from 1 to 5. Strategy that is less suitable, feasible or acceptable is ranked as 1 and which is more is ranked as 5 as shown in figure 1. As per evaluation the most appropriate strategic option for the brand is to focus on product differentiation or innovation. Though innovative skills in the team are missing but production capacity and financial resources are sufficient to implement this strategy (Duhaime, Stimpert, Chesley and Chesley, 2012). The brand needs to create unique designs giving it a major priority instead focusing on market expansion. Comparison with current strategy Vivienne Westwood has adopted the strategy of subdividing its target segment which forms a kind of differentiation. The products that it offers to its market segment are categorized on the basis of age and genders. Like other high end fashion brand it does not focus on one particular target market (Onkvisit and Shaw, 2009). Focus is on expanding market share and to stay competitive in the industry. The company gives more importance to maintaining quality and brand image in consumer market. However the proposed strategic option of product innovation is not aligned with present strategy (Hines and Bruce, 2007).Through this strategy the company can gain market share by satisfying customers in terms of new innovative styles or designs. On contrary the other strategies are also different such as opening up of new stores or better development of online stores (Chevalier and Gutsatz, 2012). However similarity between current and proposed strategic options is its common objectives which are quality and brand reputation. Conclusion Vivienne Westwood over the years has been developing products based on punk style which attracted many customers but at the same time even shifted attention of customers to other brands. The growing trend of local brands and highly competitive environment of luxury fashion industry has posed serious threat on this high end brand. However there are certain strengths which make this brand recognizable in consumer market segment. These strengths are its high quality and reliability that grabs attention of majority of its target market. The brand has capability to analyze well its target market due to which it offers different products to different market segments. Lesser number of store outlets is affecting the operations of Vivienne Westwood as customers are not able to try real products. Though this is a major issue with the brand but for long term sustainability in fashion industry it needs to develop innovative designs and not to be dependent on its standard designs. The recommended strategic option which has even proved to be suitable, acceptable and feasible is product differentiation or product innovation. This strategy can only be implemented through adding new styles and designs in all its product range. Latest fashion collection of the brand needs to be promoted appropriately so that customers find the collection appealing and interesting. High production capacity and desirable financial resources supports the proposed strategy. It is recommended that customer demand should be properly analyzed by the company before innovating new collection. This would help the brand to meet customer expectations. The intense competition can be successfully handled by the company through creating new products and developing strong market presence. Fashion industry is an ever changing industry and in order to sustain in this field it is essential that company maintains product innovation and diversity along with quality. References Aggarwal, S. 2008. Brand Management: A Theoretical and Practical Approach. Singapore: Global India Publications. Ashworth, G. and Kavaratzis, M. 2010. Towards Effective Place Brand Management: Branding European Cities and Regions. Cheltenham: Edward Elgar Publishing. Assael, H. 2005. Consumer Behavior. New Delhi: Dreamtech Press. Batey, M. 2012. Brand Meaning. USA: Psychology Press. Carlopio, J. 2010. 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