SWOT Analysis of Carters Brand - Essay Example

Do a trend analysis (SWOT Analysis) leading to a strategy recommendation for a the Carter's (baby clothes) brand Carter's brand is one of the most popular baby clothes designers and manufacturers in the USA. Carter's Inc operates on the slowly growing market, but the company obtains a strong market position and became one of the most popular baby clothes brands in the USA. The top competitors of Carter's are Gap and Disney. Key Target Markets. Carter's target market involves middle income segment. Most middle-income families prefer to buy high quality products at comparatively low price. They include middle-income families and young married couples, and blue-collar workers. Most of the families have two wage earners. In general, Carter's is focused on three different markets namely infants, toddlers, and preschoolers. (Carter's Company Profile, 2006). Strategy Statement. Be in one of the most highly rated industries for stability and success, Carter's offers a high quality clothes to everyone who wants excellence for their children. It is advantage is that Carter's meets the requirement of wide audience marketing fashion made of high quality materials. The high quality materials are the main criterion for Carter's. It does not want to reduce costs of production as it can worsen quality of goods (Caster's Inc, 2006). Recommended Message Strategy. In order to compete on the market, Carter's can implement new product line based on natural materials only for those who are health conscious and are willing to pay for natural fabric and dyes. This strategy will help to create a core of loyal supporters and repeat buyers. The target audience of Carter's will not be changed greatly, although Carter's can attract high income market segment that can afford high quality baby clothes at high price. This new line will help to penetrate to new market and create a strong target audience. The sales strategy is to build and open new locations on schedule in order to increase revenue. This strategy will help to overcome possible demographic changes and attract new market segment in order to sustain strong brand and market image as a leader in the USA baby clothes and apparel for fashionable youngsters SWOT ANALYSIS Strengths 1. Brand Recognition. Carter's brand creates a complex bundle of images and experiences in the customer's mind. It represents a promise about a high quality children clothes and the latest fashion designs. Carter's brand recognition helps it to differentiate the company's offering from all others. Customers integrate all their experiences of observing, using, or consuming children clothes with everything they hear and read about it (Carter's, Inc. Reuters, 2006). 2. Brand Equity. Brand equity represents the added value that accrues to a product as a result of Carter's prior investments in the marketing of the brand. Brand equity is thought of as an asset representing the value created by the relationship between the brand and customers over time. The stronger the relationship, the greater the equity. For example, the value of Carter's has been estimated to run in the billion of dollars (Caster's Inc, 2006; Fill, 1999). 3 Stable Financial Growth. Carter's retail value is about $17 billion, and expected to jump up to $20 billion by 2010. Also, "total wholesale sales increased $8.4 million, or 9.3%, to $99.0 million in the first quarter of fiscal 2005 from $90.6 million in the first quarter of fiscal 2004" (Quarterly Report: Carter's, 2005.). This tendency shows that Carter's is able to react to changing economic conditions and increase sales volume which is about 17.0% a year (Caster's Inc. Hoovers, 2006). 4. Technological Innovations used by Carter's include Internet marketing. Internet marketing has a wider possibility than traditional marketing. For instance, Carter's uses bolt-on systems based on the addition of an e-business system as a value added service to existing supply chains. These types of B2C systems are common among retailers like Carter's and help to attract more customers and decrease costs (Caster's Inc, 2006). 5. HR. Another strength is people employed in the company. Carter's maximizes each employee's potential as an individual and as a team member providing training and reward strategies. To improve operations, administration introduces employee bonus programs and support continuing education programs for all of its employees. These and other programs improve and bring advantages in recruiting and retaining employees. Strengths of Carter's include knowledge, relationships, selling and history (Carter's Investor Relations. 2005). Weaknesses 1. Absence of Unionists Policy. "Carter's has 20 supermarket stores in Michigan, including 1 in Petoskey. None of the stores is unionized and prior to 1999 there was only one union organizing drive at a store other than Petoskey" (Carter's, Inc. and Local 876, 2003). The pattern of non-union relations reflected the number of problems involving lack of protection and fair wages. This example vividly depicts that internal weaknesses of the policy is closely connected with external threats such as legislation and government regulations. 2. Unfair Labour Practices. It was found that Carter's "alleged 6 unfair labor practices and 14 objections to the Respondent's conduct in early 2000" Carter's, Inc. and Local 876, 2003). This policy can reduce effectiveness if sustained within a generally good relationship between management and staff. Also, this policy weakens strong company's position on the market. 3. The slowly growing market of baby clothes Carter's operates in a simple and static environment. Firms operating in a relatively simple and static environment can generally rely on management strategies that are based on historical data. To compete on this market, Carter's has to invest in production facilities and design in order to attract new customers and resist competitors. 3. Seasonality. Carter's reported that "it experiences seasonal fluctuations in our sales and profitability, with generally lower sales and gross profit in the first and second quarters" (Quarterly Report: Carter's 2005). Seasonality in production and demand conditions in the domestic market is industry specific and affect all companies. Opportunities 1. New Collection for year 2006. The purpose of new collection is more than to renew a product line: it must also satisfy the customer in its performance, durability, simplicity of operation and cheapness. A new or changed design is costly, as it needs new tools and new layout of works, although it helps Carter's to attract new customers and propose to existing ones new products in order to meet their demand. 2. Merger By focusing on rates of return on investment, adjusted for inherent risks, new merger will develop an economic overview of those options likely to produce the best returns for them. In 2005 Carter's Inc. acquires OshKosh B'Gosh, Inc for $312 million (Hurt, 2005).In this situation Carter's is in a powerful position within market to influence the expectations of other stakeholders. It will have access to information and channels of influence which are not available to many other stakeholders. 3.Increasing on-line presence To maintain public relations a company uses Internet as the main tool of advertising and communication. The development and management of customer relationships has, in recent years, become a central focus of marketing policy and conceptualization as it has been realized that they are valuable assets of a firm. Having a powerful customer knowledge base also enables a firm to plan a communications campaign that targets potential customers in a highly specific way. This can be done using banner advertisements, electronic mail, experiential marketing and viral marketing. Techniques used here include: temporary price reductions; extra value offers, including offers relating to future purchase; premium offers (incentives), including free mail-in premiums, self-liquidating premiums and banded free gifts (relevant for electronic services) (Caster's Inc, 2006; Johnson, Scholes, 1998) 4. New Stores will lead to increase sales Merger with OshKosh B'Gosh allows Carter's to sell its goods in 152 OshKosh stores (Carter's, Inc. Company Profile, 2006). New stores will cover wider target audience and help Carter's to sustain its market position as number one baby close marketer. 5. Managing diversity is an opportunity of Carter's. Managing is a part of business action that is socially as opposed to genetically transmitted. It comprises ideas through which managers perceive and interpret the world, symbols they use to communicate these ideas, and institutions which enable individuals to become socialized and satisfy their needs. Managing diversity, by effective leadership in Carter's ensures human resources policy is adhered to and department activities are successfully carried out (Carter's Investor Relations, 2005). Threats 1. Competition. The market is very fragmented in terms of supply, with a large number of smaller operators being characteristic. The majority of businesses offer products to a relatively small geographical area, particularly in the retail segment. Consolidation is an ongoing process in the sector. The main competitor are Gap, Disney, and OshKosh B'Gosh (a division of Carter's) The threat is local competition is waning, but at the same time, potential synergies between are decreasing. 2. Demographic Decrease. Statistical data suggest decrease in birth rate durin the next several years that can have a negative impact on sales and potential growth of Carter's. Demographic and cultural factors are also have a great influence on profitability. The nation getting older and more and more families are not able to buy Carter's products. Their target market is not validated that creates the main. The threat is population shift which has a great impact on sales (Quarterly Report: Carter's 2005). 3. Inflation and Changing Prices. The main threat is high process for raw materials that have a direct impact on operating costs and expenses. Carter's reported that: "deflationary price trends outpace our ability to obtain further price reductions from our global suppliers, our profitability may be affected" (Quarterly Report: Carter's 2005). Scanning of environment and analysis of potential threats and opportunities can help Carter's to succeed and compete on the market. Carter's, as a result of being able to adapt to changing competitive demands, is likely to survive in the long term. The changes can be incremental or major in their nature, but each type provides specific advantages to deliver customer satisfaction. References 1. Caster's Inc. 2006. Available at: http://www.carters.com/ 2. Caster's Inc. Hoovers. 2006. Available at: http://www.hoovers.com/carter's/--ID__52644--/free-co-factsheet.xhtmlcm_ven=PAID&cm_cat=INK&cm_pla=CO1&cm_ite=carter's 3. Carter's, Inc. Company Profile. 2006. Available at: http://biz.yahoo.com/ic/52/52644.html 4. Carter's, Inc. Reuters. 2006. Available at: http://yahoo.investor.reuters.com/FullDesc.aspxtarget=/stocks/quickinfo/companyprofile/fulldescription&ticker=cri 5. Carter's Investor Relations. 2005. Available at: http://phx.corporate-ir.net/phoenix.zhtmlc=135392&p=irol-govConduct 6. Carter's, Inc. and Local 876, United Food and Commercial Workers International Union. 2003. Available at: 7. Fill, C.. Marketing Communication: Contexts, Contents, and Strategies 2 edn. Upper Saddle River, NJ: Prentice Hall, 1999. 8. Hurt, Christine. Carter's/OshKosh B'Gosh Merger, 2005. Available at: http://www.theconglomerate.org/2005/05/cartersoshkosh_.html 9. Johnson, G., Scholes, K. Exploring Corporate Strategy. Hemel Hempstead: Prentice Hall, 1998. 10. Quarterly Report: 2005. Carter's. Available at: http://biz.yahoo.com/e/050428/cri10-q.html 11. Sterman, J. D., 2000. Business Dynamics: Systems Thinking and Modeling for a Complex World, Irwin McGraw-Hill, New York. Read More