Customer Decision Making in Fashion Industry - Assignment Example

1. Levi Strauss & Co. (Levis) is engaged in designing and marketing products that include jeans and jeans-related pants, casual and dress pants, tops, jackets, and related accessories for men, women and children (Google Finance, 2008). To enter and market in Spain there are various environmental factors that would influence the decision-making process for the company as Spain is a vary fashion conscious market. The Spain fashion industry is only a small part of the clothing industry. The fashion industry today is marked by short life-cycles, high volatility, low predictability and high impulse purchasing (Christopher, Lowson & Peck, 2004). The fashion retail industry in Spain is turbulent as the fashion conscious consumers expect and thrive for constant change. Added to the changing consumer preferences are the factors like globalization and the technological changes that have truly revolutionized the Spain fashion retailing industry. Thus Levis has to primarily take into account the SLEPT factors or the social, legal, economical, political and technological factors. S-social factors include the demographics and the market segmentation is based on these factors. The class structure, culture and the consumption pattern has to be taken into account. The highest spending age group in the jeans market is between 15 and 24. Jeans are now even worn to work. Broader assortment of jeans is now available to suit different occasions. In the apparel industry demand is uncertain because it is difficult to foresee the fashion trends in advance for a certain season and product failure rates can be as high as 10 percent (Diaz, 2005). Demand can also be volatile because demand can change suddenly due to a variety of external factors. L-legal: The abolition of the quotas in the textile industry has pushed down the prices of clothes in general, making the market very competitive. The cheap chic revolution has turned the European fashion market upside down (Mesure, 2007). Jeans in the market are trying to differentiate themselves with cult connotations, lifestyle images, and distinctive details. E-economic: The Spanish fashion industry has experienced exponential growth in the last decade, not merely in women’s clothing as fashion is generally associated with, but in menswear childrenswear and accessories as well. The fashion industry today is marked by short life-cycles, high volatility, low predictability and high impulse purchasing (Christopher, Lowson & Peck, 2004). The weakening of the US dollar has caused a shift in the location of production. P-political: Threats from the low-priced jeans market exists and constantly pushes the prices down. Besides, the emergence of the European Union (EU) or the emergence of a single market has prompted the marketers to re-think their marketing strategy. The phenomenon of disposable fashion rules – “buy it, wear it, and chuck it” is the mantra that the fashion conscious follow in the 21st century. Consumers expect low prices, and increasing incomes are the key to increased economic activity (Mesure, 2007). The supermarkets however, have shifted away from selling the discounted brands and concentrate on building their own labels. Prices in the mass market have fallen due to cheaper imports especially from China, and because other retail brands like Marks & Spencer, Next, and Burtons have reduced their prices. T-technological: Technological advancements are driving standardization. Market share can be gained through aggressive low pricing supported by standardization. Technology enables electronic stock control. Regular and frequent interactions with the customers have become possible due to technology. 2. Clothing and fashion purchase decisions are based on want rather than need (Priest, 2005). It depends upon how the consumer wants to be perceived. Competition is fierce and the market is characterized by excessive discounting. Even top socio-economic groups are price-savvy. The retail market is competitive and the consumer is the regulator. The downward price trend is likely to continue. There is a growth in the youth market and retailers have introduced incentive shopping. It would hence be necessary undertake a market research of the industry before entering the Spanish market. The objectives of the research would be to: a. Determine the price range within which the demands are the maximum b. Determine the outlets through which sales could be maximized. c. Determine the changes in the fashion industry d. Determine the highest age group for the jeans market. e. To understand the legal formalities in the jeans market. The market research would be conducted through an agency as there are professionals who have experience in the line and it would be easier and cost effective to appoint an agency. To evaluate the situation and the future trends research would have to be conducted both at the retail stores as well as the local clubs among the youth as the highest spending age group is between 15 and 24 for jeans. At the retail stores data would be collected and the interviews of the store managers would be taken to understand the prospects in the industry. It could also be determined if this is a seasonal industry and the whether the customers looks for standardized products or customized ones. Focus group interviews at the local clubs would give a different dimension of data necessary to launch in the UK. Focus group interviews have certain advantages over the personal interviews as participants tend to be more comfortable and natural in a familiar group. They are more vocal and keen to voice their concerns in a focus group. Besides, they influence and are influenced by others just as they are in real life (Redmond & Griffith, 2003). Such data would allow the company to understand the changes in the fashion industry and also allow an insight into the consumers’ perception. It would be the responsibility of the appointed market research agent to collect the data and give an assessment of the market. Thereafter comparisons would be made with the Mintel and other published reports. This would help to give a realistic approach to the marketing strategy including the mode of entry. 3. International marketing strategy refers to the deployment of the marketing mix to create a sustainable advantage in the international marketplace (Wong & Merrilees, 2007). Market segmentation, according to Souiden (2003) seems to be the most effective, realistic and feasible way that permits the multinationals to apply the hybrid approach. This helps them to standardize their marketing programs to each homogeneous segment of countries or consumers while differentiating the strategies among different segments. Numerous debates have centered on standardization/adaptation in the field or marketing. Standardization of the marketing strategy would mean that the same marketing strategy is applied in all markets without taking into account the local factors (Zou, Andrus, Norvell, 1997). This implies that markets and consumer behavior is homogenous. Hence standardization would mean identical product lines at identical prices through identical distribution systems with identical promotional programmes. This can happen when significant benefits are perceived in standardizing the marketing strategy. The benefits of standardizing the international marketing would include cost savings, improved planning and distribution, and greater control across borders. Advanced technology in information, communication and transportation are supposed to have homogenized the markets and this has led to the production of high quality products at lower costs. Hence heterogeneous cultures, political systems and economies across borders should not disturb the mindset and the firm should seek to rationalize their worldwide operations. Hence Levis should have a mix of both standardization and adaptation. Spain is a very fashion conscious market and hence local adaptation is necessary. The strategy should be tailored to suit the local market needs. The fashion industry today is marked by short life-cycles, high volatility, low predictability and high impulse purchasing (Christopher, Lowson & Peck, 2004). This implies according to Zara, the leading Spanish fashion company, that there could be as many as 20 seasons in a year. In Spain, because of the high price, it is a fashion item. Product positioning has to be done keeping in mind the target audience. The high priced segment is a sensitive one and cannot be combined with the low-priced segment. Since nations differ on their perception of jeans, the positioning in each region would have to differ. Levi’s would need to brand their products differently in different regions as keeping the same brand image could affect their customer segment in other regions. Thus the right degree of the standardization/adaptation approach would have to be adopted and this could be decided upon receiving the market research report. The mode of entry again varies across regions and countries. Many manufacturers tie up with retail giants to sell their products like TAL Apparel of Hong Kong (China) has tied up with retail giant C Penney in the United States (Hirsche, 2005). On the other hand, many in the industry outsource their manufacturing to others to take care of the marketing aspect. In the fashion retail sector, choices are now determined by lifestyles and hence usage situation is necessary to be considered. In diverse market segments, customers reveal their patronage (Danneels, 1996), in which case the small retailers take a passive approach. They rely on word-of-mouth and footfall to generate business. Retailers now recognize the limited value of segmentation on the basis of socio-demographic variables. Retailers all over have now started selling branded jeans. Since in Spain jeans are considered prestigious, the company should open its own stores and not sell through retailers. This would give it the freedom to change/alter its promotion strategy from time to time. 4. Segmenting has to be supported by other factors like positioning, store-layouts, very selective range and quick response times. Along with these, the reputation, the store sales personnel, and the store location also hold importance (Newman & Patel, 2004). The senior managers at the stores should be sent from the head office while the sub-staff should be locally recruited as understanding of local language and nuances are important. The sales assistants should wear uniform which should change with the season. A store which tries to serve all consumers may end up appealing to none (Daneels, 1996). Targeting implies renouncing a great number of potential consumers and it contradicts the tendency to sell as much as possible. To keep up the trends it is important to understand what the customers want and hence a positive store experience is essential. Store images assist the retailers in determining the positioning strategies (Birtwistle, Clarke & Freathy, 1998). The retailers project an image which matches the targeted customers’ self-image world, which increases customer loyalty. The store image is linked to customer expectations, previous purchase experience and customer perception of the store. Since clothing is now being produced for every season to suit every market and every generation (Bakewell, Mitchell & Rothwell, 2006), Levis would have to exploit the power and strength of their own brand and use it to reinforce their market positioning. Price is the least important attribute for consumers which also demonstrate how seriously fashion is taken by these consumers (Newman & Patel). The promotion through the media should be based keeping all of the above factors in mind. An advertising agency should be appointed to take care of the media. The market can initially be captured by special offers like family discounts. This could last for a month after the initial launch after which the discounts could be reduced. Once the brand awareness is created, Levis could introduce some other offers to sustain interest. Firms like M&S have been unsuccessful in the overseas market because they wanted to use the same techniques that brought it success in the domestic market (Procter & Kitchen, 2002). Since Levis is a well known brand it should have an integrated approach to marketing. While the body, text, size, and color of advertisements can be standardized in the EU markets, the headline, background, product, and layout should meet the local requirements. The slogan too should differ in different markets. Adopting the local culture is very important is successful brand building. Brand differentiation is essential as it helps to build deeper relationships with the customers. References: Bakewell, C. Mitchell, V. & Rothwell, M. (2006). UK Generation Y male fashion consciousness. Journal of Fashion Marketing and Management Vol. 10 No. 2, 2006 pp. 169-180 Birtwistle, G. Clarke, I. & Freathy, P. (1998). Customer decision making in fashion retailing: a segmentation analysis. 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