Global Fast Fashion Analysis Of Clothing Retailer & Its Competitor

Question: Analyse the an international fast fashion clothing retailer and its competitor. Answer: Introduction The main objective of this study is to draw out the comparison between the two companies. The two companies that have been undertaken in this study is HM and Uniqlo as they have achieved their success through numerous business strategies and how they have managed to influenced each other. The project despite having an economic approach aspires to highlight the customers value proposition in the retail-clothing sector. The project gives a basic overview regarding the basic concepts behind the comparative study of both companies, which operates in the fast fashion to facilitate the understanding of the customers and the prevailing market competition. In addition to this the study draws out the comparison in terms of their commercial profile by analysing and confronting them based on global marketing strategies which lead them to success on international stage (Grace and Lo Iacono 2015). Consumer perceived value proposition for HM: Perception is regarded as key for every business. The perceived value of consumer is regarding a brand is what the marketers demand in order to compel a customer to buy a product. This is how a product is justified weather it is a premium product or not. If the consumer perceive that their dedication is towards the quality as brands which luxury have dissipated (Wong and Yazdanifard 2014). Several marketers and sales teams have mastered the art of dangling the designer clothing brand over the consumers with average purchasing power. Several marketers have undertaken the strategy of implementing high price in order to keep the value of brand and consumer perception of middle class families to purchase their product. Benefit of shopping at fast fashion cloths Sacrifices of visiting supermarkets Convenience a. Wide selection of products which goes beyond the scope of fashion b. Large number of retail outlets located centrally c. Ease of access for both pedestrians and vehicles Monetary a. Cost involved in purchase of retail cloths b. Cost involved for the customers to travel to the retail outlets Monetary a. Affordable prices b. Rewarding schemes c. Points scoring vouchers Efforts a. Time involved by a customer to travel stores b. The time a consumer consumes to purchase a product Quality a. Items which are standardised and backed by the consumer regulation standards b. Large brands which offers certain degree of quality and trust Social a. Social esteem associated with large brand names b. Self esteem from purchasing higher quality of goods Health a. Stress arsing due to overcrowding in retail outlets as result of this consumers are unable to purchase products Opportunities a. The lack of opportunity to buy high quality goods. Table 1 (Consumer perceived value proposition) Source (Grace and Lo Iacono 2015. pp.560-570.) Intrinsic vs Extrinsic value: Extrinsic Intrinsic Active a. Wide range of products available for selection b. Large number of outlets are located centrally c. Offers service 24x7 d. Online shopping includes door to door delivery through the use of smart phone application e. Offering ease of access a. Offers the flexibility of purchasing luxurious and branded clothes. b. Offering recreational opportunities in stores such as serving coffee and some sort of refreshments. Reactive a. Products are under the regulation of consumer standard. b. Established brand names facilitate certain level of quality and trust among the consumers (Zimmerma 2012) a. Neat and clean outlets b. Easy and simple to follow the outlays of stores (Gallarza et al 2016). c. Attractive display of products to attract consumers. Other orientations a. Enhancement of customers self esteem through high quality goods. a. Preserving the ecological surrounding through the use of environmentally friendly bags b. Establishing a community support schemes. Table 2 (Intrinsic value vs. Extrinsic value) Source (Zimmerman, M.J., 2012. Intrinsic vs. extrinsic value) Target market: HM has expanded exponentially during the last decade from a small family business to a global sensation rivalling the giants like Uniqlo, which is one the retail apparel fast fashion industry. HM target market is very broad since they do not define the target market by segmenting the ages and lifestyle as traditional retailers do. HM generally targets the youth and educated mass of people who prefers fashions, as they are sensitive to fashion. It is noteworthy to denote that in the present era where technology acts as a communication to several devices which has more access to information regarding the fashion (Parry et al 2012). Henceforth, fashion it is recognised as more internationally standardised and HM uses this to their benefit by offering the latest trends in apparel. It is to be believed that around 80-85% of the fashion apparels which company offers are of relative high fashioned products. The study highlights that the international strategy adopted by HM is excellent since it has adopted the balanced approach to mix the standardisation and customisation. Customer value= perceived benefits perceived sacrifice: HM looks up the customers value proposition in the form of gain, which defines the acquisition of the product and services (Jewell et al 2013). On the other hand, it must out weight the pain of acquisition, which is cost of difficulties while obtaining the item, service and uncertainty regarding making the right choice and cost of making the wrong decision. HM identifies the certain numbers of customers value proposition based on value parameters: HM aims to meet and exceed customers expectations, which is not based on price. HM being a leader in the retail fashion industry offers a quality environment, which enables the customers, feel valued and comfortable. HM being a leader in the fashion sector also provides customers with the service, which exceeds beyond its competitors. As a company, HM needs to match up with the customers values and beliefs by reflecting the same on their products through the advertising and sales promotion which surrounds it. Sheth Models of customers perceived value: Sheth identified the five dimensional concept of customers perceived value, which was based on the value of social, emotional, functional, epistemic and conditional. The functional value is understood as the perceived usefulness of the service offered by the HM to its customers., HM provides emotional value, which is based on the feelings of effective states being generated by the customers consumption experience. The social value is given by the acceptability based on the individual level and the relations with the social environment. Epistemic value gives the ability of the service to generate the curiosity in order to satisfy the desire for the knowledge. The conditional value is related to the situational factors such as the disease or the specific social situations. Sheth models defines that HM which is a retail brand can be compared with the rival brand to alleviate boredom with the Uniqlo which aims to satisfy the desire to learn and feel something new in relation to the response to such aroused interest (McColl-Kennedy et al 2013). Due to this cognitive-affected and multi-dimensional nature of customers perceived value, it is mandatory for HM to evaluate the customers perceived value from viewpoint of customers consumption experience. The models defines that the customers based on the experience of value-in-use often create value. While HM can establish and communicate the value proposition, it is the customers, which creates the value using specific value creation having based on dynamic situations. Evaluation of the value proposition of Uniqlo in contrast with HM: Basis of review: HM and Uniqlo is one of the relatively new sub-industry within the greater clothing industry which is characterised by companies competing in the fast fashion industry. A comparative study is performed based on the price, promotion, product and place. Product: Uniqlo primary objective relating to the product is to provide the customers a variety of affordable, innovative and stylish clothing of high quality. To differentiate its products with the rival company HM and remain comparative in the declining industrial trend Uniqlo sells its products in wider array of colours. One such example is socks, which comes in 50 different colours at its Tokyo outlets. On the other hand HM developed another draw for its customers specifically during the colder months made of fabric, which is used for inner layers and has been applied to the products such as leggings. Uniqlo offers a wide range of clothes to its customers during all times of year which ranges in style from casual wear to more fashionable wear of high quality and of many colours (Payne and Frow 2014). A sum of products offered by Uniqlo and HM is listed below Design Several colour variations, simple, adapt to numerous needs, casual to formal Quality Controlled quality, creative fabrics and functions Features Offering wide varieties of products with innovative and affordable price Branding Fashionable, economical, reliability and desirable Table 3 showing sum of products offered by Uniqlo and HM Source (Barnes, L (2013) 45(2-3), pp.182-207) Pricing strategy: In line with the product strategy in foreign markets, a penetrating strategy is used to enter into the retail clothing market. At a lower price point than the competitors, Uniqlo aims to provide its customers high-quality goods at relatively low price. The prices are of certain products are comparatively low for example socks offered by Uniqlo is priced lower than the one provided by HM. The comparative study also defines that t-shirts and button down products-shirts are priced lower by Uniqlo than that of one sold by HM. Hence, it must be noted that the basic objective of Uniqlo is to increase the volume of sales and expands its market share while HM strategies are focussed towards wide distribution and products cost. It is assumed that the cost of operations will gradually decrease for HM as a result of new store outlets which is being opened and with multiple stores sharing inventory and more stocks can be shipped from Asia during any given period of time. Such strategies adopted by Uniqlo can reduce the repeated incurring of product costs and shipping cost will be reduced (London et al 2015).. On the other hand, Uniqlo will also utilise its enhanced levels of branding awareness with the help of continuous advertising and convincing the customers that products offered by Uniqlo is highly desirable in terms of fashioned retailers Promotion: Having experienced a sudden decline in the brand perception of Uniqlo due to the oversaturation in the market and wide array of apparels products introduces by its competitors HM it was noticed that Uniqlo were often taunted as a Unibare. Though it experienced decline in its brand it still had the pride of serving a wide range of assortment and high quality products. Such strategies have been aimed at classier brand image by offering high value perceived to its customers (Kyhnau and Nielsen 2015). Uniqlo has high innovative fabrics, which offers consumers to with wide array of products. Such varieties help in creating consumers awareness and ultimately helps in brand promotion for uniqlo. While on the other hand HM aims to strive and redefine the relationships between the affordability and quality in order to attract wide range of customers and pool together to sought values such as the quality, style and affordability. Place: HM strategizes to establish and expands themselves into the international market which is focussed towards establishing a powerful brand image being centred on the systematic opening of large flagships outlets. On the other hand, Uniqlo aims to open its outlets under the Australian flagships, which it considers as an ideal location for expanding it retail-clothing stores. An identical form of central location will be sought by Uniqlo as their main of transit in Sydney outlets, which will be located in trendy, young shopping neighbourhood, and the store in gold coast will be located in a central and touristic area (Huang and Wang 2012). Value map- Company and competitors position on the value map: Uniqlo is considered as one of the fast fashioned retailers who have outperformed the retail clothing department stores and less nimble speciality stores, which not only creates high profitability but also increases the speed of revenue growth. Uniqlo has the vertical scope and sells apparels for men, womens and children however both the brands put more emphasis on womens clothing. Uniqlo owns much of its productions and retail outlets in comparison to HM but it outsource all of its production. In contrast to this HM has invested largely on the production but study reveals that licensees ran its stores (Grnroos and Voima 2013). Those two competitors are also placed differently in the product space from Inditexs chains. According to the Inditex trends HM is generally perceived as more fashionable than Uniqlo. The survey shows that Uniqlo is more fashionable while HM on the other hand, offers products at lower price. Figure 1 - Value Map of Uniqlo and HM Source: (Grace and Lo Iacono (2015) pp.560-570.) Types of value proposition: Low price: The prices of retail clothes for Uniqlo are affordable so that a customer can buy its products. This is because Uniqlo has better manufacturing and distribution systems than HM as it aims to reduce the operational cost. This serves as an advantage for Uniqlo to create a value proposition as it is easy to attract the consumers and sell them products at relatively lower price. Unique and better products: To execute the value proposition among the customers both Uniqlo and HM, this will cause the customers to consider the product of both the brands, based on superiority of the competition. Such strategies help to establish uniquely batter value proposition so that the buyers are sure of the quality of products being offered by both the retail brands. Offers hassle free customer experience: This value proposition is designed to create hassle free customers experience with the products and services offered by the Uniqlo. This will enable the customer to buy products in order to save time and mental energy. The advantage of this type of value proposition is that the customers just do not think about the products and services offered to them as they simply buy them (Aarikka-Stenroos and Jaakkola 2012). Ownerships of customers results: Uniqlo performs the customers business more better than they could perform as it can been seen that a part of enterprise ensures that the customers are offered what they need meanwhile it also controls the overall controlling cost. Dimension of value proposition: Cost: Customers value perception is generally defined as a customers evaluation of what they get in return for what they give. The cost value proposition is recognised as the perception of customers whether the value created by HM and Uniqlo is worthy enough of the cost paid. The cost paid by the customers can be of monetary terms based on time and effort, which the customers invest in a firms offering. Customer roles: This refers to the in general the customers familiarity during the communications with the seller. Value can be added to relationship along with the magnitude consisting of product, quality, services, delivery performance, suppliers know how and process cost. Such creation of customers value establishes and maintains the customers relationships with the suppliers so that it can obtain hassle-free purchase and consumption mode (Grnroos and Voima 2013). Performance: Uniqlo manufactures open source of software and correlated services, which do not rely entirely on the source of software. They often combine the proprietary and open source of offerings and implements hybrid business models to deliver greater value to consumers. Interpretation of Value Proposition: Uniqlo retail value proposition is mostly centred on low product prices. Nevertheless, several surveys has suggested that currently Uniqlo is not successful even though it offers clothing apparals at low prices. Uniqlo has created a strong brand that is linked with the fashion and top designers such as Cate Moss, Madonna and Stella Macharty as Uniqlo has managed to create something unique. The fact the company is offering products at lower price does not mean that brand has to be a cheap one too. It is regarded that Uniqlo has put in a great amount of effort to build up its brand, which is associated with range of price, which cannot be related with HM (Osterwalder 2012). Uniqlo demonstrates that how a company can build brand even if the organisation is selling the products at comparatively lower cost. Nothing can be considered as only black and white and one can understand that Uniqlo is one of the luxurious brand in most of the countries. On the other hand when other fashion brands like Uniqlo started acquiring market in retail clothing there were rising speculations about how the connections to HM would affect the Uniqlo reputation as high quality brand. At the moment Uniqlo is feeling satisfied with the choice of work together with the one of the bolstering retailers in the fashion industry. Evaluating value proposition: Price: Price can be defined as the sum of expenditures paid by a customer for a product and any associated services that is required by the product. The total cost for high end clothing apparels offered by HM and Uniqlo to support the dedicated fashion trends followed by the customers. The price for a product also includes the price of the services hence, in customers value proposition price is considered as the value of product and not the cost. Customers value proposition is the cost that is not reflected in the price as the cost is reflected in the value experience. Support: As it is mentioned earlier, the customers value proposition emphasis on experiences. Uniqlo initially identifies these experiences when it profiled how a key-targeted set of customers would use the product (Chandler and Lusch 2014). In the evaluation of value proposition process, customer support is necessary between the products offered by Uniqlo would offer them the benefit, which is equivalent to those that are negative users. Features: Human live in world where the products offered by several clothing retailing industry are constantly changing as new features are constantly gets added. Prices gets changed, competitive products are enhanced and new alternatives are introduced. All such elements effect the customers value propositions. Reputation: Evaluation of customer value proposition is based on the reputation or the image of brand. Offering high and better quality products with wide array of assortment Uniqlo proposes to establish a classier brand reputation by offering higher perceived value to its customers (Grace and Lo Iacono 2015). Value proposition: Basis of distinctions HM Uniqlo Price Lower Lower-Middle Quality High Middle-high Fashion High High Age group served For ages ranging from 15-30 For ages ranging from 15-40 Kind of Supply Generally Casual From Casual to Formal Brand reputation Good Under-development Production Out sourced 60% outsourced Table 4 (Value proposition of HM and Uniqlo) Source (Payne and Frow (2014) pp 213-227) Benchmark the two-value proposition: Globally most of the fashion retailers have followed the customer value proposition to keep the new trends and the fashion prevailing all corners of the world. Uniqlo and HM follow the value proposition, which is largely successful, as both the companies understand the importance of customer value proposition. Uniqlo differentiates from HM in order to find and follow latest trends. Uniqlo believes that customers are more cautious regarding the quality and value than lending a rapid response to changing style (Osterwalder et al 2014). On the other hand, HM uses long developmental strategies to test new materials and designs. It creates collaboration with the vendors based on long term strategy. Such strategies is similar to that of car manufactures who spend long period of time in product development in order to create a new product (Kyhnau and Nielsen 2015). Uniqlo recognises the product with style which do not go out of fashion rather easily and discovers a new of creating levels of differentiation with those styles. On the other hand HM aims to build a strategy to the trends and needs of consumer by embracing the rapid change to the consumer tastes and preference. Uniqlo has established a high range of receptive supply chain that facilitates the liberation of fashions as soon as a trend materializes. Uniqlo approach is somewhat more of a hybrid in nature than that of HM models. It serves to combine the commitment to prolonged existence while staying receptive to the latest fashion trends. The study reflects that Uniqlo outsource production to a network from more than 500 suppliers. Uniqlo new value proposition and implementation plan: HM retail value proposition is predominantly centred on low prices of product. However, a number of surveys has suggested that presently HM is not flourishing though it offers clothing apparels at reduced prices. HM has created a muscular brand name that is connected with top designers such as Cate Moss, Madonna and Stella Macharty as HM has managed to create somewhat exclusive. The truth is that the corporation is offering products at reduced price that does not necessarily represents that brand name has to be inexpensive too. Figure 2 model of mission statement Source (Grnroos, C. and Voima, P., 2013. Pp 133-150) It is understood that HM has put in a enormous effort to construct its brand, which is allied with wide range of price, which cannot be associated with the small boutiques. HM demonstrates that how a company can build brand even if the establishment is selling products at reasonably lower cost. Nothing can be painstaking as only black and white as one can understand that HM is one of the lavish brand for the most part of countries. On the other hand, when other fashion brands like Uniqlo started acquiring marketplace in retail clothing there were growing speculations about how the connections to HM would affect the Uniqlo status as high quality brand. At the moment Uniqlo is feeling satisfied with the choice of work together with the one of the bolstering retailers in the fashion industry (Chandler and Lusch 2014). External and internal implementation plan new value proposition: A vigorous and meaningful value proposition is necessary for any industry to effectively engage and establish a connection with the consumers, partners stakeholders and decisively internal workforce by precisely communicating the differences and worthiness of making such purchase (Hollensen 2015). The implementation of external and internal implementation plan of new value proposition is listed below; Figure 3 relationship between internal and external marketing Source (Hollensen 2015) Provides directions: The Value proposition offers directions by identifying the perfect-targeted audience right from the front, rather than understanding and recognising the central needs. This can be contented by the planed solution (Smith et al 2012). A comprehensible value proposition helps in wastage of time and money by offering product and service, which are less relevant to customers. Figure 4 Relationship between internal and external marketing Source (Hollensen 2015) Creates focus: A robust value proposition system offer fundamental initiatives and activates the aspects of business which have the greatest impact on meeting the defined targeted customers needs. Such value proposition helps in delivering excellence for HM. It also outlines what it must deliver to meet and define the audiences needs and create an overall remarkable experience for customers. Figure 5 Perception of problem vs willing to change perception Source (London, N., Pogue, G. and Spinuzzi, C., 2015 99 1-8) Improves customers understanding: Implementing value proposition provides HM with the opportunity to understand how the consumers view products and services. This enables them to talk to customers which breeds misunderstanding or to certain extent alienation. The value proposition identifies the factors that not only make a difference to the targeted audience but also inspects the ways that are meaningful to HM (Kyhnau and Nielsen 2015). Figure 6 relationship between employee and customers satisfaction Source (Hollensen 2015) Conclusion: In a world where retail fashion is fast changing along with the changing buying behaviour of the consumers it is significant that the companies like HM and Uniqlo is well equipped with the flexibility where it is able to adopt to all kinds of changes very quickly but even more it is able to anticipate and predict such changes. As a reason of this both the companies operates in the pull systems and gives emphasis on the customer value proposition. It is precisely evident that both the companies seek to enhance their efficiency and improving the customers satisfactions. As shown in the above study, that customer value proposition allows the exchange of ideas from the downstream area of chain to the upstream area. The study also provides numerous advantages in terms of cost and time to both the organisation. Referenced List: Ng, I., Parry, G., Smith, L., Maull, R. and Briscoe, G., 2012. Transitioning from a goods-dominant to a service-dominant logic: Visualising the value proposition of Rolls-Royce.Journal of Service Management,23(3), pp.416-439. Aarikka-Stenroos, L. and Jaakkola, E., 2012. Value co-creation in knowledge intensive business services: A dyadic perspective on the joint problem solving process.Industrial Marketing Management,41(1), pp.15-26. Barnes, L., 2013. Fashion marketing.Textile Progress,45(2-3), pp.182-207 Brohi, H., Khubchandani, R., Prithiani, J., Abbas, Z., Bhutto, A.H. and Chawla, S.K., 2016. Strategic Marketing Plan of Nike. Chandler, J.D. and Lusch, R.F., 2014. Service systems a broadened framework and research agenda on value propositions, engagement, and service experience.Journal of Service Research, p.1094670514537709. Frow, P., McColl-Kennedy, J.R., Hilton, T., Davidson, A., Payne, A. and Brozovic, D., 2014. Value propositions A service ecosystems perspective.Marketing Theory, p.1470593114534346. Grace, D. and Lo Iacono, J., 2015. Value creation: an internal customers perspective.Journal of Services Marketing,29(6/7), pp.560-570. Graebig, M., Erdmann, G. and Rder, S., 2014. Assessment of residential battery systems (RBS): profitability, perceived value proposition, and potential business models. In37th IAEE International Conference, New York City. Grnroos, C. and Voima, P., 2013. Critical service logic: making sense of value creation and co-creation.Journal of the Academy of Marketing Science,41(2), pp.133-150. Huang, L. and Wang, L., 2012, October. Research on the Application of 4Ps Marketing Theory Based on Chinese Consuming Conceptions. InBusiness Computing and Global Informatization (BCGIN), 2012 Second International Conference on(pp. 163-166). IEEE. Jewell, D.V., Moore, J.D. and Goldstein, M.S., 2013. Delivering the physical therapy value proposition: a call to action.Physical therapy,93(1), pp.104-114. Kyhnau, J. and Nielsen, C., 2015. Value Proposition Design: How to create products and services customers want.Journal of Business Models,3(1). London, N., Pogue, G. and Spinuzzi, C., 2015, July. Understanding the value proposition as a co-created claim. InProfessional Communication Conference (IPCC), 2015 IEEE International(pp. 1-8). IEEE. Oh, S., Han, Y., Nah, K. and Kwon, K., 2016. Development Direction Research Of Korean Lifestyle Brands Through Analysis For Global Lifestyle Brands-Focused On The Trend Analysis.The International Business Economics Research Journal (Online),15(2), p.41. Orton, L., LLoyd-Williams, F., Bromley, H., Hawkes, C., Taylor-Robinson, D., O'Flaherty, M., Moonan, M., Rayner, M. and Capewell, S., 2013. Using the 4Ps marketing approach to evaluate fashion policies: A rapid scoping review.The European Journal of Public Health,23(suppl 1), pp.ckt126-263. Orton, L.C., Lloyd-Williams, F., Bromley, H., Hawkes, C., Taylor-Robinson, D.C., OFlaherty, M., Moonan, M., Rayner, M. and Capewell, S., 2013. PP11 Using the 4Ps Marketing Approach to Evaluate Fashion Policies. A Rapid Scoping Review.Journal of Epidemiology and Community Health,67(Suppl 1), pp.A53-A53. Osterwalder, A. and Pigneur, Y., 2013.Business model generation: a handbook for visionaries, game changers, and challengers. John Wiley Sons. Osterwalder, A., 2012. Achieve product market fit with our brand new value proposition designer canvas.Business Model Alchemists. Osterwalder, A., Pigneur, Y., Bernarda, G. and Smith, A., 2015.Value Proposition Design: How to Create Products and Services Customers Want. John Wiley Sons. Osterwalder, A., Pigneur, Y., Bernarda, G., Smith, A. and Papadakos, T., 2014. Value Proposition Design: How to Create Products and Services Customers Want. 320 pages. Payne, A. and Frow, P., 2014. Developing superior value propositions: a strategic marketing imperative.Journal of Service Management,25(2), pp.213-227. Smith, L., Ng, I. and Maull, R., 2012. The three value proposition cycles of equipment-based service.Production Planning Control,23(7), pp.553-570. Wong, K. and Yazdanifard, R., 2014. How Fast-Fashion Apparel Stores are able to Operate Sustainably in New Global Economy.Journal of Research in Marketing,3(2), pp.274-278. Zimmerman, M.J., 2012. Intrinsic vs. extrinsic value. Gallarza, M.G., Gallarza, M.G., Arteaga-Moreno, F., Arteaga-Moreno, F., Del Chiappa, G., Del Chiappa, G., Gil-Saura, I. and Gil-Saura, I., 2016. Intrinsic value dimensions and the value-satisfaction-loyalty chain: a causal model for services.Journal of Services Marketing,30(2), pp.165-185. Hollensen, S., 2015.Marketing management: A relationship approach. Pearson Education.