Describe and evaluate Giordano¶s product, business and corporate strategies? Product Strategy : Giordano sees itself as being more mo re than just a retailer of casual apparel. It was able to successfully incorporate customer service as part o f its product. Besides its brand name, logo, style and quality, qua lity, excellent service has become part o f the tangible products sold at Giordano stores. Customers have come to associate service excellence as an integral co mponent of Giordano's merchandise. Giordano is able to provide a high level of customer service through a concerted effort, which involved every employee of the company. Ho wever, it is also essential to recognize the importance of the management and leadership's co mmitment to be customeroriented and to provide high quality service. Besides incorporating service as part of its produ ct, Giordano focuses on the concept o f valuefor-money. Giordano is constantly aiming to improve the value of the product. Being Be ing customeroriented allows Giordano to focus on o n what the company's products mean to the consumer. Customers are often encouraged to request certain product adaptations if current products fail to meet their expectations. For instance, Giordano removed its logo from some shirts. Another example is Giordano's invitation to customers to set the price of its jeans. Giordano's other product strategy is to sell a small nu mber of core products in its stores. While other retailers have 200-300 items, Giordano features no more than 100 variants of 17 core items. Flexibility and speed is essential in the retailing industry, especially when t he fashion trend is evolving constantly. Maintaining a restricted range o f core products has allowed Giordano to respond to market changes faster than its competitors, and to keep costs down.
str ategies advanced as business strategies (Porter): Business Strategy : There are three generic strategies cost leadership, differentiation and focus, and co mbinations of these three pure strategies. Giordano seems to pursue a combination, i.e. a focused differentiation strategy. The pr imary source of differentiation comes from Giordano's commitment to quality, in terms of the products it sells and the service it provides to customers. This can be illustrated by its dedication to training and motivating its front-line staff as well as its no-questions asked return po licy. licy. Giordano's strategy is focused on customer responsiveness understanding what its customers want and putting their interests first, as well as on a specific niche - value-conscious consumers who want affordable yet trendy casual apparel ap parel with reasonable quality. Giordano is changing its focus to expand the market niche that it has been serving to include a more up-market segment. However, this is done ca refully to prevent a loss of existing customers who may become confused by the value proposition that Giordano provides to them. For instance, its launch of the Blue B lue Star Exchange (BSE) line clearly indicates its commitment commitment to the t he existing value-for-money segment, but at the same time it is upgrading its core brand's position so that customers may eventually eventua lly perceive that Giordano stands for more than just 'low priced' apparel. With the successful launch of the new product line and re-launching of Giordano Ladies and Junior, Giordano appears to have overcome the main problem that niche st rategies face i.e. the inability to move to new niches.
Corporate Strategy : Giordano initially adopted a tapered vertical integration (backward) strategy, as it had manufacturing plants in the Philippines and Mainland China, while also a lso sourcing from external suppliers. This was deemed necessary to allow allow better cost and quality
control, and the strategy worked until the currency crisis hit Asia. Competition amongst suppliers (manufacturers) of good quality apparel became so intense that prices came down dramatically, and it became an opportunity cost to rely on Giordano's own manufacturing division for supplies. There could be other reasons, such as rising operating costs, putting pressure on the firm to look for alternative sources of supply. In fact, in 1999, the Philippines plant was closed do wn, and Giordano is now concentrating on their core business in retailing/ distribution. This can also be evident in their allocation of investments to expand its retail outlets. This strategy is risky but consistent with Giordano's core competency i.e. in customer responsiveness as opposed to operational efficiency.
Q2: Describe and evaluate Giordano¶s current positioning strategy. Should Giordano
reposition itself against its competitors in its current and new markets and should it have different positing strategies for different geographic markets?
Giordano¶s current positioning strategy is based on providing ³value-for-money merchandise of discounted casual unisex apparel´. Giordano repositioned its brand to focus on value-added products and broadening it appeal by improving on visual merchandising and apparel. The company also emphasized on the merchandise that is relatively mid-priced which means ³inexpensive yet contemporary and trendy´, and offers quality, value and excellent customer services. Now the fact is whether or not Giordano should reposition itself against its competitors in its current and new markets. Repositioning is not necessary for the entire company because Giordano¶s relatively mid-priced positioning worked well: ³the inexpensive yet trendy´ clothing appealed to Asia¶s frugal customers, especially during the Asian economic crisis. However, with the Asian economy booming, customers now have more disposable income and spending power. Thus, Giordano could find it worthwhile to alter their brand image into a more high-value, high-quality and therefore higher price market.
This could mean primarily repositioning Giordano as a higher priced and higher value brand. Giordano must continue to be creative in their promotions. Perhaps they should spend more on traditional advertising, as they spend less on advertising and promotion than close competitors. A spokesperson, McCann- Erickson, in his one comment about Giordano was that it was a ³good brand but not a great one. Compared to other international brands, it doesn¶t shape opinion´. A competitor of Giordano is Esprit. They are seen as more upmarket than Giordano, whilst being stylish and trendy. However, Esprit promoted a ³lifestyle´ image, even though it is positioned similarly to Giordano. So, Giordano could re-launch its image, to be more stylish and thus promoting a lifestyle and not just a brand. It is not necessary for Giordano to follow same positioning strategies for different market but it will depend on the market condition of a particular whether to follow standardized or customized strategy. The company can go after with standardized positioning strategies ³value-for-money merchandise´ for different market within the same region like South East Asian countries. But before implementing this standardized positioning strategy Giordano needs to understand the single market on the basis of consumer¶s
tastes and preferences about the product and promotional activities. On the other hand, the other successful strategies of Giordano in proving excellent customer services, information system and logistics and human resource policies and practices should be implemented tactically for different markets. It means customized strategies should be developed for different countries even within Asia because there are some variations between countries in terms of their economic, cultural and social factors.
Q3
The competitive advantages those worked as key success factors for Giordano to achieve a distinct position in the competitive markets are: Computerization ± The POS terminals that are used to record and transmit flows of stocks to a mainframe computer which then aids in contr olling stock flow of inventory. A tightly controlled menu ± It mainly focus on a few items whose demand and desirability can be closely monitored. Frugality ± curbed spending on advertising and tight inventory control
Sources of competitive advantage for Giordano¶s are:
1. Products are various and categorized like ladies, kids, etc so it reaches all ages and unisex 2. Providing a proffesional service so customers feel comfortable and concentration on quality at the service core 3. Many people have known Giordano as quality brand 4. Giordano was able to consistently sell value-for-money merchandise through careful selection of suppliers, strict cost control, and resisting the temptation to increase retail prices unnecessarily 5. A dedicated workforce in all outlets that provides quality service: In order to maintain this Giordano follows stringent selection procedures to ensure only desired employees are chosen, conduct workshops on ³attitude training´, follows rotational on the job training method and performance related pay systems on the bas is of periodic performance evaluations 6. A quality staff recruitment for a high quality and loyal staff in Giordano from a careful staff selection
7. A well chosen supplier to get the finest supplier and keep innovating to create creative products and high quality materials 8. Prices are reasonable and keeping it normal, not to raise it up 9. Giordano store¶s are located in dense population and high traffic areas 10. Move fast on a market change 11. Smart in sales opportunity and minimizing store size for the efficiencies 12. Using high technology for fast distributions. Every sales and the barcode information will be identified and transmitted directly to the company main co mputer and sales distribution department 13. Giordano always make sure t hat the stocks are always available in the store 14. Fast moving items to avoid old items piled at the warehouse o r best seller items unavailable 15. Informations are fast spread to the produ ctions so if there¶s any slow moving item, Giordano will try to sell it as fast as possible and if it¶s reaches the minimum number o selling it will be stopped 16. Customers are satisfied because out of stocks doesn¶t happen often 17. Giordano using a smart information so they are different than others 18. Giordano aggressively promoting their brand through creative and focused campaign on customers so the marketing succesed 19. The employee have awareness of their roles in customer satisfaction and econo mic system 20. Integration of employees into a winning team 21. Giordano has many 1800 outlets in over 30 countries 22. Giordano offers value for money clothing with a good quality 23. Giordano maintains a flat organizational structure which makes it easy to make communication with employees within the company thus this leads to quick decision making. 24. Has excellent management and staff that offer excellent service 25. Tight inventory control that will not result in overstocking of goods
26. Has high advertising budget due to this their company is more recognizable. 27. Simplicity and speed of operations: Giordano maintained a flat organizational structure and this facilitated easy communication between people w ithin the organization, helped to make speedy decision and to manage the project efficiently 28. A recognized brand: Giordano has received awards such as: The American Service Excellence Award, ISO 9002 Award and People Developer Award which helped Giordano to establish their brand as a familiar one in over 30 countries
