MKTG2010
11’
G2000 A marketing plan for G2000
By:Adam Ivarsson, Eri Okubo, Guan Tianyue, Hiromi Higashijima, Li Danyang, Ryuta Ueda, Takashi Yoshikawa and Zhang Huizhong
Executive Summary This report provides a marketing plan for the entry into the European and Japanese market of the business apparel company G2000. Methods of analysis include looking at the micro- and macroenvironment, including analyses of the company, competitors and current economic situation in target markets. A survey was made in both the European and Japanese to investigate the needs and wants of target customers, which age is between 18-26 and occupations include students and newly graduates. The results of our analyses show the scepticism towards brands originating from Hong Kong is high among customers and a growing demand in online shopping. The report presents the objectives for the expansion in Europe and Japan, as well as key issues G2000 will be facing in their new markets. For the recommendations on the new marketing plan we list two key aspects together with action plans needed for success. We found that a detachment from G2000’s origin and the interaction with customers through online media are two important factors of our marketing strategy. And as action plans we want to launch a commercial competition engaging customers through social media networks and invite famous guest designers to create affordable collections for G2000.
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Table of Contents 1
CURRENT MARKETING SITUATION ........................................................... 3 1.1 MICROENVIRONMENT ...................................................................................................... 3 1.2 MACROENVIRONMENT .....................................................................................................4
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THREATS AND OPPORTUNITIES ANALYSIS .............................................. 4 2.1 PROVIDENCE PARADOX ....................................................................................................4 2.2 OTHER THREATS AND OPPORTUNITIES ............................................................................. 5
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OBJECTIVES AND ISSUES ........................................................................... 5 3.1 SHORT-TERM OBJECTIVES AND ISSUES ............................................................................. 5 3.2 LONG-TERM OBJECTIVES AND ISSUES ...............................................................................6
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MARKETING STRATEGY ............................................................................. 6 4.1 PRODUCT, PRICE AND PLACE ............................................................................................6 4.2 PROMOTION ..................................................................................................................... 7 4.3 SUMMARY OF MARKETING STRATEGY ............................................................................... 7
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ACTION PROGRAMS .................................................................................... 7 5.1 COMMERCIAL COMPETITION ............................................................................................ 7 5.2 GUEST DESIGNER COLLECTIONS ..................................................................................... 8 5.3 FASHIONABLE LIFE ......................................................................................................... 8 5.4 ACTION PROGRAM SUMMARY ...........................................................................................9
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REFERENCES ............................................................................................ 10
APPENDIX 1 ..................................................................................................... 11 APPENDIX 2 .................................................................................................... 15
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1 Current Marketing Situation The clothing market, which G2000 operates in, is very competitive and for a successful expansion both a microenvironment and macroenvironment analysis had to be done. An evaluation of what G2000 is currently offering in terms of products is also an important part to cover before the marketing strategy is established. The expansion we chose to make for G2000 is to the European and Japanese market.
1.1
Microenvironment
For the microenvironment of G2000 we start of by looking at the company itself. The company’s mission is to be the apparel market leader by e.g. offering superior customer value (G2000, 2011). To do so they need to offer quality clothes to an affordable price. To offer these low price clothes G2000 need to keep close attention to the entire value chain, from suppliers to intermediaries. Promotion and selling of clothes are currently done through G2000’s own stores. Looking at the competitors we can see that there are several big companies providing similar concepts, and these include Zara, H&M and Uniqlo. They all provide clothing to a low price, with focus on design and, especially for Zara, fast-fashion. This means quick response to market trends, which impose a need for a controlled value chain. So to sum-up G2000 most differentiate it from its competitors to succeed in the new markets. The most important part of the microenvironment is undeniably the customers. Too succeed with a marketing strategy the needs of customers and the factors that may affect their purchasing needs to be investigated. We did so by distributing two questioners (Appendix 1), one for each of the two target markets that will be described in the macroenvironment. From the answers of the questioner we derived that customer demands focused on price and brand. G2000 will target customers in the age 18-26, with occupations such as students or recent graduates in demand of low priced business wear. The reason for targeting this segment is since they have a lot of opportunities to wear a suit, but often not the purchasing power to buy an expensive suit. This target segment of the consumer market is, also according to our survey, highly sensitive and sceptical towards brands with a Chinese or Hong Kong origin. This is one of the weaknesses we have in our SWOT, since the target customers don’t accept the brand origin of G2000. We found this to be a very significant topic and will discuss it further in chapter 2 on threats and opportunities.
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1.2
Macroenvironment
When it comes to the demographics of the customers we have mentioned the target age and occupation under the microenvironment. What we could se here is a few things, especially for the European market, that is interesting. A lot of the customers in the European market tend to live far away from the big cities. More than 40% of the population in Europe live in rural areas, and have no access to big brand stores or fashionable clothes to a good price. This opens up a opportunity for online shopping for G2000 so we can reach out to all customers in the region. We could also see from our questioner that a lot of people actually preferred online shopping, because it’s easy and you don't have to leave your home. The growth in the online shopping distribution channel will be 10% the coming 5 years (Econsultancy, 2010). If we take a look at the economy for the Japanese and European market we can see that customers on both markets currently have limited spending power. Some might think this is a disadvantage for G2000, but the economic downturn has made customers more pricesensitive and they tend to look for affordable clothes with a lot of value. One of the strengths of G2000 in the SWOT is that it’s offering just this and we hope this will establish them as a key player in both markets.
2 Threats and Opportunities Analysis There are a few major threats in the market, but we found that G2000 could use them as opportunities to enter the new markets if they are fully aware of them. One example, and maybe the most significant for G2000, is the threat they face from scepticism towards brands from Hong Kong or China in both new markets.
2.1
Providence Paradox
When a brand is limited by its origin in a sense where customers aren’t willing to pay the same price for a product since that country isn’t seen as a quality producer of a specific product the problem is called the providence paradox (Deshpandé, 2010). Other examples of this is that producers of chocolate, e.g. from Venezuela (that produces the worlds finest cacao), have a hard time competing against chocolate from countries famous for quality chocolate such as Switzerland or Belgium. The same problem rises when looking at the market G2000 operates in. Quality suits are often connected with Italy, France or England, and when G2000 to enter the European market it has to compete against brands from those countries. Even though G2000 offer lower prices on its clothes, we can see the scientism to the origin from the customers. One way of overcoming this is for a brand from e.g. China to buy a foreign brad, known for great quality, and produce goods under that brand name, and 4
then be seen as a quality product in the eyes of the consumers. This is what Pang Da did when they bought Swedish car manufacturer Volvo, know all over the world for producing some of the safest cars, and they could take advantage of an already famous brand image. This approach is expensive, and for G2000 we chose another one. Looking at what Corona accomplished by dethatching the brand from its Mexican origin we see it as an opportunity for G2000 to do something similar.
2.2
Other threats and opportunities
When entering both the European and Japanese market G2000 has to be very cautious of how they portray their brand. The threat of customers not accepting the brand is one of the challenges G2000 has to overcome, and in the marketing strategy part we will describe how this is done. Another thing that might be seen as a threat is the decline in purchasing power in both Japan and Europe, but as described before this also opens up an opportunity for G2000 to enter the market with it’s low priced, high value clothes. The biggest threat comes from the competitors. In Europe there is H&M and Zara, and for Japan there is Uniqlo. All of these competitors offer suits and business wear at a low price, just like G2000. The key difference, and the thing G2000 has to focus on, is the fact that that all competitors offer a lot more than suits too. G2000’s focus on business wear gives them a niche in this market, and if they successfully take advantage of that they can differentiate themselves from the other competitors. An opportunity for G2000 is that the ‘Agreement on Textiles and Clothing’ ended in 2005 (Nordås, 2004). This means that since the beginning of 2009 trade in textiles and clothing is fully liberalized and there are no longer any quantitative restrictions in the EU on textile and clothing exports, also including imports originating from China. This policy has cleaned up many barriers for G2000 to enter the European market. Another opportunity is also the growth in online shopping, something that might differentiate G2000 from other suit companies due to the fact that they will offer online shopping in both Europe and Japan.
3 Objectives and Issues The objectives for G2000’s entry to the new markets is divided into two parts, short-term and long-term.
3.1
Short-term objectives and issues
The short-term objectives, goals within 3 years of entry, are to achieve a high level of brandawareness among the customers. For the first 3 years the goal is a 25% growth per year and 5
to make this possible we will open 5 stores each in both markets, for Europe they will be spread out like following; one each in London, Paris, Rome, Berlin and Madrid. The most important issues to achieve these goals is to raise brand awareness and to make customers think of G2000 as a positive brand. In the threats section we described the problems with customers’ scepticism to brands from Hong Kong, and overcoming this is one of the most important issues for a successful entry in both the European and Japanese market.
3.2
Long-term objectives and issues
Looking at long-term objectives, more than 3 years, we want to have 10 stores each in both the Europe and Japan within 5 years on entry in the markets. We also want G2000 to obtain a 30% market share in the niche market of affordable business clothing within 10 years, and to be the number one supplier of business wear to customers in rural areas. To achieve these goals we have to establish a close relationship with target customers and become a part of their lives, and the obvious choice when they need e.g. a new suit. More on how to establish these close customer relationships will be described under marketing strategy below.
4 Marketing Strategy To start with we will describe the specific strategies for each element of the marketing mix and then continuing by outlining the broad marketing strategy to achieve the objectives previously described.
4.1
Product, Price and Place
For the marketing mix we start of by looking at product. The product G2000 offers is mainly business wear, such as suits or shirts for men or dresses for women. The focus of the products are fashionable clothing to an affordable price and to create a niche a broader selection of business wear will be offered than that of main competitors such as Zara, H&M and Uniqlo. The price of the products will be cost based and the price for a men’s suit will be approximately 2000 HKD. With the present discount system targeting university students the prices for our target customers will be even lower and G2000’s idea of offering superior customer value will be strengthened. When it comes to place we will use selective distribution as described in the objectives part. Focus will be on flagship stores at top locations in the biggest cities in both target markets. The service of the online store, and free delivery, will stimulate sales to customers living in rural areas.
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4.2
Promotion
Most of the promotion steps we plan for G2000 involves online and direct marketing. Since the target customer segment is young adults and they spend a lot of time online we want to use these promotion channels to present G2000 as an international and modern brand. Utilising the internet for marketing G2000 can also easily interact with the customers and this is one of our key ideas for the marketing strategy. To develop G2000 into a life-style brand together with our customers will help us overcome the scepticism of the origin of G2000. Using the internet for marketing will also further promote the online shopping that we see as one of the big opportunities for G2000 when entering especially the European market. The fact that it enables G2000 to promote themselves to customers outside the big urban areas will significantly increase the target market since the online shopping will enable customers in rural areas can access great fashion at a low price.
4.3
Summary of Marketing Strategy
Summarising the strategies above, and the threats and opportunities for G2000, a broad marketing strategy was formed. The most important aspects, derived from the threat of not being accepted due to the origin of the brand, is to detach G2000 from its origin. To do so we want to involve to customers in both Japan and Europe to develop G2000 into their own personal brand and create a strong personal relationship between the brand and the customers. To do so we have developed an action plan described below, but the broad sense of it is that we want to engage the customers closely with the brand to develop a sense of that the brand is an international life-style brand offering quality clothing to an affordable price. We also want to collaborate with local designers to make the brand more local for the customers. To finish this we summarise by a positioning statement. To young adults who are in need of quality business wear at an affordable price, G2000 is an international life-style brand that provides you with fashionable clothes at with superior value, both in online and in physical stores.
5 Action Programs 5.1
Commercial Competition
When it comes to turning our marketing strategies into action programs we basically have three programs that will do this. The first one, and maybe also the most important one, is the commercial competition. In this competition G2000 will ask its customers to make a short
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video commercial on the topic “Me and my G2000”, and in the commercial show how G2000 plays an important role in their life. A winner will then be selected through online voting combined with a panel of expert judges. The winning commercial will then be shown all over Europe and Japan, one winner for each market, and also be given a $25,000 cash price. There are a lot of benefits with the commercial competition. One of the most important is the fact that the customers, by creating their own commercials, will develop a personal connection with the brand, and this is something we defined as a key part of our marketing strategy. The customers who join the competition will also use their own personal social media channels to promote their commercial. This will give G2000 a lot of “free” viral marketing and customers will no longer connect G2000 to its origin, but instead see it as a international or local brand promoted by their friends through viral marketing. So, this action program will cover both of the most important aspects of our marketing strategy, the importance of marketing through internet and the detachment from its origin.
5.2
Guest Designer Collections
Another action program is the guest designer collections. This is an initiative from G2000 to invite famous, local, guest designers that make their own collections at G2000. We could look at the enormous success from the G2000 competitor H&M has had with their guest designer collaborations and also see how this isn’t just going to localise G2000 to the two target markets, but also give a lot of promotion in newspapers and online media. The price you pay for a guest designer is considerably lower than the actual promotion cost you will gain from it. A lot of promotion will be made because e.g. newspapers finds it interesting to report on the subject and customers talk about it since it will enable many of the to for the first time acquire clothes from designers that usually price their product way over their purchasing limit. By enabling customers to acquire designs from those designers to a lower price than usual customers will connect G2000 with superior value, something reflected in the companies mission statement. So here the actual promotion will be initially done by G2000 when they invite the designer, but hopefully the excitement among customers will turn it viral and the promotion will be done by the customers themselves.
5.3
Fashionable Life
G2000 will also use another action program. By the distribution of free giveaways to target customers in form of screensavers, calendars (Appendix 2) and other personal products we hope that customers will connect to G2000 on a personal level and not only bring them fashionable clothing but also a sense of fashion in everyday life. The use of G2000 products 8
in daily life will not only increase the awareness of the brand among customers, but also accustom them with the fact that G2000 is an important part of their life. The slogan for this campaign will be “Living in a high taste of fashion, living with G2000”. This will hopefully make G2000 the first choice among customers when they want to buy fashionable clothing and they will wear G2000 clothes with pride since it displays a life-style of fashion awareness, but doesn't have to be so expensive the customers can’t afford it. The promotion in this action program will be done controlled by G2000, but making it a part of customers lives will help spread the word beyond the reach of G2000.
5.4
Action Program Summary
To summarise all action programs relies on the connection and dialog with customers and those customers’ satisfaction and willingness to spread the word about G2000. Internet plays a significant role and since the target customers are young social media plays a vital role in their lives, and therefore also in G2000’s marketing strategies. The shift from being a Hong Kong based brand to an international brand will also be done by detaching the brand from its origin and creating it to a personal and international life-style brand.
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6 References Armstrong, G. and Kotler, P. (2011) Marketing: An Introduction,10th ed. New Jersey: Pearson Education, Inc. Deshpandé, R. (2010) Why you aren't buying Venezuelan Chocolate, Harvard Business Review, 2010(December), p.25-29. Econsultancy (2010) Double-digit growth for online retail in US & W. Europe , [online] Available at: http://econsultancy.com/us/blog/5702-double-digit-growth-foronline-retail-in-us-w-europe [Accessed: 24th Nov 2011]. G2000 (2011) G2000 Group, [online] Available at: http://www.g2000.com.hk/corp/ag/ms.aspx [Accessed: 11th Nov 2011]. Nordås , H. (2004) The Global Textile and Clothing Industry post the Agreement on Textiles and Clothing, Geneva: WTO Publication.
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Appendix 1 Questionnaires
Questionnaire for Japanese Market (185 results) 1.Age A. 10-25: B. 25-30: C. 30-40: D. 50-:
81.6%; 151 10.3%; 19 4.9%; 9 3.2%; 6
2.Profession A. Student: B. Office worker: C. Other:
26.5%; 149 18.4%; 34 1.1%; 2
3.How many days a week are you dressed in suit/business wear? A. B. C. D.
0-2: 3-5: 6-15: 16-:
59.5%; 110 6.5%; 12 14.6%; 27 19.4%; 36
4.On average, how much do you spend on clothes each month? A. B. C. D.
0-3000YEN: 3000-10000YEN: 10001-30000YEN: 30001YEN:
45.4%; 84 36.2%; 67 13.5%; 25 4.9%; 9
5.On average, how much do you spend on a suit? A. B. C. D.
0-20000YEN: 20001-40000YEN: 40001-60000YEN: 60000YEN-:
4.3%; 8 38.4%; 71 42.7%; 79 14.6%; 27 11
6.Have you ever bought clothes on the Internet? Do you want to buy them on the Internet again? A. YES & want to buy again: B. YES & do not want to buy again: C. Never bought on the internet:
78.4%; 145 2.2%; 4 19.4%; 36
7.How do you think about suit made in Hong Kong? A. Positive: B. Negative: C. I do not care:
6.5%; 12 49.7%; 92 43.8%; 81
8.Do you think the price of suit is expensive in Japan? A. YES: B. NO:
83.1%; 152 17.8%; 33
9.Which of the following factors affects you most when you choose a suit? A. B. C. D. E.
Price: Quality: Design: Brand: Place made in:
35.1%; 65 38.4%; 71 11.4%; 21 14.0%; 26 1.1%; 2
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Questionnaire for European Market
(87 results) 1. Age A. B. C. D.
16-20 20-26 26-32 33-
24.1%; 21 57.5%; 50 12.6%; 11 5.7%；5
2. Profession A. B. C. D.
Student Officer Worker Job seeker Other
50.6%; 44 28.7%; 25 3.4%; 3 17.2%; 15
3. How many days a week are you dressed in suit/business wear? A. <1 42.5%; 37 B. 1-2 37.9%; 33 C. 3-4 6.9%; 6 D. >5 12.6%; 11 4. On average, how much do you spend in clothes each month? A. B. C. D.
<€40 €40-€80 €80-€120 >€120
14.9%; 13 32.2%; 28 43.7%; 38 9.2%; 8
5. G2000 is selling high-quality, fashion-designed business wear at a low price. What price are you willing to pay for a Men’s suit from G2000?
A. B. C. D.
<€75 €75-€150 €150-€200 >€200
11.5%; 10 50.5%; 44 31.0%; 27 6.9%; 6
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6. When you’re buying a suit from G2000, through what channel would you like to buy it? A. B. C. D.
In a G2000 store In a department store G2000 online store Other
83.9%; 73 42.5%; 37 81.6%; 71 2.3%; 2
7. G2000 is a Hong Kong based brand, how would that affect the way you look at it? A. B. C. D.
Positive Does not affect at all Negative Other
25.3%; 22 35.6%; 31 44.8%; 39 0.0%; 0
8. If the G2000 collections were designed by a European designer, how would that affect the way you look at it? A. B. C. D.
Positive Does not affect Negative Other
49.4%; 43 32.2%; 28 18.4%; 16 0.0%; 0
9. Do you usually connect brand like Zara (Spain) and Uniqlo (Japan) with their origin? A. B. C. D.
Yes, always Sometimes Never Other(s)
40.2%; 35 35.6%; 31 24.1%; 21 0.0%; 0
10. Which of the following factors affects you most when you choose a suit? A. B. C. D.
Price Quality Design Brand
60.9%; 53 33.3%; 29 42.5%; 37 69.0%; 60
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Appendix 2 Calendars
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