Marketing Strategies & Merchandising Process ADM4307 Apparel Manufacturing By Dr. Shin, Ph.D. Associate Professor The role of the marketing division Marketing is a part of a firm s strategic plan. To market product successfully; Positioning the firm relative to target markets and the competition. Identifying Target markets for their products Continually monitoring markets. The role of the marketing division Market segmentation and Target markets Target markets Described in demographic characteristics (See Table 2-1, p. 34) 1) Core customers (the foundation of their business) 2) Fringe customers (potential for business growth) Market segmentation Mass market strategies Middle income class, large portion of the U.S. population (about 80%) Multiple-segment strategies Two or more marketing, Examples: men s sport shirt + a line for women s shirts Niche marketing (or Micromarketing) Narrowly defined target market (gender, price range, size range, life style) A firm may change its conception of target market; 1) Distribution changes among age groups (Example: Y Generation) 2) Population shift to the south and west. 3) Needs of special market segments: petite, plus, tall, and large size. 1
Strategic marketing processes Marketing strategy considers; Marketing objectives Analysis of the competition Market positioning and product differentiation Product sell-through Marketing objectives Market penetration Expends sales of current products in current markets Achieved through Price promotion/ Low pricing Brand/ Store loyalty Convenience/ Accessibility /Internet Market development Seek new markets or new uses for products (Example: Nylon) Diversification Develop new products aimed at new markets (Example: Liz Claiborne s diversification Elizabeth for large sizes, Liz sport for casual market, Claiborne for men s wear) Marketing strategy Analysis of the competition (see p. 37) Identify by asking customers/ reading the trade press/ consulting industry directories/ and participating in trade associations. Determining potential competition is difficult. Market positioning and product differentiation To make positioning decisions, the firm must know 1) purchase criteria of their target customers 2) product performance expectations 3) customers perceptions of competing product Market analysis example (see Figure 2-1 p. 39) Product differentiation by using Labeling, price, quality, customer service, fit, fashion, styling. Market positioning example (see Table 2-2. p. 38) Marketing strategy Product sell-through It must be sold at regular price. 1) Push-through system 2) Pull-through system (the essence of QR) Sale Forecasting Outlines expected company sales for a specific good to a specific consumer group over a specific period of time Research method: Qualitative methods (Consulting) Quantitative methods (statistical analysis) Reflect market potential (Pull), NOT production capability (push). 2
Retail/Wholesale Marketing Strategies Relate to Channel distribution. Developing retail strategies Selling distressed merchandise in outlet store. Examples: VF Corp. using Dual-distribution system (own stores+ traditional discount, specialty, or department store), Lands End (Internet + catalogue) Developing wholesale market strategies A place where a group of apparel manufacturers is showing their product lines for sale at wholesale. MAGIC International trade show in Las Vegas (twice a year) www.magiconline.com Target of the wholesale force-> Retailers ->target consumers. Sale reps (2 types) Inside sales rep. Outside sales rep. QR Partnering arrangements Marketing calendar Marketing calendar Timing of product development, production, and presentation is critical. Selling periods: Factors: Seasonal, Holidays, fashion change. T-shirts (52 weeks), Seasonal items (8-12 weeks) 6 selling periods a year and 5 lines a season. Marketing calendar See Table 2-3, p. 45 Marketing dates Line review: Presentation of the line to the sales staff. (2wks prior to line release) Line release: Line must be complete for showing. Start to ship: Line is ready for delivery to retail store. Ship complete: Date by which retailer orders are to be completely filled. (within 3 wks). Other marketing strategies Global marketing Marketing on the Internet Labeling and Licensing Labels National brands and trademarks Private brands Legally required labels Merchandising license agreements Intellectual property Licensing (Example: Lauren by Ralph Lauren, Peerless International, a licensee of RL) Licensing contracts Royalty (1~15 % of sales) 3
Merchandising processes Merchandising is: Planning Developing And, Presenting product lines for a target market involving pricing, assortment, styling, and timing. Merchandising calendar Merchandising calendar: The timing required to develop, plan, and present for each selling period. Based on 52 week merchandising cycle Selling periods (3~52 wk) defined as weeks of sale for products. Merchandising calendar with Quick Response system Lead time: The time between placing an order and delivering merchandise. Customer-driven. The importance of level of inventory Enough inventory to minimize lost sales but not so much as to have lots of excess at the end of the selling period. In the past (56 weeks) Retailers Manufacturers Quick Response (Short time) Customers 4
Concepts of apparel product lines Product line: The total merchandise mix presented for sale. Merchandisers/ Designers when planning lines think in groups rather than individual styles. Categories for merchandisable groups: Separate: Tops/ bottoms or both items (see Figure 3-1, p.67) Coordinates: Groups of different products with common characteristics such as style, trim, colors, etc. (see Figure 3-2, p.68). Multi-piece style Example: Suits Related separates: Displayed and sold like a separates line but has even more coordinating potential because of common colors and materials.(see Figure 3-3, p.68) A Perceptual Map Merchandising Merchandising responsibilities: Merchandising taxonomy detailing planning, developing, and presenting a product line (see Figure 3-6, p.75) Line planning Line Development Line presentation 5
Merchandising Line planning: guides, defines, and limits the line by evaluating merchandise mix and forecasting. Look at last seasons sales at same selling period. Review current market information Brainstorm for new ideas World market shopping. Planning merchandise budgets by: Looking at last years sales and plan for sales increase/decreases. Take into consideration new accounts and current retail relationships. Talk with buyers on their projected buying % for the upcoming selling period. Example: See Figure 3-7, p. 78. Line planning Planning merchandise assortments based on budgets: A balanced assortment matches the assortment plan to customer demand. Assortment balance is based on the model stock plans that identify SKU (number of Stock Keeping Units). SKU = Number of Styles x Number of Sizes x Number of Colors Number of Styles Number of Sizes Number of Colors Line planning Assortment: Range of choices offered, usually defined by: Style + Size + Color Assortment variety: Total number of unique items that must be produced to satisfy the design plan Assortment volume: Number of units that must be sold to achieve planned sales Assortment diversity: Is measured by Volume per SKU (VSA) for the assortment. Example: 5 or less means losing sales. Assortment distribution: Allocation of volume broken down by style, size, and color. Analyze and update merchandise plans when conditions change in the market, merchandising plans must be adjusted. Example: see Figure 3-9, p. 81 6
Line development Line development: Includes all processes required to translate a line plan into real merchandise. Line concept: First phase, determining the look and appeal that establishes identity and salability. Current issues, fashion trends Inspiration/Concept board. Product development Product development: The design and engineering required to make products salable and producible. Apparel product development (2 phases) 1) Creative design- focus on creativity and formation of merchandisable groups 2) Technical design- perfecting the style, fit, patterns, also including specs and costing. Line presentation Line presentation Wholesale level: Line preview- Sales reps see the line and become inspired with its sales potential. Line release- must coincide with market dates, target date for showing to buyers. 7
Next Class.. 8