Research Design and Methods
Literature Review Section
Background and Justification
Overview of Clothing and Apparel Industry
The clothing and apparel industry is facing numerous challenges such as higher rent costs for the retailing establishment, intense competition, and cautious consumer spending. According to IBISWorld (2016a), the annual growth rate of the clothing and apparel industry in Australia is estimated at 3.3%, the amount of revenue is $19 billion, and the number of people employed is 122,266 while the number of businesses is more than 12,785. IBISWorld (2016b) also analyzed the women clothing industry in the USA. IBISWorld (2016) estimated the revenues generated for women clothing in the USA is more than $42 billion, the annual growth rate is -0.9%, the number of businesses is 33,439 while the number of employment opportunities is more than 371,128.
The data indicates that the number of businesses and employment are high even though there are variable views when it comes to the growth of the business. Since clothes are a basic need, it means people will continuously purchase the products but issues associated with economic, social, political and cultural variables may dictate the type and amount of purchase.
The clothing and apparel industry can be seen as having a medium barriers to entry, and for the smaller establishment, it can even be lower. Some of the establishments have a single outlet while others have multiple outlets across the world. For example, some companies have online presences while others have strong supply chains strategic approaches (Bhardwaj and Fairhurst, 2010). It means that it is easier for competitors to enter the market. In addition, the diversification of manufacturing processes, whereby companies are outsourcing the manufacturing processes becomes an integral component in the clothing industry (Gupta and Hodges, 2012). For instance, many companies are seeking production services from Asian countries because of lower production costs compared with the Western countries.
In addition, the customers continue to become more consciousness when it comes to the clothes and apparels. The customers are conscious of prices, quality, brand, customer care, and other associated with customer behavior (Hill and Lee, 2012). For example, the price is the first component that consumers use to review a product. Some customers want cheaper products while others require expensive products because of such customers believe the more the expensive the product, the better quality the product (Lo, Yeung and Cheng, 2012). Other consumers are influenced by the society while the political system in place also plays an important role. Thus, analyzing the internal and external environment of an establishment elaborates experiences of the businesses.
Justification for the Study
Smart Jeans Company is facing challenges because of increase in competition, which directly affects the market share. Smart Jeans Company products and services are of high quality and also expensive due to the cost of production. Understanding the market dynamics and other business processes is important in developing a strategy to counter the diminishing sales and business aims. Smart Jeans Company targets different customers incorporating aspects of demographics such that it creates products and services for different genders and sizes. Understanding the requirements of the customers is one thing and developing the product to accomplish these requirements is a different approach. Therefore, reviewing the reasons contributing to the diminishing sales and variables associated with market requirements enables the creation of appropriate strategy to counter competitors’ strategies.
The fashion industry is a complex sector since numerous stages and processes are involved from design phase to distribution stage. To survive in the fashion industry, which is competitive, it requires simplification and innovation (Mostard, Teunter and De Koster, 2011). The success of any establishment such as Smart Jeans Company depends on many things and stylish designs, and convincing marketing strategy does not allow success for a company (Gupta and Hodges, 2012). It requires an understanding of numerous processes and strategies to ensure the company becomes successful. Some of the factor associated with costs, prices, and the customer; technology and supply chains; brand management and competition; and sustainability and innovation.
Costs, Prices, and the Customer
The fashion customer determines what to buy based on financial condition, status needs, and personal taste. Numerous fashion companies compete in layered price ranges in which customers chooses the products in price points (Nagurney and Yu, 2012). A fashion company that targets couture sector often develops different products for mass merchandisers and ready to wear line for department stores. Therefore, the pricing of the products incorporates numerous variables (Watchravesringkan et al. 2010). For example, the clothes targeted for the departmental stores are cheaper because of lack of additional margin requirements for the distributions (Gupta and Hodges, 2012). Hence, the design of the products and the customers’ wants influence the strategies that companies have to embrace to advance the strategic requirements of the company/organization.
In developing and launching the product, identification of the niche market is the beginning of customization of the product. It includes identification of different costs ranging from the price point, production costs, sourcing costs, and design requirements (Bhardwaj and Fairhurst, 2010). It includes balancing the requirements of the customer and the interests of the customers (Nagurney and Yu, 2012). The customers’ preferences and tastes are reviewed, and the inclusion of costs of production are used in determining the cost of the products (Watchravesringkan et al. 2010). Numerous financial controls have to be included in valuing the clothes and accessories to create a win-win situation for the company and customers. It is imperative to note that customers are influenced by different variables, and any business establishment aims to satisfy the customers’ preferences and wants.
In the case of the status conscious consumer, the customer may not be appealed by the reasonable price, design, materials, and workmanship but other factors (Lo, Yeung and Cheng, 2012). However, such appeals may gain traction in a larger consumer group that does not require extensive differentiation and segmentation requirements (Mostard, Teunter and De Koster, 2011). It is imperative to launch the products, and after the products have gained traction in the market, the retailers such as Smart Jeans Company can penetrate into other market levels (Gupta and Hodges, 2012). It means a single entry strategy cannot succeed in all the markets and entering the markets in levels enables understanding the preferences and needs of the customers, and customize the clothes based on the requirements of the customers.
Technology and Supply Chains
Technology is an integral component in the clothing manufacturing industry (Lo, Yeung and Cheng, 2012). Companies employ strategies such as offshore manufacturing, which has contributed to cutting costs and allowing for quality materials and increase in accents: accents such as detailed tailoring and embroidery (Gupta and Hodges, 2012). The technology is also used in mass production of the materials and other processes in the production of the clothes (Mostard, Teunter and De Koster, 2011). These processes result in cheapening of the cost of production resulting in lowering the cost of production and the final product. However, these different services and manufacturing processes are accessible to many clothes companies, which shield the competitive advantage (Chaudhry and Hodge, 2012). It means the use of technology is not an only component that advances profitability and market share for the companies, but other factors have to be considered (Nagurney and Yu, 2012). For example, Smart Jean Company produces high quality products and high quality materials, but the customers are seeking for the cheaper alternatives. The cheaper alternatives may use the same technology, but establishments have to analyze their intended market and create or rejuvenate the products to reflect the changing market(s).
The clothing industry supply chain can sometimes be risky especially when it depends on importing products manufactured internationally, and when the design houses lack the capacities to manage or do not own their overseas factors (Lo, Yeung and Cheng, 2012). Problems associated with international supply chains includes lost goods in transit or delayed delivery of products. Controlling the supply chain is important because it reduces the risks and numerous challenges while improving the competitive edge against other competitors in the market (Mostard, Teunter and De Koster, 2011). Complications in the supply chain also may increase the cost of the product, which affects the margins, and also the prices to the customer. Companies tend to compensate by increasing the cost of production (Nagurney and Yu, 2012). In addition, the cost of production may increase because of the distributor’s supply costs. Successful apparel companies tend to have different distributors because of the targeted market and the geographical regions (Watchravesringkan et al. 2010). Ineffectiveness in supply chain whether international or local increases the costs of production and other ineffectiveness. Hence, companies determine the effectiveness of the supply to improve on credibility, the satisfaction of customer requirements, and efficiency in the operation processes.
Brand Management and Competition
Brand management incorporates numerous factors and influences the marketing strategies. Small or new entrant to the market has to utilize brand management to penetrate a crowded market that is dominated by recognized brands (Gupta and Hodges, 2012). The fashion brands convey value, utility, status, innovative design, and quality. It is important for any establishment to maintain high levels of brand and utilize different approaches in championing the brand (Mostard, Teunter and De Koster, 2011). Recognition of the brand, and utilizing the brand to develop and sell the products is important since it creates a lasting impression of the company (Watchravesringkan et al. 2010). An effective brand is important because it supports the business in a positive manner (Nagurney and Yu, 2012). Customers can recognize brands and can utilize the image of the brand to creating a lasting impression and even associated with other products.
Competition is also another component that incorporates brand management. Analyzing the brands in the market and determining the strengths and weaknesses of these brands is important (Lo, Yeung and Cheng, 2012). Understanding the brands that compete for similar customers is important and finding an underserved niche is crucial (Mostard, Teunter and De Koster, 2011). The tastes of the customers keep changing meaning the preferences and tastes of the customers have to sample different brands to satisfy their cravings (Turker and Altuntas, 2014). New entrants fashion brands are able to enter into a new market and be able to capture major market share, and it is possible through streamlining the brand to satisfy the requirements of the customers (Nagurney and Yu, 2012). Such companies are also able to utilize the strengthened brand position to leverage in product diversification and to license the brand beyond to clothing products, such as cookware, home decoration, luggage, perfume, and eyewear.
Sustainability and Innovation
In numerous instances, sustainability has been associated with the production of products in an eco-friendly approach (Nagurney and Yu, 2012). In the apparel industry, sustainability refers to whether a new designer is in a position to sustain and grow the market in a competitive marketplace (Watchravesringkan et al. 2010). Distribution and marketing play an integral role in sustainability requirements; therefore, the company has to balance the requirements of sustainability and the ability of a company to continually design and produce appealing apparels (Lo, Yeung and Cheng, 2012).
Constant innovation is another component that is associated with sustainability (Bhardwaj and Fairhurst, 2010). The constant innovation is based on the strategy a company undertakes in the involvement of the customer, expansion of the products, distribution, supply chain, and design process. In addition, process modeling has become an integral component in fulfilling the different design and processes in the fashion industry (Watchravesringkan et al. 2010). It employs numerous phases and research into consumer needs and buying habits, in combination with cost analysis and production methods (Nagurney and Yu, 2012). These processes are important not only to the production processes but also the production of attractive designs.
There are important factors of competition in addressing the requirements and fundamentals of the clothing and apparel industry. The management and leadership of any company have to understand the market dynamics in creating a mechanism to improve the position of the product in the market and increase the market share. These activities are possible provided the company embraces different fundamentals in supporting the business operation. Cost, prices, and the customer have to be incorporated in the entire processes to ensure the market share is improved. Factoring these factors, it is possible to create cheaper products and satisfy the preferences and needs of the consumers. A clothing company has to appreciate the importance of technology and supply chain in ensuring the products are sourced and delivered to the customers at the right time. In addition, brand management and competition should be viewed from strategic requirements of the company. Capitalizing on the development of the brand is crucial since it assists during the diversification of the products into products such as perfume and eyewear. Sustainability and innovation are also important in advocating the requirements of the establishment and determines the future of the business. Innovative companies are able to counter competition and continuously develop products, which reflects the needs and preferences of the customers.
Bhardwaj, V. and Fairhurst, A., 2010. Fast fashion: response to changes in the fashion industry. The International Review of Retail, Distribution and Consumer Research, 20(1), pp. 165-173.
Chaudhry, H. and Hodge, G., 2012. Postponement and supply chain structure: cases from the textile and apparel industry. Journal of Fashion Marketing and Management: An International Journal, 16(1), pp. 64-80.
Gupta, M. and Hodges, N., 2012. Corporate social responsibility in the apparel industry: An exploration of Indian consumers’ perceptions and expectations. Journal of Fashion Marketing and Management: An International Journal, 16(2), pp. 216-233.
Hill, J. and Lee, H.H., 2012. Young generation Y consumers’ perceptions of sustainability in the apparel industry. Journal of Fashion Marketing and Management: An International Journal, 16(4), pp. 477-491.
IBISWorld. 2016a. Clothing Retailing in Australia: Market Research Report. Available at: http://www.ibisworld.com.au/industry/default.aspx?indid=407 [Accessed on: 9 September 2016].
IBISWorld. 2016b. Women’s Clothing Stores in the US: Market Research Report. Available at: http://www.ibisworld.com/industry/default.aspx?indid=1067 [Accessed on: 9 September 2016].
Lo, C.K., Yeung, A.C. and Cheng, T.C.E., 2012. The impact of environmental management systems on financial performance in fashion and textiles industries. International Journal of Production Economics, 135(2), pp. 561-567.
Mostard, J., Teunter, R. and De Koster, R., 2011. Forecasting demand for single-period products: A case study in the apparel industry. European Journal of Operational Research, 211(1), pp. 139-147.
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Turker, D. and Altuntas, C., 2014. Sustainable supply chain management in the fast fashion industry: An analysis of corporate reports. European Management Journal, 32(5), pp. 837-849.
Watchravesringkan, K., Karpova, E., Nelson Hodges, N. and Copeland, R., 2010. The competitive position of Thailand’s apparel industry: Challenges and opportunities for globalization. Journal of Fashion Marketing and Management: An International Journal, 14(4), pp. 576-597.