Introduction
Being such an important part of the retail business, considerable attention must be paid to the organization of the sections of the retailer that carry out the functions which are included within product management. A buying organization could be defined as the entity within a retail organization that carries out the essential task of bringing goods into the retail business from the supply base to be sold on to retail customers. Although it is the most directly concerned with the product offer, the buying organization is not the only department or section within a retail business that is involved in product management (2001). Logistics and visual merchandising, for example, have a deep involvement with products, but their role is one of support rather than control. The people who essentially ‘control’ the product offer are referred to, either in title or as a collective team, as retail buyers. Retail buying personnel operate on behalf of the commercial organization which employs them. Decisions are made for the benefit of the organization rather than the individual, therefore the ability to divorce personal taste or preference from the business role is an essential qualification ( 2001).
Although most of the buying decisions are centered on the ability of a product to satisfy a customer need at a price the customer is willing to pay, a retailer has to ensure that it meets its legal obligations with regard to the products it sells. It also has to consider its long term image in the eyes of the public. It is therefore necessary to ensure that a product conforms to legal standards and provides value for money. A buyer is usually a marketing orientated person, who may need some advice when it comes to assessing certain product features and criteria. This is where a technologist can be a useful member of the buying team. Technologists will be up to date on product standards, manufacturing process innovations, raw material properties and so on (2001). They are not primarily concerned with sales and profitability of individual items but, by ensuring that product standards are met and maintained, they play a key role in the long term success of retail product management. The quality of products such as Heinz baked beans or Phillips light-bulbs is assured by the brand, and in such cases the manufacturer takes the responsibility for maintaining the trust in product quality of the customer. However, from the retailer’s point of view, it is especially important that their own-labeled products do not violate any product law or tarnish the retailer’s reputable name (2001).
A retail business sells goods and other consumer merchandise in a fixed marketing location. People who operates such kind of business, buys from their supplier or corporations large quantities of consumer products. The retail business has many ups and downs depending on diverse environmental and cultural instances. The paper will discuss about Giordano and its’ products, and the markets it serves. The paper will analyze how forces in the marketing environment have resulted in changes in the last 5 to 10 years to the organization’s marketing mix. The paper will also evaluate what further environmental changes might arise and consider their effect.
The company Giordano
Giordano is a retailer serving the upwardly mobile youth of Southeast Asia, expanded rapidly into the enormous Chinese market and soon found itself losing money. Company chairman Peter Lau felt that the company had no focus, and he decided that it should emulate the trendy U.S. retailer The Gap, but with even better service. Excessive inventories led to the discovery that Giordano’s buyers had been ordering clothing without careful thought that they seemed to have lost touch with what their Chinese customers wanted. Lau’s solution was to force those buyers into focusing on the company’s customers by closing all but the largest of Giordano’s warehouses (1996). His staff had to squeeze all the stock into the one remaining building, and, as Lau had anticipated, the crowding forced buyers to order more carefully by focusing their buying on a profitable segment of young customers. The strategy turned million of inventory into cash that Lau then used to refurbish the stores in keeping with his Gap vision. Giordano’s laser-beam focus is on delivering what its customers want, and growth is extraordinary (1996).
As one of the fastest growing retailers in the Asia/Pacific region, Giordano has seen its sales increase from .7 million in 1986 to over 0 million. But in 1993, revenue growth had translated into losses of over million in its China operation. Peter Lau, the new chairman, took a number of actions to improve profitability, aiming at becoming outstanding with customers and at becoming The Gap of China, having 1,000 stores in China by the end of the decade. Although the company already had a strong service reputation, the largest neon sign in China was erected on the Pearl River, saying Giordano means service, and Lau and his team engaged in a number of activities that helped the firm turn out a profit two years after its crisis (1996). One highly leveraged activity was Giordano’s commitment to not only listen to its customers but use the data to improve how the company worked. Giordano conducts customer surveys twice a year and has an innovative program in which staff members play mystery shopper to put themselves in the customer’s shoes. In Hong Kong, which represents 26 percent of the group’s total sales, Giordano made an even more visible attempt to get connected to customers. It ran newspaper advertisements in Hong Kong asking customers for complaints, and offered a free T-shirt for every one submitted (1996).
Over forty thousand customers responded. After synthesizing all of the data, Giordano took action. One of the most frequent complaints was related to size availability (1996). The company taught its sales associates how to deal with different types of customers, and the next year won Next magazine’s Best Service Award in the boutique category (1996). Giordano is one of the most popular clothing retail stores not only in Hong Kong but in most parts of the world. It caters to various clients and provides them with different clothing needs and accessories. The company made use of its non store retailing strategies to reach more people and provide better service to people.
The company’s market and market orientation
Market orientation was evident in the idea to involve staff in making the kinds of internal changes to policies and procedures that could be linked to market place performance that external customers would value. This involves more than traditional marketing skills. The more orthodox marketing approach to try to change staff attitudes by formal communications alone was rejected as superficial and unidirectional. The shift to market orientation and customers first meant that the logic of existing organizational knowledge was reframed, seen from a different perspective. Thus, new knowledge was indeed ‘discovered’ in a new patterning of the verities ( 2000). An organization’s strategic values are the rationale for the viability of a business and link the organization to its environment. These values are reflected in, and are a reflection of, the prevailing culture within the organization (2000).
The main product of the company is various clothing lines that suite the taste of its diverse clients. It sells affordable casual wear for the diverse taste of their clients. It specializes in creating and selling types of clothes that include t-shirts, long sleeve shirts and denim jeans. It caters to male and female markets but it has more products that cater exclusively to women clients. This market is one that needs fashionable dresses. The marketing orientation that the company tries to implement is deeper customer focus. This type of orientation provides assistance for the company to achieve their goals and provide effective service compared to competitors.
Macro environmental forces that shape the marketing environment
When it comes to the law component of the macro environment Giordano make sure they comply with what the law states in the country; they make sure that they comply with the regulated standards of the country. When it comes to the economy the company tries to adjust to the economic situation of their market. When it comes to the technology aspect of the macro environment, the company makes use of various technological innovations that help in increasing productivity and improving the quality of their products. The demography aspect of the macro environment is used as a method of determining their target market. The culture aspect of the macro environment provides Giordano the information it needs to create products that most people will like and purchase. The society aspect of the macro environment dictates how long the company will stay in the industry. Nature as an aspect of the macro environment is used as a way for the company to improve its image to its clients.
Micro environmental forces
The micro environmental forces of the company include potential entrants. The influence of potential entrants to the companies is weak. But to ensure that no other problem arise the company maintains low cost of unit production, this helps in making sure that the new entrant will not have advantage over them. Another micro environmental force is the competitive rivalry. Competitive rivalry affects the decisions made by the companies. Different things are done by both companies to ensure that they have advantage over their competitors. Moreover substitute which is a micro environmental force that gives high influence to the companies since substitutes can make a company lose the clients it has. Both companies make sure that the substitutes won’t give them much problem. Lastly the micro environmental force of bargaining power of buyers and sellers highly influences both companies.
SWOT analysis
Giordano’s strength is the international popularity it has. The company is known throughout the world. Another strength of the company is the strong brand name they have. The strong brand name is what makes the company and its products popular. Furthermore a strength of the company is the effective advertising the company uses. Lastly a strength of environment Giordano is its website that is easy to use, attractive, and informative. The main weakness of the company is the financial issues when their product is purchased. The products they have cost much money and too much purchase of it can give the user financial problems. Lastly a weakness of the company its high rates of expenditures. The company is known to spend too much. This could be a problem for the company in the future. Opportunity for the company is to create products that can give not only satisfaction to clients but health benefits as well. The company can create a product that will not cause much harm to the user’s health. An opportunity for the company is to find out more ways to give a distinctive look and features to their product. By doing this the company will have competitive advantage over other firms. Lastly an opportunity for the company is to reach newer territories where it can offer its products and services. The company can reach more territories not yet reached by its competitors. The threat to the company includes the laws in the country they are operating in. Another threat to the company is the tariffs and taxes that the company has in different countries, each countries has its own rate of taxes and tariff. Lastly a threat to the company is complaints to the health problems that their product may cause. Its products may have some effect not liked by people.
Market Segment
The market segment of the company is divided into 4 classes. Each class represents a certain economic standing of people in the society. The company makes sure that they cover all the segments in the society they are operating in. The company has specialized prices for the different market segment, this will ensure that the clients will have lesser doubts about taking a look at the company’s product and the products that they can afford.
Target market
The company’s targets markets are mostly women customers but they value the importance of male customers. This target market is more beneficial for the company since women tends to shop more for clothes. This target market is a larger source of income and can provide much bigger help in introducing the company to more people. The company has different marketing strategies that can cater to the taste and appeal of such markets. The company makes sure that its stores and branches are located in the most profitable places where clients can easily see the store and they can be encouraged to visit the store and buy products. The company also makes sure that competition in the location they want to put up the branch will not be too heavy. Most of the branches belonging to the company can be located in malls.
Targeting strategy and -positioning strategy
The targeting strategy of Apple Computers Inc is concentrated on undifferentiated strategy wherein the entire market is targeted and a simple marketing mix is used on such market. The needs of the market are nearly similar thus this targeting strategy is used. The positioning strategy of Apple computers Inc. is concentrated on comparing what they can do to what their competitors can do. The information that they will acquire from the comparison of their capabilities assist them in determining the actions they will take in competing with their rivals and knowing their place in the market.
The environmental changes
When there is increase in the changes in the environment there should be increase on learning for an organization. As changes happen new development and learning’s should be craved by a company so that it can be prepared for the possible effects of the change. The changes in the environment can give the company benefits but it may also give a company its problems. The changes in the environment include, introduction of newer technologies that has more capabilities and unique features. Another change in the environment is the increase of the prices of materials used in creating the product. The increase in prices of materials can be due to the changing world economy. The increase in prices of materials can mean increase in the market price of the product thus there would be drop of clients purchasing the product.
How the marketing mix changed
Success in the market place depends not only on an ability to identify customer wants and needs but also upon an ability to be able to satisfy those wants and needs better than competitors are able to do. This implies that organizations need to look for ways of achieving a differential advantage in the eyes of the customer. The differential advantage is often achieved through the product or service itself but sometimes it may be achieved through other elements of the marketing mix. Marketers have to understand cultural values in all aspects of implementing the marketing concept and managing the marketing mix (Proctor 2000). The whole of the marketing mix is important in developing effective positioning, as attributes of the offering must be closely in line with the targeted customers’ expectations and needs, as must the associated price points and channels of distribution. However, promotional activity is one of the fundamental elements of creating an effective positioning, as it is through promotion that the positioning is communicated to the target audience (Proctor 2000). The organization has to communicate with the customer through the strategic window. This can be achieved in a variety of ways ranging from spoken and written communications to more symbolic forms of communication. This is the function of the marketing mix. The point is that the elements of the marketing mix should not be seen as individual entities, but as a set of interrelated entities which have to be set in conjunction with one another and in the context of the strategic window presented (Proctor 2000).
Positioning products in people’s minds and making them attractive to market segments requires careful formulation of the marketing mix. Getting the right blend of the product, promotion price and distribution is essential to put the carefully carried out analysis into operation. The aim is to portray an image for the product or service that will match with how one wants the product to be visualized in people’s minds. Image is not only reflected in the promotional messages which are directed towards the market target but also in the pricing strategy, the mode of distribution and in the appearance of the product or service itself (Proctor 2000). The marketing mix categorizes different aspects of the company and how the company can provide satisfaction of the needs of the customers. Through the marketing mix each aspect of the company can be checked and given consideration with regards to its ability to attract clients. The marketing mix has created many changes over the years. Newer components of marketing mix have been added. Some sectors have considered packaging and personnel as components of the marketing mix. The marketing mix is also continuously being improved to meet the needs of industrial product marketing rather than the consumer marketing.
Changes in the next 5 to 10 years
In the next 5 to 10 years the marketing mix will put its focus on providing more use other marketers. The focus of marketing mix will continue to increase and it will be able to reach more marketers. In the next 5 to 10 years the marketing mix will be able to provide a deeper analysis of marketing problems and it can provide more direct solutions to the marketing problems. The marketing mix can serve as an analytical tool that can sort out solutions for various marketing problems.
Credit:ivythesis.typepad.com
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