Executive Summary
This paper tackles the different sales and marketing concepts as applied to organizational setting. The objective of this paper is to analyze the sales and marketing strategy of UNIQLO an apparel manufacturer and retailer in Hong Kong. The discussion includes the analysis of the internal and external environments, the analysis of the marketing mix of the organization, analysis of its major competitors, and analysis of its consumers.
Sales and Marketing Concepts
In order to form a foundation for the later discussions, the author aims to present the sales and marketing concepts that will be used and discussed all throughout the paper. This section seeks to provide basic definitions and descriptions of the concepts that the author learned in the module. This section will also serve as a learning journal for the author.
Marketing
Marketing in a nutshell, is defined as the art of selling products. However, marketing does not only aim to sell products. It involves a deep understanding of the customer and identification of products or services that will satisfy their needs and wants. Marketing according to Bradley (2003) is a philosophy that leads to the process by which organizations, groups, and individuals obtain what they need and want by identifying value, providing it, communicating it and delivering it to others. Marketing is strategically concerned with the direction and scope of the long-term activities performed by the organization to obtain a competitive advantage. Marketing according to Proctor (2000) is about satisfying wants and needs and in the course of doing so facilitating the achievement of an organization’s objectives. By paying attention to customer wants and needs, organizations are more likely to achieve their objectives in the marketplace.
Segmentation
Market segmentation, according to Applbaum (2004), is the act of dividing distinct groups of buyers who might require separate products and/or marketing mixes (p. 32). According to Mochis (1994), market segmentation refers to subdividing the market into several groupings, with each group being recognized for its preferences regarding products/services and methods of delivery (p.41). Market Segmentation is a marketing management technique which can help firms find ways of establishing competitive advantage. A market segment is a section of a market which possesses one or more unique features that both give it an identity and set it apart form other segments. Market segmentation amounts to partitioning a market into a number of distinct sections, using criteria, which reflect different and distinctive purchasing motives and behaviour of customers. Segmentation makes it easier for firms to produce goods or services that fit closely with what people want (Proctor, 2000). Segmentation enables marketers to divide prospective customer groups into segments that consist of people with similar demographic, psychographic or usage patterns (Locke, 2001).
Targeting
Targeting follows segmentation and gives a clear indication of market opportunities, refines the design of a product or service and focuses the sales and marketing efforts on those segments with the greatest potential.
Positioning
Positioning refers to the decisions and activities intended to create and maintain a firm’s product concept in the customer’s minds. Market positioning amounts to arranging for a product or service to occupy a clear, distinctive and desirable place relative to competing products – in the minds of target customers (Proctor, 200). Positioning is the process of distinguishing a company or product from competitors along such dimensions as product characteristics or values that are meaningful to consumers. Positioning strategy aids customers in evaluating product attributes that are of significance or value to them (Michman et al 2003). Once the segment is determined then a decision has to be made as to how to position the product. The idea of positioning is to find out how the consumers/ consumers in particular segments are going to perceive the product and service and the company’s message about these products and service (Kermally, 2003). According to Paley (2006), positioning is not what you do to a product, it is what you do to the mind of the prospect. Positioning is the act of designing the company offer and image so that it occupies a distinct and valued place in the target customers’ minds.
Needs, Wants and Demands
Marketing deals with the identification of the needs and wants of the consumers including their demands. Needs describe basic human requirements such as food, air, water, clothing, and shelter. People also have strong needs for recreation, education, and entertainment. These needs become wants when they are directed to specific objects that might satisfy the need. Demands are wants for specific products backed by an ability to pay.
Product or Offering
People satisfy their needs and wants with products. A product is any offering that can satisfy a needs or want. Products include offerings such as goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.
Marketing Mix
Achieving a favorable position in the minds of the consumers and making the product or service attractive to the target market entails careful formulation of the marketing mix. Getting the right mixture of the product, promotion, price, and distribution is important in marketing. The goal of the marketing mix is to portray an image for the product or service that will match with how the organization wants the product or service to be visualized in people’s minds. Marketing mix according to Kotler (2001) is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market.
Product – The products or services of an organization help in creating an image of the firm in the mind of the consumer. This image is reflected in the customer’s perceptions and feeling about its products or services. The product is the element in the marketing mix that includes all of the issues surrounding the development of the product or service.
Price – where market demand and the cost of producing the product or service come together and determines the profitability or lack of it.
Promotion – Promotion is consist of all of the methods of communicating the product offering to the target market, such as advertising, publicity, and sales promotion.
Place – Place is the task of getting the goods to market.
The Organization
UNIQLO is a brand name of the Fast Retailing Corporation Limited, a Nikkei listed Japanese fashion retailer. The name is itself an example of internationalized Japanese inventiveness, combining the English words ‘unique’ and ‘clothing’. Uniqlo’s emergence on the Japanese (and now International) clothes retail markets has been spectacular and sudden. Sales quadrupled in fiscal 2001 – a remarkable performance given the state of the Japanese retail trade. Uniqlo’s segmentation encompasses lower to mid-price sensitive middle class, which can mean just about everyone in Japan except the extremely rich or the extremely poor. The 2002 advertising slogan ‘Our clothes are not branded on the outside, because we want to promote your sense of style, not our brand name’, illustrates Uniqlo’s inclusive customer focus. The company has made basic staple fashion items acceptable to a highly brand-conscious consumer group and has been credited with, among other things, ‘turning fleece into fashion’ (Jackson & Tomioka, 2003).
My Role in the Organization
I work in the organization as a sales and marketing personnel. I work in the sales and marketing department. As sales personnel, I work with store managers and supervisors in creating marketing strategies and sales promotion.
Company Mission and Objectives
The mission and vision of UNIQLO is to continuously offer fashionable, high quality, basic casual clothing that everyone can wear at reasonable prices (Fast Retailing, Annual Report 2006). The company has undergone an extensive growth campaign that spanned from Asia to Europe to America. The company has opened stores in strategic locations. The company has expanded its production and operations in different locations around the world. All these were guided by the company’s objective of becoming the premiere manufacturer and retailer of affordable, fashionable and quality apparel. The company’s mission is to provide quality clothing to everyone and to provide a wide selection of products that will enhance the individual consumer’s personality and style. Giving quality clothing at affordable prices is the company’s overall mission. The goal of the company is to expand its operation to other locations around the world. It aims to establish a strong position in the market and to reach other market segments.
Company Orientation
The marketing activities of the company is carried out under a well-thought-out philosophy of efficient, effective, and socially responsible marketing. There are different concepts that guide organizations in conducting their marketing and sales activities. These concepts are production concept, product concept, selling concept, marketing concept and societal marketing concept. The company has both product and marketing orientation.
Product Orientation
The product concept holds that consumers favor those products that offer the most quality, performance, or innovative features. The marketing activities of the company focus on making superior products and improving them over time, assuming that buyers can appraise quality and performance (Kotler 2001).
Marketing Orientation
The marketing concept agrees with sales that the most important and successful philosophy is to identify the wants and needs of the customer and provide services and products to satisfy those needs. The marketing concept according to Kotler (2001) holds that the key to achieving organizational goals consists of the company being more effective than its competitors in creating, delivering, and communicating customer value to its chosen target markets.
The organization integrates both concept successfully to its overall marketing plan. The organization makes sure that its products are of superior quality and that they are what the customers really want. The organization, through its research and development capabilities was able to come up with products that are affordable yet very competitive when it comes to quality, design and durability. Through a series of marketing activities, the organization was also able to communicate customer value to the target markets and to other potential customers.
The UNIQLO Difference
UNIQLO has a differentiation strategy. It aims to differentiate itself from its competitors. Differentiation is achieved through:
- Strategy – Systematically deriving their marketing effort (as opposed, for example, to product development) from foreign rivals; notably GAP and to a lesser extent Benetton (Jackson & Tomioka, 2003).
- Segmentation – Addressing and setting trends simultaneously for the freeter (Japanese expression for people between the age of 15 and 34) generation and for consumers of all ages currently motivated by the ‘quality of life’ trend in Japan. For example, Uniqlo’s ‘Precision Basics’ are designed to appeal to a wide range of consumer age groups in Japan by being well made, affordable, fashionables, and international and assume growing opportunities for leisure time and demand for ‘smart casual’ wear (Oumi, 2000 cited in Jackson & Tomioka 2003).
- Price – Consciously differentiating their products with a lower retail price against foreign rivals’ benchmark price while simultaneously recognizing that there is virtually no tradition of wearing ‘cheap’ or throwaway casual clothes in Japanese public life (Jackson & Tomioka, 2003).
- Product – focusing on limited product range to achieve economies of scale. Uniqlo clothes are made under licence in mainland China and South East Asia under strict design and quality controls. In doing this, they confront a common consumer prejudice that clothes ‘Made in China’ must be cheap and therefore of low quality (Jackson & Tomioka, 2003).
- Packaging – Conforms to high Japanese standards: is understated and effective and carries English language translations of important product specifications and marketing concepts: appears confident and future-oriented (Jackson & Tomioka, 2003).
- Distribution – Individual store managers appear to have considerable opportunities for responding to local customer demand: The point-of-scale inventory system is directly linked to production, storage and transport operations in mainland China. Delivery usually takes less than a month. Shop displays are changed on average very two months (Okamoto, 2000 cited in Jackson & Tomioka, 2003).
- Customer Service – Customers are allowed to shop freely, without the immediate and individual attention of shop assistants, as is normally expected in the Japanese retail sector. Online shopping is also available, thus further freeing up time and space for individual customer choice (Jackson & Tomioka, 2003).
- Brand/Overall Image – Uniqlo appears young and dynamic without appearing brash and aggressive. It presents itself as international but also as Japanese (Jackson & Tomioka, 2003).
SWOT Analysis
STRENGTHS
- Highly Efficient store operation
- Expertise in inventory control
- Expertise in distribution and store development
- Global materials procurement
- High quality products
- Devotion to low-cost management and the direct coupling of production and sales at the fastest possible speed and lowest possible cost (Fast Retailing Annual Report, 2005).
- Directly engages in all product planning, production, quality control, distribution, sales and sales promotion activities (Fast Retailing Annual Report, 2005).
- UNIQLO products are inspired and shaped by a great variety of information such as customer opinions and market trends around the world (Fast Retailing Annual Report, 2005).
- UNIQLO stores offer comprehensive selection of men’s wear, women’s wear and clothing for children and infants, making them the ideal spot for families of all ages to shop (Fast Retailing Annual Report, 2005).
Weaknesses
- UNIQLO entered the American market in 2005. Analysts argue that the most difficult adjustment for the Japanese Apparel Retailer is the very thing that made it a huge success in Japan – its focus on basic rather than cutting edge clothes. American consumers differ from their counterparts in Japan. American consumers demand more than the basics. Analysts believe that one of UNIQLO’s weaknesses is its limited fashion elements (Roberts, 2005).
- Corporate Acquisition – Fast Retailing engages in Merger and Acquisition (M&A) activities as one of its management strategies for the expansion of its operations. Through these activities, the Group seeks to pursue synergies with companies and operations that are the objects of its M&A activities and optimize its business portfolio, thereby aiming to maximize the Group’s business value. However, in cases where the Group is unable to realize the expected profit and benefits of M&A activities, this could have an adverse impact on the business results.
Opportunities
- Emerging trends in the fashion and apparel markets; companies operating in the global arena are expanding their business activities
- Free trade zone has grown and the fashion and apparel markets have become increasingly borderless
- Globalization has spurred greater simultaneity in fashion trends around the world; trends spread like wildfire around the globe
- Innovations in information technology have increased the speed with which information travels throughout the world
- Low-price apparel market remains underdeveloped in Japan, presenting a huge business opportunity
Threats
- Intense Competition – In each of its businesses, the customers of the Group are consumers who are always highly discriminating about merchandise, services and price, and the Group engages in tough competition with other companies in its industry in Japan and overseas (Fast Retailing Annual Report, 2006).
- Production Regions – The largest percentage of merchandise sold in UNIQLO business operations, which are the core activity of the Group, is manufactured in China and other countries in Asia and then imported into Japan. For this reason, in the event that major changes occur in the political, economic and/or legal environment and natural disasters are experienced in China and other producing countries, this could have an adverse impact on business results (Fast Retailing Annual Report, 2006).
- International Operations – UNIQLO operates in the UK, China, Hong Kong, the United States and South Korea. If the Group is unable to deal with the uncertainties of changes in market needs and product trends in its overseas markets or if economic fluctuations occur, political and economic conditions become turbulent, or changes occur in legal regulations and/or other conditions, these could have an adverse impact on business results (Fast Retailing Annual Report, 2006).
- Foreign Currency – The majority of product imports of the UNIQLO business, which is the Group’s core business, are dominated in U.S. dollars. If there is a major trend toward a weaker yen and a stronger U.S. dollar and this trend persists for a prolonged period, this could have an adverse impact on business results (Fast Retailing Annual Report, 2006).
- Changes in economic conditions and consumption trends
Marketing Mix
Product
The products of the company is currently positioned as one of the top choices when it comes to affordable yet quality and fashionable apparel in Hong Kong. However, the competition in the apparel industry is very stiff. The trends indicate that the demand for affordable yet quality and fashionable apparel in Hong Kong will continue to rise. The products of UNIQLO are marketed as quality apparel with innovative concepts and design that are competitively priced. The prime benefit of the products are their affordability, innovative design, quality. The products also accentuates the personality of the consumer. The products are also seen as very fashionable.
Price
The company maintains a competitive pricing philosophy. The company has streamlined its value chain in order to come up with products that are affordable without compromising the quality. The wide range of products attract different consumers with different tastes and different budget. Compared to other competitors, the price of UNIQLO’s products can be considered more affordable considering the quality and the prestige of the brand.
Place
UNIQLO is a company that produces and retails its own products. The company has established a very effective and efficient distribution channel that integrates stores in different locations around the world and different production plants in strategic locations. Distribution takes place through a multi-level channel system. UNIQLO stores are the most direct link to its customers. UNIQLO creates distinctive merchandise and sales floors that faithfully project the heart and soul of the company. UNIQLO operates both stand-alone roadside stores in suburban areas and stores in shopping centers. A familiar sight in neighborhoods all across Japan, UNIQLO stores have become a popular shopping destination for the entire family (Fast Retailing Annual Report, 2005).
Promotion
The advertising and marketing strategies of the company is intended to communicate the benefits that the consumers will get by purchasing the products. There are different sales promotion strategies that the company employs in order to attract both the target markets and other potential consumers.
Consumer Profile
UNIQLO has become a household name in Japan and is now making a big impact on the international market. It has gain a good reputation in the United Kingdom, China, Hong Kong, Korea and the United States. UNIQLO is committed in providing customers with true excellence and innovation in casual wear, from design and functionality to the fit and color choices. The target consumers of UNIQLO are lower to mid-price sensitive middle class. The target consumers are very brand conscious and have varying styles and demands when it comes to clothing.
Competitor Analysis
UNIQLO has a number of competitors. There are different manufacturers and retailers that offer the same products as UNIQLO. These competitors have their strengths and weaknesses. This section aims to analyze the different competitors of UNIQLO.
Bossini
Bossini is a brand of casual apparel owned by Bossini International Holdings Limited. The company is headquartered in Hong Kong. Over the years the company has established an extensive international operating platform and distribution network that extended to more than 1,000 outlets around the world (Bossini Annual Report, 2006). Bossini has established a reputation for manufacturing casual wear that is comfortable, easy to mix-and-match, colorful and energetic. Bosinni aims to provide products to different market segments by creating a full range of value for money casual apparel. Bossini built a ‘Familiy-Fit’ brand which aims to cater to the needs and wants of every family member.
Giordano
Giordano is among the most popular and established casual retailer in Asia Pacific. Giordano started as a small manufacturer of casual clothing based in Hong Kong. Now, the fashion retailer has grown to over 1,300 outlets in different parts of the world. Giordano is one of Hong Kong’s most successful homegrown retail stories and the company has won numerous honors for its groundbreaking achievements in the fields of marketing, branding, retailing and service. Unique among local retail operators, Giordano has built a pan-regional and international footprint. It operates successful retail networks in 13 Asian countries as well as 75 shops in the Middle East. From its early days, Giordano helped write a new code of practice for the Hong Kong retailing scene and introduced innovations to the retail industry. Giordano was the first mass retailer to offer unconditional returns and refunds. It was the first to individually greet customers when they enter the store and say goodbye when they leave. Giordano’s ‘For the People’ philosophy has served the company well since 1981 as it has grown from local manufacturer of casual clothes into an international retailer of men’s, women’s and children’s apparel. By providing comfortable and casual everyday fashion in a fun and lovely environment, it has built a brand name synonymous with customer service and value in clothing. The Giordano name today reflects the contemporary lifestyle choices – simplicity in design and quality in substance – of its core 20 to 35-year old target market. the energetic and vibrant Giordano shopping experience reinforces the brand, and has allowed the company to expand both geographically and horizontally, establishing successful retail operations in 26 markets and developing the sub-brands Giordano Ladies and Giordano Junior, each with its own individual market positioning and retail identity.
How Does the Company Deal with the Stages of the Buying Process?
The buying process involves different stages. This section analyzes how UNIQLO deals with the different stages of the buying process.
1. Problem Recognition – In this stage, the prospective purchaser experiences a need to buy a certain product. There are different things that may trigger the need. The company deals with this stage by identifying the factors which give rise to the recognition of the problem and using these in marketing communications about a particular product.
For example, one of the problems of the consumers is that they are looking for casual clothing that is affordable yet very fashionable and of quality. The consumers are also looking for clothing items that can be easily mix-and-match with other items or brands. Because of this, UNIQLO came up with its products that will satisfy the needs and wants of the consumers and solve their problems. In this stage, segmentation and targeting take place. During segmentation, the market is divided into several groups. During this stage, the company identifies the market segment that it will focus on. Different criteria are used in this stage in order to come up with segmented markets that have distinct needs, wants and demands. Targeting is also important in the buying process. In this stage, the company identifies the target market/s and identify their needs, wants and demands. This stage is very important.
2. Information Search – Once the problem has been recognized, prospective purchasers search for information about the product in question. This stage is very critical for the company. In this stage, the company has to communicate the benefits that it can give the consumers. In this stage positioning takes place. Positioning is important in the buying process. Positioning is about creating a favorable product concept in the customer’s minds. During the positioning phase, the company conducts an internal and external environment analysis. In order to make a favorable position in the consumers’ minds, the company uses different marketing tools and strategies such as advertising, web marketing and sales promotions.
3. Evaluation of Options – In this stage, the consumers evaluate the product of the company and compare it with the products of the competitors. In this stage marketing communication is very important. The company communicates with the consumers and make them aware of the different aspects of the products. The consumers must get the impression that the company’s product is better that its competitors’.
4. Purchase Decision – the attitudes of other people often influence intending purchasers. In this stage, the marketing team analyzes what influences a consumer to buy. One of things that can influence a consumer to purchase the product of UNIQLO is the location and the design of the store. In order to strengthen the reputation of UNIQLO as a manufacturer and retailer of fashionable and quality clothing, the stores are strategically located and the design embodies elegance, comfort and style.
5. Post Purchase Behavior – this stage is very critical as it leads to repeat purchase and positive word-of-mouth. In order to make sure that purchase leads to positive results, the company makes sure that it fulfills its promise to the consumers. The consumers are assured that the product of UNIQLO are really of high quality.
Conclusions
UNIQLO’s success has been phenomenal. UNIQLO was able to achieve success because it was able to fulfill its mission of continuously offering fashionable, high quality, basic casual clothing that everyone can wear at reasonable prices. UNIQLO holds a strong position in the market because of its affordable yet fashionable and high quality products. The company was successful because it effectively identified the needs, wants, and demands of its target markets. It developed an expertise in producing products that satisfy the consumers and was able to create a unique product line that has a favorable position in the minds of the consumers. The company also knows its strengths and weaknesses and its competitors, the company analyzes its environments and through this analysis, the company was able to create a sales and marketing plan that is effective and efficient. The marketing mix of the company was well-planned and it follows the company’s philosophy. The marketing communication is also effective and the company is able to reach its target markets. New products and innovative concepts are always introduced in order to make sure that the company is at pace with the changing needs, and wants of the consumers.
Recommendations
Influencing Buying Decision Process
1. Importance of Motivation
It is important that the marketers identify what motivates people to buy the product. Given this information, it may be possible to gain competitive advantage in the design and/or marketing of a product. This can be done through persuading consumers that the product is better able to satisfy their wants and needs on account of the benefits it offers.
2. Importance of Social Factors
The marketing team must also identify the social factors that affect the buying behavior of the consumers. Social factors according to Proctor (2000) exert an influence on the purchase behavior of consumers. The social factors that must be analyzed are the following:
- Roles and Status Symbols – people often buy products that relate to or reflect their role and status. Status symbols vary for different social groupings and it is the job of the marketer to recognize what the status symbols are for different groups of people (Proctor 2000).
- Age and Life Cycle – different buying patterns are exhibited at every stage in the life cycle.
- Reference Groups – reference groups are made up of people who directly or indirectly influenced an person’s attitudes or behaviors. The marketing team must identify the reference groups of the target consumers and make use of opinions reflected by such groups in the marketing communications.
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