CASE STUDY FOR JH MEN’S APPAREL.. 3
CASE STUDY FOR JH MEN’S APPAREL
INTRODUCTION
Xu Qiang has worked extremely to get his men’s wear company, JH Men’s Apparel, to where it is currently. However, as things stand at the moment he is under immense pressure as a result of competitors. Competitors have drastically reduced their prices. Additionally, they have copied Xu’s designs where they make inferior products and sell them cheaply. The Chinese men’s wear industry is extremely huge with great potential for growth.
JH Men’s Apparel has to come up with a proper Marketing plan and strategy to keep its position in the market and grow further. Xu has to come up with innovative ideas on how to counter the pressure from the competition. He also has to decide whether to diversify in terms of producing new products to exploit new market. Diversification strategy can be a critical decision that, according to Michel and Shaked, (2010) needs keen interest before decisions are made. All these decisions are analyzed below so as to come up with the best strategies available for the company.
COMPANY DESCRIPTION
JH Men’s Apparel owns one of the biggest factories. Its factory occupies more than 7,000 square meters of space. Its employee number stands at more than 100 workers. By 2012, it was producing in excess of 450,000 sweaters annually. The company was founded in the early 90’s by Xu Qiang’s parents. The company first launched as a small workshop. Its specialty at the time was processing garment sheets and supplying fine wool for making sweaters to large manufacturers. It, with time expanded, to become a sweater producer. This consequently meant that it also had to expand to incorporate other services.
SITUATION ANALYSIS
An internal analysis is very critical when trying to understand the situation a company is in (Kamoche, 2006). JH Men’s Apparel internal analysis is the review of the strengths and weaknesses of the organization. Internal analysis focuses on factors that fall within the organization’s domain (Spencer, 2006).
To do this, a number of questions have to be answered in the context of the organization. These questions, as identified by McConnell and Muscarella, (2005) include, how well the company’s strategy is working, what the company’s competitively important resources and capabilities are, are the companies prices and costs competitive in the current market and relative to key rivals, what is JH Men’s Apparel’s competitive strength. So far, the strategy adopted by JH Men’s Apparel seems to be working according to plan. For a long time since its inception, JH Men’s Apparel’s strategy has been working very well. The company has recorded tremendous growth to become one of the leading sweater manufacturers in China.
Its strategy to modernize and adopt technological advancements is also successful. It reduces the maintenance costs of production whilst increasing output. This results in the company maintaining its foothold market share. However recently, the company is being forced to change its strategy in the long term and short term.
Competitors are taking advantage of the company’s designs especially with their new sweater designs, the M108 style. This has led to unfair competition. Competitors are now producing far inferior products and selling them cheaply. This has led to JH Men’s Apparel suffering a set back and to rethink their strategy especially regarding production and selling of new designs.
Customer analysis in JH Men’s Apparel business will be the process that determines customer purchasing behavior, segmentation, motivation and value. This process is done through customer focus groups, customer satisfaction measurement, field testing and other methods. When this is examined it is apparent that JH Men’s Apparel has an extremely loyal customer base.
When JH Men’s Apparel’s competitor copy their new sweater designs and sell them at cheap prices, the customers do not automatically opt for the cheap products. This has been aided by the fact that JH Men’s Apparel has established a tradition where everything is high quality from the start of production to the end. This has always ensured that their products are high quality and satisfy their customers.
A Market Analysis will be the process that analyzes the truth behind JH Men’s Apparel’s products, market share, total market size, segmentation and market growth rate (Spencer, 2006). The greatest benefit of a complete and thorough market analysis to JH Men’s Apparel is that it assists to indicate on how well the company is doing in respect to its competitors.
JH Men’s Apparel is doing extremely well compared to its competitors. Due its longevity in the industry, it has established a huge market base; its products are popular as shown by competitors copying its brand. As an organization, JH Men’s Apparel is very well placed in the market it operates in.
An environmental analysis is systematic process where environmental factors of its business are identified. This provides to analyze the business environment in JH Men’s Apparel business sector. After careful identification and quantification of the factors, JH Men’s Apparel future of the business looks healthy despite the challenges.
After analyzing the demographics, technology, socio-cultural, economic factors, political-legal factors and location of the business, an environmental analysis of JH Men’s Apparel concludes that it is in a competitive market. According to Porter (2005), such a market is extremely difficult one to survive in, but JH Men’s Apparel has strategies in place to overcome.
By embracing technology, the company has a competitive advantage over its competitors. In the clothing business, it is extremely vital to evaluate the technological aspects of the business. Technology over the years has significantly grown. JH Men’s Apparel has not been left behind. There are technological advancements in they have integrated their employee appraisal program such that it is one integrated concept. Technology in the business of sweaters and other men’s wear will also help in communication. The situation currently is such that any entrepreneur has to be online. Since the entrepreneur intends to work online they will have to invest in computers that are efficient.
Communication in any business is extremely vital (Kamoche, 2006). JH Men’s Apparel has done exactly this as they have a fully equipped IT department that is extremely competent. There are also political-legal factors to be considered in any business (Spencer, 2006). In a majority of cases, businesses will require business permits from government or permit issuing authorities.
There are guidelines provided by the issuing authorities on conditions to be met before the license is issued. The issuing authorities will have to be satisfied that the company is capable of meeting client needs. Such licenses will also involve payment of a certain amount of fee. The entrepreneur will also have to assess the political climate in the area they intend to put up shop.
A volatile or insecure area will hurt their business. In respect to this environmental factor, JH Men’s Apparel has been able to navigate this area very well. They have attained the required the licenses and permits in areas and territories they do business. JH Men’s Apparel has also been successful in setting up shop in areas where the political climate is not volatile and favors its operations.
The wealthy and those with taste is the biggest target for most designer and patented sweaters and men’s clothing. By designing clothes, any entrepreneur meets specific targets set by the client. This means they will have to satisfy the customer as per their needs.
The entrepreneur, therefore, will need to identify the customers’ characteristics, and their demographics. In this case the entrepreneur intends to sell either directly or to retailers to reach the customer. Therefore, then entrepreneur will have to be ready to meet different clients with different temperaments.
JH Men’s Apparel has also successfully handled this challenge. They are able to handle different client needs and tastes (Hoskisson et al, 2009). Despite fierce competition they have been successful in having their own loyal customer base. Then there is the economic aspect. JH Men’s Apparel has always known their financing options so as to raise the required additional capital.
The capital to be raised is usually dependent on the project or expansion to be undertaken by the company. Before undertaking such a project, they always have to carefully consider and assess all the financial aspects available. They have to come up with ways to raise finances either by borrowing or other means.
However, of importance here is that they do a good assessment of their intended market. The business always has to be strategically placed so that it reaches its intended market. After establishing the source of capital, they then plan on how capital will be spend on the businesses. This has gone a long way in establishing a healthy financial base for the business.
Competitor analysis is an extremely effective way to identify and determine the situation of a company. This is a strategic process carried out by a company to evaluate their external competitors. Competitors in the case of JH Men’s Apparel are extremely aggressive. They use all means possible to outdo JH Men’s Apparel. They copy new designs by JH Men’s Apparel, use cheaper and far inferior raw materials. The result of such a move is that they produce inferior products at lower prices. The firm faces fierce competition despite JH Men’s Apparel’s dominance of the market by producing far more superior goods.
THE TARGET MARKET
In this case, the target market for JH Men’s Apparel clothing is active costumers ranging between the ages of 25 to 65. This is the age bracket of people who would wear sweaters as casual wear, to work or for evening activities. This means that JH Men’s Apparel has to design sweaters that differ in taste and preferences. For example the younger age bracket will prefer a different type of sweater from the aging man.
The target active customers for JH Men’s Apparel represent a wide demographic group. They are successful well-educated individuals. Most of these people are either single or married. For the married ones, they are most likely to be raising families. As for the target market’s household income, it will range at a value between $40,000 and $150,000,000 annually. This range represents a wide demographic group with a comfortable income level.
However, in spite of their comfortable incomes, these are people who are bound to be price conscious. They will consistently look to get value for their money. This demographic group, despite their age, is a group of people who lead an active lifestyle. At times, they want to be associated with a certain status so they mind what they wear in public. This target market loves association and to be linked products that are high quality. However they are only willing to spend premium prices on only certain brand but remain price conscious. Current JH Men’s Apparel customers live in china. JH Men’s Apparel should aspire to target overseas customers as well so as not to limit its potential.
THE MARKETING MIX
The biggest problem with JH Men’s Apparel as a company is the fact that it has not been able to expand out of its comfort zone. For so long, the company has always relied on its Chinese market as its consumer for its products. This has proved quite successful but cannot sustain the company for much longer. Hence, there is a need for the company to now expand to overseas markets. Additionally, the company has to look into coming up with new products apart from sweaters to expand its market share. Below is a discussion that will focus on the marketing mix for JH Men’s Apparel. The discussion is meant to provide solutions to the problem identified
MARKETING STRATEGY
Moving on forward, JH Men’s Apparel should have a detailed and clear marketing strategy for its products. A good entry strategy as envisioned by Porter’s (2005) work can be of great benefit to the company. The market has now become more volatile and competition is fierce than ever. Their marketing strategy cannot be faulted as they have been able to stay relevant over the years. One advantage that JH Men’s Apparel has over its competitors is that they have a management in place that is familiar with the industry for a long time. Their head, Xu, also is a technology man aware of new trends in today’s markets.
This are two areas that the company should strive to exploit. Through their knowledge of the market, a company should strive to know what the consumers crave for (Hoskisson et al, 2009). A good customer analysis should go a long way in assisting to get this. Once that is identified, JH Men’s Apparel will work on delivering that.
Second, as they have done, JH Men’s Apparel should embrace technology to reduce operations costs. This way even when competitors lower their prices, the company can afford to do so to. This way the company will remain relevant in the industry even as it moves forward with its plans to expand. Expansion is another key market strategy for JH Men’s Apparel. The company should strategize to expand in terms of market reach and products.
PRODUCT STRATEGY
JH Men’s Apparel currently produces high end designer sweaters that are of high quality with a rich tradition. The sweaters are designed to suit customer needs and are produced by the company from inception till they are the complete product. JH Men’s Apparel biggest consumer and market is in China. However, in the course of the next five to ten years, JH Men’s Apparel should plan to expand.
This expansion should be in terms of their product line. They should do so to include other items of customized clothing items apart from sweaters. At the beginning, there would be ten new logos and five new slogans; more would be added later. They should start with items of clothing like T-shirts that are customized to test the market.
The other way in which JH Men’s Apparel can plan to expand is by offering items that are of lightweight luggage. It would expand its product line so they are now able to offer items like duffel bags and daypacks. They have to make sure that these items come in trendy but basic colors. This expansion would come with an expansion beyond china in mind.
It would have to come at once but gradually. They would introduce new products in their already existing market. Aligned with this would be JH Men’s Apparel now expanding their sweater product to involve the larger Asian market. This way the company is able to evaluate the performance of each on its own.
DISTRIBUTION STRATEGY
JH Men’s Apparel, currently, markets through its local wholesalers and retailer shops that are distributed all over China. So far, JH Men’s Apparel has not been able to exploit distribution through the widely spread chains that specialize in apparel goods and services due to the nature of goods that they deal with, climate is a major factor in the company has to worry about.
It therefore has to have a well-documented detail on when the demand for the products is at its highest. It has to invest in information gathering from their distribution agencies on when they are at peak in their sales and when they are at their lowest. This way the company is able to efficiently organize their distribution strategy.
In the course of the next five years, JH Men’s Apparel should seek to expand their distribution to retail shops that specialize in their types of products. This should be done not only throughout the nation but also the larger Asian region. JH Men’s Apparel has to decide whether it is much beneficial to do their sales through a big national chain. This is because at times such chains can be seen as competitors.
Xu, the head of the company, has studied technology. He, therefore, is aware of the benefits that come with online sales. Online sales can be implemented by offering for example a customized product line through the Internet only. This would enable the company to help their consumers to distinguish between specialty ship offerings and internet offerings.
Such products would be exclusive to for example their high end consumers who demand customized products. The company should also set up internet kiosks where customers can place their orders online. This makes it easier on the consumers to order products and eliminates the hustle of going through a retailer chain. Whatever the expansion plans, JH Men’s Apparel will adopt it should strive to maintain and monitor its already existing strong and effective relationships with the company’s distribution channel players.
PROMOTIONAL STRATEGY
JH Men’s Apparel has always had a strategy where it communicates with its wholesalers, retailers and consumers regarding its products in different ways. News and information regarding JH Men’s Apparel’s products is always readily available direct mailings, in person, in publications, company’s website and the internet as a whole. The company also strives to have its promotional efforts differentiate its products. This is quite a challenge as most of its competitors copy JH Men’s Apparel’s design. The company, therefore, has to strive to differentiate its products from competitor’s products.
PRICING STRATEGY
Due to the nature of high product goods JH Men’s Apparel produces, their prices are higher compared to competitors. The company, however, has now to rethink its pricing strategy going forward. Competitors have forced JH Men’s Apparel to reduce its prices and offer incentives to consumers. This is considered a temporary measure to prevent the company from losing its market share.
JH Men’s Apparel should now rethink the pricing of their items to ensure that they remain profitable in future. By diversifying to new markets, they would be able to charge slightly higher prices for their superior quality products. In the Chinese market, they can keep producing the usual products at the right price. This way they remain profitable. JH Men’s Apparel should also strive to always be coming up with new ideas to avoid copying by competitors. Through these new designs they are able to charge the right price.
Executive Summary
JH Men’s Apparel is a company that is strategically placed in the market that it operates in. however, there is always a need for a company to always be thinking and come up with ambitious strategic management decisions. As described above, the greatest advantage of strategic management is a good overall situation analysis of the company.
That is done above as the situation analysis of JH Men’s Apparel is well carried out above. Then, the business’s objectives of the future of JH Men’s Apparel are analyzed. Opportunities that exist for the company will be looked at and analyzed critically. This will sum up the future plans of the company as it aims to maintain its competitive edge in the market.
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