Fashion Marketing & Merchandising Final Review

This set of flashcards covers key concepts in fashion marketing and merchandising, including retail organizations, marketing strategies, global expansion, brand identity, and social responsibility.

Distribution channels

The various pathways through which products pass from producers to consumers.

ZARA marketing strategy

changes its stock approximately 17 times a year & design to shelf in 2 weeks. «Design-to-stores» or vertical supply chain – no middlemen

retail organizations: Marketing strategy

A plan of action designed to promote and sell a product.

retail organizations: Department stores

Retail establishments that offer a wide range of merchandise, such as Macy's and Saks.

retail organizations: Chain organizations

2 or more units under common ownership, centrally organized from corporate hq. The Gap, Target, Walmart.

retail organizations: independents

usually small/medium, family-owned, multi-brand, no more than 2-3 in all.

retail organizations: Franchises

Business arrangements where an independent operator buys the rights to open and operate a store under a larger brand. flagship stores not belonging to the company that owns the brand, buys from brand as a wholesale customer. Benetton.

retail organizations: Discounters

buy in advance, get lowest prices for largest volumes. Mix brands, unknowns, private label. Target, Walmart

retail organizations: Off-price (close out)

buy when whl prices dip, usually 1-3 seasons later, poor assortments. tjmaxx

retail organizations: Catalogues

retail+catalogue or catalogue+online. ex. Nordstrom:

retail organizations: Home shopping networks:

qvc

retail organizations: internet

Amazon, Zappos, Zalando (Europe), Asos (Europe)

Retail organizations – concessions/shop-in-shops

Store within a store where stock, sales staff & fixtures are brand’s/concession’s (not retailer’s) responsibilities. Retailer receives approx 15-30% of weekly sales

Advantage of shop-in-shop for brand/concession:

proven retail outlet with minimal risk

Advantage of shop-in-shop for retailer:

try out new/unknown brand without risk of buying stock

Main reasons for concession/shop-in-shop

1. Retailer’s own bought ranges not enough to fill space

2. Specialist goods that require expert buying

3. Cutting edge brand too risky to buy & stock

4. Testing new brand/product

Vendor relationships:

The fewer the vendors/suppliers the better (but without sacrificing purchasing power/independence)

Establishing good vendor relationships

• Early orders

• No cancellations

• Do not exceed coop advg allowances

• Prompt payments

• Limited returns (unless defective)

• Priority to current (not past) season merchandise

• Apply & respect SRP

• Confidentiality

Resource classification: Manufacturers

• Production factories

• Normally use wholesalers to get to retailers

• More knowledge

• No middleman: quicker & cheaper

• Made to order options

• minimum order quantity

Resource classification: Manufacturers’ reps/agents

• Intermediaries responsible for sales only

• 1 showroom with many lines

• Product compatibility in 1 showroom

• Each showroom closer to local retailers than manufacturer

• Better sales service

• Commission base

Resource classification: Service wholesalers

• Intermediary b/w producer & retailer

• Warehouses, not factories

Service wholesalers Advantages for retailers:

• Lower MOQS

• Assortment of brands & product categories

• More & better attention: delivery, special requests

• Better payment terms: larger credit limits, delayed payments

• Better stock turnover ratios (less stock/sales)

• Market info, merchandise planning, promotional aids

Service wholesalers Advantages for retailers

•Higher prices

• Lower mark-ups & profits

B2B trade shows

• How above players (brands, manufacturers, distributors, wholesalers, agents) reach retailers who then reach end-consumers

• Retail buyers can view & compare a variety of brands all showing at the same event

• Best way to get new B2B customers/retailers

• Best way to get new B2B customers/retailers from emerging markets

What is B2B Franchising

• Retail POS not owned by brand name above the door

• Owned by an individual or smaller company (franchisee) that takes on a retail operation from the brand – profits from goods sold @ retail

• Contract between brand & another independent retail business which buys the right to own and operate a shop in a closely specified format

• Enables brands or franchisors to expand quickly without risking huge capital & management costs – profits from goods sold @ wholesale

ex: benneton

How does B2B franchising work

• Franchisee buys all stock (only 1 brand) from franchisor

• Already proven retail format

• Buying into existing brand equity

• Franchisee agrees to all rules, procedures & protocols of franchisor

B2B franchising is good for foreign expansion however…

Luxury brands (ex. Burberry) have moved away from franchising toward DOS or directly operated stores for more control over: consistency of marketing communication, and brand ID & values.

what is B2B licensing

• Brand or licensor allows another party or licensee (usually in another country) to trade its products for a set fee or royalty

advantages of b2b licensing for the licensor

1. Licensee has a better understanding of local market demands

2. Licensee has a better grasp of culture & language

3. More business risk for licensee

4. Licensee must protect & control brand image & reputation

How does B2B licensing work

• Watertight contract to give licensor best legal control of situation

• Normally:

• 5-10% royalty fee on sales

• 75% guaranteed income on sales

• 5 to 10 years

• Brands must have control over licensing or risk being destroyed: licensing dept with specialist staff

Global growth: keys to success

1. Globally sustainable competitive advantage

2. Adaptability:

• Colors/fits/sizes

• Different selling seasons

• Store design/layout

• Government regulations

• Cultural values

3. Global culture: local management but regular global meetings for immediate awareness & implementation of global best practices

4. Financial resources: long-term commitment & profits

Global growth: entry strategies

• Direct investment: greatest investment, risk & returns; complete control

• Joint venture: between entering & local retailers; shared ownership/control/profits; requirement in many countries

• Strategic alliance: collaboration bw independent firms: use local firms for logistics & warehousing

• Franchising: lowest investment, risk & returns; limited control; split profits

Vegetable tannin (tree bark extract)

active ingredient responsible for the transformation of the animal hide into a compact and resistant material durable through the years.

Tuscan Vegetable-Tanned Leather and the environment:

•No animal is killed for its skin: discarded by-products of the food industry producing meat for human consumption. SAME FOR CHROME NORMALLY

• Can be easily disposed of at the end of its life, thanks to its chemical-biological characteristics.

• Huge investments in depuration systems and waste recycling.

• Substances used are recovered, recycled and reused in different fields. Ex.: hair removed from raw hides is transformed into agricultural fertilizer; sludge produced by the depuration plants is reused in the construction field to make bricks.

• Does not contain any toxic substance such as azo-dyes, nickel, PCP or chrome VI

Vegetable/tannin vs Mineral/chromium

• Like vegetable tanned leather, chrome leather goes through the tanning process but using chemicals and acidic salts to treat the animal hides.

• Chrome leather is cheaper and widely available due to the automated tanning process (1 day) and suitability for all kinds of leather goods.

• Vegetable-tanned leather is more expensive than chrome leather due to the longer manufacturing times (2 months) and artisanal nature of the tanning process. It’s usually used for high-end products.

disadvantages of Vegetable/tannin vs Mineral/chromium

vegetable tanning include the heavy use of water. MORE THAN CHROME

Why are about 90% of the world’s leathers are chrome tanned

partly due to the lower cost, but also because chrome tanned leathers are softer and less susceptible to water stains, making them preferable for clothing, such as jackets and gloves, and upholstery.

Vegetable tanned leather continues to be associated with tradition and craft, but relatively few tanneries today have the capability to produce vegetable-tanned leather because…

It is a thick and malleable leather making it ideal for goods like sturdy bags and belts.

gucci components of brand value

• Awareness (Italy vs US):

• Product attributes:

• Benefits:

• Social/image value:

• Personality:

• Product variations:

• Consumer preference:

• Customer loyalty:

Branding

Significant strategic activity for companies wishing to differentiate their products & services

Brand:

• Shaped internally by company strategy & externally by consumer perception & experience • Concrete features: logo, tagline, slogan, actual products, physical retail environment…but most of what constitutes a brand is intangible.

Brand Identity Onion

• Used to analyze and map brand identity •

Goal: capture essence, values & personality traits that differentiate brand from competitors • Benefit: establish how brand identity should be made manifest in reality

Layers of brand onion (inside to outside)

brance essence, bran values, brand personality, brand in action

brand essence

• Essential nature or core of brand; brand’s heart, spirit or soul • Brand proposition or promise or message to customers genuine brand essence + achievable & deliverable brand proposition = well-defined brand identity…Important for building brand loyalty

Brand values

• Also important for building brand loyalty

• Build upon & expand central theme of brand essence

• How company: runs its business, designs & develops its products, delivers its services, markets & promotes its brand

• Consumers more likely to engage with brand whose values they respect & connect with

Brand personality

• Brands can have personalities the same way people do: Brand personality = Designer personality

• Potential tool for building relationships bw brand & customers

• Social media: to create a brand personality

• Content strategy: to control how people receive brand personality

Brand touchpoints or «Brand in Action»

• Points of interaction between a brand and consumers or potential consumers

• 30 to 100 possible touchpoints per brand

• Potential to make either + or – impression

• Categories: 1. pre-purchase, 2. purchase, 3. post-purchase

• At each touchpoint someone can be converted either for or against brand

Triple bottom line

• Triple bottom line accounting system - not just traditional bottom line but also:

• Social ethical performance – ethical fashion

• Environmental performance – sustainable fashion

2013 Savar building (Rana Plaza) collapse

24 April 2013 in Dhaka, Bangladesh.

The search for the dead ended on 13 May 2013 with a death toll of 1,138.

Approximately 2,500 injured people were rescued from the building alive.

It is considered the deadliest structural failure accident in modern human history, and therefore also the deadliest garment-factory accident in history.

The factories manufactured apparel for brands including Benetton, Bonmarché, the Children's Place, El Corte Inglés, Joe Fresh, Monsoon Accessorize, Mango, Matalan, Primark, Walmart, ETC!

Reasons for the Savar building collapse

1. Building built on a filled-in pond which compromised structural integrity,

2. Conversion from commercial use to industrial use,

3. Addition of four floors above the original permit,

4. The use of substandard construction material.

Some people have argued that the decision by managers to send workers back into the factories was due to

the pressure to complete orders for buyers on time. This second line of argument gives partial responsibility for the disaster to the short production deadlines preferred by buyers due to the quick changes of designs, referred to as fast fashion.

Some have argued the demand for fast fashion and low-cost clothing motivated minimal oversight by clothing brands, and that…

collectively organised trade unions could have responded to the pressure of management.

Petroleum-based fibres (ex. polyester) & other synthetic fabrics - energy-intensive process:

• needing large amounts of crude oil

• releasing emissions including:

• volatile organic compounds: ex. benzene, ethylene glycol, formaldehyde, etc

• particulate matter: ex. dust, pollen, soot, etc • acid gases: ex. hydrogen chloride

(all of which can cause or aggravate respiratory disease)

Natural fibres can be just as or even more destructive than manmade fibres:

• Cotton: use of more pesticides (& water!) than any other agricultural crop during growth & cultivation water pollution

• Wool: use of parasiticides and use of petroleum-based products for cleaning & processing

Response to environmental impact of textiles

• use of organic fibres – no toxic insecticides, herbicides, fungicides

• recycling: Patagonia, Adidas, Eileen Fisher

Fashion products/materials more environmentally friendly:

• Organic cotton: no chemical fertilizers, pesticides or herbicides

• Soy: renewable

• Bamboo: highly renewable

• ‘Repurposed’ (recycled) fur, leather, denim

• Blends of cotton & recycled plastic soda bottles

• Wood obtained through sustainable forest management programs