Marketing plan to launch a clothing brand in danang market

Therefore, GRC has planned a strategy to make it be less dependent on exporting marketing by creating a clothing brand to offer the local market.. Now is the time for GRC to study local

STATEMENT OF ORIGINALITY

This work has not been submitted for a degree or diploma in any university To the best of

my knowledge and belief, the project contains no materials previously published or written

by another person except where due reference is made in the project itself

Le Quang Truong

February 15th, 2011

TUTOR’S COMMENTS

(anh attached trang co chu ky cua thay Trang vao)

TABLE OF CONTENTS

EXECUTIVE SUMMARY   1 

  CHAPTER 1: INTRODUCTION   4 

1.1.  Reasons to Research   4 

1.2.  Objectives of Research   4 

1.3.  Methodology   4 

1.4.  Scope of Research   5 

1.5.  Structure of Research   5 

  CHAPTER 2: LITERATURE REVIEW   6 

2.1  Process to launch a new product   6 

2.1.1  Concept Development   6 

2.1.2  Concept Testing   7 

2.1.3  Prototype and Product Development   7 

2.1.4  Pilot Launch  7 

2.1.5  Commercialization   8 

2.2  Target consumer   8 

2.3  Positioning   9 

2.4  Marketing Activities To Build And Develop A New Product   9 

2.4.1  Product   9 

2.4.2  Price   13 

2.4.3  Distribution   15 

2.4.4  Promotion   17 

CHAPTER 3: RESEARCH DESIGN   19 

3.1  Framework of Research   19 

3.2  Methodology and Sampling composition   20 

3.2.1  Qualitative Research   20 

3.2.2  Quantitative Research   21 

  CHAPTER 4: MARKET ANALYSIS, RESULT OF RESEARCH & MARKETING ACTIVITIES   23 

4.1  Market Analysis   24 

4.1.1  Market situation   24 

4.1.2  Introduction of Garment Resource Company   26 

4.2  Result of Research   27 

4.3  SWOT Analysis   33 

4.3.1  Strengths   33 

4.3.2  Weaknesses   33 

4.3.3  Opportunities   34 

4.3.4  Threats   34 

4.4  Target Consumers   35 

4.5  Positioning   36 

4.6  Marketing Activities to launch ZIK ZAK   37 

4.6.1  ZIK ZAK   37 

4.6.2  Pricing of ZIK ZAK  38 

4.6.3  Distribution of ZIK ZAK   39 

4.6.4  Communication Strategy of ZIK ZAK   40 

4.7  PROFIT/LOST in 5 YEARS   43   

CHAPTER 5: CONCLUSION   44 

  REFERENCE A BOOKS   46 

B DOCUMENT OF MBMM-4 COURSE   46 

  APPENDIX   47 

Appendix 01: Discussion Guidelines   47 

1)  CONSUMERS’ LIFESTYLE   47 

2)  APPEARANCE & U&A OF FASHION/CLOTHING   47 

3)  IF RESPONDENTS DON’T MENTION CLOTHING, PROBE:   48 

4)  For BRANDED CLOTHES WEARER   48 

5)  PURCHASE HABIT:   48 

6)  BRAND ASSESSMENT   49 

Appendix 02: Quantitative Questionnaire   49 

LIST OF TABLE

LIST OF DIAGRAM

LIST OF CHART

LIST OF GRAPHIC

Total Vietnam fashion market is estimated at value of US$ 2.6 billion for the year 2010, growing

by 16% vs 2009 Euromonitor also gave a forecast in 2012, this market value will achieve a value

of US$ 3.4 billion

EXECUTIVE SUMMARY

According to the research of EUROMONITOR International1, Total Vietnam fashion market is estimated at value of US$ 2.6 billion for the year 2010, growing by 16% vs 2009 also gave a forecast in 2012, this market value will achieve a value of US$ 3.4 billion Thanks to the initiatives in changing design and cost advantage of local taste, local brands are taking share of foreign brands and occupying 40% of the market share with PT2000, Blue Exchange, Vietthy, Foci, Nino Maxx, N&M, Maxx Style, T-up, Manhattan, An Phuoc etc Local contribution is expected a better growth rate in the next following rate thanks to its understanding and improved capability

in competition

Foreign brands are focusing on the

working people who have income to

afford their fashion Majority of local

players also targeted on this segment with

more competitive price The segment of teenager (14 years old to 18 years old) is not well exploited by foreign brands as well as local players

Garment Resource Company (GRC) was founded in 2005 in Quang Nam – a coastal central province of Vietnam It is the clothing manufacturer with 1,000 workers which mainly produces and exports garment product under the orders from multi-national clothing companies The markets of GRC are US, Japan and EU with contribution of value of 60%, 25% and 15% respectively

Euromonitor International Ltd is a privately owned, London-based market research firm, providing market research and business intelligence reports and data to industry The firm was founded in 1972

Euromonitor's website states the firm currently employs more than 1000 analysts and consultants globally, who source market information in 80 countries, producing consumer industry market reports, reference books, company profiles, current market data, and market forecasts (Wikipedia, Aug 2010)

With 100% of relying on exporting market, its business experienced fluctuations which depended too much on macro-economic policy of both Vietnam and exporting country or economic status of exporting country, for instance, the total exporting value of GRC decreased 30% in the end of 2008 due to economic crisis in US, then EU and Japan

Therefore, GRC has planned a strategy to make it be less dependent on exporting marketing by creating a clothing brand to offer the local market

With the in-house production, GRC has not owned any clothing brand to offer local market Now is the time for GRC to study local market and find the untapped segment to offer the most required clothing brand to offer the target consumers

As reviewed above, the segment of 14 ~ 18 years old has not well exploited by both local clothing players as well as foreign players Therefore, GRC has chosen this segmentation

as a potential segment to initiate its own clothing brand

With the advantage of labour cost, GRC chose Da Nang as a strategic geo-market to launch

a new brand The success of the new brand in Da Nang is the initial foundation for its mass launch in whole nation of Vietnam

The thesis conducted a research to find out the insights of its target customers Then it proposes a concept to launch new clothing brand to offer its target customers of of 14 ~ 18 years old

The research found out that target consumers initiatively chose the clothing brand they wanted to buy; under the harsh control of school and family, the target consumers would like to express their “Independence” There is a huge opportunity for GRC since there is

no clothing brand which was able to incorporate into “Independence” characteristic

Understanding the insights from target consumers, GRC has planned to launch a clothing brand named “ZIK ZAK” to help its target consumers to self-express himself/herself as an independent person through the 360 degree integrated communication campaign

Because target consumers are dependent on income from their parent; therefore ZIK ZAK

is positioned as an affordable and accessible clothing brand Because of initiatives in raw material, design and in-house facility, GRC has cost advantage which a limited number of players are having That is why GRC is able to commit to bring ZIK ZAK to target consumers at the most competitive pricing to business partners (Resellers and consumers) ZIK ZAK is mainly distributed through its flagship store chains and stores at supper market and hyper market where target consumers usually purchased clothing brands (findings from research)

With the sales forecast in five years, the accumulated Profit will be positive in the third year, and continuously achieves a good net profit of VND 3 billion and VND 6 billion in year 4 and year 5 respectively This is a very good project

However, GRC still has a lot of challenges to be addressed once it does not have any experience or back-ground in retailed business Moreover, the presence of Chinese or no-name clothes are the threats of ZIK ZAK in particular, and other local brands in general

CHAPTER 1: INTRODUCTION

1.1 Reasons to Research

GRC is the clothing manufacturer with 100% of relying on exporting market, its business experienced fluctuations which depended too much on macro-economic policy of both Vietnam and Exporting country or economic status of exporting country

GRC has found that with the local market value of US$ billion 2.6 in 2010 and the high growth rate in the incoming years, there is a big opportunity for it to penetrate into this market With competition in production cost, innovative proposition and capturing market dynamics, it is more capable to compete with other local players in the market

In order to find the ideas of product to develop the product concept, the primary research needed to be conducted to explore the target consumers’ insights The target consumers’ insights are the foundations to shape the product concept

1.2 Objectives of Research

- Teens’ perception of current brands in the market

- Clothing Brand Usage and Attitudes of Teenager

- Discover the criteria of a clothing brands

- Unmet needs and ideal fashion brand for teens

- Affordable and acceptable price range

1.3 Methodology

Qualitative was conducted with focus groups in order to collect the insights, needs, key perceptions The result of qualitative research is the basics to move the next step of quantitative research

Quantitative research was conducted with questionnaire in the field Personal interviews (face-to-face) were done with 120 respondents of 14-18 years old

1.4 Scope of Research

Due to financial and time constraints, this primary research was conducted in high schools

in Da Nang As a result, this thesis proposed a marketing plan to launch a clothing brand ZIK ZAK in Da Nang market The success of ZIK ZAK is the foundation to expand the brand into the nationwide of Vietnam

1.5 Structure of Research

The thesis includes 5 chapters as follows:

Chapter 1: Introduction

Chapter 2: Literature Review

Chapter 3: Research Design

Chapter 4: Market Analysis, Results of Research, Marketing Activities

Chapter 5: Conclusion

Besides chapter 1 which has already done here, the remain of the thesis is constructed as following Chapter 2 reviews the theoretical framework of launching a new product and constructing a marketing plan for this new product Chapter 3 figures out research design including sample selection, qualitative approach and quantitative methods that will be used for the research Chapter 4 presents and analyses research results as well as the proposed

marketing plan for the new brand Finally, chapter 5 highlights main contributions of the thesis as well as some conclusions which capture the whole research

CHAPTER 2: LITERATURE REVIEW

The chapter “Literature Review” was written based on the book “KnowThis: Marketing

Basics” by Paul Christ (2008)

2.1 Process to launch a new product

2.1.1 Concept Development

Concept Development

Prototype Development

The organization may have come across what they believe to be a feasible idea, however, the idea needs to be taken to the target audience The idea must be:

It must be practical and feasible

It must offer the benefits that the target consumers are expecting and requiring

It must be overlooked the current issues

After the organization gets the idea, then they will conduct the qualitative and quantitative research to evaluate the feasibility of the concept If it works with target consumers, then

organization will develop the concept testing

2.1.2 Concept Testing

After concept is developed, it is validated through focus groups or quantitative research with customers Then the marketer seeks information that may include: likes and dislike of the concept; level of interest in purchasing the product; frequency of purchase; and price points to determine how much customers are willing to spend to acquire the product If the concept is accepted by target consumers and is able to feasible to business, we move to the

next step to develop prototype to test market

2.1.3 Prototype and Product Development

It is at this stage that a prototype is finally produced The prototype will clearly run through all the desired tests, and be presented to the target audience to see if changes need to be made

After prototype is finished, organization produces the product to offer target consumers

2.1.4 Pilot Launch

Pilot launch means testing the product within a specific area The product will be launched within a particular region so the marketing mix strategy can be monitored and if needed, be modified before national launch

2.1.5 Commercialization

If the pilot launch has been successful then the product will go for mass launch There are certain factors that need to be taken into consideration before a product is launched nationally

These are timing, how the product will be launched, and the organization will consider the marketing mix to launch the product

2.2 Target consumer

The target consumer and the marketing mix variables of product, place (distribution), promotion and price are the two elements of a marketing campaign that determine the success of a product in the marketplace

A target consumer or target audience is a group of consumers that the business has decided

to aim its marketing efforts and ultimately its merchandise A well-defined target consumer

is the first element to a marketing strategy

Target consumers are groups of people separated by distinguishable and noticeable aspects Target consumers can be separated into geographic segmentations (their location); demographic/socio-economic segmentation (gender, age, income occupation, education, sexual orientation, household size, and stage in the family life cycle); psychographic

segmentation (similar attitudes, values, and lifestyles); behavioral segmentation (occasions, degree of loyalty); and product-related segmentation (relationship to a product) Once these distinct consumers have been defined, a marketing mix strategy of product, distribution, promotion and price can be built by the business to satisfy the target consumer

2.3 Positioning

The most common definition of positioning is identifying a market niche for a brand, product or service utilizing traditional marketing placement strategies (i.e price, promotion, distribution, packaging, and competition)

Positioning is the perception that happens in the minds of the target market It is the aggregate perception the market has of a particular company, product or service in relation

to their perceptions of the competitors in the same category It will happen whether or not a company's management is proactive, reactive or passive about the on-going process of evolving a position But a company can positively influence the perceptions through enlightened strategic actions

2.4 Marketing Activities To Build And Develop A New Product

2.4.1 Product

What is a product?

The focal point of the marketing mix is the product A product includes more than a good or service that is designed, produced and offered for sale It includes all the planning that precedes actual production, it includes research and development and it includes all the services which accompany the product

We will use the term “product” to cover offerings that fall into one of the following categories:

ƒ Goods - Something is considered a good if it is a tangible item That is, it is

something that is felt, tasted, heard, smelled or seen In some cases there is a fine line between items that affect the senses and whether these are considered tangible

or intangible

ƒ Service - Something is considered a service if it is an offering a customer

obtains through the work or labor of someone else Services can result in the creation of tangible goods (e.g., a publisher of business magazines hires a freelance writer to write an article) but the main solution being purchased is the service Unlike goods services are not stored, they are only available at the time of use and the consistency of the benefit offered can vary from one purchaser to another

ƒ Idea - Something falls into the category of an idea if the marketer attempts to

convince the customer to alter their behavior or their perception in some way

In marketing, the term Product is used as a catch-all word to identify solutions a marketer provides to its target market Marketing therefore plays a key role in determining such aspects as the appearance of the product - in line with the requirements of the market, and the function of the product - products must address the needs of customers as identified through market research

Key product decision

ƒ Consumable product features

o Features Set vs Cost

For marketers an important decision focuses on the quantity and quality of features

to include in a product In most cases the more features included or the higher the quality level for a particular feature, the more expensive the product is to produce and market

o Is more better?

Even if added cost is not a major concern, the marketer must determine if more features help or hurt the target market’s perception of the product The product with too many features could be viewed as too difficult to use

o Who should choose the Features?

Historically, marketers determined what features to include in a product, for traditional products, such as clothing, company allow customers to stylize their purchases with logos and other personalized options

ƒ Branding

Branding involves decisions establishing an identity for a product with the goal of distinguishing it from competitors’ offerings Creating an identity through branding is essential, it is particularly important in helping position the product in the minds of the product’s target market

o Branding strategy: with competition growing more intense in almost all industries, establishing a strong brand allows an organization’s products to stand out and avoid potential pitfalls such as price wars Making smart branding decisions in the early stages of a new product is crucial since a company may have to live with the decision for a long time

Branding approaches includes:

- Individual Product Branding

- Family Branding

- Private Label or Store Branding

- Co – Branding

- Brand Licensing

o Advantages of brands:

A strong brand offers many advantages for marketers including:

- Enhances product Recognition:

Brand provides multiple sensory stimuli to enhance customer recognition A brand can be visually recognizable from its packaging, logo, and shape A brand can be recognizable via sound or verbally

- Builds Brand Equity:

Strong brands can lead to financial advantages through the concept of brand equity in which the brand itself become valuable

- Help build brand loyalty:

Brand loyal customers are frequent and enthusiastic purchases of a particular brand Cultivating brand loyalty among customers is the ultimate reward for successful marketers since these customers are far less likely to switch to other brands compared to non-loyal customers

- Help with Product Positioning:

Well – developed and promoted brands make product positioning efforts more effective The result is that upon exposure to a brand (e.g., hearing it, seeing it) customers conjure up mental images or feelings of the benefits of that brand The reverse is even better When customers associate benefits with a particular brand, the brand may have attained a significant competitive advantage

ƒ Labeling

Most packages, whether final customer packaging or distribution packaging, are imprinted with information intended to assist the customer For consumer products, labeling decisions are extremely important for the following reasons:

- The label is likely to be the first thing a new customer sees leading to his/her first impression of the product

- Label serves to capture the attention of shoppers The use of catchy words and graphic may cause strolling customers to stop and evaluate the product

- The label provides customers with product information to aid their purchase decision or help improve customers’ experience when using the product

- In some countries many products, including food and pharmaceuticals, are required by law to contain labels, such as listing ingredients, providing nutritional information, or including usage warning information

2.4.2 Price

What is price?

Price is the cost, or what the buyer must give up, to receive the product Actually price means more than an amount of money, in general appropriate price is determined by both target objectives of the seller (supply side) and the willingness to pay of target customers (demand side) It is also well known that prices depend on life cycle of the product Therefore, price is not static

In general terms, price is a component of an exchange or transaction that takes place between two parties and refers to what must be given up by one party (i.e., buyer) in order

to obtain something offered by another party (i.e., seller) In fact, price means different things to different participants in an exchange:

ƒ Buyers’ View – For those making a purchase, such as final customers, price

refers to what must be given up to obtain benefits

generated for each product sold and, thus, is an important factor in determining profit For marketing organizations price also serves as a marketing tool and is a key element in marketing promotions

Importance of price

Pricing decisions can have important consequences for the marketing organization and the attention given by the marketer to pricing is just as important as the attention given to more recognizable marketing activities Some reasons pricing is important include:

ƒ Most Flexible Marketing Mix Variable – The flexibility of pricing decisions is

particularly important in times when the marketer seeks to quickly stimulate demand or respond to competitor price actions

ƒ Setting the Right Price – Pricing decisions made hastily without sufficient

research, analysis, and strategic evaluation can lead to the marketing organization losing revenue

customers are more likely to dismiss a product when all they know is its price If so, pricing may become the most important of all marketing decisions if it can be shown that customers are avoiding learning more about the product because of the price

ƒ Important Part of Sales Promotion – Many times price adjustment is part of

sales promotions that lower price for a short term to stimulate interest in the product

Price versus Value

For most customers price by itself is not the key factor when a purchase is being considered This is because most customers compare the entire marketing offering and do not simply make their purchase decision based solely on a product’s price In essence when

a purchase situation arises price is one of several variables customers evaluate when they mentally assess a product’s overall perceived value

Value = perceived benefits received/perceived price paid

For the buyer value of a product will change as perceived price paid and/or perceived benefits received change

For marketers the value equation suggests that to improve customers’ perception of value require

2.4.3 Distribution

Distribution is the path which is organized to move products from manufacturers to consumers It means making decisions on the activities that will give consumers access to and permit purchase of a marketer’s product

Type of channel members

Channel activities may be carried out by the marketer or by specialist organizations that assist with certain function Distribution channel includes:

- Retailers: organizations selling products directly to final consumers

- Wholesales : organizations purchasing products from suppliers and selling these to other resellers, such as retailers or other wholesalers

- Agents and brokers: organizations working to bring suppliers and buyers together in exchange for a fee

- Distribution Service Firms : offer services aiding in the movement of products, such

as assistance with transportation, storage, and order processing

- Others : this category includes firms providing additional services, such as insurance and transportation routing assistance

Channel arrangements

The distribution channel consists of many parties each seeking to meet their own business objectives Clearly for the channel to work well, relationships between channel members must be strong with each member understanding and trusting others on whom they depent for product distribution to flow smoothly

Relationships in a channel are in large part a function of the arrangement that occurs between the members It can be divided in two main categories: independent and dependent

- Independent channel arrangement: A channel member is free to make whatever arrangements they feel is in its best interest This so – called conventional distribution arrangement often leads to significant conflict as individual members decide what is best for them and not necessarily for the entire channel An independent channel arrangement is less restrictive than dependent arrangement and makes it easier for a channel member to move away from relationship they feel are not working to its benefit

- Dependent channel arrangement: With a dependent channel arrangement a channel member feels tied to one or more members of the distribution channel However, the dependent approach provides much more stability and consistency since members are united in their goals

The dependent channel arrangement can be broken down into three type: corporate, contractual and administrative

2.4.4 Promotion

What is promotion?

Promotion is perhaps the element most visible to consumers Promotions is the broad term used to describe the entire field of sales communication – advertising , personal selling , sales promotion , and public relations These activities result in consumer awareness of a product’s existence, as well as knowledge about its unique and desirable features In short, promotion informs and persuades, and sometimes irritates, as the expert observed ( Steven Star )

Objectives of Promotion

The most obvious objective marketers have for promotional activities is to convince customers to make a decision that benefits the marketer (of course the marketer believes the decision will also benefit the customer) For most for-profit marketers this means getting customers to buy an organization’s product and, in most cases, to remain a loyal long-term customer

Promotion mix

- Advertising: Involve non-personal paid promotion often using mass media outlets to deliver the marketer’s message While historical advertising has involved one – way communication with little feedback opportunity for the customer experiencing the advertisement , the advent of computer technology and, in particular the Internet , has increased the options allowing customers to provide quick feedback

- Sales promotion: Involves the use of special short- term techniques , often in the form of incentives , to encourage customers to respond to or undertake some activity

- Public Relation: Also referred to as publicity , this type of promotion uses third – party sources , and particularly the news media , to offer a favorable mention of the marketer’s company or product without direct payment to the publisher of the information

- Personal Selling: this form of promotion involves personal contact between company representatives and those who have a role in purchase decisions

CHAPTER 3: RESEARCH DESIGN

3.1 Framework of Research

The research’s framework is summarized in Diagram III.1

we built up the Clothing choice criteria are defined as the intrinsic (inherent to the product)

and extrinsic (product-related, but not part of the physical product) product attributes that associated with desired benefits or incurred costs as consumers make buying decision among clothing alternatives

Focus groups sample:

- We selected 6 high-schools in Da Nang

- Every school, we selected 03 grades of 10, 11 and 12

- Each grade, we selected 01 female student and 01 male student

- We grouped 06 students in same gender of 06 different high schools into 01 specific group Totally, we had 06 Focus groups

- Respondent criteria: High-school student, belonging to ABCD family, self-driven of his/her purchase of garment at least once in last 03 months

Samples selection was composed as below table

Male Female Male Female Male Female Group 01 Group 02 Group 03 Group 04 Group 05 Group 06

Number of Samples are sellected Male Female

Samples Selection

[High-Schools in Da Nang] Sub-Total Grade 10 Grade 11 Grade 12

Table III.1 Samples of Qualitative Research

3.2.2 Quantitative Research

Personal interviews conducted by the exit interview in front of the high-schools using structured questionnaire Questionnaire survey was employed as the tool to collect primary information of consumers’ decision-making styles and clothing choice criteria in sample