Foschini Marketing Strategy
Table of Contents
Question 1: Foschini as a “reactive retailer”
1.1 Reasons for Foschini as a “reactive retailer”
1.2 Outline of the marketing research process.
1.3 Marketing research project support for marketing planning initiatives
Question 2: Foschini’s comprehensive branding strategies
2.1 Building, measuring and managing Foschini’s brand equity
2.2 Elements in crafting Foschini branding strategy and brand
Question 3: Marketing mix strategy adopted by Foschini
Question 4: Human resource and corporate social investment Initiatives
4.1 Various human resources initiatives launched by Foschini and support for its overall cultural change
4.2 Corporate social investment activities of Foschini and impact on its overall image
Bibliography
Question 1: Foschini as a “reactive retailer”
1.1 Reasons for Foschini as a “reactive retailer”
A reactive retailer, as opposed to a proactive retailer, refers to a firm’s marketing strategy of considering changes in demand and responding to these accordingly (Kotler & Armstrong 2001). The focus of a reactive retailer is the ability to meet the demand of consumers as these arise. This means that there may be a gap between the occurrence of the change in demand and the implementation of the solution to address this change, depending on the extent of adaptability and flexibility of the firm. A proactive retailer anticipates changes in demand (Kotler & Armstrong 2001) to develop marketing strategies able to meet changes in demand at the instant that these occur. Proactive retailers also engage in innovative ventures to create or influence the change itself and ensure long-term benefit for the firm.
Foschini has become a reactive retailer based on the marketing research because it merely responded to the purchasing behaviour of customers instead of being on top of emerging customer demands (Kotler & Armstrong 2001). First, the company only responded to the demand of consumers for a bargain so that the types and volume of fashion items produced are those sold at a bargain price and mostly purchased by many customers. This translated to sales in terms of volume but not necessarily in terms of profit generation. Second, although Foschini is a fashion company, it is not able to provide fashion options (Cant & Machado 2005) to meet the different styles and tastes of consumers because it only focuses on bargain items. This limits its market and revenue generation because the market does not only consider price but also quality and choice in making the purchasing decision.
1.2 Outline of the marketing research process.
The marketing research process supports the importance of information in creating value for consumers by translating knowledge of consumers demand into products and services (Hawkins & Coney 2003). As a process, the company went through a number of steps that to understand its situation and develop effective solutions (Sekaran 2003).
v Observation—the company observed changes in the political and socio-economic realities of the market affecting concurrent changes in market demand especially in terms of fashion styles and tastes and purchasing power.
v Identification of the Problem—by focusing on this observation, the company was able to identify its need to adapt to the changes in the business environment and market demand to reposition itself as a fashion brand in the market.
v Data Gathering—the company conducted a two-fold data gathering process. One is in-depth profiling of its target customers in terms of demographics, habits, life stages, and fashion orientation to provide details that would ensure that the marketing staff would be able to recognise the targeted consumer through the descriptions (Cant & Machado 2005). The other is competitive intelligence on its competitors (Pole, Madsen & Dishman 2001) to determine its current position and set out its intended future position.
v Data Analysis—the company considered the changes in the business environment, market demand, and competitive positioning in terms of its corporate culture and competencies (Porter 1998) to determine its areas of strengths and weaknesses to determine required improvements.
v Deduction—based on the analysis of information, the company determined that it needs to build its brand image as a fashion company committed in providing easy-to-wear quality fashion items and warm and knowledgeable service (Cant & Machado 2005).
1.3 Marketing research project support for marketing planning initiatives
The results of the marketing research project allowed the company to develop its marketing strategy. An effective marketing strategy is one able to reflect the business and market realities (Luther 2001). In-depth and accurate information derived through marketing research provided information on the position (Sekaran 2003) of Foschini relative to its competitors and the nature or extent of market demand (Sekaran 2003). The company gained a comprehensive picture of where it is at present in relation to its competitors and its target market (Ries & Trout 2001). A rational or sound marketing plan emanate from informed decision-making so that there is need to draw information from the market (Sekaran 2003). The results of the marketing project provided the information necessary to make decisions on the brand strategy based on the target customer profile and competitor analysis. This also related to the effective implementation of the marketing plans since information on the market and competitors enabled the company to develop effective communication and positioning strategies to ensure success.
Overall, accurate information and analysis translates into marketing plans and effective implementation strategies responsive to the changing needs of the market and the competitive environment (Luther 2001). In addition, results of the marketing research also minimised uncertainties (Westwood 2002) in the marketing plan. Moreover, information also supported the shift of the company towards proactive marketing strategies (Kotler & Armstrong 2001) that involved innovative fashion products, services, and service delivery that ensured business success.
Question 2: Foschini’s comprehensive branding strategies
2.1 Building, measuring and managing Foschini’s brand equity
Brand equity refers to the totality of value accorded by customers on products, services or company name. This also refers to the associations made by customers towards a brand. (Porter 1998) High brand equity accrues a number of benefits to the firm including the facilitation of income flow predictability, increased cash flow, cost-effectiveness, and ownership of the brand as an asset for lease or sale.
To build its brand equity, Foschini has to undergo three stages. First is the introduction of quality products (Farquhar 1989) to establish the brand and build equity through brand identifiers. Foschini has already done this by implementing its brand strategy and providing quality and easy-to-wear fashion with flair for women. Second is elaboration (Farquhar 1989) by developing easy recall and recognition of the brand to support repeat usage (Kotler & Armstrong 2001). This means the experience of the product and services of the company should not only create a positive impression on the customer but should also establish a strong link between the positive experience and the brand. Unique value offering and consistent product or service quality can support the achievement of elaboration. Third is fortification (Farquhar 1989) or the reinforcement of the image that customers have of the brand over time through consistent fulfilment of providing quality and easy-to-wear fashion with flair. Fortification can also occur through brand extension by developing or innovating on new products and services within the brand.
Foschini has a number of options in managing its brand equity. First is single brand identity so that the company utilises different brands for each product (Aaker 1991). Foschini can employ this method to distinguish different fashion brands targeting different customer segments so that one brand is for children and teens and another brand for working and older women. Second is umbrella brand, where all products fall under a single brand (Aaker 1991). This could also work for Foschini but this limits the potential of the company for product diversification since an umbrella works well for closely related products. Third is multi-branding for various product categories (Aaker 1991). Foschini can employ this when it diversifies its fashion line so that a fashion brand for teens could be different from that of women or clothing has a different brand from shoes and watches. Fourth is family of names branding with various brands with a single name association (Aaker 1991) such as Foschini Teens and Foschini Ladies.
Foschini can measure its brand equity in a number of ways. One is through financial means by determining the price premium of the brand relative to a generic product, which means looking at the difference in the price that consumers are willing to pay for the company’s fashion product relative to a cheaper generic alternative. A higher difference means higher brand equity. Another is the number of related products successfully launched using the brand as platform. More products launched reflect higher brand equity. Last is by looking at consumer behavior in terms of repeat purchases, referrals, and loyalty to the brand over a significant period. (Aaker 1991)
2.2 Elements in crafting Foschini branding strategy and brand
In building brand strategy, Foschini can take into consideration a number of elements. First is targeting of customers for the brand (Aaker 1991). Accomplishing this involves the identification of the important customers to the company and to the brand together with the means of getting these customers to purchase the product of the company. Since the company focused on frocks and dresses, the target market are women. However, the specific market profile for the brand deserves further consideration to determine the income range, age, and other characteristics of the targeted market. This is necessary to ensure an accurate fit between the target market and the brand strategy. Second is value alignment (Aaker 1991) achieved by establishing and strengthening the value represented by the brand and the value demanded by consumers through quality products and services. Third is proposition (Aaker 1991) or the communication and message sought to be communicated to the market through the brand. This encompasses the all the tangible and intangible aspects such as physical product, advertisement and other marketing communication strategies, customer service, product or service availability, pricing policy, and other forms and means of communication. These elements should be considered by Foschini in developing its branding strategy to ensure that it is able to identify its target market, develop brand values that fit the value expectations of its target market, and utilise all appropriate means of creating and strengthening links between the brand and customers to support actual purchases and long-term customer relationship.
Question 3: Marketing mix strategy adopted by Foschini
Foschini adopted a different marketing mix strategy in repositioning the organisation as a leading firm in easy-to-wear fashion for women. The change was necessary to ensure consistency between its brand strategy and overall marketing strategy.
Foschini developed repositioned its product as an easy-to-wear fashion for women reflecting the values of accessibility, femininity, quality and value backed by convenient locations and excellent service. The company sells mainstream fashion products for women but with a unique flair. (Cant & Machado 2005) By doing so, the company balanced adoption of fashion trends but established differentiation by introducing a unique flair for its easy-to-wear products. This implies the company’s engagement in innovative ventures for it to provide trendy fashion items with a unique flair that sets out its products from that of its competitors.
The pricing strategy of Foschini is a combination of promotional, psychological pricing and value pricing. The company’s fashion products are distinguishable from its competitors but were not identified as luxury products since the value communication is easy-to-wear, quality, value and trendy fashion products for women. This means that the pricing is not similar to luxury products since even if the target consumers are not highly sensitive to price, they place importance on value so that the price should match the perceived worth of the product. Initially, the introduction of the fashion products encompassed by the brand strategy is promotional pricing (Kotler & Armstrong 2001) to draw the interest of the target consumers. This is so during the initial years. After the company has achieved a significant customer base, the company utilised psychological and value pricing. Psychological pricing meant selling products at prices that create a semblance of cost savings on the part of consumers (Kotler & Armstrong 2001) such as pricing a dress as .99 instead of dollars. Value pricing also achieves a similar purpose except that the focus of the pricing strategy is to create a perception of value spending (Kotler & Armstrong 2001) such as by pricing a dress and matching frock at a lower price when compared to purchasing these separately.
The company distributes its easy-to-wear fashion products through its various store branches. The strategic position of its stores ensures that even with exclusive distribution, it can provide accessibility to its target consumers. Using exclusive shops as channels for distribution also allowed the Foschini to build its brand through the visual messages communicated by its store façade and design. Since the company has a website, the company could also have distributed its products via the Internet.
The company utilised a wide range of promotional channels. Foschini maximised available mass media channels including television, magazines and sponsorship. These supported wide exposure of the company, its brand and products, to a wide range of women. These promotional channels support uncontrolled communication since the company can only approximate the extent of reach of its communication. The company also does not directly communicate to specific people. (Hawkins & Coney 2003) In addition, the company also utilised controlled means of communication through direct mailing of brochures, loyalty rewards for top consumers. These channels enabled the fashion company to apply controlled communication (Hawkins & Coney 2003) directly to particular individuals enabling it to foresee likely results. Moreover, the company also promoted its brand and products through creative displays in its shop windows. Foschini also engaged in corporate social investment to promote the company by sponsoring a fashion design competition and providing a scholarship and company training for the winner. This builds its reputation as a fashion company. The combination of various channels of communication allowed the company to reach out indirectly to a wide range of women as well as communicate directly to selected individuals.
The marketing mix strategy enabled the Foschini to succeed in its marketing strategy and achieve positive results within three years.
Question 4: Human resource and corporate social investment Initiatives
4.1 Various human resources initiatives launched by Foschini and support for its overall cultural change
To support its marketing strategy, Foschini implemented various human resource initiatives intended to foster culture change. These initiatives focused on involvement and open communications together with support of innovativeness.
One human resource initiative is the standardised performance system that fostered honest and open feedback sharing (Cant & Machado 2005). This works by developing appreciation for the sharing of ideas and information through meetings and group sessions. This applies through a standard performance management system that provides recognition and rewards for great and unique ideas or helpful comments. Providing incentives for developing and sharing ideas encourage the staff to participate in this initiative. This implies a flatter organisational structure (Hornsby & Kuratko 2005) to support open communications that ensures feedback sharing across and within the different structural levels. This also meant leaders and managers accommodating feedback from their subordinates (Hornsby & Kuratko 2005). This also implies a team-building approach (Hornsby & Kuratko 2005) to feedback with the front line staff participating in discussions to discuss comments on various aspects of operations based on their personal work experience and direct experience with consumers.
Another human resource initiative is the retail academy that encourages the initiation of projects at the front line level of the organisational structure. The retail academy provides training on various aspects including effective communications, handling customer service, fashion advice and information sharing to customers, and other aspects closely linked to the marketing of fashion products. (Cant & Machado 2005) The academy also supports continuous learning and knowledge enrichment through mentoring or coaching (Mathis & Jackson 2006). Knowledge and training are necessary elements to innovation (Mathis & Jackson 2006) so that the staff that went through the retail academy is likely able to develop innovative fashion products, marketing strategies, and service features subject to decision-making, approval and supervision at the management level.
By integrating learning and training with a performance management system, the company is able to track knowledge and skill building into performance. This would allow the company to determine the nature and extent of impact of the initiatives on performance and productivity.
These human resource initiatives strongly influenced overall cultural change of the organisation. Human resource initiatives are crucial in the change process because human resources comprise the movers and shakers of the organisation (Mathis & Jackson 2006). This means that change can be achieved only when human resources actively take part in changing their attitudes and behaviour to create change as response to incentives and motivations introduced by the company. Creativity and innovativeness brought about by participation in the retail academy supported the shift of Foschini from a reactive to a proactive fashion firm that is able to not only respond to changes in demand but also influence the direction and pace of change in demand in favour of the firm. Feedback system that emerged from its performance management program also led to the appreciation and participation in sharing great ideas to continuously improve performance and ensure customer satisfaction. This supported the achievement of Foschini’s goal to become a leader in easy-to-wear fashion for women.
4.2 Corporate social investment activities of Foschini and impact on its overall image
Corporate social investment influence the overall image of companies by defining the nature and extent of relationship of the firm with the community it serves. The manner that business firms deal with the community within which they operate determines its overall image to its consumers, who are also members of the community, as well as to its competitors. (Irwin 2003) Foschini wanted to be known as a fashion company providing quality easy-to-wear trendy fashion with a unique flair instead of remaining as a retailer of low-priced clothes. This means that it has to present itself to the community as a fashion expert and icon. By holding the Foschini Annual Design Awards that supports fashion education and entrepreneurial skills with the winner of the design contest receiving a scholarship and internship at the company, Foschini is presenting itself as a fashion expert able to judge and recognise talent in fashion. In addition, selecting a winner that captured the fashion sense of African women presented the company as highly knowledgeable of the fashion identity of the African woman.
Bibliography
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