To whom it may concern.... What is the Role of Consumers with Today`s Economic Crisis?
To whom it may concern
What is the Role of Consumers
withToday`s Economic Crisis?
Consumers facing a recession, job lossess and tight credit have cut spending on all but the most essential items. With today’s economic crisis, and the sharp drop in buying power, companies have to be even more creative in finding new ways to attract the consumer.
In the US the retail industry has been another drop in sales in November 2008, seen now as the latest five month trend. For a company to survive it will have to reinvent or develop its brands in a more innovative way.
There are three basic approaches that a company can take, in order to achieve this goal:
(i) To develop effective brand-partnershisp
(ii) To select in a rational way the consumers- to focus on the resulted group, rather than on all fronts;
(iii) To find innovative approaches in product design and marketing.
What these three approaches have in common is that they all are differentiation strategies. Moreover they provide a differentiation in the products and services of the company.
Ultimately, all have the same target to achieve a competitive advantage.
Each company should have a clear vision of what they want to do, with who they want to compete with and whom they will sell to.
Developing a strategy for a sole brand is likely to be costly and very limiting in regards to what you can do in order to reach that goal.
Rather than using this approach companies are applying brand-partnerships. It is an innovative way to put together two brands, find a common denominator, develop a new strategy, and serve the interests of both parties involved.
For example: There are some cases one of them already selected as an example that is the case with Hennes & Mauritz (H & M). Although the tactic was used in the past by the same company and by others, this brand-partnership has served them well, and since 2004, H & M has employed the same tactic.
The basic strategy underling is: a big retail chain joins with a fashion star to put together a lower-priced line exclusively for that chain , What they create though is the opportunity for the retailer to have a bit of a couture seal and for the designer, a sample of the mass market.
And no strategic measure has been more welcomed than at this point and in this economical context.
In year 2008 the industry suffered a slowdown, with sales growth negligible, and for 2009 faces a harsher economic environment.
Although H & M has had a distinctive growth over the past ten years. It has encountered some difficulties during this year and registered even a decrease in sales.
Nonetheless, there was still a monthly growth in sales, but at a smaller rate.
The big plunge in sales happened during the months of March and April 2008 with a comeback in the figures in May 2008, the decrease in sales was then more pronounced for the next six months. It should also be taken into consideration that H & M raised the number of stores from 1,522 in 2007 to 1,738 in 2008. Even after these circumstances, of appealing to a larger number of consumers by increased availability, the current economic climate has had a definite impact on the company’s economic growth.
But analysts concentrated on another factor that the company said was weighing on its gross, rising production and logistics costs, H & M and other clothing retailers are squeezed by cost increases in china and other sourcing countries as well as consumption declines in their end markets.
The impact of this brand-partnership was seen immediately, in a very high turnover for a new collection line, transforming this into a successful
story for H & M and the brand partnership. In November 2008, the month in which the new collection line was launched, sales at H & M were reported to have a seven percent increase on sales for the same period in the previous year.
As a consequence, the company has announced another future collaboration for the summer collection, with a British designer. It is an incredible opportunity to be working with H & M to create H & M capsule collection.
It is a great fact that H & M have created a new phenomenon in fashion through the pioneering concept of collaborating with high-end designers to create one-off limited edition capsule collections.
From a marketing perspective these collaborations give H & M exposure to Markets outside of the normal customer base and help to strengthen the brand.
As a company they internally finance growth and during 2007 H & M opened more stores and launched new offerings at a faster pace than ever before. They like to surprise the consumer with new offerings, collaborations being a part of this.
The ability to surprise and the collaboration ,line success brings attention to the shopping culture-the same one that the current global economic crisis has almost lost.
Is this the mark of a slowing down trend to the shopping culture, rather than of an almost stop?