Identifying and Assessing Market Opportunities
2.0 SITUATION ANALYSIS
American Apparel is in a bid of bringing into the market a new product brand for women who are pregnant as adaptable to changes in body size during the pregnancy period. The maternity line is not for the XXS but for women who have shapes and sizes adapted to the pregnancy period. The maternity line, therefore, comes to cater to women ranging within XXL to XXXL.
2.1 Market Summary
The new cloth line’s targeted market includes both pregnant women who develop new shapes and sizes but want to appear stylish as well as friends and family members of expecting women who will buy the clothing as gifts. The market lacks clothes for expectant mothers because pregnancy sizes vary, and after all, one can keep their one-time maternity apparel to wear during their pregnancy periods. However, this is not the case since maternity apparel must come in different styles and sizes. The line is to offer stylish, comfortable, and readily available maternity wear that makes expectant mothers continue to look good as they remain fashionable during pregnancy.
2.1.1 Market Demographics
The maternity line apparel assumes a homogenous demographics in terms of race, ethnicity, and religion. The targeted age groups ranged between 25-45 years of age since this is the potential childbearing age. Also, the pricing will vary from a low price to a premium pricing strategy based on a person’s choice. The lifestyle changes a lot since some would appear to be spendthrift, while others would be thrifty to save for their unborn babies.
Expectant mothers are in dire need of fashion during their pregnancy period since life must go on during the nine months of pregnancy. To seize this opportunity and win more clients, a fashion magazine and creative TV shows to include expectant mothers will be developed. With the increased effort, the maternity line is expected to generate unprecedented revenues after say three years
2.1.2 Market Needs
The market is in dire need of maternity line for the plus size clothing that is authentic, quality, and fashionable for choice. A contemporary store setting is required, as well as setting accommodative prices for the target audience.
2.1.3 Market Trends
The maternity market has experienced a 200% growth over the last 5 years. According to a study conducted by Smith (2014) it depicted that since the start of 2014 the maternity market has had solid growth across the biggest retailers in the U.K and the U.S. Since more people are becoming pregnant, the maternity market has been attributed to attracting about 2 billion dollar each year for the U.S market. Also, with the increased population of women at work, there are more bumps to be dressed in a wide range of apparel than before.
2.1.4 Market Growth
The U.S and U.K maternity markets have experienced a 200% growth over the last 5 years. This has been attributed to the childbearing age group that has been infiltrating the markets for the last five years. The rising trends towards fashionable clothes for specific groups, more brands are go-getting in terms of new cloth lines and grab the attention of clients globally.
2.2 SWOT Analysis
· Well recognized Brand name
· Diversified target
· Excellent Financial Performance
· Depends on new Fashion trends
· Depends on third party for supplies
· No guarantee of maintaining price
· High quality products for good price
· Threat of competition
· The high cost of linen fiber
· Quick Change of Fashion trends
a. Well recognized brand
American Apparel is a well-recognized brand and therefore the maternity line apparel marketed via the is experienced to experience minimal hitches. With a well-established brand name, there is no need to vigorous campaigns for new product selling via the same name.
b. Diversified Target
Maternity apparel targets a wide diversity of women across all races, faiths, and ethnicity. The pricing also accommodates the affluent and the less affluent within the society reach.
c. Excellent Financial Performance
American apparel has been known to be on the top cream for companies making excellent sales over the years. With the coming of new cloth line, the maternity apparel, the sales are expected to soar to greater heights.
a. Depends on new Fashion trends
The maternity line like any other cloth line heavily depends on fashion and hence it will require the company to be always on the look for fashion trends.
b. Depends on third party for supplies
The supply of linen and tailors among other resources must be provided by third party who in this case may switch price affecting the company profit margin.
c. No guarantee of maintaining price
Fluctuation among other economic forces dictated by change in cotton price significantly vary price for products of clothing and hence shift in prices.
a. New market
The maternity apparel for the American Apparel could expand to other markets such as China, Latin America, India and African nations in a bid to expand its market.
The cloth line industry is heavily dependent on fashion trends and hence for the company to be placed in a competitive advantage they must be innovative enough.
c. High quality products for good price
Manufacturing high quality products will fetch good price in the market and simultaneously win client’s loyalty. In that case the maternity line should guarantee clients quality products to attract and maintain clients.
a. Threat of Competition
Apparently, there are many vendors offering the same product and hence stiff competition is anticipated.
b. High Cost of Linen Fiber
Linen fiber has apparently garnered high cost due to low production of cotton fueled by changing climatic conditions.
c. Quick Change of Fashion Trends
Fashions change rapidly due to change in taste which affects the purchase power. This will be attached to the myriad companies offering the same products which will switch to fashions regularly to be on a competitive advantage.
The fact that the cloth line deals with only one product, “maternity Line,” competition is eminent from other cloth lines who sell in the same product (The Fashion Law, 2017. Competitors in the market include Urban outfitters, Fruit of the Loom and Hanesbrand.
The main competitor is Urban outfitters who offer similar product as American Apparel. They offer quality products that include an assortment of women’s casual apparel and accessories such as tee shirts, dresses, activewear, swim wear, etc. Urban Outfitters also offer a premium pricing strategy ranging in price from $10 to $100 dollars and their promotional policy is mainly based on social media as well as digital and print advertising. Their social media outlets include, Twitter, Facebook, Instagram, Blogs, and Foursquare. They also use photo advertisement featuring everyday customers and window displays as well as celebrity endorsements to encourage trial of the brand sales. Their stores are strategically located in upscale metropolitan areas like the Aventura Mall in Miami, FL and the Walnut Creek area in San Jose, CA. With the demographics of their customers and convenience in mind, Urban also has online stores and catalogue services.
The maternity line for American Apparel comes in a linen fiber that is light and soft. The touch of this material is soft, and many expectant mothers will love it. The clothes come in different designs to accommodate different style choice. The price to be adopted at launch will be the promotional one, after which the price will switch to a premium strategy from $10 to $100 for client loyalty (Kotler, & Keller, 2011). Leading stores will be launched in the upscale metropolitan areas while continuing to maximize online stores and catalogue services. The promotional strategy will be to use digital and print ads such as social media platforms, TVs, and the launch of fashion magazines.
2.4 Product Offering
Apparently, American Apparel offers varied cloth products that target diversified market for both genders such as skirts, tee shirts, body suits and dresses just to name a few at an affordable pricing. Some of the best sellers are the “Nylon Tricot High Waist Leggings” and the “Cotton Spandex Unitard”. There are over 3.5 million women expecting each year therefore the introduction of a maternity clothing line is a good fit for American Apparel. It will act as a boost to the rest of the product offering since all are connected to family shopping and include clothing for pregnant women who are hip and stylish while helping them celebrate their style and still looking great as their body changes. American Apparel will make a holistic brand equity that will make customer happy. It will create competitive advantage because it is in demand by a specific population not common in the market. As a result, American Apparel can increase pricing and have pregnant women purchase the product. Maternity line clothing creates positive feeling, beliefs and perceptions by pregnant women and their family members about the business. Pregnancy is a critical time in a woman’s life where they need specific clothing with a specific design. By providing the maternity line American Apparel can create an attachment to the lives of both pregnant and non-pregnant women. Therefore, American Apparel offers positive value to a niche market and despite increasing the product price expecting mothers would still purchase.
2.5 Keys to Success
A myriad key to success will be involved, such as a change in promotional technique, innovation for selling, and distribution of materials. The cloth industry as seen involves fashion changes and hence innovation is a must. In that case, American Apparel has to contract fashion designers for the maternity line as a way of being relevant in the market.
During the launch of the maternity line, a promotional price will serve it better to bring the brand awareness and also attract and maintain clients. After this, the brand will switch to a premium pricing technique which will guarantee its clients quality products and maintain client loyalty. The use of audio-visual media will guarantee the new brand success.
The marketing strategy is to create product awareness among expectant mothers and their families by using digital marketing ads, direct mail tactics sold and generating PR. Also, by creating an online platform such as groups on WhatsApp and Facebook to interact with clients. These marketing platforms will act as good promotional platforms since apparently most people spend time in social media websites. Also, making a fissured workplace will be useful to increase productivity.
2.6 Critical Issues
Based on the SWOT analysis, it will be important for the company to maximize its strengths and work on the opportunities to curb the weaknesses and eliminate the strengths. Employing designers and making use of the strong brand name will see the company evolve new brand fashions and remain relevant in the market. Before the product is introduced, the buying team needs to choose materials, styles, and colors to produce the designs. Suppliers then produce and distribute to American Apparel’s warehouse for introduction into the market.
At the start of the life cycle cost will be high while revenue is low because communications will be made to market, attract, and maintain new clients regularly. CRM analysis will also be run to maintain customer loyalty and trust. During the growth period, revenue starts to exceed cost and contribute to profitability. After the line is made available, American Apparel can do things like adding a link directly to the items from the homepage and weekly newsletter. Ensure adequate stock so not to disappoint customers. Once the line moves into the growth stage it will begin promoting itself as customers see it on digital and print ads. At the maturity stage American Apparel need to remind people about the product online, for example by using trend features on the website and in its newsletters and order more stock to ensure supply. During the saturation stage American Apparel may do things like reduce the price to clear remaining stock while providing an opportunity to make space for new product.
During the first three years, all profit made will be pumped back to the business to increase production alongside catering other expenses. for growth, capital will be invested to do advertisements in audio-visual media such as television and the use of social media platforms. These platforms will ensure growth of the maternity apparel is constant. After the brand is well-known, a premium pricing will be used focusing on quality and innovative ideas.
Kotler, P., & Keller, K. (2011). Marketing management 14th edition. Prentice-Hall.
Fashion Law. (2017). American Apparel: The Rise, Fall, and Rebirth of an All-American FastStats. (n.d.). Births and Natality. https://www.cdc.gov/nchs/fastats/births.htm
Business | The Fashion Law. Fashion Law. Retrieved 30 August 2020, from https://www.thefashionlaw.com/the-rise-and-fall-of-american-apparel/.
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