Question

CASE STUDY: Natalia Norman (About: Competitors and customers)

Natalia Norman is a designer and manufacturer of knitwear clothing. She has based her designs on ethnic patterns, inspired by clothing she has seen in Central Asia. She has sourced her products both from these Asian regions - Uzbekistan and Kazakhstan - as well as from small factories in parts of the United Kingdom. Her products, though stylish, are relatively cheap, but her marketing strategy is totally passive.

She has a website and most of her sales are reactive, responding to orders over the internet. The resultant sales and, in particular, profits have been disappointing and so she has hired a marketing consultant to give her some advice. The following are extracts from the consultant's report.

'Your product, although distinctive, is insufficiently unique. The designs have no patents or copyright and because the production technology is so simple and inexpensive there are few barriers to entry.

Competition is all too prevalent. Your promotion is too general. It focuses on no specific market. By relying on the internet your advertising is rather indiscriminate and you have failed to create a loyal following and your image is diffused with little opportunity for building brand awareness. There is a failure within distribution. Most consumers wish to see, handle or try on products before making a purchase, particularly if the products do not already have a well-established reputation and/or a brand name. In your case the only exposure your products have is via the world-wide web. Your pricing structure is too cost based. You are able to source your products cheaply but your margins are too low to provide you with the necessary capital to reinvest if the business is to develop profitably in the future.

You have failed to establish yourself in the market place as a dominant player. Too many of your business decisions are reactive and often too late to have adequate impact. You are following market trends and not attempting to lead them.'

Natalia is naturally disturbed by the criticisms which this report has leveled at her company's operations and has decided that she must be more positive in her actions. In particular she has decided that her marketing efforts must be more focused and she must pursue more proactively her competitive activities.

REQUIRED

In order to focus her company's marketing efforts more precisely Natalia has decided to segment the market for knitwear products.

(1) Suggest potential bases for segmenting (segmentation) this knitwear market and discuss the benefits which a more focused segmentation could bring to the company.

(2) Evaluate strategies which Natalia might pursue as a market follower to make her knitwear company more competitive.

Answer 1

1)Potential bases for segmenting (segmentation) this knitwear market are:

• Price Based segmentation
• Lifestyle Segmentation
• Gender Based Segementation
• Age Based Segementation
• Geographic Based Segmentation
• Behaviour-Related Based Segmentation

Benefits of more focused market segmentation on a Company

a) Helps determine market opportunities

Companies can reap the benefits of market segmentation by studying the various groups of customers and their level of satisfaction from the existing offerings. Wherever gaps of dissatisfaction are observed, companies can use this as an opportunity to improve and launch products to meet the requirements of this segment.

Tailor-make marketing initiatives

With the help of market segmentation, companies can understand the varied mindsets of their customers. These benefits of market segmentation help businesses to make the necessary adjustments in their marketing initiative targeted at different groups of customers. It further makes the customers feel that the brand is sensitive to their needs and ultimately gain a sense of belongingness with the brand.

2)Strategies which Natalia might pursue as a market follower to make her knitwear company more competitive:-

a) Since the product is new to the industry Natalia should try to establish a clear brand identity through extensive promotional campaigns

b) She should maximise availability of the product through strong distribution channel.

c)She should shift the business strategy to retention of customers from motivating product trial to generating repeat purchase and building brand loyalty.

d) It is mentioned that it is a competitive market so a seller is price taker and customer is price setter, so Natalie should try to find the ideal balance between price and demand as per price elasticity.

e)She should analyse the demand for her product over a period of time and try to find among which category of customers demand for its product is highest.