1.0 Introduction

The retail brand chosen in this report is River Island, of which the new sub-brand, specifically tailored to target the ‘plus size range’ market named “Golden Island”. Part I of this report discusses about the sub-brand idea, the rationale for brand extension, and the fashion industry. Part II is a comprehensive marketing plan developed to guide the brand extension exercise.

Part I: Sub-Brand & Rationale

In order to penetrate the new ‘plus size range’ market, the market potentials and details on this particular segment will be examined. The discussions are presented in several sections as follow.

2.1 The Brand Idea

It is for the ‘plus size range’ market whereby people of big body size can also be fashionable and look graceful. Brand extension is necessary to boost profitability of River Island that is not very encouraging in recent years (Figure 1).

It is valid to assume that the ‘plus size range’ market segment is huge (thereby, a feasible segment), given that statistics show that around 25% of the population is obese (Figure 9 and Figure 10). The age group to be targeted is 35-65 years old (Figure 11). This is a market segment of consumers with higher purchasing power, and great depth (given that percentage of obesity in this age group average about 30-35%).

Brand extension is feasible, as research does indicates that more than half of the women (55%) who are plus size shoppers say they prefer to shop at a store that has a plus size department. Furthermore, variety of product selection is a critical factor causing consumers visit to a retailer (Figure 17).

2.2 Porter Five Forces

To gain insights to the fashion industry (with special attention to the ‘plus size range’ market segment), Porter Five Forces analysis will be applied.

2.2.1 Rivalries among Existing Competitors

The fashion industry is crowded and fragmented with different market players with not obvious leader (Figure 6 and Figure 7). Worse, both Figure 3 and Figure 5 indicates that the expected growth rate of the entire fashion and apparel industry to be slow in UK, which can also means the intensifying of competition among industry players. This is an intensely competitive industry. However, for the ‘plus size range’ market segment; the competitive pressures are lesser, as this is a niche and unique segment.

2.2.2 Bargaining Power of Customers

Due to wide selection of choices (brands, retailers and channel to purchase), bargaining power of buyer is high (an unfavourable situation to River Island).

2.2.3 Bargaining Power of Suppliers

Depending on the size of the fashion retailer, they may have different degree of bargaining power against suppliers. Mid-size retailers such as River Island have moderate bargaining power against suppliers.

2.2.4 Threat of New Entrants

The barriers to entry are relatively low – and this encourages new entrants. Threats of new entrants are high (an unfavourable situation to River Island).

2.2.5 Threats of Substitute Products

There are little effective substitutes. The threats of substitute products are low.

Part II: Marketing Plan

A marketing plan will be prepared to discuss the ways to take the ‘Golden Island’ brand to market.

3.1 Corporate Missions & Goals

The corporate objective for the brand extension exercise is to enhance the profitability of the firm, in the sense of increasing the revenue to be received by the company, strengthen profit margins via the sub-brand, as well as to diversify the sources of revenue. Following that, the marketing objectives are set as follow: (i) to build a strong sub-brand, i.e., Golden River in UK market within 3 years, (ii) to ensure brand profitability by offering trendy and excellent quality products to consumers, at a reasonable price, and (iii) to achieve a growth rate of 100% increase in sales per annum (in the first 5 years this marketing plan).

3.2 Marketing Audit

3.2.1 Macro Environment Analysis

To better understand the business environment, PESTLE framework will be used to guide the discussion. The details are shown in Table below.

Table 1: PESTLE Analysis

Then, to better understand about the competitive forces that can affect the positioning of every single industry players within the ‘plus size range’ market segment; Porter Five Forces analysis will be conducted. The discussions are presented in Table below.

Table 2: Porter Five Forces Analysis

3.2.2 Micro Environment Analysis

Micro environment analysis will research into firm specific issues in River Island (with a focus on Golden Island). First of all, value chain analysis is presented below. It can be seen that River Island can provide the necessary resources for brand extension.

Table 3: Value Chain Analysis for Golden Island

Source: Fleisher & Bensoussan (2003)

Table 4 below however shows BCG growth matrix for River Island. Majority of the products fall under the ‘cash cow’ category. For Golden Island, the outcome is yet to be known.

Table 4: BCG Growth Matrix for Golden Island

Source: Fleisher & Bensoussan (2003)

Product life cycle of most of the plus size fashion products are at its maturity. Nevertheless, when new fashion hit the market, there is a short period of market growth. However, that is unlikely to be sustainable, given product life cycle is shortening.

3.3 The SWOT Analysis

From both the internal (i.e., micro) and external (i.e., macro) analysis, input to form relevant strategy for ‘Golden Island’ can be summarised via the SWOT framework (in Table 5).

Table 5: SWOT Analysis

From the SWOT analysis, some direction that should be pursued by the company includes:

• To engage in brand extension (i.e., Golden Island) to serve the ‘plus size’ market segment for better margins and to lead the growth of the firm
• To specialise and design for the aging population
• To bring fast fashion concepts to serve those in the following age group: 35 – 65 years old
• To focus more on online channel (especially most of the other retailer still focus on brick-and-mortar sales channel) [i.e., try to differentiate itself]

3.4 Assumptions

Several assumptions that guide the marketing plan presented herein that worth mentioning include:

• Demographics changes in UK in the future is minimal and in line with forecast
• There is no new competitors that try to compete with ‘Golden Island’
• The existing competitors maintain their existing strategy

3.5 Marketing Strategies

Overall, the main positioning strategy of ‘Golden Island’ is to focus on the ‘plus size’ people from 35-65 years old, by offering premium grade fast fashion at affordable prices to the mass. The strategy for growth (for River Island), as shown in Table 6, it a product development strategy.

Table 6: Ansoff Growth Matrix

To clarify the strategy, Bowman’s Strategy Clock is employed. The relevant strategy that meets the situation of ‘Golden Island’ is actually a “differentiation” strategy that focuses on medium price with high value added products for consumers.

Table 7: Bowman’s Strategy Clock

Source: Bowman & Faulkner (1996)

To put the marketing strategies in details, marketing mix framework (i.e., 4Ps) will be used to structure the targeting strategies for ‘Golden River’ brand extension exercise.

Table 8: Marketing Mix Strategies

3.6 Expected Results

With the right efforts (i.e., effective execution), it can be expected that ‘Golden Island’ will emerge as the new market leader, in serving the ‘plus size’ market. Revenue contribution from ‘Golden Island’ to River Island will be around 20% within three-year time period.

3.7 Identify Alternative Mixes

There is no alternative mixes required of within the marketing strategies outlined above, in order to achieve the intended marketing objectives outlined earlier.

3.8 Programmes

Various marketing programmes shall be conducted to facilitate the execution of this marketing plan. This is necessary to support the achievement of the marketing objectives.

3.9 Measurement & Review

Constant marketing audit on the environment is necessary to adjust the marketing plan and strategies outlined within this report. The marketing audit should be performed by management heading the brand extension exercise on every quarter. Feedback from customers should be gathered, and recoded. The review of the performance and execution of this marketing plan should be analysed from multiple angle, which include: customer perception, actual revenue, market share and sustainability of the operations.

4.0 Conclusion

This marketing plan had outlined the various aspects of marketing objectives, strategies and techniques required for the brand extension exercise for ‘Golden River’. Nevertheless, it should be subjected to continuous improvement and adjustment, dependent on the changes of the macro and micro environment, whenever relevant.

5.0 Appendix

The marketing plan above is prepared based on the data gained from Mintel database (http://www.mintel.com/). The relevant data used is presented as follow.

Figure 1: Turnover of Market Players in Fashion Market

Remark: It is shown that performance of River Island is weak, as compared to majority of the other retailers. Therefore, it is necessary to boost the profitability of the firm via brand extension (i.e., a product development strategy, which is about to offer new products to an existing market).

Figure 2: Forecast on UK Sales of Women’s Outwear (Graph)

Figure 3: Forecast on UK Sales of Women’s Outwear (Table)

Remark: it is forecasted that growth rate of sales of women’s outwear is around 4% per annum. This is a sign of maturing industry with ‘GDP-like’ growth rate.

Figure 4: Forecast on UK Sales of Men’s Outwear (Graph)

Figure 5: Forecast on UK Sales of Men’s Outwear (Table)

Remark: it is forecasted that growth rate of sales of men’s outwear is around 4.8% per annum. This is a sign of maturing industry with ‘GDP-like’ growth rate. Both Figure 3 and Figure 5 indicates that the growth rate of the entire fashion and apparel industry to be slow in UK, which can also means the intensifying of competition among industry players.

Figure 6: The Industry Players

Remark: Some of the industry players include: M&S, Next, Debenhams, Primark, TK Maxx, New Look, Matalan, Asda, Tesco and Sainsbury. Some of these players are retailers with wide product portfolio, such as: Asda, Tesco and Sainsbury. It is noted that the market is quite fragmented, without a dominant leader. This is akin to the price-taker market, which means the industry landscape is likely to be very competitive.

Figure 7: Market Segregation

Remark: it is noted that while M&S is the market leader, the advantage edge the company possess against the competitors are unclear. The data reaffirm the findings from Figure 6 that the fashion industry is one that is very competitive.

Figure 8: Trend of Obesity in England (1993 - 2011)

Remark: There is a trend of rising proportion of obesity among the population in England, for both men and women, over the time period being researched. This is true for both genders.

Figure 9: Proportion of Overweight and Obese Male Population

Figure 10: Proportion of Overweight and Obese Female Population

Remark: both Figure 9 and Figure 10 reaffirm the findings from Figure 8. It is shown that percentage of overweight and obese female and male in England is high, at around 25% of the population. This is indeed a huge market segment.

Figure 11: Female Obesity, by Age (2009 – 2011)

Source: There is a tendency whereby obesity tends to increase in proportion to the age. Indeed, percentage of obesity is high in this particular age group: 35 – 75 years old. This is a business segment that worth targeting at, given that the range of age is wide, and that such consumers are typically have greater purchasing power (i.e., disposable income), as they are working adults (i.e., in their earning years).

Figure 12: Change of Cotton Prices

Figure 13: CPI for Garment

Remark: input prices are relatively stable.

Figure 14: Reasons Consumers Make their Purchases

Remark: Quality and prices top the reasons – in influencing purchase decision of consumers.

Figure 15: Impacts of Age on Consumers’ Perceptions

Remark: As the consumer age, quality is becoming more influential factors in affecting their purchase decision. However, it is noted that consumers at 35-45 years old are relatively price sensitive.

Figure 16: How to Improve Shopping Experience

Remark: to provide personalise stylish advice is crucial to win over the heart of the consumers.

Figure 17: Reasons Consumers Prefer certain Retailers

Figure 18: Trend of Online Shopping

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