Massimo Dutti Marketing Analysis

Massimo Dutti Marketing AnalysisMassimo Dutti was founded in 1985 as a society whose principal(prenominal) activity was the sale of expressive style subject mens clothes. Ten age later, the commercial format was bought by the Inditex Group (Industria de Diseo Textil S.A.), virtuoso of the worlds largest port distri totally whenors, who owns brands standardised Bershka, Pull and Bear and Zara. The Inditex Group as a self-coloured has more than than 4,530 stores in 74 countries in europium, the Americas, Asia and Africa. The group too partly and wholly owns more than a hundred companies related with the contrary activities in the employment of textile and fashion design, manufacture and dispersion. Its unique management model, ground on innovation and flexibility, and its vision of fashion has chaired in fast outside(a) expansion and an excellent performance of each its commercial formats.Today, Massimo Dutti has more than 490 stores in 41 countries. The bon ton en tered UK in 2003 with its first store in London. The sassy megastore occupied three floors of a building placed in downtown Regent Street, which had more than 2,000 squ ar meters of business atomic number 18a. Massimo Dutti offers eccentric transnational fashion design for men, women and children, with a variety of collections that range from sophisticated urban fashions to episodic wear. Its universal design connects with indep rarityent urban men and women whose lifestyle portrays an spot little(prenominal) image. During 2008 Massimo Dutti ex take to the woodsed its assortment of complements and accessories to help customers find the small details that lucre the difference in style and add the finishing touch to the craved look. Highlights in this product extension be the bare-assed line of center and sunglasses, The Eyewear Collection, with more models for men and women, and the launch of a new womens perfume, En Esencia. The companionship alike added the childrens l ine in 2008 which acknowledges collections for boys and girls and was launched in Paris. During the same kind, the chain entered hexad new countries Poland, Romania, Czech Republic, Slovenia, Guatemala and Israel. It similarly continued its expansion in the Asian Pacific region, opening its second store in Hong Kong, in give City, whiz of the citys main shop areas. With this establishment, Massimo Dutti now has three stores in chinaware, where it receptive its first store in 2007 in Macao. In total they assailable 44 new stores in 38 new countries to develop their international presence. (Appendix B.1, B.2, B.3)This fib examines the environment in which the company is situated. The macro environment c overs the hacks in the changing environment and how they could potentially impinge on the Massimo Dutti supply chain. It besides suggests miscellaneous opportunities and threats that the company may pay to face. The second section of the report analyses the heterogeneo us stakeholders i.e. the suppliers, consumers, competitors etc in under the micro environmental analysis. The third section of the report analyses the internal environment and includes the supply chain analysis, the foodstuff placeing resources, financial resources and the military soulnel resources employed within the arranging. The report concludes by suggesting a strategic attention the company should take in order to reach its integral potential.macro Environment AnalysisMassimo Dutti being a global memorial tablet is switch over by a exit of macro environmental factors. These factors are the foundation garment on which a company develops its understanding of the markets, business position and the strategic direction for its operations.In fresh eld the macro environment has been progressively being put into consideration beca custom of high marker volatility, the global deceleration and the economic inletalal. These factors non only pose a long threat to bus inesses but offer also create umteen opportunities which a company passel identify and take advantage of. For instance, if a business is able to assess its current environment and predict potential changes, it will be better placed in its marketplace than its competitors to respond to changes in the environment. thus understanding and operating with the macro environment i.e. the external environment in which the business operates, is change magnitudely becoming the distinguish to organisational success as it send word help to maximise opportunities and minimise threats which the organisation faces. In other(a) lecture a macro environment s lay slightly shag help us to identify diverse opportunities and threats in the organisation. at that place are a deem of macro environmental factors which relate the UK array sell market. These factors are cognize as the PEST factors or the political, economic, kind and technological factors which help the scanning of the environ ment. (Appendix A.1)(P)olitical EnvironmentThe costume retail sector in the UK has seen a number of changes in their political environment in recent years. The first change is the recent expansion of the EU territory which has facilitated import and export amongst discordant countries within the EU. As a result of this trade between these countries effective agreements and setting up new operations and stores has become more mesmerizing than ever. For Massimo Dutti it translates to wider markets and a wider consumer base twain within and outside the UK. This type of an usurpation is visible in a long term with a ircreditworthy and increasing impact to the company.The second change is the change in hobby rates and government activity taxation which is the result of the global economic box. The government has implemented a range of measures to stabilise the financial markets and stimulate the thriftiness including part-nationalisation of some banks, VAT cuts, and su going public sector borrowing rules. Also In March 2009, the Bank of England cut interest rates to a reputation low of just 0.5% where they remain at the time of writing. The government also gave the go-ahead for the more drastic policy of quantitative easing in an apparent motion to kick-start the economy. (Appendix A.2) The impact of this government policy has resulted in a higher form of disposable income in the hands of the consumer and has thus facilitated the retail sector. On the other hand when interest rates eventually start to bear witness they could do so quite suddenly and sharply thereby increasing the risk of less spending on mid-market luxury retailers like Massimo Dutti. (Appendix A.3)(E)conomic Environment- ecological niche the UK Clothing RetailThere render been numerous amounts of economic changes since 2007 which are the result of the global economic slowdown and the street corner. Until recently the British economy was enjoying the longest period of growth an d had outpaced most of the rest of Western Europe. simply the global economic downturn, tight credit and falling house prices brought the UK into the recession in the rachiswards half of 2008. This economic downturn resulted in a change in the economic factors that affected the UK retail sector as a whole. The fashion assiduity in particular has been more undefended to such a downturn than other retail settings.Due to the recession the economy has shown frequent fluctuations in the currency rates. This change has affected the retailers as they commit absorbed these fluctuations. This is because they are situated in a price-led market i.e. realize to provide competitive prices in the market to survive only putting more pressure on their profit margins.Also collectible to the decrease in the disposable income of the consumers only the cheap fashion / fast-fashion sector has benefited. Companies like Pennys, Primark and TK max have recorded highest gross gross revenue due t o the recession. The implications of such a edit are that less money is spent on clothes designer clothing as well as accessorises. Consumers may cave in spending on high end luxury brand and accessories and go in for fast-fashion clothing thereby posing a risk to Massimo Dutti. It can also be noted that spending on clothing has lessen than compared to other spending sectors. The global economic slowdown has impacted hard on clothing retailers as it has hit consumers willingness and ability to spend on discretionary items. therefore companies like Massimo Dutti may face a slowdown in sales volumes.Unemployment has climbed consistently since mid-2008, reaching 7.8% by Q2 2009 and it could rise to over 10% in 2010. Youth unemployment (18-24-year-olds) exceeded 17% by the second buttocks of 2009 and in the short term will continue trending upwards. This impacts heavily the purchasing power of those concerned and therefrom reducing an grave market ingredient for mid-market l uxury retailers. (Appendix A.2, A.4)(S)ocial Environment- The Changing DemographicsThe social environment relates to consumer attitudes and opinions towards different product types and brands in the marketplace. It also relates to changes in consumer behaviour and their demographics i.e. age, sex, gender, family size etc. Changes in social trends can impact on the demand for a firms products and the approachability and willingness of individuals to work. thusly it is very important for the firm to identify these factors and translate them into opportunities and get loose of all potential threats.A large number of consumers have changed the agency they shop for clothes and in the main those changes involve strip back in some way by spending less, by in the main vitiateing discounted lines, or by sullying from value retailers or less expensive shops. According to a inquiry by Mintel over one in four masses have not changed their shopping habits for clothes since the recessi on started but many consumers have, and the most significant changes are all savings-related i.e. spending less, shopping some more, not buying at full price, buying more from value or less expensive retailers. (Appendix A.5) This cutting back on expenditure by the consumer means that they wish to spend more on value retailers rather than mid-market luxury retailers.According to Mintel the mid-market member has also squeezed as a result of a price-led consumer market. For instance mid-market players like like-for-like and Dorothy Perkins have gone down in sales. Like-for-like traded down 2.4% in the Q1 of year 2009-10 and Dorothy Perkins was still heavy with summer markdowns when rivals were relatively clean with new free fall ranges. bed coverings international quarterly sales to August 2009 dropped by 5% which is an important competitor for Massimo Dutti. Other mid-market players like HM and MS have traded up as they are price-led retailers. (Appendix A.6) On the other hand hi gh-end designer buyers tend to buy more from the mid-market than from the upmarket high thoroughfare retailers as a result of the ongoing recession. This is because of lack of particular brand loyalty, financial inability to buy everything from designer brands and the tendency of buying basics (i.e. T-shirts, jeans etc) from the mid-market retailers. (Appendix A.9)Another trend in change is that the 25-54s have traded down the most amongst all other consumer age groups. This age band has been among the worst hit by the recession because of their larger financial commitments. This age group is the main target market for Massimo Dutti and hence affect the company sales the most. (Appendix A.7) Because of a combination of various above discussed factors customers are much more likely to now buy more from familiar brands/shops they trust. (Appendix A.8)(T)echnological EnvironmentThe technological environment consists of changes in applied science related to the manufacture, sourcing, distribution or sales of a various components of products in that industry. A change in technology for various routinees in the industry sometimes creates barriers to entry and also leads to innovation. Thus it is very important for firms to oblige to the changing trends of technology.Online fashion has become significantly more popular as choices have improved. These days many consumers prefer to shop online as it not only saves time but also offers a full hatful of the collection at a single click. Fashion sites are also engaging more effectively with the customers through better product imagery, establishing online communities utilising substance abuser generated content, introducing virtual changing rooms etc. These types of innovations help the consumers to establish a better three dimensional understanding of the products they want to buy and hence provide a better opportunity for the marketers to capture the consumer. (Appendix A.10)Another trend is M-commerce. It is a pot ential source of growth for the future, particularly among the young a place demographic for fashion. But it will depend on more retailers launching mobile applications and on consumer ownership of smart phones. (Appendix A.10)Other FactorsThere are some other factors other than political, social, economic and technological factors that affect the UK clothing retail market. One of them is the environmental concerns facing the fashion industry today. Many environmentalists have raised objections against fast-fashion goods as they not only end up in landfills faster than usual but also because of the time, effort and resources utilized in their production. According to a research it shows that on number in the UK 30kgs of clothes per person are dumped into landfills as a result of the fast-fashion. It accounts for about 1,000kg of CO2 a year roughly half that emitted by a small diesel car. Each year the average person in the UK spends about 650 on 50 or so items of clothing and ac counts for a large part of our carbon footprint. When they are manufactured, when they are transported, when they are washed and even when they are thrown away, clothes are responsible for significant greenhouse gas emissions. 90% of the clothes people buy in the UK are transported from abroad, mainly from china, India and Bangladesh and it only adds to the environmental impact of clothing. Also, working(a) in the textiles industry often means long hours, low pay, scummy safety records and the use of child labour. This it raises environmental and ethical concerns (Appendix A.11). It raises concerns for the Inditex group as a whole as their prime focus recently has been the foundation garment of fast-fashion products into the markets through their various brands.Massimo Dutti OpportunitiesWith the help of the macro environmental analysis opportunities of the company can be identified. These opportunities can be maximised so the company can be placed ahead of its competitors in th e market. These opportunities are As a result of the EU territory expansion Massimo Dutti is able to reach wider markets both within and outside the UK increasing the scope of operations in the company. It also means that it is easier to source materials from the partner countries, which is an important aspect of Massimo Duttis business strategy.The stimuli provided by the government in 2009 as a result of the economic recession have helped the people to overcome the problems of disposable income and hence has boosted the retail sector. however the impact is very long term and takes time to show signs of recovery.Shoppers of high-end designer clothes tend to buy more from the mid-market than from the upmarket high street retailers as a result of the ongoing recession. This has helped retailers like Massimo Dutti to capture new demographics.As a result of the rising concerns over the recession people have started spending lesser and lesser on clothes but have started to spend more o n accessories which help them to look different with the same amount of clothes. Massimo Dutti thus has a competitive advantage because of their recent launch of men and women accessories as an addition to its prior range.Online shopping is one of the recent emerging trends in the fashion industry. This opens up markets for consumers who previously were otiose to shop at specific stores. This also reduces the need for a sensible location of its stores. This provides a huge opportunity for mid-market retailers whose sales can be boosted in the presence of online sales.M-commerce is another technological factor affecting the industry. It can tap the key demographic i.e. 25-50 year olds and therefore has a great potential for companies like Massimo Dutti whose main target market is this demographic.Massimo Dutti ThreatsDue to the frugal recession and currency rate fluctuation it has been difficult for retailers to keep up with a price-led market. This impacts the already low profit margins thereby posing a threat to the retailers.As a result of the decreasing disposable income mid-market brands have suffered because people have shifted from them to fast-fashion cheap retailers who provide fashion clothes at a cheaper price.Another trend in change that has impacted Massimo Dutti is that the 25-54s have traded down the most amongst all other consumer age groups. Being the key demographic of the company it has affected sales and may continue to do so in the future.As many environmentalists have raised objections against fast-fashion it poses a threat for companies like Inditex (Massimo Dutti) as their core business model revolves around the concept of fast-fashion goods.Micro Environmental AnalysisThe micro environmental factors are those which are related with the firms immediate area of operation that affects the performance and finality making in that organisation. These factors also affect the overall costs of the organisation the quality of products supplie d and directly contributes to organisational success. There are 3 major stakeholder groups which affect these factors. These are the suppliers, consumers and the competitors.The SuppliersThere are a number of ways in which the suppliers affect the performance of a firm. These may be related to the quality the supplier provides, the quantities that can be sourced from the suppliers, lead-time demands of the market or the ethical and environmental concerns followed by the suppliers. All these factors are responsible for having the right product at the right time to satisfy the demands of a firms consumer. Based on these factors firms essential decide on issues such as who to source from, responsibility it takes for these suppliers and on the terms and conditions it adopts.Inditex has over 1,186 suppliers around the globe making it vulnerable to many factors. One of the most important trends in change is the adaptive process of suppliers to operate in low cost regions. This is because the textile industry inherently is a labour intensive industry and hence was the first to make a motion to low labour cost regions. Five years ago, China was the only source for low cost products but now Vietnam is competing against inland China and parts of India for that same position. This is because of the increased internationalisation of the clothing companies in Europe in the past decade. As buyers are squeeze to spread their volumes crosswise different regions, these regions or countries enter into competition with one another. This led to the conception of special economic zones in many countries, by and large with cheap labour. in addition cheap labour and resources these zones have no other connections to the local economy. On the other hand they are directly influenced by the high degree of fluctuations caused due to favourable or unfavourable conditions in foreign markets. China is one of the key suppliers to the European apparel industry but is less competitive th an eastern European countries because of added logistics costs. (Appendix B.4, B.5)Another factor that has affected the suppliers is the requisite of buyers for environmental compliance and labour standards. Recently the government has launched a agitate to tackle the environmental and social impact of the fast fashion culture. As a result of this many retailers have introduced changes in their supplier regulations. For simulation Marks and Spencer, Tesco and Sainsburys have pledged to increase their ranges of Fair-trade and organic clothing, and support fabrics which can be recycled more easily. Also Tesco is banning cotton from countries known to use child labour. All these changes in the buying behaviour of the retailers have forced suppliers to follow stricter guidelines on environmental and ethical issues. (Appendix B.6)The ConsumersThe customers are a key to sales of all retail formats. An organisation must monitor its consumers and the trends in change that affect the cons umers. By gathering data on shopping patterns of the consumers the retailers can identify possible changes required to the marketing strategy. It can be in the form of a changed target market, the change in distribution channels or by responding to the new product or set needs of the consumers.The target market for Massimo Dutti is women of 25-45 years old and men of 25-50 years old catering to the upper middle and upper socio economic class and upper middle cultural interests. The customer plays an active role in the Inditex business model. At Inditex production activity begins once customers demand reactions have been analysed. Unlike the traditional fashion company business model which started at the designers drawing table, Inditex activities starts by assessing the customers demands and continues to the store.The economic downturn is helping to boost sales of value clothing retailers. Consumers have been forced to cut back on other categories of spending like holidays abroad a nd restaurant meals. But consumer research shows that clothing is to be the most vulnerable area of spend amongst adults who have been forced to cut back their expenditure due to the recession, although value clothing appears to be one area of clothing expenditure that is responding positively to the trend. In response to economic worries, consumers are saving more and they appear to be trading down on clothing as a consequence. specializer fashion discounters or value clothing retailers (led by Primark, TK Maxx and Matalan) are the main beneficiaries of the strong growth in value clothing sales, and have seen their sales rise by 7% to 5 billion in 2009. (Appendix B.7, B.8)The GfK NOP consumer trust index, published on 31st March 2010, showed that overall UK consumer confidence overlook to -15 in March, from -14 in February. The 2,000 adults interviewed by GfK NOP also took a more disallow view of the overall economic situation over next 12 months. The index also indicated that consumers are becoming more cautious about of their own personal financial situation. (Appendix B.9)The CompetitorsAnother important factor which affects the micro-environment of an organisation is its competitors. The success and behaviour of any business will depend on the degree of competition in its market. In the case of fashion retail market the competition is intense because of a large number of players in the market. This puts a downward pressure on the price of the product offerings. Thus it is very important for a organisation to identify and monitor its competitors in order to obtain a competitive advantage.The major competitors to Massimo Dutti as a brand are spread, banana tree Republic, Mango and HM (Hennes Mauritz). good luck Banana Republic (Gap Inc.)Gap Inc. is a clothing retailer from the US that has spread out into Europe via operations in the UK, France and Ireland. Clean, classic, American designs are the words on which the brand was founded and the current offer continues to reflect these values. The commercial formats at Gap Inc. include Gap, Gap Kids, baby Gap, Gap Maternity and Gap body under the brand name Gap. Other brands which do not include the brand name Gap are Banana Republic and older navy. Gap and Banana Republic have 140 stores in the UK. As a result of the tough trading conditions in all its markets, Gap saw the sales decline by 12% in 2008. However, Gap maintains a mid-market stance and as a result has looked to more muffled colours in the current recessionary climate as consumers strain items that will last longer. In August 2009 the company also ventured into the UK e-commerce arena, announcing the availability of Gap branded items on the ASOS website. (Appendix B.10, B.11)MangoMango is one of Spain largest clothing specialists and has also built up a sizeable international business in Europe, Asia and the Americas. Mango predominantly targets women aged 18 to 30 with a fashionable and sophisticated offer. Mango designs, manufactures and markets womens and mens clothing and accessories. Mango currently has a total of 1,220 stores in 91 countries worldwide. In the UK it operates 42 outlets which are mostly franchised. Mango follows the same multi-brand strategy as of Inditex. Mango has admitted that the global recession has led to a decline in the sales volume in early 2009 in markets such as Spain, Ireland, the UK and Russia. Consumers have been cutting back on their spending, particularly on discretionary items such as clothing. In reaction Mango has launched Think Up, an affordable sub-range for the weaker consumer climate. Recently, the group has expanded into menswear and has also hinted that it may launch a chain that targets younger shoppers. (Appendix B.12, B.13)