Executive Summary FJ Benjamin is a Singapore based fashion and lifestyle company. The company distributes major clothing brands and accessories, and is one of the leading fashion distributors in Singapore. Their success is derived from their ability to secure distribution rights from major brands. FJ Benjamin introduced it very own house label, Raoul, in 2002. Raoul was created to increase the company? s portfolio as well as to diversify away from distribution risk.
Raoul contributes a large percentage of FJ Benjamin? s annual revenue.With intensive competition in the fashion industry, Raoul must have it own identity in order to differentiate itself from the competitor. Analyses have been undertaken to determine what necessary strategies to be implemented to enhance the brand image so as to increase profits.
Strategies are recommended by taking advantage of Raoul? s strengths and building on their weaknesses in order to take advantage of the available opportunities in the market and to defend it from threats. Studies of the internal and external environment had been conducted to be able to work with Raoul? core competencies to gain a competitive advantage over its competitors. This report concludes that Raoul needs to make adjustments on its marketing strategies, and maintain some of its current strategies, in order to be more competitive in the fashion market. Hence, it is proposed that (1) Raoul focus on a single-market strategy and focus on the local market as well as to create strong market commitment, to be able to serve customer better. (2) Introduce a new ecofriendly product line based on product improvement strategy, and offer product customization for current and new products, as well as enhance current product and services. 3) Maintain current product pricing, and implement price skimming strategy on new product line. (4) Maintain its efficient and cost effective distribution strategy.
(5) Changes are to be made on its promotional efforts in order to gain max exposure possible. Benefits of the proposed recommendations would allow Raoul to achieve the proposed objectives which includes increasing in sales revenue, repurchase rate, and introducing a new product line within the next three years.It is there for proposed that the recommended strategies be implemented at Raoul to be able to reap in revenues as well as gaining a competitive edge in the fashion industry for a highly sustainable business.Over the last 20 years, Singapore has taken a great leap in its fashion industry. Singapore is recognised as the second largest fashion apparel business and sourcing hub in Asia-Pacific after Hong Kong. Special fashion events such as Singapore Fashion Week and Singapore Fashion Festival are some of the impressive achievements made in the fashion industry. These events played a critical role in portraying Singapore as a major fashion hub in the whole of Asia Pacific region.
This also gives both local and international designers a platform to showcase their talents to the fashion industry in this region.Today, a total of 4,500 wholesalers, retailers, and manufacturers generate some $7 billion in operating receipts and $1. 2 billion in value added to Singapore economy.
As Asian consumers become more affluent, they increasingly drive global demand. With Singapore? s strategic location, cultural affinity and connectivity with the region made Singapore an ideal place to serve as a test-bed to gather and analyse consumer insights, to develop products for the Asian market. This also made Singapore an optimum location for many companies to set a base in, managing and controlling their regional and global operations. . 0 Corporate Background F J Benjamin was founded in 1959 by Frank Benjamin, who came from a well-to-do family who have been in the fashion industry before World War 2. The company was initially FJ Benjamin and Sons but due to the nature of the business, where it positioned itself as a holding firm with subsidiaries, it was later renamed to FJ Benjamin Holdings Ltd in 1993 (Wang 2009).
The company started of dealing with photographic equipment, and everyday novelties such as paper products as well as pots and pans.However, in the 1960s, the company started to modernise its operations by entering into partnerships with many fashion labels, by importing and retailing designer jeans. The success motivated Benjamin to focus his business on the fashion industry. The company brought in brand names such as Lanvin, Gucci and Fendi in the early 1970s, and was a big player of the fashion industry in Singapore (Wang 2009). FJ Benjamin was listed on the SGX in 1996, before the Asian financial crisis, posting a net loss of over $40m in their first financial year; it was mainly due to high operating expenses and fixed cost.The profitability of the company continued into the early 2000s, where they lost major brand names such as Gucci, Lanvin and Fendi. The company learnt to diversify away from distributorship risk by developing its own brand, thus the creation of Raoul. 1 Company Present Operation& Business Core Today, FJ Benjamin has operations in eight cities worldwide, including Singapore, Sydney Australia, Jakarta Indonesia, Hong Kong, Vietnam, Kuala Lumpur Malaysia, Taiwan and Bangkok Thailand carrying over 20 brands and has over 180 retail stores in the Asia Pacific region.
FJ Benjamin focuses on 3 core business; fashion retailing and distribution, timepiece distribution, and licensing and design: (FJ Holdings Limited 2009). ? Fashion retailing and distribution core – Acquired rights to distribute major fashion labels across the South East Asia and the Pacific region ? Exclusive distributers of timepiece – Acquired rights to distribute timepieces in the South East Asia and the Pacific region ? Licensing and Design – Has a design division to design for Guess Kids and its own house label, Raoul However, they also have their fair share of failures, one example was with the Manchester United brand and Devil? Bar that were unprofitable, which the company had a joint venture with CEO of St James Power Station, Dennis Foo. The company dropped the Manchester United brand name and closed all its retail stores and cafes. Current Developments FJ Benjamin is benefiting from Singapore? s healthy economic growth.
With Singapore transforming into a tourism hub, and the opening of Marina Bay Sands (MBS), the company had took advantage of the influx of visitors and has opened four new retail stores at the MBS, including brands names like Guess, Banana Republic, La Senza and Raoul; totalling the number of stores in Singapore to 32.The management was optimistic with its new stores as it was able to secure attractive rental rates at MBS and would be able to benefit from the ever growing number of tourist. The company also stand to avoid other competition with the opening of new shopping malls in Orchard Road and other shopping districts in Singapore (FJ Holdings Limited 2009). Future Developments FJ Benjamin had secure exclusive distributorship for high end brands such as Goyard, Givenchy and Dewitt, building the company? s brand portfolio to more than 20 reputable brand. The company? success is evidenced by its ability to attain distributorship of French luxury giant Moet Hennessey Louis Vuitton? s (LVMH) Celine and Givenchy; this is only the beginning of their collaboration with LVMH (FJ Holdings Limited 2009). 2 Company’s Milestones & Achievements FJ Benjamin have made its mark in Singapore and have been contributing much to the fashion industry and providing various lifestyle products [See Appendix 1]. Corporate Vision FJ Benjamin? s vision is to be a global company ? Dedicated to delivering their promise to their customers by fulfilling their lifestyle aspirations ? Committed to talent development Delivering sustainable and superior returns to their shareholders Corporate Mission FJ Benjamin? s mission is strive to lead in everything they do ? Implementing brand strategies with deep market penetration ? Delivering superior customer service with long-term customer loyalty ? Empowering employees to deliver value processes for phenomenal growth ? Pursuing best-in-class economics with strong margins Corporate Social Responsibility (CSR) FJ Benjamin has been committed to various charities in Singapore since the company was founded in 1959.
The company believes that charitable giving is a necessary element of CSR.The company? s Charitable Giving Committee is made key employee of the company. The committee meets on a quarterly basis to review the company? s charitable initiatives and approves all charitable giving. The company sets aside up to 1% of its net profit for a fiscal year, in forms of monetary or in-kind gifts. FJ Benjamin? s charitable objectives includes, supporting good causes relating to health, education, arts and/or the community in Singapore. The company also encourages and supports projects and activities that helps strengthen in which their employees work and live in.
FJ Benjamin? Contributions to the society [See Appendix 2]. Company Structure FJ Benjamin Holding employs a divisional structure that is divided according to geographical region and further subdivided into countries and product [See Appendix 3]. In the South East Asian region, the company branch out to various countries such as Singapore, Malaysia, Thailand and Indonesia. Each country would then be fragment base on products, e. g. Timepieces, Investment and Concepts (FJ Holdings Limited 2009). 3 As of financial year end 2009, Douglas Benjamin is the Chief Executive Officer for FJ Benjamin Singapore.Mr.
Douglas oversees the operation in Singapore, directs the international expansion of Raoul house label and heads the Raoul design team as a Creative Director. Douglas Benjamin has strong experience in brand management and development of retail distribution thereby allowing the company to expand quickly into various regions within eight years and having a diverse range of products (Star Creation 2010). The senior management board in Singapore includes Samuel Benjamin, Quah Kim Tong and Matthew Chan (FJ Holdings Limited 2009).Samuel Benjamin is the Group Director of Timepiece and the Senior Vice-President of FJ Benjamin Fashion U. S. Inc. He joined the company Fashion division in 1991 and has more than 19 years of experience in the retail industry (FJ Holdings Limited 2009). Quah Kim Tong is the Director for Wholesale.
He administers the logistic/ distribution center in Singapore, plus the distribution business of Sheridan and Guess Accessories. He started his career as a product manager in 1982 and steadily moved up the corporate ladder. Matthew Chan is the Divisional CEO of Fashion and Corporate Services.He oversees the day-to-day running of the fashion retail in Singapore, as well as the managing the back end support services in the company. Mr. Chan joined the company back in 2006, providing strong organizational and financial knowledge from his past experience as Director for Head of Channel Acquisitions and Head of Acceptance with American Express. Key stakeholders FJ Benjamin key stakeholders are directly affected by the company? s performance, which includes: ? Customers who purchase products from various SBU ? Employees – Management staff to salespeople ?Licensors who sell the distribution rights to FJ Benjamin ? Retail malls that leases out spaces for company? s retail division ? Investors who own FJ Benjamin? s corporate share ? Creditors – Banks ? Shareholders ? Government agencies which may require the company to abide/ conform to accounting standards, taxation regulations and employees? CPF ? Trade unions which may certain framework that the company needs to work within; such as working hours and minimum wage 4 Financial Performance Financial Year Profits after tax and shares 2005 4. 26 million 2006 10.
17million 2007 1. 47millon 2008 14. 8 million 2009 (2. 66 million) Table 1 Financial performance of the past 5 years The growth from financial year 2005 to 2006 was mainly attributed by attainting the distribution rights for Gap and Banana Republic in Singapore and in Malaysia. During the same year, other SBUs, namely Raoul and Timepieces started its expansion into the Middle East and Thailand (FJ Benjamin Limited 2006). The significant growth from 2006 to 2007 was further encouraged by the optimistic economies and mainly by the conversion of warrants to share (FJ Benjamin Limited 2007).The decline in profit for 2007 to 2008 was caused by the subprime crisis in America, the increasing inflation rate that reduced consumer spending power and the high volatility in the financial market.
It was also noted that, FJ Benjamin exited from the Thailand market due to the political instability and shut down two timepiece shop in Hong Kong due to poor results (Leong 2010). On the other hand, the company reassured shareholders through their diversified portfolio of brands and vigilant cost discipline; the company business is still viable (FJ Benjamin Limited 2008).As of financial year end 2009, FJ Benjamin had made a net loss of $2,661,000 compared to a net profit of $14,804,000 in 2008. The loss in 2009 was caused by the financial crisis.
FJ Benjamin minimizes their financial risk by ensuring that there is sufficient cash reserves to meet any unforeseen circumstances and is committed to a low gearing ratio. 5 Breakdown of Financial Result Liquidity ratio Current ratio Quick ratio 2009 2. 11 times 7. 8 2008 1.
67 times 14. 7 Table 2 Financial results – Liquidity Ratio The liquidity ratio refers to the company? ability to meet its short term obligation (Madura 2007, 580). As compared to 2008, the current ratio has increased but it is still within the healthy range of 1 – 2. Excessive liquidity could imply that the company may have excessive cash or stocks in inventories (Madura 2007, 580). Leverage Ratio Debt/Equity ratio 2009 2.
13 2008 1. 14 2009 -2. 02% 2008 10. 65% Table 3 Financial results – Leverage Ratio Return on Equity Table 4 Financial results – Return on Equity Return on equity measures the return of investments in the firm for the shareholders (Madura 2007, 586).Although losses were made in 2009, the company has since been making steady progress in their quarterly financial results as show in Figure 1.
2009 Earnings per share (cents) 2008 -0. 47 2. 61 Table 5 Financial results – Earning/share Earnings per share serve as an indicator for the company? s profitability. Since in 2009 losses were made, it is accepted that the earning per share would decrease significantly as compared to 2008. Figure 1 Analysis of Financial Results Despites the losses made in 2009 due to the financial crisis, FJ Benjamin has since been making steady progression.For first quarter 2010, a net profit of $459,000 was made, followed by the second quarter with a net profit of $1.
72 million and latest financial results for third quarter 2010 showed a net profit of $3 million. 6 The company is financially sound; based on the breakdown of ratio, financial reports and third party recommendation for investors to invest in the company. FJ Benjamin has recently secured license for Goyard, a French luxury retail brand and has intention to introduce three other new brands in 2011 (Seow 2010). Currently the company has plans to expand into China and widen its existing market in US and Europe (Leong 2010). . 2 Strategic Business Unit Fashion FJ Benjamin? s fashion retailing includes prestigious line such as Guess, Celine, La Senza, Banana Republic, GAP and Raoul. It takes up two-third of its profit turnover through fashion retailing (Wang 2009). Timepieces F J Benjamin held exclusively rights to distribute timepiece brands such as Bell & Ross, GirardPerregauz, Guess, Chronotech, Victorinox Swiss Army, Marc Ecko, Rado and Nautica (FJ Benjamin Holdings Ltd 2009).
Timepiece contributes about 30% or one-third of FJ Benjamin? s profit turnover through retailing (Wang 2009). Creative & LicensingFJ Benjamin? s creative and licensing division has conceptualized and developed house brand Raoul and has licence to create original designs and manufactures merchandise, such as Guess Kids. 7 2. 3 SBU BCG Matrix The following is the tabulated values for BCG matrix analysis, for the breakdown of calculations [see Appendix 4]. Largest Competitor 2009 2008 RMS Growth rate % Total Fashion $48. 92 $203. 40 $226.
30 4. 17 10% 68. 00% Timepieces $35. 87 $94. 30 $113. 40 2. 59 17% 31.
00% Licensing $14. 80 $2. 20 $2. 70 0. 20 20% 1. 00% Table 6 BCG matrix analysis Star Question MarkDog Growth Cash Cow Relative Market Share Figure 2 BCG Matrix This shows that Raoul is considered a cash cow of FJ Benjamin? s business with high relative market share and average industry growth rate.
Raoul is currently positioned under a maturity stage where growth rate and market share may decline into dog in the next few years. Therefore, new marketing strategies are needed to maintain the Raoul? s position by altering the product, price, distribution and promotional strategies to increase growth and maintain its current market share. 8 3. 0 SBU Raoul Situation AnalysisRaoul is the brainchild of creative director Douglas and Odile Benjamin (Raoul 2008). Currently Raoul is one of the most profiled fashion brands coming out of Asia. It is being known as a stylish, innovative fashion brand offering high quality accessible luxury products to their consumers. Raoul? s is designed, manufactured, and retailed under a corporate vertical marketing system with is solely owned by FJ Benjamin (FJ Holdings Limited 2009).
3. 1. 1 SBU Culture FJ Benjamin believes that Raoul can help them move up a level from being a brand distributor to a brand owner.Frank Benjamin claims that in fashion today, there is no shortage of brands and there would be market that Raoul can cater to (Sim 2009). Raoul has created a new history for Singapore by introducing luxury fashion-forward corporate wear at an affordable price to business executives in Singapore. Raoul has become a renowned homegrown label that is now known to many business executives that demands style in corporate wear. (Smart lines for business times n.
d. ) Raoul has such a strong influence in Singapore that local Prime Minister Lee Hsien Loong wore a pink Raoul tailor shirt during his National Day Rally Speech.Therefore, with a strong culture and adequate support from the parent company and local government, Raoul culture can become part of the Singapore heritage brand (Jalal.
2010). 3. 1. 2 SBU Resources Tangibles Resources Physical Physical refers to the equipments, furniture, retail outlet which can use to grow or sustain the business.
With 24 Raoul flagship stores in Southeast Asia and Dubai, the company is still looking to expand its geographical footprint. Currently, FJ Benjamin occupies the second floor of the “The Alpha” at the Science Park. It is filled with show boutiques and workrooms.
It is used by the company’s visual merchandising team for training purposes and doubles as an impressive space for press samples (Simon 2009). This allows Raoul? s staffs to provide quality service to the consumers by using boutiques to train, giving them a chance to experience in a real life scenario. The availability of showroom allows Raoul to customize its concept layout before executing on the actual shop front. 9 Technological With the help of FJ Benjamin? s support in terms of finance and experience, Raoul is able to fully utilize technology to help Raoul perform more effectively and efficiently.Raoul also has its very own Customer Relationship Management (CRM) system. CRM system is effective in increasing spending per customer, by tracking the spending patterns of customers, increasing the efficiency of marketing communication strategies. In addition, the front-end point-ofsales system has been upgraded to integrate with the CRM to improve in-store service quality (FJ Benjamin 2008). Sales Force Automation (SFA) is combined with CRM system to record stages of a sales process.
It helps to manage customers? contact for future follow ups through contact management system.SFA would increase productivity and allow salespeople to utilize their time efficiently and effectively. SFA can help increase customer satisfaction which leads to increased customer loyalty and in return, high profit margins. Technology used on Supply Chain Management has improved the efficiency of the back-end support. Having implemented a new auto replenishment system, Raoul has been able to make inventory distribution more efficient. This help to save time and labour cost to keep track on all the movement of stocks and can provide a more accurate prediction of the delivery time (FJ Benjamin 2008).Financial FJ Benjamin achieved three consecutive quarters of earnings recovery in the first nine months of Financial Year Jun10.
Earnings surged from a loss of $0. 1m for Financial Year Jun 2009 to a net profit of $5. 2m for Financial Year June 10 (Lee 2010). The outperformance in core earnings was driven by an improvement in gross profit margin, reflecting FJB? s strengthening brand portfolio and astute merchandising capability, as well as rising consumer demand (Lee 2010). In June 2010, the group? s turnover from the fashion business was flat at $49. m, with the marginal increase in the Southeast Asia markets offset by the slide in the Australian market. Geographically, sales in Southeast Asia rose three per cent, with fashion up two per cent (Seow 2010).
As economics begin to recover, consumers? confidence begin to rise so purchasing increases. 10 Organization There are 9 directors on the board, consisting of Executive Chairman, Chief Executive Officer, Independent Director, Executive Director, Non- Executive Deputy Chairman and Non- Executive Directors [see Appendix 5].In Singapore, there are 2 members on the senior management, consisting of the top management, such as Group Director and Wholesale Director FJ Benjamin adopt Traditional Organization Structure (Subhash and Haley 2009, 207), where different departments concentrate specifically in an area which they are an expert in it. Therefore, it helps Raoul to have a strong management team, which can grow Raoul to the next level and sustain a competitive edge. Intangibles Resources Goodwill As mentioned in section 4.
1 FJ Benjamin has been proactive in its CSR.This helps project a positive image of FJ Benjamin to the public. Therefore, in the future they can do a combine sponsorship with Raoul to increase brand exposure and awareness. Goodwill are intangible assets, this includes the company being in a dominant market position by building a positive brand image, create a positive reputation and increase consumer confidence of the company (Reference for Business : Encyclopedia of Business, 2nd ed n.
d. ). Under the context of Raoul, they continuously explore different strategies where they aim to ecome a global renowned luxury brand that is recognised both regionally and internationally. As shown in appendices [see Appendix 6], Raoul had participate in numerous fashion events where they are able to showcase its products with other major luxury brands in the world. This would create a perception that Raoul as an international luxury brand.
In Singapore, FJ Benjamin also creates a positive image by supporting and grooming Asian talents to become professional designers. Raoul had also won numerous prestigious awards, portraying that Raoul is a prestigious brand to Singaporeans.Innovation FJ Benjamin? s expertise and capabilities in original design manufacturing allows the company to create its own house-brand, Raoul. FJ Benjamin is committed to deliver innovative and differentiated products to the market. Raoul aims to create and deliver new value-added products and invest in research in order to respond to the ever changing needs of consumers. 11 Knowledge/Skills FJ Benjamin has rich experience in marketing and distributing luxury products. This makes FJ Benjamin an industry leader for building brands and management.This can help Raoul has a clear directions and a strong strategy to grow the brand.
FJ Benjamin place customer service top on their priority list, therefore, every year they will send their staffs for upgrading or training to increase their service quality. After years of hard work, in 2009 FJ Benjamin won “Best Service Provider in the Industry” award. In retail, FJ Benjamin has a rich experience in marketing and advertising campaign to expand its market share. They also have the capital to heavily advertise Raoul on traditional print such as fashion magazines, newspapers, posters and billboards (Wong and Lim 2009). . 1.
3 SBU Stakeholders Stakeholders hold an important to affect Raoul? s ultimate growth. Raoul needs to take in the view of the interest of their stakeholders in order to have a positive growth. Stakeholders can also influence the directions of Raoul. The stakeholders are further classified into 4 different groups: Classification of Stakeholders The Community The Customers / Partners The Competitors The Investors ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Government regulators Media General public Shopping Mall Developers Shopping Mall Management EmployeesFashion Designers Customers prospects Strategic alliances partners Raw Materials Suppliers Insurance Company Supply Chain/Freight Forwarding Company Schools (e.
g. School of Business, School of Art and etc) Direct Competitors (e. g.
Massimo Dutti, G2000 Black Label) Non- Direct Competitors/Substitutes Board of directors Investment Analysts / Financial Consultant Shareholders/Investors Table 7 Classification of Stakeholders 12 3. 1. 4 SBU Performance Raoul entered into the fashion industry at the right time, where men have been paying more attention of their looks.With the successful launch and business, Raoul has also further strengthened its well established values (Sunny Side Up: Start your day the Kim Eng Way 2010). Financial Year Profits after tax and shares 2005 724,200 2006 1,728,900 2007 3,649,900 2008 2,516,000 2009 (452,200) Table 8 Financial Performance for the past 5 years Base on assumption from the above financial year performance under section 1 with Raoul having a financial contribution to FJ Benjamin profit of approximately 17%. From 2005 to 2007 shows a steady increase mainly attribute by positive financial economies.From 2008 to 2009 a dip in Raoul? s sales was caused by financial crisis across the world. As of June 2010, FJ Benjamin recorded a net profit of $8,260,000 from a net loss of $2,661,000 in 2009 (FJB Singapore 2010) and Raoul accounts for approximately 15% – 20% of FJ Benjamin? s sales revenue, it is clear that FJ Benjamin wishes to take this opportunity to venture into other big market to increase their revenue and market share.
3. 2 SBU Customers Characteristics Segment 1 Segment 2 Working Adults Generation Y Sex Male and Female Male and Female Age 36-60 22-35 Education ;gt;Diploma gt;Degree Monthly Income ;gt;$3800 ;gt;$2800 Purchasing Power High Medium – High Benefit Sought Seek Prestige Services ; Product Seek Individualism, Status ; Self Quality Image VALS Innovators Achievers/Experiencers Lifestyle Factors Traditionalist Modernist Brand Loyalist Opinion Leaders Opinion Leaders Early Adopters Purchase Frequency Occasionally Occasionally Occasion of Use Work Work and Social Size 65% 35% Demographics Description Table 9 SBU Customers 13 3. 3 SBU Competition 14 Table 10 SBU competition 15 3. 3. 1 Current Product Positioning Quality +ve Price -ve + ve -veFigure 3 Current Product Positioning Purple: Raoul, Blue: Massimo Dutti, Orange: G2000 Black Label The above shows the current position of Raoul and its competitor, Massimo Dutti and G2000 Black label. Raoul currently offers high quality products at a mid-range price, while competitor such G2000 Black label offers slightly lower priced and quality clothing.
Massimo Dutti offers slightly lower price and same quality clothing as Raoul. 16 3. 4 Key Findings PESTLE Environment Political Political Stability and Risk Political stability and risk varies between countries in the region.Singapore has very little political issues compared to neighbouring countries such as Indonesia, Malaysia, Taiwan and Thailand. Singapore is rank 1st in Southeast Asia as the least corrupted country and 4th worldwide. Low degree of social unrest, political sovereignty, conflicts and low government interventions, makes Singapore a safe place for any business operation. As indicate in the World Bank? s Doing Business Report, Singapore is the world? s easiest place to do business in the year of 2009 and 2010 due the political stability of Singapore.
Economic Singapore? economic growth, interest rates, exchange rates and inflation rates, consumer purchasing power and the standard of living in Singapore are part and parcel of the economic environment. In May 2010, Singapore topped the list of world? s most competitive nation in the World Competitiveness Yearbook. Singapore dethroned USA as from its 16 year reign (Lim 2010). Gross Domestic Product (GDP) Singapore? s GDP expanded strongly by 15. 5% in the 1st quarter of 2010, it exceeded the projected 13.
1% estimates. On a quarterly basis the Singapore economy grew 38. 6 %, 6. 5% more than the government? s estimates (Howells 2010).According to World Bank, Singapore GDP is worth 182 billion dollars or 0. 29% of the world economy (Singapore GDP Growth Rate 2010). Singapore has a highly developed and successful freemarket economy and it soared above 30% in the first quarter of 2010, the manufacturing sector growth was doubled as compare to previous quarter of the year recovering from a 2.
8% drop in fourth quarter of 2009. The growth of the manufacturing sector accounts for up to one quarter of the country? s economy. This would cause the projected forecast of the GDP to increase to up to 9% in 2010 (Adam 2010). Inflation Rates As of 2010, Singapore? inflation rate is 1. 6% (Singapore Inflation Rate 2010). Inflation is an increase of overall price level in the country. This would increase the cost of living as products/services would now cost more than previous years. It is interrelated to the Consumer Price Index, which will be further discussed in the next section.
17 Consumer Price Index The current CPI of Singapore is 1. 6%, it is the measures of inflation rate, where measures consumer prices that the price changes in a fixed amount of consumer goods and services that are commonly purchased over time (Singapore Department of Statistics 2010).CPI is influenced by lifestyle, income level, household composition and consumer preference (Singapore Department of Statistics 2010) this also determines the quality of life of Singaporeans. This relates to the increasing trend in Singaporeans having higher spending power, where cost of consumer products are increasing; resulting in the increase in inflation rate.
With the increasing cost of living and quality of life, Singaporeans have more disposable cash to spend on better quality products which would aid the sales growth of Raoul. Socio-Cultural Social AttitudesSingaporean has a „fear of losing? attitude, which is frequently used to describe the social attitude of Singaporeans. This refers to people who desire to always want to be first, the best and never losing out. This could be a positive attitude that reflects the high standards of Singaporeans; however it could lead graceless image to the society. It also strongly reflects on the Singaporean work ethics and competitiveness. ‘Face’ This is an important value amongst Singaporeans. It refers to saving and maintaining „face?. Singaporeans typically are not expressive in their ehaviour and emotions and do not criticize others openly in public; to avoid losing face.
Losing face will lead to damage to one? s reputation, credibility and authority in the social and working environment. Technological Factor Technological Infrastructure Broadband infrastructure in Singapore allows for better global networking for businesses that enables better customer support. With the support of such technology, Supply Chain Management (SCM), Customer Relationship Management (CRM), Sales Force Automation (SFA) and Point of Sales (POS) system are made easier.Thus, allowing Raoul to operate more effectively and efficiently in Singapore. Furthermore, the government introduced the next generation high-speed fibre optic broadband (Next Gen NBN 2010).
18 Legal Factors Singapore Legal System Singapore? s legal system is English common law and has a strong regulation in place protecting consumer and company. Raoul, being a domestic brand would receive stronger support from the government. Singapore also has an additional Islamic law to cater to the Muslim community. Since, Singapore? economy is highly dependent on the revenue from import and export, it is important to implement proper regulations to protect the safety of Singapore. Also in terms of employment policies, firms need to consider the working hours and wages rate of the employees. Environment Factor Environmentalism There is an increasing trend green consumer in the global segment and since Singapore being one of the countries that is actively involved; environmentalism becomes an opportunity for Raoul to introduce environmentally friendly products as recommended in products.
Targeting environmentally conscious consumers, where they are more willing to pay for greener products. Green Movement Singapore is highly involved in going green and government bodies that are responsible include National Environmental Agency (NEA) and Environmental Challenge Organisation (ECO). The NEA signed the Singapore Packaging Agreement with 5 industry associations, 19 individual companies, 2 non-governmental organizations, the Waste Management ; Recycling Association of Singapore and 4 public waste collectors on 5 June 2007 that aims to reduce packaging waste over a 5year period.It encourages the flexibility for the industries to adopt cost-effective solutions to reduce waste (Singapore Packaging Agreement 2008). ECO launched the „Million Acts of Green? Singapore Campaign to spur a national green movement by getting Singaporeans to think and act green in their day-to-day lives.
Million Acts of Green Singapore is targeted at both Singaporeans and businesses with the aim of getting them to register their green acts and sustainability ideas on the millionactsofgreen. sg website (ECO Singapore 2010). 19 3. 5 Internal Analysis – TOWS Matrix AnalysisTable 11 Internal Analysis – TOWS Matrix Analysis 20 4. 0 SBU Objectives and Goals Table 12 SBU Objectives and Goals 21 5. 0 Recommended Strategies Recommendations have been made in order for Raoul to achieve their objectives and goals.
5. 1 Market Strategies Market-Scope Strategy It is recommended that Raoul should focus its strategy on a single market basis, where Raoul can gain competitive advantage of being able to adaptive and responsive to market opportunities threats to successfully remedying any possible changes in policies.Thus, Raoul will be able to capture the market and better serve the customers, at the same time experiencing higher profits while keeping the cost down while prices are kept high. Market-Geography Strategy Currently, Raoul has existing plans for expanding its business geographically. However, this report recommends that Raoul should return to the most traditional form of local-market strategy.
As a home grown brand by a local company, F J Benjamin, it can gain competitive advantage of serving a narrow geographic area within Singapore.This can emphasis more interpersonal service with local consumers that can induce beliefs into consumers to motivate them in buying and supporting local produce. Market Commitment Strategy It is recommended that Raoul should create strong commitment with the potential consumers, where Raoul needs to create a firm foundation of operations within the market and amplifying its own economies of scales in promotion, distribution, manufacturing and promotion. This would in turn create high barrier to entry and competitors would have difficulties in challenging Raoul? s existing system.Creation of strong commitment can also be enhance with development or new products, improving product quality and increasing budget for sales force personnel. Raoul can work its product line with a more environmental approach. Such as usage of organic cotton in manufacturing of the apparels and recyclable shopping bags, to promote the eco-friendly line, to the consumers that are committed in saving the environment.
Allocating resources to train retail associates can create a wholesome retail experience for the patrons of the boutique and would increase product and brand loyalty. 22 5. 2 Product StrategiesNew Product Strategy: Improvement ; Positioning The introduction of eco-friendly clothing aims to attract new consumers from the targeted segment. In Singapore context, organic cotton wear is still a relatively new concept. Currently there are not many fashion retailers providing formal wear made of eco-friendly materials. By being the first to introduce, Raoul could gain to attract a greater awareness for its own brand name and products. The eco-friendly clothing would help Raoul in attracting a larger number of potential consumers from the identified target segment. Quality +ve Price -ve + ve -veFigure 4 New Product Positioning Green: Eco-range positioning It is recommended that Raoul maintain its product positioning for the current clothing line.
However, with the launch of eco-range, quality of product should be improved so as to differentiate the product from the competitors. Price of eco-range should increase so as to in-line with the new product pricing strategy (Price Skimming). 23 Value-marketing strategy: Product and Service Differentiation To differentiate its customer service from other fashion retailers, Raoul could offer complementary beverages for shoppers as well as offering image consultation service.The image consultant would make recommendations to consumer based on their needs, based on their body contour, purpose of occasion and nature of job scope. The consultation service is an optional product aimed at building the brand image and is subjected to charges. Product-design strategy: Product Customization Raoul should adopt standardise customisation to gain the extra competitive edge and to maximise benefits. Product customisation would aid Raoul in showcasing itself as a quality provider thereby differentiating the brand and increasing consumers? commitment to the brand.
Standardise products refer to the clothing offered such as shirt, pants and blouse. Customisations could be done on various levels: ? At a basic level, clothing could be tailored in terms of length to meet basic expectations of consumers. ? At an intermediary level clothing could be tailored to meet specific needs of consumers, such as broadness of the lapel, thickness of shoulder padding in jackets, allow requests for particular colour and particular material for clothing like cashmere Lycra as well as embroidery of customers? initials on clothing.
24 5. 3 Price StrategiesWith reference to the PESTEL analysis, Singapore has a stable economy; does not face drastic changes in the environment. It is recommended that company should maintain the current pricing strategy for current products and use price skimming strategy for the new eco-friendly clothing.
Maintaining Current Pricing Strategy It would allow Raoul to maintaining its position in the marketplace and enhance public image. The benefit of maintaining price is appropriate when Raoul cannot anticipate the reaction of customers and competitors? price change. Furthermore, with this strategy it can further enhance the Raoul? public image New Product Pricing It is recommended that due to the uncertainty of consumers? demand and competitors? responds to the new eco-friendly range, that Raoul should use price skimming strategy to gain maximum revenue prior to competitors? respond with similar products. It not only serves customers who are less price sensitive, while there are demands for eco-friendly clothing in the early stage of the Product lifecycle, but also recovers the high cost of R;D used to develop eco-friendly clothing, and high promotional cost incurred to education consumers on the need to go green. .
4 Distribution Strategies Corporate Vertical Marketing System (VMS) Figure 5 Corporate VMS Raoul currently uses a Corporate VMS. As seen on the above figure, Raoul? s products are designed, manufactured and retailed under a single ownership of FJ Benjamin. It is recommended that the distribution strategy remains the same as Raoul would have greater control over the entire distribution chains. This would eliminate the need of slow-moving suppliers for raw materials. New products designs shaped in Raoul? design centre at the “Alpha” as mentioned in section 5.
2. 1, and new designs 25 feed into Raoul? s manufacturing centres and is distributed directly to its retail outlets. This saves time, cost and keeps inventories low.
5. 5 Communication Strategies Raoul needs to further improve their current strategies and introduce new strategies to increase their market share and consumer base. Advertising A good advertising is able to stimulate interests and could lead to sales. It is able to influence customers? erception of Raoul and is able to reach out to more audience at a lower cost. Traditional advertising (Magazine) The use of traditional advertising such as magazines will be an effective medium for Raoul. Raoul could advertise in both male and female and luxury magazines such like HerWorld, Elle, Cleo, August Man, Prestige and L? Officiel, as these are the magazines that have readers that are similar to that of Raoul; targeted consumers get the latest information on fashion trends. Outdoor advertising and informative advertisingIn order for Raoul to introduce eco-friendly clothing, they have to do informative advertisements to generate environmental awareness among the public. Raoul can portray a positive brand image by introducing an eco-friendly range of clothing, and informing the public of the need to protect the environment through sustainable means.
For instance, they are could place advertisements along high end shopping districts like Orchard Road, Marina Bay as well as the Central Business District areas to be able to attract attention of potential targeted consumers.However, special attention has to be made as not to place posters at cluttered environment as people may not notice the posters. Placing huge posters of bright green and earthy colours would draw consumers? attention, followed by a few informative words that explain the need for using organic materials which are biodegradable and pesticide free, such as organic cotton, to reduce environmental impacts.
26 Personal Selling strategy In retail line, personal touch and customer service is essential, and would differentiate Raoul from the rest of its competitors.It is recommended those salespeople are trained to be able to interact well with customers, as a good salesperson would be able to close higher sales, and customers are usually loyal to the person who provides the service, and may not be loyal to the brand. Therefore, more resources should be allocated in training of salespeople. Building Relationship through Database Marketing and CRM Building up a relationship with consumers with aim to retain consumers and increase their level of satisfaction. Raoul can implement customer loyalty programs so as to have a long-term valued relationship.This could be done by constantly sending update to their consumer through email or direct mail whenever there is any new launch or sales. Alternatively, Raoul could send birthday cards and offering birthday discounts to consumers on their birthday month. This will create a sense of belonging for the customer and further encourage return sales.
Collaboration with designers In order to attract eco-conscious consumers, Raoul can collaborate with renowned designers to come up with a new series and designs made from organic materials.By taking a proactive approach in saving the environment, it projects a positive image of the brand. In addition, they are also able to educate the public on the need to save the environment. Product Packaging To be line with the eco-friendly range and promotion, purchase of any clothing in stores will be packaged with recycled paper wraps and paper bags. In addition, with purchase of eco-friendly apparels, customers will be issued a specially designed recycled cloth bag with a green theme. Those special eco-bags should be able to attract potential buyers? ttention as well as raise awareness of the need to go green. 27 6.
0 Implementation Program An implementation table has been drawn up for the recommended strategies. IMPLEMENTATION AND CONTROL TABLE STRATEGY WHERE DATES HOW TO IMPLEMENT BUDGET CONTROL MECHANISM Market 1. Scope – Single Market 2. Geography – Local 3 years 3. Commitment – Strong 3 years Market Research on ideal store locations 3 years Singapore Island-wide Market Research Integrate CRM system Sales return – if segment is not profitable then use market haversting strategy $1,000,000Outlet sales figure – close outlets that are less profitable due to customer traffic Measuring repurchase rate – if repurchase rate is low, $500,000 consider using market haversting strategy Product Reviewing current product to come Nov 10 – Jan 11 up with improvements to restore product to health 1. New Product Positioning 2.
Value-Marketing – Product ; Service Differentiation Training and development of staff Work closely with customer to review the progress of the product until completion that meets customer’s specification. On going 3. Design – Customization On going