Athleta Company’s Retail Marketing Plan Case Study

Executive summary

This marketing plan is prepared for Athleta Inc, which is going to expand the range of its operations in the foreign (Canadian) market of women’s sporting clothing. The plan contains general descriptions of the macro-economic environments in all three of the initially considered countries. It also outlines present dynamics in the Canadian domain of clothing retail and provides readers with the insight, as to what should account for the company’s marketing strategies in the targeted market.

Introduction

Athleta Inc. is the US-based retail store chain that specializes in selling women’s activewear clothing. The company was founded in 1998 and until the year 2008 (when it was acquired by Gap Inc.) it operated as an online-only retailer. Athleta is concerned with targeting educated and environmentally conscientious middle-aged women who lead a physically active lifestyle. As of 2015, the number of the company’s stores accounted for ninety-five in the US and two in Britain.

In the fiscal year 2014, the amount of the company’s net sales was reported above $600 million. Following the success of Athleta’s expansion into the British market of women’s sporting goods, the store’s managers decided that they should proceed with the adopted market-expansionist policy and to make Athleta-branded products available in yet another foreign country. Among the initially considered ones were Kenya, Bangladesh, and Canada.

PEST-based overviews of external macro-environments in:

Kenya

As of today, Kenya is considered to be one of the most politically destabilized countries in Africa, which in turn reflects the fact that Kenyan society continues to be divided alongside the tribal and religious lines. Even though the country’s economy has been showing steady growth (1%-2%) through the years 2011-2015, it did not prevent the majority of citizens from becoming progressively poorer. As of today, the poverty rate in Kenya accounts for 55%. Kenya also continues to be counted among the world’s most corrupted countries. One of the qualitative traits of Kenyan society is that it adheres to the traditional (patriarchal) values and that the percentage of Kenyans who belong to the middle-class (7%) is rather insignificant (Owiti 550).

Bangladesh

Being the tenth most populous country on the planet (160 million people) with the steady growth of GDP (2%-6% per year), Bangladesh is seen increasingly attractive to foreign investors. At the same time, however, Bangladesh remains a politically volatile state, in which 40% of citizens suffer from poverty. The integrity of Bangladeshi society is undermined even further by the continuation of ethno-religious tensions between its members, which represents a major obstacle in the way of technological progress in this country. Just as it is the case with Kenya, the middle-class stratum in Bangladesh is virtually non-existent, with most people adhering to conservative values (“Research and Markets” 247).

Canada

Canada is a fully developed and politically stable country with the servicing sector of its economy accounting for 72%. Even though Canada’s population is only 35 million, it is highly urbanized and endowed with a great buying power, which in turn is predetermined by the fact that the standards of living in this country are assumed to be among the world’s highest. Canada’s economy has been on a steady rise since 2011 (“Research and Markets Adds” 29). Canadian society is a technologically advanced one, with most of its members subscribing to the values of an intellectually open-minded/environmentally friendly living. Based on the provided insights into the macro-environments of Kenya, Bangladesh, and Canada, it was determined that Athleta will be most likely to benefit from choosing the latter.

Market research

Porter’s Five Forces analysis

• The threat of new entrants – strong. The reason for this is that: a) The barriers (such as legal, economic, cultural, etc.) to this market’s entrance are rather low; b) The establishment of a new player on this market will not require much capital to be invested.
• Buyer power – strong. There are two factors that presuppose such a state of affairs – a) The heightened extent of consumers’ purchasing independence; b) The factor of low-cost switching.
• Supplier power – weak. The contributing circumstances are a) A strongly defined ‘division of labor’ within the clothing-manufacturing industry in Canada; b) The availability of substitute inputs.
• The threat of substitutes – weak. Even though Canadian women are at liberty to choose in favor of just about any fashion style, their options are limited when it comes to substituting high-quality sporting apparel with any other products of the same nature.
• Degree of rivalry – moderate. The reason for this is that, although there are indeed many retailers competing within the same segment of the apparel market in Canada, the ongoing competition between them is the subject of a number of formal and informal rules and regulations – something that reduces the rivalry’s intensity (“Apparel Retail Industry Profile: Canada” 13-18).

SWOT analysis (concerning Athleta’s expansion to Canada)

Strengths

1. Athleta offers a number of uniquely designed women’s apparel, many of which are made of the company’s hi-tech fabrics, such as the one that has silver salt embedded in it;
2. Athleta charges thoroughly competitive prices for the lines of its products.

Weaknesses

1. Athleta’s brand name is virtually unknown in Canada;
2. The current exchange rate of USD to CAD undermines the feasibility of the intended expansion to an extent.

Opportunities

1. Canadian female consumers are known for their sensitiveness to the ‘perceived’ (lifestyle-related) value of clothing, which makes them a legitimate object for targeting by Athleta;
2. There are many reasons to expect the continual growth of the targeted segment of the market.

Threats

1. In Canada, Athleta will be faced with much competitive rivalry, on the part of such companies as Nike, Adidas, and Lululemon Athletics;
2. The devaluation of CAD is likely to continue in the future.

Trends

Through the years 2016-2019, the Canadian apparel retail industry is expected to grow at a rate of 3% per year, which should have a positive effect on Athleta’s competitive standing in the market. What is more, the company should also benefit from the fact that, as the relevant statistical data indicates, more and more Canadian women grow increasingly comfortable with the idea that a particular clothing item can serve both: casualwear and sporting-related purposes (“Apparel Retail Industry Profile: Canada” 21).

Retailed products

Description

With its corporate slogan ‘Power to the She’, Athleta aims to empower those women who spend most of their time ‘on a move’, in the sense of allowing them to combine their professional and active lifestyle agendas into one. The line of the store’s activewear apparels and other related products is rather extensive: “Athleta’s provides a variety of products for all athletic occasions and seasons; such as yoga and indoor apparel, running and high-performance outfits, ski & snowboard apparel, winter outerwear and sweaters, yoga accessories, and footwear” (Putri 3). As of recently, the company also began to offer menswear items.

Unique features/benefits

Probably the most notable feature of Athleta-branded apparels is that along with being extremely durable, they are perfectly fashionable – something that should come at a great value to the would-be targeted consumers. In its turn, this was made possible by the fact that Athleta makes a deliberate point in using the most scientifically advanced materials available, such as the patented fabrics Pilayo and Power Pilayo. All of Athleta’s products come in a variety of sizes, including the ones considered ‘exotic’ (XXL and XXS). Moreover, the company provides various discounts to buyers.

Objectives

The set of objectives that Athleta aims to achieve within the matter of a year, following its entrance into the Canadian market of women’s activewear clothing, can be formulated as follows:

1. To establish a strong base of brand-loyal buyers.
2. To ensure that by the end of the designated time-period, at least 50% of consumers in the targeted market will be aware of the brand name and all the values for which it stands.
3. To build a reputation of being a socially responsible commercial enterprise,
4. To succeed in selling enough products for the first store’s annual margin profit to account for at least 30%.

Targeted consumer-audience

Because Athleta’s is supposed to serve the purpose of helping women to attain self-actualization, the targeted consumer-audience is best discussed in terms of what happen to be their lifestyle. In this respect, the typical buyers of Athleta-branded products are most likely to consist of professionally engaged and holistically minded (yoga) women, who strive to remain in a good physical shape well into their forties.

Even though there is no statistical data, as to the percentile ratio of this type of consumers in the Canadian market of women’s activewear clothing, we can assume that it is rather considerable. The commercial successfulness of competing brands (Nike, Lululemon, etc.) proves the validity of this suggestion (Lazarus 25).

Suggested marketing approaches

Niche-focused

Because of the earlier outlined characteristics of the targeted consumer-audience, it will be thoroughly logical to suggest that Athleta should benefit from taking practical advantage of the niche-focused marketing strategy. In this respect, Athleta will need to investigate how the audience’s psychological presuppositions correlate with the purchasing behavior, on the part of its members. The same calls for the application of a continual effort in making sure that the store’s apparels are perceived distinctively different from those of its competitors (Toften and Hammervoll 278).

Cost-leadership

Athleta has always been known for its ability to provide competitive prices – something that continues to be the case even today. When compared to the prices on many similar lines of products from Lululemon and Nike, the ones charged by Athleta are 20%-30% lower. If pursuing with the same pricing-policy in Canada, Athleta will be able to increase the base of its loyal buyers, on one hand, and to strengthen the company’s corporate reputation, on the other (Sharma 133).

The appropriateness of this marketing approach can be explored even further, concerning the essence of the socio-economic realities in today’s Canada, affected by the continual weakening of CAD.

Implementation

Location

Athleta’s first store will be located in Vancouver, BC (Robson st.), in close proximity to the store of Lululemon Athletics. As it was mentioned earlier, this location will provide a steady inflow of customers, especially given the nearness of the competitor’s premises. The retail space will be 1500 sq. ft., which should prove sufficient. The store’s operational hours are going to be from 9 a.m. until 9 p.m. during the week, and from 11 a.m. until 5 p.m. during the weekend. The store’s ground floor staff will account for three salespersons working on a full-time basis.

Sales/promotion strategy

Athleta’s sales strategy will be concerned with prioritizing long-term commercial objectives and with deploying a few marketing approaches at the same time. The main effort will be applied in advertising the company’s products conventionally and unconventionally (‘word-of-mouth’), and in providing customers with different incentives to remain loyal to the brand name. Additionally, customers will be qualified to receive substantial (up to 50%) discounts while shopping at the store.

Monitor and control

There will be two instruments used to monitor and control the process of Athleta strengthening its presence in the targeted market – analyzing customer feedback and measuring the amount of the achieved sales on a monthly basis. The logic behind the adoption of this particular monitor and control strategy has to do with the fact that, according to Athletas’s corporate philosophy, both of these indicators of the company’s operational efficiency are closely interrelated.

Budget

The investment-funds will consist of $110.000 in equity capital and $90.000 in various loans. Due to what we know about the specifics of operating a women’s activewear store in downtown Vancouver and the qualitative characteristics of the company’s products, it is estimated that by the end of the fiscal year one, the accomplished sales will account for at least $230.000. In its turn, this suggests that Athleta’s newly opened store in Vancouver should prove profitable within a matter of one year.

Conclusion

In light of what has been mentioned earlier, Athleta’s intended expansion in the Canadian market of women’s sporting clothing does appear to make much sense. Such an eventual development has been predetermined by both: the targeted market’s actual demands and by the fact that, as practice indicates, the extent of just about any clothing chain’s commercial effectiveness positively relates to the measure of the affiliated managers’ willingness to remain committed to pursuing an expansionist policy.

Recommendations

Because it is very likely for the dynamics in the Canadian market of women’s clothing to remain highly fluctuant, Athleta should be willing to experiment with unconventional/innovative marketing methods. In part, this can be achieved by ensuring that the company’s operational paradigm adheres to the principles of:

1. Reactivity – Athleta must react to the market-demands, as they come into being, rather than to conceptualize what these demands may be ahead of time.
2. Interactivity – Athleta should pay close attention to what account for the fashion-related anxieties in consumers – something best achieved through the company’s close affiliation with social media, such as Facebook.
3. Creativity – the company should place emphasis on producing styles, rather than on selling clothes per se. As a result, Athleta will find itself in the position of defining the ways of the market – the strategy thoroughly consistent with the concept of post-industrial marketing.

Even though the provided recommendations are rather vague, we nevertheless believe that they will prove an asset for the company’s managers through the years to come.

Works Cited

“Apparel Retail Industry Profile: Canada.” Apparel Retail Industry Profile: Canada (2015): 1-35. Business Source Complete. Web.

Lazarus, Eve. “The Tao of Lululemon.” Marketing 113.6 (2008): 23-27. Print.

Owiti, Jeremiah. “Political Drivers of Inequality in Kenya.” Development 57.3-4 (2014): 547-558. Print.

Putri, Oen 2014. Athleta Marketing Plan. Web.

“Research and Markets Adds Report: Country Analysis Report – Canada – In- Depth Pestle Insights 2014.” Professional Services Close – Up (2010): 25-37. ProQuest. Web.

“Research and Markets; Bangladesh Country Profile 2015 – Geography, Economy, Education, Demography, Labor, Political Climate, Infrastructure, Industry, Tax, Trade, Investment & Ease of Doing Business.” Investment Weekly News (2015): 247-254. ProQuest. Web.

Sharma, Bishnu. “Marketing Strategy, Contextual Factors and Performance: An Investigation of their Relationship.” Marketing Intelligence & Planning 22.2 (2004): 128-143. Print.

Toften, Kjell, and Trond Hammervoll. “Niche Marketing Research: Status and Challenges.” Marketing Intelligence & Planning 31.3 (2013): 272-285. Print.