Business Plan of “L.k Bennett” Coursework

Description of business

The company is in the fashion industry and it allows one to stay up-to-date with the latest trends in the market. The company provides access to fashion magazines or fashion shows in order to stay updated and fashionable.

Fashion means attractive and appealing clothes, and all the right accessories and the right kind of make-up that enhances one’s outlook. This helps in giving a boost to one’s self-esteem and flatters them. If you look good, knowing you’ve followed the fashion, you ultimately feel good too.

The fashion industry does show versatility, no doubt! This is a plus point for those who want to and who can stay trendy by acquiring the awareness fashion industry exposes. This is good for those teenagers who want to pursue fashion industry as their profession can learn a lot of sense through whatever fashion that is shown on the television or in magazines

The company also uses modeling as part of fashion to create fashion. Most of the fashion awareness that teenagers, especially girls, get is through watching modeling shows on TV. This lets them know what’s being worn around. Fashion-conscious teens can get latest clothing and accessorizing ideas from models. Highly inspired teenagers may of course want to take up modeling as their future profession. So viewing modeling may have a positive impact in a way

SWOT analysis

Strengths

• Competitive pricing of the fashion
• Convenient store locations in China
• High-quality fashion cloths
• Right product, quality and reliability
• Product innovation ongoing
• Management is committed and confident
• Superior product performance Vs the competitor

Weakness

• No company brand awareness in China
• More training of the staff to familiarize with the fashion industry

Opportunity

• Could develop and improve the new fashions
• Open of new stores in viable locations for distribution
• Sources new suppliers in china
• Can surprise competitors
• Profit margins will be good

Threats

• Threats of the key staff is critical
• Mimic of the idea of the fashion by the competitors
• Vulnerable to reactive attack by major competitors e.g. sabotage
• Cheaper substitutes and imitation in the country

Entry and growth strategy

Entry:-To make the business to be known in China at the start, posters will be printed and placed at strategic places to inform its customers of its existence, its area of specification, its location, the services it offers and the products are sold.

L.K Bennett’s strategic approach for the penetration of the Chinese market should be closely related to the distribution of luxury clothes. From UK company to a company committed to pursuing globally integrated operations, fashion International has come a long way. The first concrete step was to clearly define and streamline the strategic business divisions that will best showcase and leverage the inherent strengths of L.K Bennett products and services. Along with the restructuring of business, rightsizing should also be done by opening a branch with the right number of employees.

As a major global company L.K Bennett doesn’t have many options but to seek out the most established and solid partners, especially having in mind that the many companies share economic interests and strategic goals in the fashion industry in China. Ten years ago, nobody would have believed this was possible. China fashions , like many other Chinese products, were so low quality that they could barely satisfy local consumers, let alone buyers abroad. The deal illuminates an arresting change in the world’s most populous country.

Having this in mind L.K Bennett has two possible approaches for the entrance in the Chinese market and cooperation with existing company. The first approach is a direct co-operation. Since the local company may be trying to improve and develop ventures, L.K Bennett could invest money into research or give already accomplished improvements for development of fashion distribution. L.K Bennett could also expand company distribution by introducing new fashions that could be both used locally. The other possibility for L.K Bennett to enter the Chinese market would be the creation of outlets using the resources available.

Technology plan

Despite the slack in investor interest in Internet companies in china market, L.K Bennett should go public because its business model is different from others. Having captured the China market, the company should not wait for their enthusiasm to cool down. Whetting their appetites and then abandoning the IPO will probably discourage them from any future offering from the company. Moreover, the company is not just selling promises. It is selling clothing in a manner that is by far more convenient than traditional fashion stores. Its catalog listing is extensive that even hard-to-find cloths are available with the company. Analysts may say that the IPO will fail but analysts have been known to fail in their forecasts.

Market segmentation

Market needs

Guangzhou malls offered mostly high-end brands and some high street brands such as Mango and Tommy Hilfiger. Guangzhou upper-middle-class consumers prefer designer brands or the cheaper but stylish offerings from Mango, Max & Co, Kookai and Zara, but Guangzhou consumers can only buy Zara from Hong Kong.

Guangzhou suffers from its proximity to Hong Kong, where luxury products are at least 20% cheaper. According to research, a majority of Guangzhou luxury consumers prefer to do their shopping in Hong Kong explains why there are fewer international fashion brands to be found in Guangzhou than in other two 1^st-tier cities Beijing and Shanghai.

The choices of Western high street fashion brands are limited in Guangzhou, and there is a gap needs to be filling in between high-end and high street. Therefore, according to the market demand, it is the opportunity for L.K Bennett to exploit the high-end high street fashion market in Guangzhou.

Target Market Segment Strategy

The Primary Customer

The upper class and upper-middle-class females are the major targets for L.K Bennett.

Demographics Criteria

• Age
  • 25-55
• Gender
  • Female
• City
  • Guangzhou

Social-economic Criteria

• Annual Income
  • RMB 100,000- RMB 1million
• Occupational Status
  • Professionals, Entrepreneurs, Mangers etc

Education

Bachelor’s degree as a minimum.

Psychographics

• Looks for bargains (seasonal fashion) but willing to spend money on quality, core item
• Would like more time or help in understanding what clothing is right for her
• She wants to look her best because she wants to feel good about herself as well as make a good impression at her job

Clothes Shopping Behaviors

Spends over RMB30, 000 for clothes each year

1. Shops at Bally, Louis Vuitton, Aquascutum and Mango
2. Wear a UK size 6, 8, or 10， Shoes from UK size 3- size5
3. Buys mostly handbags, tops, pants, suits, dresses, and shoes
4. Looks for trendy items each season, with 1-2 classic basic items
5. They care about how they present themselves, enjoys fashion, and looks for quality over quantity

Consumer needs, expectations, and behavior

It were found that the Guangzhou citizens have high environmental awareness. At the same time, the younger generation, especially those between the age of 25- 30, were found to be more environmentally concern than their older counterparts.

The research indicates that Guangzhou consumers are still uneducated when it comes to luxury fashion brands. They are eager to buy luxury fashion products, and have the purchasing power to buy them, but they are unfamiliar with many Western luxury fashion brands.

Respondents were asked to name their favorite or familiar Western luxury fashion brands. Ninety-nine percent responded that Louis Vuitton was their most favourite or familiar luxury fashion brand followed by Gucci, CHANEL, Hermes, Prada, Christian Dior, Fendi, and Giorgio Armani. All of these brands are typical big name brands and they have very strong advertising in China. The respondents were not aware of other designer brands which do not advertise in China.

PESTLE

Political factors:- The China market has been increasingly attractive to international franchise businesses. The whole market is growing amazingly at a year-on-year rate of 40-50%. Franchising business has aroused the interest of more and more powerful local businesses with solid governmental backgrounds, which ensures enough qualified prospective franchisees for foreign franchisors to seek when entering the China Market. At present, China’s franchise has covered most of the sectors of the global franchise system. With improvement in its legal, regulation and supervision systems, the China Market is becoming another hot spot for developing franchising business (China franchise background, 2008).

In 2008, among 678 cases of trademark infringement dealt with by Guangzhou Customs, 206 cases involved the world-famous luxury brands. Grasping this new trend promptly, Guangzhou Customs together with Louis Vuitton and other international well-known trademarks held the special training class of identification for infringing goods of luxury brands to improve the officers’ skill at telling truth from falsehood to crack down on the infringing acts of import and export severely，and good results have been achieved. In the first quarter of 2008, Guangzhou Customs solved 147 cases relating to intellectual property rights infringement (Xu, 2009).

In China, there are two basic areas of taxation: business taxation and individual Income Tax (IIT). Although taxes in China can appear high, many sectors offer tax incentives designed to encourage foreign investment and technology transfer.

Economic – China is now the world’s fastest-growing luxury market. According to World luxury Association, China has overtaken the United States to become the second-biggest luxury goods market. Luxury consumption totaled US$8.6 billion in 2008, accounting for 25 percent of the global luxury market (Shanghai Daily, 2009).

The Chinese luxury retail market is still enjoying a steady growth, while the rest of the world is deeply affected by the second global economic crisis.

GDP growth of Guangzhou

Guangzhou is the provincial capital of Guangdong province. Guangdong province has played a leading role in China’s rise over the past 25 years. The province, currently the biggest GDP contributor on the Chinese mainland, is expecting its GDP to grow by nine percent a year over the next five years (Xinhua, 2007).

Guangdong surpassed the GDP of Hong Kong and Singapore in 2005 when its GDP hit two trillion yuan. In 2008, Guangdong’s GDP per capita has reached 4000 US dollars, which has surpassed that of Taiwan (Yan, 2008).

The provincial capital Guangzhou has a population of slightly more than 10m, with 8.2m in the urban area. The per capita income of Guangzhou’s urban residents is now the highest in the country (The China business handbook, p168-p174).

Interest and Exchange have impact on consumer spending and could affect the profitability of the venture. Interest rates and exchange rates have an impact on consumer spending and can affect the profitability of the firm. There are many economic indicators that determine the environment of the business. This includes;- effects of affluence, depression, inflation, shortages of product in the market, effects of research expenditure, research costs, buying power index, consumer ability and willingness, price elasticity, and cost of distribution affects the business. Other economical factors that affect business environment include;- the long-term focus of the government, macroeconomic projections of the government and the financial stability of the state.

SOCIAL factors:- A consumer is influenced by the society he lives in, if a person is of a particular religion, nation, tribe or population grouping he will adopt the culture of that grouping, and the culture of a grouping is as a result of the influence of the language of the people, beliefs, knowledge, values, habits, and laws of those people. This means this affects the consumer in question in terms of his lifestyle to the extend of what he consumes. At times it is difficult for a person to consume some products even if he has a large disposable income because of his culture. It is important for managers of various companies to look into the influence of culture before introducing a product into the market

Technological factors: – Technological environment is one of the best environments which have influence on the lives of a product. It is common in the world today where there are technological changes for managers to know technological innovations taking place in market in product development. The technological environment is responsible for drastic changes in product development. The introduction of computers and other machines has made marketing and production of a product to be easier

Environmental Factors

More and more Chinese people start to pay attention to how to save the earth. In recent years, litter from plastic bags has been a growing concern among the general public. Early in 2008, China’s State Council announced a new regulation on all traders, including supermarkets, stores, and markets. On June 1 2008, plastic bags have no longer be given out free of charge (People’s Daily Online, 2008)

In recent years, Guangzhou has financed a number of projects aimed at reducing pollution. The provincial government has invested Rmb11bn for the projects in 2006, and plans to invest a further Rmb2bn each year from 2007 until the end of the decade. The city has also relocated 147 highly polluting factories away from the area.

Legal Factors

In the legal and policy aspect, “Regulations on Management of Commercial Franchise Operation” was released in February 2007 and came into effect on May 1st, 2007. The Regulation, based on the previous “Franchising Measures”, has re-defined the “2 stores and 1 year” (two direct stores run at least one year) requirement, relaxing the qualification for foreign franchisors to do business in China, and has detailed the specific franchise operation processes including the license application, information disclosure, etc. This new regulation is regarded as a manifesto of the Chinese Government’s determination to develop franchising business in China (China franchise background, 2008).

THE EXISTING LABOUR LAW of the PRC has been effective for over a decade, and the China’s new Employment Contract Law became effective on 1January 2008. The laws are a vital part of doing business in China and must be understood.

Marketing mix

Product Service/Features

The Company’s products & services is the selling of men’s clothes that have already been manufactured. The main products which are being sold by this company in the world market include men’s clothing, women’s wears and kidswear. Men’s wears include belts briefcases clothing cufflinks and tie clips shirt dresses, jewelry, shoes, swimming kit, underwears wallet sunglasses, watch and many others. Women’s clothes include belts, clothing, handbags, purses, accessories, jewelry shoes, underwear sunglasses, swimming kids, wallets, watches, and many others. The kids’ wear includes, toys, clothes, accessories, belts, shoes, swimwears, watches and many others.

These products, are designed to cover all market segments of almost all income levels and the form of packaging that the product enjoys gives the customer a motivation to come back to the company to buy the product. Therefore, through product mix of this company they are able to create attention of customers get new customers who patronize business buy and consume the product. The product takes all the needs of the family from the age of one month to the age of 100 years. This is because of product mix decision that they have employed. They have more than 1000 items in-store to sell to the customers and these products are in different lines. Men’s clothing, women’s sloth, shoes to mention a few of the product lines employed by this company.

They have stocked high-quality products with well-known brands that have given the company good image not only in the US but in the world market. The products are displayed for purchase by customers. the store has built a packaging and labeling of their product in a such a manner that the customer has the confidence of choosing the product they want this is done through self-service and making the customer have a consumer affluence that is willing to pay more for the convenience of the service appearance of the service dependence of the company goods and the prestige of packing. Self-service can be seen clearly from their online shop and the physical store. This has given the company a good image thus creating a good brand name.

In developing the brand policy, they have grouped individual items or precuts into different products lines based on the quality feature and design this has given rise to a different pricing strategy.

Price

Pricing is one of the best decisions that a firm can make in order to remain competitive in the market. The company has priced its products based on quality and market segments. A high-quality product will have high price the same way a medium quality product will have a medium price while a low-quality product will have a low price attached to it. the company has segmented the markets while setting its prices this is aimed at making profits at the same time capture the market. The main aim of setting the selling price is able that stimulates market growth. At the same time be able to remain competitive and make profits. They have considered the factors that affect market segment while coming up with the pricing strategy. Some of the factors they have considered in setting various pricing strategies include the value attached to the products as viewed by specific market segment. Availability of a substitute in certain segments the amount spends in production of the product, the quality of the product fixed cost and inventory being held in store. All in all the pricing strategy is above the fixed cost that is after considering the contribution of a certain product.

What it means is they have different prices for different customers from different segment. The UK market is charged a cost-plus margin with no sales tax. In China goods are sold to them at price plus profit plus Value Added Tax plus a shipping cost. These prices are charged by this company varies with the consumers in various segment.

Being a market leader they maintain their prices and profit margin. This when (a) it would lose too much profit if reduced its produce; (b) it would not lose much market share; and (c) it could regain market share when necessary. This price maintenance is dangerous because competitors may take the market and gets more confident as its sales increase.

Promotion

Promotional mix is important in this case because good advertising, personal selling, sales promotion and publicity skills should be employed to enhance the sales for clams and expand the market. This will ensure that the bundle of benefits a customer gets from a product serve the purpose for which he bought it. This will also assist the company to alert customers to be aware of the product i.e. in advertising. There are many ways of advertising. Communication that can be used on clams is visual adverts- newspapers, magazines, e.t.c. other ways are audio-visual- T.V, videos and cinemas and audio where advertisers use the radio. Another very good form of promotion to use is via the internet where clams products can be placed online for customers to be aware of and purchase. This company exploits all these avenues in marketing its products.

Good promotions aimed directly at the customers can also enhance sales just like direct mails, flyers or posters that can keep the customer updated about the product. For this case of clams where the product is sold in stores and distributors selling is essential but there is need to employ effective salespeople to sell the product and explain the important product feature.

Advertising:-The company advertises in the local press (newspapers, mail, magazines) commercial television, billboards, Use of Travel agencies, brochures, Word of mouth (personal selling), Outdoor hoarding, transport advertising by the taxi (cabs) and Celebrity endorsements. Otherwise to give a selected celebrity who frequents Las Vegas and Canada free product, for them to endorse the company’s product to the public.

There will also be a sales promotion which will involve; Temporary price reduction to attract new consumers and also retain the old consumers that the company would have captured.

Publicity: The Company entails, getting involved with the community developments by offering.With this social responsibility, the company is able to be boosted in terms of publicity of the company, hence created more awareness.

Place of distribution/positioning

The position of the company is located in great cities as well in the online shop where there is always influx of human flow and hence ensuring there is a ready target group. The company is located in the busiest streets in major and while other stores are situated in a mall which is a bonus point to the introduction and success of the company products.

Organization plan

The manager who shall take the responsibility of managing the business shall be a Chinese hired to carry out operations in the new venture. For the success of the business the manager will bring some local ideas into the branch. First and foremost the latest technology shall be employed in the offering of services and products to promote efficiency and accuracy. Further employees will be assigned duties in their areas of specialization in order to promote productivity. The manager will ensure that the objectives of the business are achieved. The assistant manager will assist in the day-to-day running of the business.

He will also ensure that employees perform their duties as required. Under the key management personnel, the business shall have electrician, financial controller and salesman. The salesman shall be in charge of the selling of spares to customers. The panel beater will be in charge of bodywork.

The marketing manager shall be in charge of marketing the clothing that the business will offer. The security man will be in charge of ensuring that the properties of the business are safe.

Before recruiting employees the business shall carry out interviews and test other factors like employees’ qualifications, experience and personality. The business will offer job training to competent employees. Employees going for short courses taking duration of less than one year shall be sponsored by the business. The business will further offer attachment opportunities to college students. Promotions shall be given to competent working employees.

To retain employees the business shall reward employees for good performance, organize social occasions for them, give them honors and introduce a profit-sharing plan. Some incentives like overtime, bonuses, good working conditions, insurance covers, staff parties and transport allowances hall are given to employees. The business shall get its license from registrar and will adhere to all laws enacted by the local government and the federal government.

Operational plan

The business needs a lot of money to start its operation in China. At the start the business will buy essential tools and equipment that will be required on daily basis while others will be hired. Under the product and service design the manager will ensure that clothes are quickly fashions with high quality, employees are dedicated to the success and growth of the business. He will lay plans that will allow for flexibility to change through his organizational plan.

The cost of production of the business was accessed on a supply basis. This was arrived at after realizing that some duties cannot be completed within one day. The business will earn 8000 per week and a total of 600,000 for a year at beginning. The regulations affecting operations include safety standards regulations and insurance act. The business shall acquire a license from the ministry of commerce. The business shall also acquire a certificate before starting its operations from local authority. All laws and regulations shall be followed in day to day operations of the business as well as strict implementations of regulations regarding the registration process.

Management plan

The organization chart for the proposed business will be-

Conclusion

L.K Bennett is a good company with main focus on customers and marketing. This company is good in consideration with the different aspects that include the views as well as the target market and clients. L.K Bennett is also aware of the increased awareness of plans and the efficiency of cost in relation to sales in China. The company will open the branch in order to gain more profit and be able to be competitive in all aspects of business. The use of different marketing strategies is of great help because of the contribution to profit and the style in the field of business. Though there are lots of pressures experienced by L.K Bennett, the company remains to stand on its own. Research and studies are also applied in this field of business in order to test the different styles of marketing with strategic points of view that may be implemented. There is also an ability in order to make money which can be further used in investing activity. Given the fact that there are many competitors, L.K Bennett remained to stand and continually searching for discoveries with many important views that can be used in the future.

Another marketing strategy used by the company is the connection of the rewards systems using the card-based in order to help the marketer for getting the information required. The beginning of good relationship between company and clients can have a nice value essential with the making of loyalty work in terms of marketing. The big division between the marketers and clients has something to do with the transactional level while fostering the need for long-term relationships. The good aspect that may be considered is the global brand used by most companies and business expansion in order to grow and also evolved with the target audience for the diversification of needs.

Marketing research enables the company to decide what marketing strategies like plotting an invasion sequence, using celebrities in advertisement, lowering prices and specializing in some services will be applied in addressing the market needs. Similarly perfect market strategies will be applied to address the market needs like use of media to advertise, by discovering new market segments, being customer-oriented and by outsourcing abroad. These are admirable marketing strategies that have been applied in international markets by multinational and they should be applied globally to promote sales (Winer, R.S., 2007).

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