Marketing Assignment Paper on Evaluation of Forever 21’s Marketing Strategy

Evaluation of Forever 21’s Marketing Strategy

Introduction

Exceedingly competitive institutions, which are all competing for the customer loyalty, typify today’s market. Businesses encounter the challenge of sustaining their own competitive advantage and being competent to endure and be efficient. Plans are cautiously designed and carried out to attain the ultimate objective of all; business growth. Nevertheless, external aspects are not the solitary factors which determine expansion. Internal elements within the organization also shape the direction of the firm. The company’s promotion atmosphere affects the business directly. This comprises the dealers that transact explicitly or implicitly with the proprietors, the customers who order for the goods provided by the company, and other stakeholders who manipulate administrative actions or influenced by the resolutions made by the entity.

Intrinsically, the atmosphere of a specific business explains the relationship between entities and the motivating forces that regulate and influence their marketing productivity. This paper studies Forever 21’s competitors in the clothing industry. A substantial number of firms have grown into a fundamental part of the era of international competition, enhanced development, superior business models, and business restructuring. The ongoing conversion from the conventional industrial structure with its hierarchical firms to an international, knowledge-based marketing system and smart corporations demand business administration to realign and reposition its marketing strategies. Together with the rigorous marketing these days, businesses are confronted with the challenge to preserve their own competitive advantages to be able to endure and be flourishing. This paper examines Forever 21’s marketing strategy. The first section of the paper contains a brief literature review about the company’s marketing information, its marketing plan, and competitors. The second section contains proposals that Forever 21 can implement to improve its competitive edge over its global competitors. The third section contains recommendations and the best choice of the proposal to be adopted by the company.

Literature Review

Background Information

Forever 21 is a Los Angeles-founded fashion retailer with revenues of over $3 billion annually from its 500 stores, with aspirations to open over 1,000 stores internationally. From its 450 United States store headquarters, the “discounted stylish teen retailer” is selling in Japan, South Korea, Canada, the Middle East, Europe, and China (Comunale, 2008). The company has declared plans to start in other European markets, for example, France, Germany, and Italy, as well as other global markets like Israel. The Korean-American Change family and debt-free privately own the firm with revenues spent into international extension. The firm receives strong competition from a range of apparel manufacturing firms. The firm has been swift to take advantage of the adversities of other competitors, occupying into premises abandoned by Dillard’s, Saks, Virgin Megastore, Mervyns, Circuit City, and HMV. Sites comprise Manhattan’s Fifth Avenue, Times Square, and London’s Oxford Street. Forever 21 represents continuously switching styles and reduced prices in the stylish fashion industry sweeping over other rival companies such as H&M and Zara. Fast stock turnover provides higher volumes covering for reduced margins. To keep costs low, Forever makes and develops most of its products internally. The fast-shifting collections endeavor to inculcate a “once it is gone, it is gone” attitude with teenage customers. While discounters give low-price value, Saks gives high fashion, and Zara offers range, Forever 21 endeavors to merge all those potentials in one brand.

The company developed out of the Korean-American environment in Los Angeles comprising apparel production, wholesaling, and retailing. Now, Forever 21 makes only 15 to 30 percent of its apparels in Los Angeles (those requiring a quick spin) and manufactures in China, Vietnam, Pakistan, and other nations. For many Forever 21 customers, being able to get low-priced copies of superstar apparels and runaway styles is a key attraction. Forever 21 draws some controversy since it has regularly been blamed of not only following fashions, but trading copies of attire fashioned by trendy. Forever’s ventures in information systems for financial 2011 extended to concentrate on their stores, supply chain, central business systems, and communications.

Industry Analysis

Competition

Forever 21 receives strong competition from a range of apparel manufacturing firms. H&M runs more than 650 stores in the United States. It manufactures both gents’ and ladies’ attire and add-ons. H&M has been closing and merging its stores for the past few years because of declining sales. H&M lately launched a huge flagship store in New York City which is the eleventh shop in the city so far and intends to establish more flagship shops (Walker, Curren, & Kiesler, 2013). This action from the Swedish-founded fashion retailer confirms their commitment to internationalization to make sure the firm continues developing in the United States market, but as well underscores H&M alertness of aggressive rivals in the industry, such as Forever 21 which launched its flagship XXI Forever shop in New York four years ago. Zara is another Forever 21 key business contender. Zara runs over 400 individual stores in the United States and Europe. It additionally wholesales its outfits via department stores, in addition to its own website. Another competitor, Virgin Megastore, runs over 500 stores under the Virgin brand name. It trades both brand name and company manufactured clothing and accessories. Its apparel is directed towards teenage women. The company also sells outfits through a number of websites. Forever 21 also contends against smaller, privately-owned designers, for instance, Azria, Circuit City, and BEBE (Walker et al., 2013).

Porter’s Five Forces

Threat of Substitute

One of the well-known reasons for such powerful competition between firms is the missing charge of changing firms. Shifting from a firm to another is as easy as walking into another store. Additionally, customers do not view high-end apparel products as an important product. Hence, when Forever 21 or a competitor increases prices, consumers will go search a more inexpensive alternative. Since consumers are regularly seeking the finest products at the cheapest prices, Forever 21 and its competitors are required to be exceedingly inventive in winning and retaining customers.

Threat of Rivalry

Forever 21 encounters considerable competition in the retail and clothing business. Forever 21 has contended with the long-established department stores, specialty shop retailers, cheap price point merchants, business to customer websites, off-price sellers and direct dealers for, among other things, production materials, market share, business space, finished products, sourcing and workers. Numerous firms provide similar outfits and supply to the same demographics as Forever 21. Some of these players have all been in the industry for approximately 3 decades, and each seize a considerable portion of the market share. The nature of Forever’s target market trend connotes that every year there are consumers outmatching the store and exiting the market and new consumers just moving into the market with no existing brand allegiance (Yu, Kim, & Kim, 2011). Competition between the company and its rivals for those new consumers is strong. To remain viable, Forever 21 applies reliable sales to present its consumers with the finest quality goods for the very low prices. Since a lot of these contenders are larger and have significantly larger financial, distribution and marketing supplies than Forever 21 does or sustain relatively reduced cost of operations, Forever 21 may lack the funds to contend with them sufficiently. If Forever 21 does not stay competitive by any means, it will hurt their selling, financial situation, and outcomes of operations.

Threat of New Entrants

The retail and clothing industries are extremely competitive and are typified by low difficulties to entry. The prime competitive aspects in the clothes markets are: brand name recognition, sourcing, product titling, quality, appearance, pricing, aptness of product development and delivery, store setting, consumer service and expediency. Forever 21 and its major contenders have all been in operation for a significant period. Attributable to this recognized credibility, there subsists relatively a bit of brand allegiance among customers (Holmes, 2010). A new firm would have to work against years of publicity advertising brand recognition to be capable to think getting competitive.

Bargaining Power of Buyers

The success of the company’s business relies greatly on the capacity to recognize style trends and to respond to shifting consumer demand in an appropriate method. The clothing industry is a trade that contends on the ever shifting whims of the consumer. Accordingly, Forever 21 relies partially upon the customer reaction to the innovative efforts of their selling, style and marketing players and their aptitude to predict styles and fashions that will satisfy their customer base. If Forever 21 misjudges consumers’ product inclinations or the demand for their goods; they may be confronted with surplus stock. Previously, this kind of happening has resulted in surplus fabric for some outfits and reductions and write-offs, which has reduced the profitability (Holmes, 2010). Correspondingly, any malfunction on their part to predict, recognize, and act efficiently to shifting consumer preferences and fashion trends has negatively affected sales.

Bargaining Power of Sellers

The company outsources all of their materials to firms internationally; concentrating on Asia because of the reality that labor there is reasonably priced. Outsourcing saves the company huge sums of capital on production expenditures. Because of the great amount of substitutes that give low charges, the dealers do not hold immense power. If an independent firm breaches labor or other related regulations is charged with breaking any such regulations, or if their labor performances deviate from those commonly acknowledged as ethical, it could hurt business and brand reputation. Although the company upholds a policy to check the operations of its independent contractors by establishing an independent firm to scrutinize these manufacturing locations, they cannot direct the actions or the public’s opinions of such contractors, nor can they guarantee that these contractors will perform their businesses applying ethical and lawful labor practices. Clothing companies, in some situations, may be held equally responsible for the illegal behaviors of the contractors for their products. Forever 21 does not direct its contractors’ employment provisions or business performances, and the contractors operate in their own interest.

Business Analysis : SWOT Analysis

Strengths: The Forever 21 stores commenced with a great advantage over its rivals’ as a brand that aimed at a very exclusive market with a stylish idea. This made the brand extend beyond and assisted in expansion into global territories.

Weaknesses: The same niche market is as well a limitation to the Forever 21 Company since it fails to draw anyone outside the target group with its promotion. The promotion itself, even though the company has used several superstars, goes unseen by anyone except their devoted customer base. The superstars that the firm has used as their brand emissaries are not too popular, which is unsuccessful in drawing in newer consumers or bettering brand reputation. The company needs a little additional market study to be capable to fix the promotion and fashion line setbacks. Additionally, Forever 21 stores are very difficult to navigate due to the numerous placed items in one place.

Opportunities: The brand can endeavor to open its doors to contain more novel markets. For instance, they can invest in the male market. Stores such as Zara have profited from that market while aiming consumers with similar attitudes. Another prospect for the Forever brand is to enlarge their globally accredited stores into developing countries such as Brazil and South Korea. These markets are developing and are expending enormous amounts of lately acquired riches. These markets are on the brink of key developing fashions.

Threats: The Forever stores require bearing in mind the diverse competitions that they have to distinguish themselves from. H&M (direct rival) and Zara (cheaper rival) are embracing a great deal of market share, which is a massive menace to the wellbeing of the company’s brand. With the economic downturn injuring the consumer’s expenditure power, the Forever 21 store brand is at a disadvantage (Tokatli, 2008).

Marketing Strategy

Product

 Forever 21 is an American clothing retailer that mostly targets women in their youthful stages. This target market, which firm refers it as the “demographic that is neither too young nor old,” proves very lucrative to the brand. They retail stirring fashion that depicts these women as fashionable and sensual. They manufacture a line of up to date fashion comprising clothing, add-ons, and shoes. Its unique product offering encompass a full variety of disconnects, tops, dresses, and add-ons in various lifestyle classes, which include profession, active, informal, and evening.
Place

Having launched their first store in Los Angeles; Forever 21 enjoyed immense success. This is demonstrated through the reality that the company is presently operating over 600 retail stores. They contain one online, which was launched in 2008. They also contain numerous internationally-accredited stores in use. The clients can find Forever 21 stores in public plazas, outlet plazas and in directories, which are accessible on request.

Promotion/Advertising

 The Forever 21 brand is depicted through an uptight promotion; a visual promotion that comprises numerous different mediums, for example, prints, in-store, and express mail. For the picture, that they fancy for their brand, in terms of what their consumer would look like wearing their brand, they applied a very definite example. The Forever 21 woman would be delineated as someone who has a distinctive perspective; who is very confident, sexy, and trendy (Holmes, 2010). They fancy for their consumers to view themselves as positive women who are trendy, stylish, and like to have an exclusive manifestation of personal style. Forever brand as well has advertised through occasions. They hold yearly collection preview event that offers shoppers special first look at their latest lines.

Price

The firm’s stores charge rates are set at a low level. Their products range anywhere from $15 to $250 according to their product prices on their official website. To keep costs low, Forever makes and develops most of its products internally. Only manufacturing operation is outsourced from external vendors.

Supply Chain Management

Information Services and Technology

Forever is dedicated to using technology to boost their competitive edge. Their information systems present information to the whole business to assist advance competence, visibility, and acceptable decision making. The main business systems, which comprise both procured and internally formulated software, are accessed all over the company network presenting workers with access to critical business functions. Forever’s ventures in information systems for financial 2011 extended to concentrate on their stores, supply chain, central business systems, and communications. They accomplished the establishment of a new point of sale system to all stores which has led to significant effectiveness developments for their stores and company offices (Scaraboto & Fischer, 2013). They as well finished perfections in product ordering and planning procedures by fully incorporating their supply chain system. In the financial year 2012, they continued to make enhancements to their POS system, enhancing their stock optimization ability across channels, and enhancing alliance capacities and incorporation with their international suppliers to deliver additional efficiencies to their supply chain.

Forever’s Development Plan

The launching of Forever 21’s flagship store on London’s Oxford Street demonstrates that the firm is ready to take on some of the world’s leading companies in its bid for international command. The firm first established stores in the United Kingdom, the Philippines, and India in 2010, and is now projecting a European attack after establishing stores in Austria and Belgium in 2011. Prior to its European launch, Forever 21 was mainly founded in its home market, the United States, where it contends with the likes of H&M and Zara, with stores as well in Canada, South Korea, India, Japan, and the Philippines. In the United States, the company is one of the top clothing firms, with sales worth around $3.0 billion, but its powerful position in the United States market is not sufficient. In 2010, it established its first outlets in India, and the Philippines accompanied by the establishment of its first Austrian and Belgian retail outlets in 2011. The company has declared plans to start in other European markets, for example, France, Germany, and Italy, as well as other global markets like Israel. Forever21 is taking on international giants such as H&M and Gap, which would be prudent to observe Forever 21’s next steps intimately. The power of value and fast trend players in Europe has not blocked the company from following its gallant development plan of establishing over 100 stores in possibly the most concentrated attire market in Europe; the United Kingdom. It has an exceptionally difficult task of distinguishing itself from its United Kingdom competitors, many of which target the same demographic market.

The application of internet media by the company to create hype for the brand has turned up victorious. What would be the best thing to learn from this is to facilitate regular interests to sustain social network postings. Forever 21 pays considerably more concentration to store design and internal design than its United Kingdom rivals, with eccentric store aspects, for instance, outfit displayed on an artificial ice cream van. Such attention-grabbers may bear out productive in conquering the hearts of teens as they look for an entertaining shopping experience. The company’s store interior offers it a considerable advantage over its closest rivals in terms of price, which has a very simple and often disordered interior.

Proposal 1: Improving Social Media Promotion

The company’s objective is to enlarge its scope of consumers by providing a broader selection of fashions, but for the company to access these other types of prospective consumers, they require to use social sites that will accomplish this objective. Competition between the company and its rivals for new consumers is strong. The company currently uses Facebook to provide clients with product information, product qualities, and benefits. From this synopsis of objectives for the company and its social media familiarity, Forever 21 can manage to use up as a minimum 6-8 hours each day on its effort. As for the company’s website, it is absolutely optimized, holding Facebook, Twitter, and YouTube buttons. The company uses Facebook as its main basis for the interaction with consumers purely because people can input and like the company’s updates (Pelton, 2013). The company as well has an amazing blog on their website displaying their YouTube account. They have very limited videos placed on their page leading to a big mistake on their side.

 Forever 21 needs to better their already inventive and thrilling website by building an optimized video blog that will provide product data and imaginative ways to put on Forever 21’s clothes (Kim & Jones, 2009). They can as well employ a social bookmarking spot and make an app for shopping. If they enforced this tool, devoted consumers and prospective shoppers would be able to view what fashions are trending and what the company is involved in. For those customers that are faithful to the company, this might potentially be a massive merchandising spot. They could utilize their YouTube profile to display pictures from a video account to help the style disputed and post new merchandise the company trades electronically. Applying this strategy could boost the company sales significantly. Regarding the video account, the amount of views each video obtains within a month of its discharge will be a great determining factor. If there are over 6,000 watches, it should be regarded a success. The achievement of the itinerant shopping application should be ascertained on the number of procurements that take place during the initial five months of its functioning. Applying a social bookmarking spot will be the most complicated to establish achievement certainly, but not without a solution. If executed correctly, achievement can be assessed by the amount of watches the profile receives; once more 6,000 within the first 180 days should be the inspection number. Regardless of how big or small a novel strategic plan is, it requires time to execute. It will take very cautious planning, time, and resources; nothing can be achieved over night. After five months, Forever 21 can assess their merchandise and strategies to establish how they have been functioning and if modifications require being made.

Proposal 2: Creating New Brands

Alternatively, Forever 21 only operates through its parent brands presenting them to numerous diverse stores. This is different from its main competitors such as H&M and Zara, which run across several brands across the price range, helping them to win a wider consumer base. Even though the United States-founded retailer presents a men’s clothing line, plentiful women’s wear lines, comprising a plus sized range and a girl’s collection, and footwear, add-ons and cosmetic items, all these categories operate under a single parent brand.

Hence, when it comes to development, Forever 21 can be restricted to the number of shops it opens since it only works under a single brand, whilst its rivals operates several. Even though Forever 21 initially penetrated Europe in 2009 by opening a shop in Ireland, the firm only has several stores opened presently and shows that the store ideas do not make the paramount utilization of the retail space present in Europe. For instance, one and half years after Forever 21 established its shop in Birmingham, the firm publicized that it was a sub-letting fraction of its retail space in the city’s well-known business mall, the Bullring. Forever 21 is competent to contend in the European market because of proved brand name, convincing in-store settings, and a broad variety of stylish product. Additionally, the direct touch altered the public’s misapprehension of the brand, Forever 21. Based on its name, it appears the brand only sells apparels for youthful ladies aged roughly 21. It is time for the company to embrace other brand lines such as jewelry, and cosmetics under different brands. Under the brand extension, Forever 21 should create new merchandise, comprising shoes, bags, intimate apparel, and cosmetics among others for all age groups to widen its target audience. Hence, Forever 21 will penetrate novel product categories dissimilar from that of the original brand. The extension of Forever 21 to add-ons, shoes, and bags can be referred to as category extension, and its extension for men and children can be viewed as a line extension. With these extensions, the company will reach out to a bigger prospective client base and be capable to suit their wide-ranging wants. The company should launch these new brands with huge opening ceremonies and offers on their various stores all over the world. The launching ceremonies will have a direct and powerful impact on the public and will assist increase new awareness towards the new brands (Kim, Choo, & Yoon, 2013).

Back in the developed world, nevertheless, business matters most, discussion less, and association least. Customers feel drawn in into this occasion and cherished by the brand service. Customers are more attracted by the flagships stores and the merchandise of the brand more than the cheap prices (Jones & Kim, 2010). On the basis of this association, discussion between the brand and consumers and amongst the consumers will eventually lead to benefit in operations.

Recommendation

The firm has made an implausible reputation over the previous decades in the apparel industry. The company is always adjusting to maintain the ever shifting styles in the trend world. Because the company is established on the maxim of remaining modern and stylish, by adding to their existing social media they will be capable to get to a bigger group of prospective consumers who are in social media, in addition to keeping their existing brand lovers informed on their newest fashions. Therefore, proposal 1 is the most excellent option for this company. Forever 21 targets young women and men rating from 13 to 30 years that are attempting to keep abreast with the newest fashions at a startlingly levelheaded price (Holmes, 2010). Even if teenagers are the main target group of the company, numerous different people from various diverse backgrounds and age groups should be persuaded to buy at the company’s stores purely because it provides almost anything one wants at the cheapest price for its quality.

As acknowledged earlier, Forever 21 constantly craves to be on the fore front and the only better way to be at the top and accommodate consumers of all age groups is to maintain all forms of social media. It is extremely imperative for a firm in the ever shifting apparel world to keep the fashion conscious fans enriched with the information they desire. This is why constancy and reliability with all of the company’s social advertising practices are critical in Forever 21’s achievement. This sales proposal is efficient since it not only presents the company time and space but also gives value. The updates posted on the company’s website can be interactive and hence draw more awareness from audiences of various demographics (Grandhi, Singh, & Patwa, 2012). The achievement of this plan as well relies on the proposed demographic response to the posts. Forever 21 and social media have comparable audiences, both sharing a large female subgroup, which provides momentum to the accessibility of the posts. The company uses Facebook as its main basis for the interaction with consumers purely because people can input and like the company’s updates. Forever 21 should use YouTube to allow consumers express their experiences on their products by word of mouth because verbal communication is the most influential form of promotion. This prospective outcome will confirm that social media sales produce a reciprocally beneficial association that has more than money value.

Conclusion

Businesses encounter the challenge of sustaining their own competitive advantage and being competent to endure and be efficient. The atmosphere of a specific business today explains the relationship between entities and the motivating forces that regulate and influence their marketing productivity. Forever 21 faces strong competition from a range of apparel manufacturing firms. To remain competitive, Forever 21 applies reliable sales to present its consumers with the finest quality goods for the very low prices (Divita & Yoo, 2013). The company targets young women and men rating from 13 to 30 years that are attempting to keep abreast with the newest fashions at a startlingly levelheaded price. The success of the company’s business relies greatly on the capacity to recognize style trends and to respond to shifting consumer demand in an appropriate method. If Forever 21 does not stay competitive by any means, it will hurt their selling, financial situation, and outcomes of operations. To handle this challenge, the company has declared plans to expand its operations in regions all over the world. The company has to enlarge its scope of consumers by providing a broader selection of fashions, but for the company to access these other types of prospective consumers; they require using social sites that will accomplish this objective. The two proposals recorded above may augment the company’s sales and revenues if implemented.

 

References

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