Discuss the below questions by reading below case:-
Q1) Does Delphi Fashions need more than help on building a marketing plan? What other areas of the business need looking at?
Q2) What tools would you use to try and analyze the problems the business is facing? What is your rationale?
CASE: Delphi Fashions
Delphi was started 5 years ago by the two owners: Samantha Godfrey and Yvonne Hazelwood. Prior to starting this business, they both had extensive experience in the garment industry. Samantha's experience had been predominantly in underwear, outerwear and work wear and Yvonne's in ladies wear and fashion. When they first started working together, they concentrated on work wear and fashion. The former gave them good (if somewhat dull) steady business and the latter more interesting if variable work. In all cases, they were producing garments for others to sell on: either designers who would sell to retailers or wholesalers selling work wear. The work wear market became increasingly competitive and as more of their potential business went abroad, they decided to concentrate on the fashion side. They established good relationships with a number of designers who produced high quality garments that sold at the mid to upper end of the market. Business remained good until autumn last year when one of their major customers (60% of turnover) decided to cease trading and their other customers reduced their orders. Last year, they had made a decision to try and sell direct by setting up a website and doing a fashion show in their home town. This concentrated on fashion for the larger lady as they felt that there was a gap in the market here. Their latest diversification was into cloth hand bags that they designed and produced. These were low cost as they could be made to order. Again they hope to sell these direct to the consumers via the website. Since the end of last year they have had no firm orders of work from their usual customers. The attempts to find new customers have been unsuccessful, as it appears that either the de signers are sourcing all their garments abroad or the new designers are no longer working for themselves but joining large fashion houses. They are also concerned that the few enquiries to date have been small and also the prices have been so low that the margin is paper-thin after they have taken their costs into account. They realized that a garment that they sell on for £30 retails at over £100 once the wholesaler and retailer have taken a cut. In order to remain in business they needed to drastically improve the margin they make. The obvious solution would be to design and sell to the consumers direct but with their limited resources, this would be difficult as they have found as no sales have come from the fashion show or the website. Another option would be to sell to retailers that would have a lower profit margin but would have the advantage of more reliable sales. As the above is risky, they would also like to continue their ‘CMT' (cut, make, trim) business i.e. making clothes to order for customers using their designs. Their problem is finding suitable customers. In the short term, Samantha and Yvonne need to find some more ‘CMT' customers to keep the business afloat while they build their ‘design and produce' range of clothes for the larger woman and the bespoke handbags. They feel that their long experience in clothes production would work well with new fashion designers who are very creative but perhaps short on practical experience! In the longer term, they want to take more control of their business by selling their own designs (under their label) to consumers either direct or via selected retailers. They believe that in this cost conscious world, it is the only way to compete. Delphi have brought in a consultant to help them with their marketing plan for the business. The consultant has identified the key objectives as follows:
CMT Business
1) Understand the current market for CMT in the UK by reviewing market reports and other published literature and conduct interviews with former customers and other contacts in the garments industry.
2) Identify sources for new CMT customers
3) Understand Delphi's competitive advantage in relation to these new customers
4) Build a business proposition to take to the new customers and identify the correct approach
5) Outline financials to ensure the survival of the business Design and produce business
1) Understand the current market for high quality (?bespoke) ladies fashion in the UK by re viewing market reports and other published literature and conduct interviews with former customers and other contacts in the garments industry.
2) Review range of products and determine which will be used in this business.
3) Identify routes to market and decide on the strategy for each one.
4) Look at pricing strategy to ensure maximum competitiveness and profitability
5) Refine website and other promotional tools to reflect the positioning of the products