LacosteThis print version free essay Lacoste.
Autor: reviewessays 29 September 2010
Words: 9918 | Pages: 40
BECOME WHAT YOU ARE!
HISTORY : â€œLA CHEMÐSE LACOSTEâ€
RenÐ¹ LACOSTE was the first, together with his friends "The Musketeers", to steal the DAVIS CUP away from the Americans in 1927.
He won the French Open three times (1925, 1927 and at the ROLAND-GARROS stadium in 1929), twice in Great-Britain at WIMBLEDON (1925 and 1928) and twice the U.S. OPEN at Forest Hill (1926 and 1927). This is the way in which RenÐ¹ LACOSTE entered the legend of tennis.
RenÐ¹ LACOSTE was born in France on July 2, 1904 and died on October 12, 1996.
The true story of the "Alligator" begins in 1927. RenÐ¹ LACOSTE liked to tell the way his nickname became an emblem recognized throughout the world.
"I was nicknamed "the Alligator" by the American press, after I had made a bet with the Captain of the French DAVIS CUP Team concerning a suitcase made from alligator skin. He promised to give it to me if I won a very important match for our team. The public must have been fond of this nickname which conveyed the tenacity I displayed on the tennis courts, never letting go of my prey!
So my friend Robert GEORGE drew an alligator which I then had embroidered on the blazer I wore on the courts."
An attentive spectator at RenÐ¹ LACOSTE 's DAVIS CUP matches was the winner of the BRITISH Women's golf title, Mademoiselle Simone THION de la CHAUME, who soon became his wife and constant support.
In 1933, RenÐ¹ LACOSTE and AndrÐ¹ GILLIER, the owner and President of the largest French knitwear manufacturing firm of that time, set up a company to manufacture the logo-embroidered shirt. The champion had designed this for his own use on the tennis court, as well as a number of other shirts for tennis, golf and sailing, as can be seen in the first catalogue, produced in 1933.
This was probably the first time a brand name had ever been visible on the outside of an item of clothing - an idea which since then has done extremely well.
This shirt revolutionized men's sportswear and replaced the woven fabric, long-sleeved, starched classic shirts. The first LACOSTE shirt was white, slightly shorter than its counterparts, had a ribbed collar, short sleeves with ribbed bands and was made of a light knitted fabric called "Jersey petit piquÐ¹". It continues to offer the same quality, comfort and solidity on which it built its name and which constitute its uniqueness.
FROM 1933 UP TO NOW, A FEW KEY DATES ENABLE LACOSTE TO FOLLOW SIXTY FIVE YEARS OF PROGRESS :
1933 Industrial production of the first LACOSTE shirts, in particular the shirt in white "petit piquÐ¹" cotton.
1934 to 1939 Progressive and selective development of sales of top quality shirts.
1940 to1946 Interruption of the Company's activity during the war.
1946 Resumption of production on the French market.
1951 Beginning of clothing exports to Italy. Addition of a colour range to the white petit piquÐ¹ cotton shirt.
1952 Beginning of clothing exports to the United States.
1959 First collection for children.
1960 Launch of shorts and striped polo shirts.The string damper is patented by RenÐ¹ LACOSTE.
1962 Signature of a manufacturing and distribution licence for clothing in Spain.
1963 Invention by RenÐ¹ LACOSTE of the first steel racket. Another revolution in tennis equipment, far superior to the wooden models. The LACOSTE racket had a revolutionary round head and open throat and paved the way for today's models. Its unique distribution of weight at both ends concentrated the power behind the ball. Its small aerodynamic resistance gave it a high handiness and its original patented system for fixing the strings provided a higher efficiency, especially with low cost synthetic strings. This racket won 46 titles of the Grand Slam tournaments between 1966 and 1978, was distributed in the United States by WILSON and was used notably by Jimmy CONNORS and Billie Jean KING.Arrival of Bernard LACOSTE, RenÐ¹ LACOSTE's eldest son, as Chairman of the Company.
1964 Golf World Team Champion title goes to 19 years-old Catherine LACOSTE, RenÐ¹ LACOSTE's and Simone THION de la CHAUME's daughter.Beginning of clothing exports to Japan.
1966 Signature of an agreement of manufacturing under licence for clothing in the United States. Addition of a line of tracksuits.
1967 Victory of Catherine LACOSTE in the U.S. Ladies Golf OPEN, followed by a double win at the U.S. and the British Amateur in 1969.
1968 Signature of a licensing agreement with Jean PATOU for a LACOSTE Eau de Toilette.
1971 Signature of a manufacturing and distribution licence for clothing in Japan.
1974 Invention by RenÐ¹ LACOSTE of the "damper" which will be used on LACOSTE steel rackets. This small patented device absorbs vibrations while improving accuracy and increasing the restitution of energy and in turn the speed of the ball up to 10 % (test from the French National Institute For Sports). This device diminishes the risk of "tennis elbow".
1978 Signature of a manufacturing and distribution licence for clothing in Brazil.
1981 Signature of a licensing agreement with L'AMY for a line of sunglasses and optical frames.Addition of sports bags to the LACOSTE line.Opening of the first LACOSTE boutique in the world, avenue Victor Hugo in Paris.
1982 Signature of a manufacturing and distribution licence for clothing in Australia.
1984 Launch of a new line of men's toiletries with Jean PATOU.For the Peugeot 205 launch, construction of a special "LACOSTE" limited series.LA CHEMISE LACOSTE, becomes a member of the COLBERT Committee.
1985 Launch of a new line of LACOSTE tennis shoes, manufactured in France, followed by deck shoes in 1986 and walking shoes in 1988.Presentation at the Paris Boat Show of the LACOSTE 42-foot yacht (the biggest "alligator" product to this day), designed by American architects "STEPHENS and SPARKMAN" and produced as a limited edition.Signature of manufacturing and distribution licences for clothing in South Korea and Argentina.
1986 Signature of a manufacturing and distribution licence in Japan with a new partner, the SEIBU SAISON GROUP.
1987 Signature of a manufacturing and distribution licence for clothing in Thailand.
1988 Mr RenÐ¹ LACOSTE takes out a patent for a new concept of tennis rackets: "EQUISYSTEME".Launch of the EQUIJET racket (LACOSTE patent). Its unique shape significantly increases tolerance for off-centre shots. It is a small frame with oversize delivery.
1989 Signature of a worldwide agreement with DUNLOP FRANCE S.A. and SUMITOMO RUBBER INDUSTRIES aimed at developing and distributing technical product lines for tennis and golf.
1990 Signature of a manufacturing and distribution licence for clothing in Mexico and Turkey.
1991 Signature of a worldwide licensing agreement with PENTLAND GROUP concerning the LACOSTE Leisure shoes.Launch of a new LACOSTE fragrance "LAND", with JEAN PATOU, on April 25th, 199159 years after the last victory of Musketeers LACOSTE, BOROTRA, BRUGNON and COCHET, the French team with Guy FORGET and Henri LECONTE wins the DAVIS Cup versus the U.S.A. on December 1, 1991, wearing a alligator on their hearts !
1992 Within the United States, Canada and the Caribbean, the LACOSTE Group has been able to take back control of the LACOSTE brands with the help of its worldwide supplier, DEVANLAY S.A.DEVANLAY will ensure both production and distribution within the United States and Canada.Signature of a manufacturing and distribution licence agreement for clothing in India.
1993 A new worldwide manufacturing agreement is signed with DEVANLAY S.A., industrial partner and associate of LA CHEMISE LACOSTE, until June 30, 2012 granting DEVANLAY the exclusive manufacturing rights for LACOSTE garments.New distribution agreements are also signed with DEVANLAY S.A. regarding France and Germany until June 30, 2012.To mark its 60th birthday, LA CHEMISE LACOSTE organizes a worldwide campaign in aid of the fight against multiple sclerosis.The campaign, "Les Plus" de LACOSTE, consisted in proposing a box of 6 brooches representing the 6 LACOSTE products lines: the shirt, the racket, the shoe, the perfume, the glasses and the watch.The proceeds total more than US$1 million for this cause.Signature of a licensing agreement with the Swiss company ROVENTA-HENEX for a line of LACOSTE watches, the distribution being handled by the company VIMONT S.A.Opening of three LACOSTE Boutiques in New Delhi, Madras and Bombay.
1994 Launch of a new line of men's toiletries, Eau de Sport, with JEAN PATOU on January 25.Opening of LACOSTE Corners in the United States at SAKS, NEIMAN MARCUS and BARNEY's.Signature of a distribution licence for clothing in China and opening of a LACOSTE boutique in Shanghai. Agreement with CARTIER for distribution and opening of LACOSTE stores in Mexico.Launch of a line of LACOSTE watches during the International Basel Watch fair in Basel on April 14.Opening of the first boutique on the African continent, in Morocco, at Rabat.
1995 New concept of LACOSTE furniture created by Yves TARALON, the world famous designer.Opening of the first LACOSTE boutiques in the USA, in Palm Beach and Bal Harbour, in Florida.The American Cotton Institute honours the development of the new "Super Light" in thin light jersey. The "1995 Global Recognition" trophy is awarded in New York City on April 27.Signature of a distribution licence for clothing in Russia.Signature of an agreement between LA CHEMISE LACOSTE and FICO, the International Federation of Oceanic Yacht Racing. The FICO-LACOSTE World Championship rewards the world's leading skipper. The FICO-LACOSTE trophy is awarded annually.Bernard LACOSTE is appointed "Companion of the Textile Institute" at a ceremony in Manchester (Great Britain).Bernard LACOSTE is elected to the board of directors and appointed Chairman of the Commission for the Protection of Industrial Property Rights, which is part of the World Federation of the Sporting Goods Industry
1996 Launch of a new line of men's toiletries, "BOOSTER", with JEAN PATOU.Opening of the first LACOSTE Boutique in Moscow, Russia.Creation of the LACOSTE Internet site on June 18.The French tennis team with Guy FORGET, Arnaud BOETSCH and Guillaume RAOUX wins the Davis Cup in MalmÑ† (Sweden) wearing LACOSTE.Opening, in December, of a LACOSTE Boutique on Madison Avenue - New York.Renewal of the worldwide shoe contract with the PENTLAND group until December 31, 2001.
1997 On 22 February in Venice, LACOSTE was presented with the MERYL AWARD in the sportswear category, for the Spring/Summer 1997 collection reversible golf jacket.Rising success of the LACOSTE Internet site: the monthly number of page visits have doubled (from 10,000 to over 20,000).Success of the French women's tennis team with its LACOSTE players, who became the new world champions by winning the Fed Cup, equivalent of the Davis Cup for women.Appointment of Michel LACOSTE and Guy LATOURRETTE as Managing Directors of LA CHEMISE LACOSTE S.A. These appointments confirm the company's development strategy and the decision of RenÐ¹ LACOSTE's family to remain in control of the company.
1998 On March 16, the partner of the worldwide textile manufacturing, DEVANLAY S.A., was taken over by the MAUS family (90 %) and LA CHEMISE LACOSTE (10 %).The advantages of this operation are as follows:- the partnership of two family companies involved in the achievement of medium and long-term common aims will guarantee the future development of DEVANLAY and of the "alligator",- MAUS FRERES' experience, involved in distribution for nearly 100 years, will reinforce DEVANLAY's strengths,- LA CHEMISE LACOSTE's shareholding in DEVANLAY together with Devanlay's continued shareholding in La Chemise Lacoste further reinforce the current community of interest.Signature of a worldwide contract with the golfer Colin MONTGOMERIE, European champion and ranked No.6 worldwide, who became world champion of Matchplay in the United States the following week. At the end of 1998, Colin is ranked European nÂ°1 for the 6th consecutive year, a record.Nathalie TAUZIAT runner-up at Wimbledon : ever since Suzanne LENGLEN in 1925, none of the French players had realized this achievement.LoÐ¿ck PEYRON is sacred World Champion FICO LACOSTE.
1999 JosÐ¹ Maria Olazabal wins the Masters at Augusta (USA) in April, one of the "four majors" worldwide. Signature in May with Alex CORRETJA, Spanish, ranked nÂ° 6 worldwide, of a multiproducts' contract. Lacoste dresses referees and linesmen for the men's final of Roland Garros with the outfit RenÐ¹ Lacoste was wearing in 1927, as a tribute to the musketeers for the 100th anniversary of the Davis Cup. Referees and linesmen were dressed in LACOSTE during the French Open. Launching of the Lacoste 2000 perfume in May. As from July 1st 1999, LA CHEMISE LACOSTE grants the worldwide clothing license of the LACOSTE brand to DEVANLAY, up to December 31stn 2012. This agreement includes creation, manufacturing and distribution, merchandizing and products advertising of the LACOSTE clothes. The three areas, creation, manufacturing and distribution, which responsibilities were divided and which gave excellent results, are now regrouped in a sole and only entity in order to increase efficiency and meet even more quickly the consumers' expectations.The goal of this evolution is to bring LA CHEMISE LACOSTE's role back to: - Registration, protection and defense of its brands. - Surveys on the consumer's expectations. - Orientation, evolution, control of creation, distribution, marketing, and merchandizing. - Strategy establishing the communication policy of the brand, the development of the image advertising and international promotion. - Coordination of all LACOSTE activities on a worldwide scale. - Development of new projects. September : launching of the first perfume for women: "LACOSTE for women". Signature on October 1st of a licence agreement covering Europe, Middle East and Africa, for LACOSTE household linen, with DESCAMPS S.A., part of the ZUCCHI-BASSETTI Italian group.Launching in India, at the beginning of December, of the LACOSTE Kurta, taking the opportunity of the exhibition France-India 2000 in Bombay. The Kurta, long sleeves tunic, is the Indian traditional men's clothing.Internet : Increasing success of the LACOSTE Website with 231 997 page views in September, 490 346 in November and 638 329 in December. Opening in October of the China Website, both in simplified Mandarin and in English. Opening in December of the India Website, both in Hindi and in English.
2000 Signature on January 1st of a LACOSTE men's underwear licence agreement with VESTRA.Signature in May of an agreement with Christophe LEMAIRE who takes over from Gilles ROSIER and will become the Creative Director of Devanlay S.A.'s Lacoste activities. His first Lacoste clothing collection will be shown for Spring / Summer 2002. Mr Christophe LEMAIRE will coordinate the styling of all product lines for La Chemise Lacoste.Internet : opening of 7 new national websites : Australia, France, Germany, Great-Britain, Italy, Japan, Spain. At the end of June the number of pages viewed reaches 1 550 000 per month.Signature on October 1st of a licence agreement with COLLAERT S.A, covering Europe, Middle East and Africa, for Men, Women and Children LACOSTE belts.Worldwide licence agreement signed on December 21st with SAMSONITE for LACOSTE bags, travel items and small leather goods.
On January 1st, 2001, sixty eight years after the company was created, 25 million different articles, representing a wholesale turnover of US$ 750 million, are sold every year under the LACOSTE brand, in 103 countries, in a network of sports shops, speciality stores as well as in 677 LACOSTE boutiques and 1651 corners.
OVERVIEW of the BRAND
Signature in May of an agreement with Christophe LEMAIRE who takes over from Gilles ROSIER and will become the Creative Director of Devanlay S.A.'s Lacoste activities. His first LACOSTE clothing collection will be shown for Spring / Summer 2002. Mr Christophe LEMAIRE will coordinate the styling of all product lines for La Chemise LACOSTE.
The young designer takes over from Gilles Rosier, absorbed by his activities with Kenzo. Christophe Lemaire succeeds Gilles Rosier as artistic director of the LACOSTE activities of Devanlay. He will be in charge of the designing studio for clothing collections, which worldwide license is held by Devanlay up to 2025. Apart from this agreement which takes effect as from the 2002 spring-summer collection, the designer will as well coordinate the style of all product families under LACOSTE license. For Christophe Lemaire, 35 years old, who is still a "young designer", although the launching of his own company goes back to 91, the contract signed with LACOSTE took effect last June 1st. On top of creating the collections, in relation with the studio, which includes today 7 designers, Christophe Lemaire will also intervene on the brand's image work (communication, merchandising, etc.). For the designer, the agreement signed with LACOSTE luckily coincides with the arrival at the head of his company, at the beginning of the year, of a new general manager John Storey, an American who lived twelve years in Tokyo. Christophe Lemaire SA - which had in 1999 a 20 million franc turnover, almost all in export, essentially to Japan - belongs at 70% in equal parts to the designer himself and his partner FranÐ·ois Frain, and for 30% to Renown Look, his Japanese distributor. LACOSTE does not plan to take a participation in this company.
DISTRIBUTION CHANNELS AND LOGISTICS MANAGEMENT
WORLDWIDE LICENSEE : DEVANLAY
TURKEY LICENSEE : DEVANLAY-EREN in the contitution of EREN HOLDING
As we all know, international marketers use existing distribution channels for the most part. Distribution channels link the producer of a product to the consumer or industrial user. This international marketing channel is sequence of marketing organizations from nation to nation that directs the flow of products.
One of the most basic levels of international marketing is licensing. A license is a contractual agreement in which one firm permits another to produce and market its product and use its brand name in return for a royalty or other compensation. Here, we present you Turkey Licensee of LACOSTE; Devanlay-Eren(Er-de Pazarlama):
Devanlay-Eren has been built in 1990 with the aim of meeting the products of famous world wide brand â€œLACOSTE" with Turkish consumer by forming distribution channels in the national market. Devanlay-Eren (Er-de Pazarlama) is currently a member of Eren Holding which is one of the fundamental textile companies in Turkey.
Eren Holding has established the biggest integrated textile manufacturing facilities in nationwide by starting the business in 1970 with Eros, one of the biggest underwear clothing companies in Turkey. Since its foundation, the company developed fastly by spreading into various business sector (mainly in textile sector) such as cement, paper, tourism and energy; and in 1997 became institutional.
In 1990, has been made the signature of manufacturing and distribution licence agreement with Devanlay-Eren (Er-de Pazarlama) Textile Company, located in Istanbul. Since then, the manufacturing of LACOSTE products made under the cooperation of Devanlay with Eren Holding, is supported by France by being completely appropriate to the top levels of LACOSTE quality standards. At the same year, has been signed the agreement of opening store in nationwide. Currently, Devanlay-Eren has 24 LACOSTE retail stores in all over Turkey.
The companyâ€™s functional working areas are mainly Manufacturing, Product Management, Marketing, Sales, Quality Management, Merchandising, Visual Merchandising, Store Management and Accounting.
Devanlay-Eren (Er-de Pazarlama), as being a corporate member of LACOSTE International must obey all the necessities and applications agreed by LACOSTE worldwide in its all working areas to continue and develop the image of the brand.
THE MAIN DISTRIBUTION CENTER
Even though, LACOSTEâ€™s majority of product today is produced in various factories all around the world where LACOSTE has an agreement of manufacturing and distribution; it also possess its main distribution center in France. This distribution center actually contains all products of LACOSTE but also the group of the outfit that comes up after personal orders.
LACOSTEâ€™s distribution center, located in France, is one of the largest and most technologically advanced in France and covers an area equivalent to the size of 44 football pitches.
The distribution process is highly complex and involves a vast amount of human and technological resources. The carousel is used for automatically distributing packaged merchandise to each store. It has 20 entry points and 600 exit points, 2000 trays and has a distribution capacity of up to 35.000 garments an hour. The merchandise for all stores is ready for loading in less than eight hours. If the items are to be transported by road, then they are simply loaded onto the lorries in the bays. However, airfreight is prepared according to the requirements of each destination.
RETAILING AND WHOLESAILING
LACOSTE WORLD WIDE BOUTÐQUE DIRECTORY
LACOSTE currently has over 677 LACOSTE boutiques and 1651 corners in 103 countries.
Dominican Rep. United States of America
El Salvador Venezuela
EUROPE AND MIDDLE-EAST
Austria Greece Slovaquia
Bahrain Ireland Slovania
Belgium Italy Spain
Bosnia Koweit Switzerland
Bulgaria Lebanon The Netherland
Croatia Luxembourg Turkey
Cyprus Malta Ukrainia
Denmark Poland United Arab Emirates
Estonia Portugal United Kingdom
Finland Rep. Tcheque Yougoslavia
France / Dom-Tom Russia
Germany Saudi Arabia
STORES IN TURKEY
ADANA ISTANBUL (Capitol Is Merkesi)
ANKARA (Bilkent Plaza) ISTANBUL (Carousel)
ANKARA (Karum, Iran cad) ISTANBUL (Carrefour Is Merkesi)
ANTALYA ISTANBUL (Carrefour2/Umraniye)
AYDIN ISTANBUL (Galleria)
BODRUM ISTANBUL (Rumeli)
BURSA (Cekirge) IZMIR (Plevne Bulvari)
BURSA (Zafer Plaza) IZMIR (EGS Park)
ISTANBUL (Akmerkez Is Merkesi) MERSIN
ISTANBUL (Bagdat Cad) MUGLA
ISTANBUL (Beyoglu Istiklal cad) TRABZON
As one of the long term marketing goals and a part of the vision of LACOSTE Company, on the retail side, the brand is extending the size of its 677 boutiques which surface (average 150mÐ†) is no longer adapted to its collections. This work will take from "5 to 10 years" (only 4 boutiques have already extended), an investment of "a few billion francs" and the opening of a flagship store in 2001.
TURKEY STEP OF RETAILING
Retail stores in Turkey are all directed by marketing department of Devanlay-Eren(Er-de Pazarlama).
All of the stores in the world as well as in Turkey must possess the same store concept that is to show appropriately the public image of the brand. As a location, happen to be chosen mostly main shopping streets and most frequented shopping malls.
As a matter and fact, the locations are the consequences of long researches focused on the target consumer group. For an example, in Istanbul, it wouldnâ€™t be appropriate to open a LACOSTE store in Umraniye because the customer profile that LACOSTE has, shows us this investment would be a useless one.
A location of the store is ought to mean that the store is the ideal site for the projection of the brand and company on a global scale. It shouldnâ€™t only house the LACOSTE collections and style, but also transmit the corporate philosophy and spirit of the brand.
In the meantime, In Turkey LACOSTE has 24 stores and among its long term goals, Er-De Pazarlama aims to open new stores in new locations. As we said before, retail stores in Turkey are all connected to Er-De Pazarlamaâ€™s marketing department and it is this department job to determine the store locations after long researches and meetings done together with the related departments. Naturally, these decisions will also depend on the annual evaluation of the firm and on the factors such as annual turnover, loss and benefits.
Distribution Channels through Stores
In Er-De Pazarlama, there is a special computer program licensed solely to the company, which task is mainly to maintain communication between the stores and the head office and to determine the needs (stocks, displays, posters...etc.) of the store.
Basically, the computer program is to be used mostly by the store managers so that they could give the right information to the head office and they could manage correctly the dispatching process.
Normally, the dispatching is being achieved in previously determined dates in Er-De Pazarlama but it also might happen spontaneously in case of need. The dispatching could also happen to be among the stores as the stores always have to keep enough stock in their warehouse.
One of the most important principles of Er-De Pazarlama is not to reject the customer by saying â€œthere is no more stock of this productâ€. Therefore the communication between the store manager or the owner with the head office is the main success tool and secondly the store managers and the owners need to be trained well enough to avoid this sort unexpected situations. For that reason, Er-De Pazarlama, has built in its constitution two departments directly related to marketing and store management to maintain the highest standards required by LACOSTE.
DEPARTMENTS RELATED TO STORE MANAGEMENT
Visual Merchandising Department
This department is directly linked with the marketing department which task is to achieve the image of the brand in the stores in most appropriate and successful way.
In other words, from the beginning of building the store process, to the end of installing every single item into the store. Teamwork, communication and professionalism are the most important criteria for this organization to function, attaining the best from the personnel and equipment to hand, and must be actively encouraged at all times.
To work as a team member to achieve corporate and departmental goals as directed by Visual Team Leader.
The managerâ€™s main function is to plan the window and instore implementations with the team members according to the companyâ€™s seasonal product developments.
For this aim: to prepare the equipment of displays to be used in special days, to be able to get the needed materials in time and send them to stores with a good timing that they also receive the materials in time, to choose the store representatives of visual team and organize tasks to work in window in store displayings together with them, to train personnel visually, to plan the visual merchandisersâ€™ working programme and control its implementations are the main issues.
The merchandising department is a conductive department, connected to marketing head office. It exists particularlarly to direct internal customers towards to choose right products seasonnally for their store.
It is this departmentâ€™s task to determine the quantity and the variety of the Lacoste products to be delivered to Lacoste retail stores in each season. At the end of researches made basically
on fashion trends of the year, characteristics of the location of the store and actual choices of clients, the merchandising department decides together with the internal customers (store owners and managers) about the stock that will go in the stores that season.
The Merchandising Team member has relations with people responsible from collections who are defining the traits of the garments to be emphasized, product managers, marketing managers, advertising managers; to follow oneâ€™s rights and advances, with related people in accounting department, with the people working in storage places and with the people responsible for deliveries; with the department manager to flow and get information, to be assigned tasks.
Team member should have direct relations if it is a continuous relationship between; and should continue the relation with the knowledge and permission of the manager if it is a changing relationship between.
The merchandising team member will have direct relations for standard relationships with outsiders him/herself; relationships with outsiders that needs change will be in the knowledge and permission of the manager.
The team has relationships with the suppliers of the needed materials and also with buyers and sales people the company works with. He can have relationships with the organizations preparing exhibitions, training programmes.
All relations should be under the knowledge of the Operations Director and he should keep the targets, management styles and company standards confident while having relations with outsiders.
As being always in touch with the retail stores and buyers nationwide; to make a more efficient travel, he/she can have relations with the travel agencies, hotels and if needed he/she will have direct relations with suppliers of materials, fabrics.
The visual team member will have direct relations for standard relationships with outsiders him/herself; relationships with outsiders that needs change will be in the knowledge and permission of the manager.
THE GLOBAL MARKETPLACE
LACOSTE is trying to broaden its territory without confusing its image.
"The advantage of the brand is to be at the same time modern and transversal. Its economic weight has to meet its notoriety."
According to LACOSTE Company principles, marketing research analysis collect, analyze, and interpret data to determine potential sales of a product or service. To this end they prepare reports and make recommendations on subjects ranging from preferences of prospective customers to methods and costs of distribution and advertising.
They research available printed data and accumulate new data through personal interviews and questionnaires. Knowing what customers want, why they want it, and what price they are willing to pay for it have always been concerns of manufacturers and producers of goods and services.
Another issue is that the area of marketing research is company service and products. Here marketing research analysts collect data on brand name, trademark, product design, or packaging for current products or products in experimental stage to measure consumer likes and dislikes. Also included in this aspect of marketing research are studies of the services and products of competitors.
Another area of marketing research in LACOSTE are the sales methods and policies. Here, the marketing research analyst is concerned with detailed studies of the firmâ€™s sales records. LACOSTEâ€™s international marketing program is generally modified and adapted to foreign markets. This international marketing program uses strategies to accomplish its marketing goals. Within each foreign nation LACOSTE is likely to find a combination of marketing environment and target markets that are different from those of its own home country and other foreign countries.
It is important that in international marketing, product, pricing, distribution and promotional strategies be adapted accordingly. In order for an international firm like LACOSTE to function properly, cultural, social, economic, and legal forces within the country must be clearly understood.
One of the most controlling factors of LACOSTE international marketing principles is management. It is very important for managers to recognize the differences as well as similarities in buyer behavior. Many mistakes can occur if managers fail to realize that buyers differ from country to country. It is the international differences in buyer behavior, rather than similarities, which cause problems in successful international marketing.
According to Er-De Pazarlama general manager, many surprises in international business are undesirable human mistakes. An international corporation must fully understand the foreign environment before pursuing business matters. Problems constantly crop up and many times have unexpected results. Sometimes these unexpected results are unavoidable. Other times they are avoidable. To be sure those avoidable situations do not occur, international marketing managers must be aware of cultural differences.
Cultural differences take place among most nations of the world as well as in Turkey. Differences in culture are one of the most significant factors in an international company. All nationalities possess unique characteristics, which are unknown to many foreigners. Many of the top international businesses are unaware of these cultural differences. It is very important to understand these cultures in order to market a product successfully.
As an example, LACOSTE to be effective in Turkish market it is necessary to understand the local customs. In other words, knowing what to do in Turkey is as important as knowing what not to do. At this point, questions to face are basically; what do like Turkish customer and what do they dislike? What is the best way of marketing in Turkey in the process of establishing an international brand labor.
According to main LACOSTE management, failure to understand local customs can lead to serious misunderstandings between business people. Simply, In Turkey, it wouldnâ€™t be appropriate to launch products that do not fit with the Turkish taste and understanding of clothing. To avoid making blunders, a person must be able to discern the difference between what is acceptable behavior and what is not acceptable behavior. Another important issue, so-called violations of a local custom in the publicities can be insulting, and can cause uncomfortable situations.
Of all the cultural aspects, communication may be the most critical. It is certain that communication has been involved in a number of cultural confusion. Sometimes messages can be translated incorrectly, regulations overlooked, and economic differences can be ignored.
ADVERTISING, SALES PROMOTION AND PUBLIC RELATIONS
ADVERTÐSÐNG â€“ POLICIES AND RIGTHS
LA CHEMISE LACOSTE is the sole owner of the trademarks, models, logos, copyrights and other Intellectual and Industrial property rights used on its site.
Any unauthorized use of all or part of these rights by a third party may give rise to legal proceedings.
The LACOSTE products are distributed through a Selective Distribution System and are sold exclusively by a network of authorized retailers, Boutiques and Corners bearing the LACOSTE sign. LA CHEMISE LACOSTE does not sell its products on the Internet network. Any goods purchased on the Internet network will be bought at the purchasers' own risk, particularly as far as the authenticity of the said articles is concerned.
As in Turkey, all rights of manufacturing and distribution of LACOSTE belong to Eren Holding therefore, although the advertisement campaigns are being determined by LACOSTE Head Office, France, all the other procedures such as localised marketing strategies and marketing budget are being achieved by Devanlay-Eren(Er-de Pazarlama) Company. Now, we analyze Devanlay-Erenâ€™s marketing strategies determined for Turkey.
First of all we start with the opinions of Devanlay-Eren(Er-de Pazarlama) Marketing Manager about LACOSTE future advertising vision.
What sort of advertising is it used by LACOSTE?
By far the most far reaching of these strategies is the use of media in various ways such as web, television, outdoors..etc. For example, a large amount of people watch TV and this type of advertising will reach many social groups.
Although this type of advertising is very expensive and even more so during peak times, TV advertising should be seen by the masses and encouraging a lot of new customers, so in time, TV advertising will pay for itself. This will prove to be a very effective form of advertising media and should be adopted in the LACOSTE situation. To boost sales even more, and to prolong the life of the LACOSTE product line, another form of advertising should be taken aboard. Newspaper advertising would also be a good idea.
Newspaper advertising would reach another section of the consumer market and would also be very effective in the right context. A full page newspaper advert is a lot of money but would bring in a lot more customers and make many more people aware of the product.
It is important to make people aware of the product so they will buy it, there are many advantages of the Television over the newspaper, such as the fact that TV is a captive market and if you can vary the showing times of the advertisement then you can vary the consumer group that will be receiving them.
A bad point, however, as is with most forms of advertising, is the delay between seeing the advertisement and buying the product. There is also a delay similar to this with newspaper advertisements but the delay is not usually as long as is the one with TV advertising.
POSITION IN THE MARKETPLACE
Description of the Customers
LACOSTE customers in Turkey are 16 to 35 year-old professionals, married or unmarried, with children and college students who belong to upper mediate economic and social level, who like nature, sports and traveling. The target customer groups are the people who prefer quality comfortable clothing.
The target customers are looking for quality, dynamism, newness and variety in fashion. Frequent customers are seeking also arrangement in all our services in the stores.
Why the Customers Choose LACOSTE?
LACOSTEâ€™s unique quality in all products, the brandâ€™s worldwide esteem and its practical customer services both in the stores and in the head office combined with well-informed, up-to-date staff, allows them to surpass the services provided by other clothing companies.
What Sets LACOSTE Apart From the Competition?
Naturally LACOSTE has competitors in the market place but the brandâ€™s characteristic of maintaining the standards always at the top levels and the importance given to organised planning, improvement and quality guarantee and systematically applied market researches brings LACOSTE one step forward.
MARKETING CAMPAIGN SPECIFICS
Goals of the Campaign
LACOSTE would like to increase its visibility, attract new customers, and display special offers that are currently available. Whilst doing this, it gives a great importance to maintain its worldwide known image stable and constant.
Campaign Focus: Specific Products or General Promotion?
LACOSTEâ€™s primary focus is to expand their customer base. The company would also like to keep their current customers aware of special promotions and newness that are being offered and secure their future business with LACOSTE.
We talked about the image of the brand to present to the public. What is it so important about launching the image of the brand. As an example, The public does not recognize LACOSTE brand of its suits or blazer jackets, a part even does not know whether it exists or not. Actually it does but this sort of product does not symbolize the real characteristic of the brand. Therefore, it is a quite important issue that the company attempts to launch products that show more clearly the image and the spirit of LACOSTE in advertising.
Products to be Advertised
This is again to be determined by French LACOSTE Marketing Team and Devanlay-Eren will be conducting the same advertisement campaign determined by LACOSTE as in all the other countries where LACOSTE is located. The head office marketing team decides together with the designers on the products that the advertisement campaign focuses. Generally, the evaluation tools are the tendencies and trends of the year that will be appropriate to the brandâ€™s image and spirit.
Measurements of Success
The company measures the campaignâ€™s success by the number of sales after each season. Besides they will be reviewing the campaignâ€™s effectiveness one month after its launch. They evaluate its effectiveness based on the number of sales done monthly in each store in every country.
Also, in LACOSTE brandometers are often
used to understand better the effectiveness of the seasonal campaigns.
Â· DECEMBER 2000 BRANDOMETER GEODIS/BVA : FRENCH PEOPLE LOVE LACOSTE
A brandometer puts the Lacoste brand in the top of the preferred brands by young French people or less young.
All French love Lacosteâ€¦Ranking among all population From very youngâ€¦Ranking among 12-14 years old â€¦ To less young.Ranking among 35-49 years old.
PREFERED BRANDS HATED BRANDS GIRLS PREFERED BRANDS BOYS PREFERED BRANDS MEN PREFERED BRANDS
1. Danone 1. Coca-Cola 1. Nike 1. Adidas 1 Lacoste
2. Renault 2. Carrefour 2. Lacoste 2. Lacoste 2. Renault
3. Sony 3. Mc Do 3. Reebok 3. Reebok 3. Danone
4. Adidas 4. Nike 4. NestlÐ¹ 4. Quicksilver 4. Nike
5. Nike 5. Reebok 5. Quicksilver 5. Nike 5. Philips
6. Philips 6. Adidas 6. Jennifer 6. Sony 6. Sony
7. Lacoste 7. Leader Price 7. Sergio Tacchini 7. Sergio Tacchini 7. Adidas
8. NestlÐ¹ 8. Auchan 8. Adidas 8. Microsoft 8. Reebok
9. Levi's 9. Leclerc 9. DDP 9. Coca-Cola 9. Levi's
10. Coca-Cola 10. Fiat 10. Fila 10. Kellog's 10. DÐ¹cathlon
11. Panzani 11. Skoda
12. Carrefour 12. ED
13. Peugeot 13. Pepsi
Campaign Start Date
Campaigns are seasonal. The winter collection goes into the stores around September and it is divided into two parts; autumn and winter season and it remains until the mid March. Consequently the winter campaign start with the same time the products go in the store.
Reciprocally, the summer campaign start at the same time the summer collection goes into the stores, which will be around March and remain until the end of August.
There is a determined annual marketing budget each year by the companyâ€™s management and it is a part of the total turnover. The marketing budget may change every year in small amounts and as this companyâ€™s policy that is the first place to be reduced in case of economical crisis.
LACOSTE plans to keep advertising costs down by targeting the most appropriate advertising methods for their business, which include use of media, outdoor advertising (billboards), newspaper and web advertising.
INTERNET â€“ (www.lacoste.com)
LACOSTEâ€™s web site is being updated seasonally. It is an interactive site focusing n the public, easy to surf and which you can move around almost intuitively, and which is updated every month. The aim is to bring the brand closer to the public, presenting all the new products and services including new campaigns, LACOSTE Company has to offer over the internet, a truly graphic and dynamic medium.
This modern and minimalist designer site is divided into several sections. As it includes a full list of the products separated into parts such as clothing (menswear, womenswear...), footwear, eyewear, swatches...; it also contains a full information about the history of the brand, its advertising campaigns, press releases and store directories.
In each country, LACOSTEâ€™s web site has an English version and a version of this countryâ€™s own language but the web site context is same all over the world.
As a company principle, LACOSTE does not prefer to attempt online-marketing in the way of selling its products in the internet but they encourage web marketing-advertisement by putting direct links to LACOSTEâ€™s own web site. As an example, Devanlay-Eren(Er-de Pazarlama) uses NTV-MNBCâ€™s web site for its link to its personal website. Once you get into NTV-MNBCâ€™s web site, you might see their advertisement from which you can have access to their customer database information and then to their website.
MAILING LIST / DATABASE
Devanlay-Eren (Er-de Pazarlama) has its own database of its frequent customers. This database has been formed by the information obtained from credit cards services and from the customer cards filled in the stores.
By means of this database, The Company has built a mailing list among its customers and its primary task is to send postcards to the clients on special days such as birthdays...and to inform customers about the new campaigns and promotions.
This marketing method is very common and encouraging at LACOSTE because it is considered the most effective way of reaching to frequent customers and to keep them.
In the field of marketing, a product promotion can be the most difficult. In LACOSTE, timing is the most critical element in the launching of new products.
As to LACOSTE vision, marketing a product internationally through a single promotional message worldwide can be effective for products that have standardized appeal for the majority of the people. Most times this could be the least expensive strategy.
Product Development and Quality Guarantee
It must be also considered product development to extend the product life cycle and retain interest in the series of products produced by LACOSTE. To fully conduct a product development scheme it needs to conduct some market research into the attitudes of the customers and what they think can be done to improve the products provided by LACOSTE.
It needs to come up with new ideas fairly frequently and brainstorming should be encouraged.
In Devanlay-Eren (Er-de Pazarlama), one of the most important issues is quality guarantee to continue and improve the highest standards therefore in its constitution it shelters a quality guarantee department which gather periodically to check the absences of the products together with all the involved departments such as manufacturing, merchandising, customer services and store management and to make the right decisions for to carry on the standards at the top levels.
As a result, quality must always be improved on in Lacoste products and a team of designers and quality controllers must be considering product development all of the time.
Merchandising and packaging principles of LACOSTE
Merchandising is an attempt to influence customers at the point of sale. The point of sale is anywhere that a customer buys a product. Customers are intended to buy based on what they see rather from a sales assistant.
Therefore at LACOSTE a vital factor in influencing customers is the way in which the items are displayed. To sell the products effectively we must take into consideration the effect that the packaging should have on the customers and the way in which displays of this particular product are arranged.
Another good advertising strategy are the bags to encourage people to see and to buy the product. To influence customers at the point of sale, a number of tactics must be employed as we must first draw the customers attention to the display and to the product, and finally, to the price of the product.
LACOSTE Advertisement Tricks
For an example, to the next we see the bags of LACOSTE. Bags are made by cardboard which is a sign of quality and fits perfectly with the image of the brand.
Consequently, it wouldnâ€™t be appropriate to use plastic bags with LACOSTE Brand; that would show the product cheaper and less quality than it is actually.
The logo on both side of the bag is practical and a simple way of advertising the brand. As in a big mall, customers that carry these bags, will make the free publicity of the LACOSTE products.
Every season LACOSTE launch six different campaigns, those are;
Â· Clothing Campaign
Â· Image Campaign
Â· Shoes Campaign
Â· Watches Campaign
Â· Eyewear Campaign
Â· Perfume Campaign
Campaigns starting dates are synchronized with the launch of new collections into the stores and the campaignâ€™s subject is the same theme inspired in the collections by designers. As a result, LACOSTEâ€™s designers and marketing team decide together about what issues they will focus in the campaigns that season, regarding the fashion of the year and also the public image of the brand.
On the other hand, it is LACOSTEâ€™s distributors and manufacturers task to determine what sources of advertisement tools are going to be used in their country. For that reason, Er-De Pazarlamaâ€™s Marketing Department, as being a legal distributor of LACOSTE in Turkey, decide what channels of advertisement will be used to market the LACOSTE product. There also exists an advertisement team, in the constitution of Er-De Pazarlamaâ€™s marketing department, to maintain the communication between Turkey and the head office in France.
For example, these posters which are the part of LACOSTE Campaign, are being designed by head office in France but they are being produced and made copies for distribution locally.
In other words Er-De Pazarlama Marketing Department make it reproduce here in Turkey by the means of its corporate advertisement company and decide together with them about the locations and channels to be used in the campaign.
We see here physically perfect menâ€™s bodies, that will symbolize the perfection just like in the curves of Collector.
A programmed encounter between an object for men
- an object of acknowledged desire, and a man
- a phantamasgoric object of desire.
And Here is the motto used in launching of this perfume campaign:
What is Collector ? This is the new LACOSTE.
Not a perfume. An idea.
LACOSTE Perfumes has announced a turnover increase of 42% in 1999, helped by the launch of LACOSTE for Women on the French market which has strengthened the reputation of the brand, says the company. According to France, "This feminine fragrance should establish LACOSTE as a true perfumery brand -- knowing that on the whole the feminine fragrances are more recognised and appreciated."
LACOSTE has several sport partners, those are :
Â· French Tennis Federation
Â· International Tennis Federation
Â· French Golf Federation
Â· International Forum
of Ocean Racing
And also LACOSTE has been the sponsor of a several Golf and Tennis players since its foundation. In its constitution, LACOSTE also possess a sports team in which the company procures all they need.
LACOSTE by being sponsorship in the golf, yachting and tennis revenues and also by manufacturing special products for the players, makes its advertisement in the most effective way.
This is one of the posters made for advertising LACOSTE sport series products.
This poster has also been used as an advertisement tool of LACOSTE during Wimbledon Tennis Championships in 1999.
And this is another advertisement made for FICO-LACOSTE World Yachting Championships.
Besides, LACOSTE attempts to conduct corporate campaigns with other brands. Recently, it has been achieved one with Samsonite.
Samsonite and La Chemise LACOSTE wish to announce the signature of a worldwide Licensing Agreement covering a number of LACOSTE Products such as bags, travel items and small leather goods for everyday use.
Many such products have been purchased in recent years by consumers for leisure, sports, travel, holidays as well as growing daily activities, and were previously sold as accessories to the LACOSTE clothing lines.
A strong sales development appears to be possible through the close cooperation planned between Samsonite and La Chemise LACOSTE.
Samsonite will use its expertise, worldwide structure and facilities to manufacture, sell and advertise this new LACOSTE line.
Samsonite is one of the largest manufacturers and distributors of luggage, marketing its products under several brands.
The addition of the LACOSTE brand ties-in perfectly to its multi-brand strategy to cover all segments of the market and consumer profiles.
La Chemise LACOSTE will use its styling expertise to develop in complete coordination with Samsonite the models marketed under the LACOSTE brand name.
This new line will be launched in Spring/Summer 2002 and will come as an addition to the other LACOSTE families of products among which its highly successful clothing collection.
PRICING CONSIDERATIONS AND APPROACHES
LACOSTEâ€™s marketing program is adapted to foreign markets to account for differences in the business environment and target markets form nation to nation. This marketing mix requires the modification of cultural, social, economic, and legal differences.
In LACOSTE, Pricing is an issue that is determined by France Head Office. But in each country where LACOSTE has a linked company, pricing considerations and approaches change according to the structure of the firm and to its place in the market.
As a main principle of LACOSTE, the price is a symbol of the quality and the aspect of companyâ€™s placement in the market.
As we all know, pricing is a very important factor in international business. The pricing system more common in international marketing is cost-based pricing as it is in LACOSTE.
The main reason why Cost-based pricing is used in LACOSTE is because the whole company is in the international marketing. Using this simple method of pricing, the seller first determines the total cost of producing or purchasing one unit of the product, in other words the fabric and the supporting materials of the product, process of cutting, draping, sewing. Besides, there is also general production cost such as electricity, food, workmanship... and general management cost which will the cost of marketing.
The seller then adds the amount to cover additional cost and profit. The cost added is called the markup. The total cost of the markup is the selling price of the product.
PRICING PRODUCTS: PRICING STRATEGIES
In LACOSTE for determining an effective markup percentage and avoiding two major flaws that may come with cost-based pricing, the markup percentage is being set to account for the working of the market.
Because, if these percentages are too costly, the product may be overpriced for its market. As an example, if YargÑcÑ sells a sweater to65$ and on the other hand, Tommy Hillfiger sells a sweater to 95$, the selling price of a same category LACOSTE sweater should be same or near to Tommy Hillfigerâ€™s sweater selling price; because these two brands are competing in the same market and have the same customer group approximately.
On the other hand, if the markup percentage is too low, the seller is â€œgiving awayâ€ profit that could have earned simply by assigning a higher price.
LACOSTE, to be effective, also integrates the various business functions. So that the company could avoid the problem with markup pricing which is that it separates pricing from other business functions. The product is priced after production quantities are decided upon, after cost are incurred, and almost without regard for the market or the marketing mix.
On the other hand, according to LACOSTEâ€™s international pricing strategy, if a pair of trousers price is 150FF then the selling price will be same all over the world, it may depend a little as to economical factors but the aim is to maintain the same price worldwide.
Besides, geographic pricing strategies deal with delivery cost. As to LACOSTE Company, the seller should share transportation cost with the buyer to pay the greatest part of delivery cost. The cost of shipping and complying with other various regulations are also added to the pricing method.
Another pricing strategy used by LACOSTE is promotional pricing which will be the evaluation of fabrics remained at stocks. For example, if there is an amount of product remained at the stocks, at the end of season its selling price might be reduced to dissolve the product off the market. And the remained fabric might be used for the next season.
In LACOSTE, there is also psychological pricing which effects the prices. For example, a pair of trousers made by unripe cotton can be sold at a very high price, even though its cost of production is quite low. And this is because LACOSTE brand has a strong and famous image known by the masses as â€œa symbol of qualityâ€.
An important economic consideration for LACOSTE is the distribution of income. The distribution of income, especially discretionary income, can widely vary from nation to nation. Discretionary income is of particular interest to marketers because consumers have more input in the spending of it. Income creates purchasing power. Therefore LACOSTE tend to concentrate on higher income countries as either personal, disposable, or discretionary.
PERSONAL SELLING AND SALES MANAGEMENT
Why a sales team at LACOSTE?
The job of a sales team is to create interest in the product with the public and retailers. The overall aim of a sales team is to create the highest level of distribution of the product and to promote the product so representatives of a firm are interested in purchasing this product to sell it in their shops. They should initially aim to start small and encourage interest in the media, the public and shareholders.
The whole image of the company rests on the sales team as it is their job to promote the product and the company and to stop any bad press about the company. They should try and convince buyers with market research that their product will sell and that buying this product is a good investment.
They could offer commission or discounts to firms for bulk buying and high sales. A sales team should also be allowed full control over the bartering of the goods and should set their own guidelines within a broad range of company guidelines.
At LACOSTE, the work mentality of a sales man must be permanent and definitely not permanent. In other words, a sales man should see the job as a gate of opportunities in the future at LACOSTE. Only with this mentality, a sales team member could develop himself and offer to perfect service to the customer.
Training Department (Manuals & Seminars)
For five years, LACOSTE Group has been in possession of â€œProduct Training Materialâ€ made up of the following:
Â· Swatches of Basic Fabrics translated into three languages.
Â· A manual entitled â€œStandarts of Lacoste Quality in Storesâ€ also translated into three languages
Â· Training Manuals on the following topics: Menswear, Womenswear, Childrenwear, Footwear, Perfume, leather goods, watches.
All this material has been drawn up by the Groupâ€™s Training Department in collaboration with specialists from all the retail chains. The idea is to create an in store â€œlibraryâ€ which will enable Lacoste group to be better professionals. Acquiring product knowledge is vital for the person joining any of the chains of group. The range of clothes, accessories, footwear and perfume is growing all the time both in size and competitiveness, whilst the clients are also becoming increasingly demanding. These manual provide employees with detailed information regarding the products available in the stores and will lead to greater efficiency and improved customer service in Lacoste Company.
Initially, the manuals were sent personally to the shop assistant (store manager) who had completed a distance training course and who was subsequently responsible for making sure that it was used by all rest of the staff in the various sections, as well as by new staff as back up for their initial training.
This material is currently being distributed abroad to all stores in the various chains. In Turkey, it is sent directly to Devanlay-Eren from where it happens to be distributed all nationwide. The importance of this project lies not only in the fact that it is the first time the LACOSTE Companyâ€™s stores have received personalized training material, thereby helping employees to unify the terminology used throughout the company, but also in the possible advantages derived from the fact that the basic training for all new staff joining LACOSTE stores will be centred around a common philosophy.
ATTRACTING, RETAINING AND GROWING CUSTOMERS
In particular companies such as LACOSTE, Tommy Hillfiger, Nautica, Gant Usa, and GAP, takes place throughout the globe. With the industry experiencing severe competition, and the product requiring intensive labour, firms are facing extreme pressure to increase their profit margins through their sourcing practices.
In the following, we will analyze this style of clothing industry, while examining the multitude of viable manufacturing options, and critiquing their current manufacturing structure. It is necessary to first gain an understanding of the dominant leaders in this marketplace.
This industry is currently experiencing hyper competition, led by six main firms â€“ LACOSTE, Tommy Hillfiger, Nautica, Gant Usa, Paul&Shark and GAP. LACOSTE is the industry leader, with a 37% market share with revenues of golf and tennis, followed by Tommy Hillfiger, a distant second at 26%, and GAP. at 18%. This category is facing decreasing demand and the rising popularity of alternative casual and sportswear, resulting in more pressure than ever before to achieve high gross margins through effective global sourcing practices.
Manufacturing options Casualwear companies have two basic options in the manufacturing of their products, they can both own and operate the factories that produce their products, or subcontract their products out to secondary manufacturers. These facilities can be located either domestically or internationally, and both present a myriad of positives and negatives. Firms that produce domestically benefit from ease of monitoring, skilled workforce, government stability, job creation, and well understood labor rules, while suffering from the relatively high wages required in the U.S. as compared to developing countries.
By manufacturing products overseas, in particular in third world economies, tremendous efficiencies are gained in the form of reduced wages, but are countered by the increased difficulty of monitoring the quality of their products and the actual working conditions in the factories. Companies that are vertically integrated, who own and operate the factories where their products are manufactured, are faced with large capital expenditure requirements and the management of the factories themselves, resulting in lower profit margins.
Strategic Outsourcing In analyzing this category of clothing industry, we are faced with the question, "What are these firms core competencies?" If manufacturing falls under this umbrella, then firms should look to produce internally. However, the core skills that set these companies apart from the competition, are their marketing, distribution, and technological expertise.
Applying the dominant casual clothing companies areas of expertise, let's review the following questions: Is internalization a source of competitive advantage? Is manufacturing a skill our firm does better than anybody else? Will firms be able to leverage their manufacturing expertise in the future? Are we releasing any of the firm's proprietary skills/information by outsourcing? With all of the above questions posed to any of the big four clothing companies, they would respond with a resounding "no". Therefore, in today's global environment, the most strategically viable manufacturing strategy is the outsourcing of their products.
The efficiencies that are gained, in the form of shifting of risk, reduced capital requirements, lower wages, and ability to focus on their core competencies, strongly outweigh all other manufacturing options. The Evolution of Manufacturing in Third World Countries As the economies of countries around world expand, so does their ability and skill level in all facets of manufacturing. Beginning in London in the early 1900's, and followed through to the present day, manufacturing in its simplest form consists of light manufacturing, which uses unskilled labor to produce items such as shirts, shorts, and jeans.
As the e