Consumer Demand and Fashion Marketing

1. Consumer Demand and Fashion Marketing

2. Fashion Marketing • The entire process of research, planning, promoting, and distributing the raw materials, apparel, and accessories • Marketing is the power behind the product development, production, distribution, retailing, and promotion of • Fibers • Fabrics • Leathers • Furs • Trimmings • Apparel and Accessories • Begins and ends with the customer

3. Consumer Demand • With increased income, consumers have • better and cheaper products • constant availability • Convenience • pleasant shopping experiences • Research what the customer wants to buy, then develop the product • Marketing firms analyze lifestyles and buying behaviors • Consumer Demand is the effect the consumer has on the market place • Created by increased spending on advertising and other marketing activities • Ultimate goal of marketing is to establish the identity of a brand or store so customers will seek it out (destination brand)

4. Consumer Groups • Also known as market segments • Age • Lifestyle • Living area • Educational background • Ethnic background • Traditionally, society was divided by income classes • Demographics are statistical studies of population characteristics based on • Birthrate, age distribution, and income

5. Grey market • Pre 1945 • Most neglected by designers, retailers and the media • Second-fastest growing segment • Tend to feel younger than actual age • Have money to spend and enjoy new products • Tend to dress up more often • Prefers shopping for apparel and accessories by catalog, Internet, or department stores • By 2010, 1/3 of the population will be over age 50 • Future marketers will need to cater to this segment.

6. Baby Boomers • 1946-1964 • Most influential group since WWII • Largest segment and primary demographic spending group • The women spend more on clothing than any other group • Often ignored by the industry • Advertisers have stereotypical ideas about the style of those over 40 and are afraid to alienate the younger crowd with multigenerational ads • Wants same style as young people but with the appropriate length and fit

7. Generation X • 1965-1979 • Also known as the Baby Busters • Now career- and family-oriented • Spending reflects orientation • Housing, home goods, transportation, and education

8. Generation Y • Post 1980 • Also known as the Baby Boomlet • Children of baby boomers • Racially diverse • Global, sports, computer, and entertainment orientation • Ads, TV, movies, Internet, and magazines influence buying decisions • Fashion oriented, passion for clothes • Cannot afford to spend as much as the baby boomers • Prefer specialty apparel chains and boutiques • By 2010, the nation will be polarized • Postwar boomers over 50 and millennial generation under 30 • Companies must respond with multigenerational ad campaigns

9. Ethnic Diversity • The Immigration and Naturalization Service projects that legal immigration exceeds 700,000 per year • Black, Hispanic, Asian, and Native American segments will grow much faster than the white majority • Look for different things in purchases • Cultural perceptions regarding styling, color, pattern, fabrics, fit, quality, and value

10. Psychographic or Lifestyle Trends • Psychographics is the use of psychological, sociological, and anthropological factors to construct market segments • Manufacturers and retailers turn to psychographics to further segment and analyze consumer groups and their fashion preferences

11. Independent Women • More than 75% of females age 20-60 work • 22 million women live alone or are single head of households • Shop less often, favor convenient shopping • Use catalogs, electronic stores, and superstores

12. Larger sizes • Majority of population is considered large size • 68% of Americans are overweight • This affects • Manufacturers • Must change sizing and construction of garments • Retail stores • Devote more square footage of the store to large-size apparel

13. Other Psychographic Trends • Community • Connection to the community; cities are gaining population • Renewed interest in family life • More money spent on the home and family activities rather than fashion • Cocooning • People stay in due to fear of terrorism, war, and crime, shopping less or by catalog or Internet

14. Other Psychographic Trends • Comfort • Staying relaxed and casual dressing at home/work or activewear • Increase at-home use of computers • Online shopping • Working at home • Expected to increase • Value of time • Willing to trade money for free time leads to the appeal of shopping at home/Internet • Stress • Busy schedules = other ways to shop

15. Target Marketing • Target Market is the group of consumers you want to reach • Market niche • small population group of unserved or underserved people who have a need for a product

16. Database Marketing • Gathered to improve offerings • Collect and analyze data • Unknowingly we give merchants data • Shopping habits • Size • Color preferences • Lifestyle • Age • Income • And address • Other information is formed into categorized into databases (consumer profiles)

17. Mapping • Merchants translate sales data and purchasing patterns into geographic maps • Visual representation of their market • Helps management to understand traffic flow and sales potential • Consumer profiles are used to • Learn about customers • Find new customers • Establish target markets • Find/create new products • New ways to advertise • Keep focused on their customers

18. Consumer Income • Personal income • Gross amount of income from all sources, such as wages and salaries, interest, and dividends • Disposable income • Personal income – taxes. This amount determines a person’s purchasing power • Discretionary income • Income left over after food, lodging, and other needs have been paid for • Money available to spend or save at will

19. Economic measurements • Purchasing power • Is the amount of goods and services that income can by • Related to the economic situation • Includes • Credit • Corporate Ownership • Labor Costs • Inflation • Recession • International Currency

20. Economic Measurements • More retailers are offering their own credit cards for their databases • Too much easy credit available • Increase in personal bankruptcy • Corporate debt has lead to manufacturer and retailer bankruptcies • Most companies have grown into corporations or purchased by other corporations • Mergers and acquisitions result in giant “corporate groups”’ • EX: Liz Claiborne • Corporations sell public stock to gain access to funding Credit Corporate Ownership

21. Economic Measurements • As people receive higher salaries and live better the cost of making products increases • Rising domestic labor costs, we now must search for cheaper sources of labor • Asia, Mexico, the Caribbean Basin, etc. • The US experienced inflation during the 1980s • People earn more money each year • Higher prices • Higher taxes • Result in little or no increase in purchasing power Labor Costs Inflation

22. Economic Measurements • 2002-2003 • A recession is a cycle beginning with a decrease in spending • Forced to cut back production • Results in unemployment • Drop in gross national product (GNP) • Furthers the cycle • Strong dollar • Americans can afford to purchase foreign-made merchandise cheaper • The Euro • In 1999, the euro became the official currency of 11 of the 15 members of the European Union (EU) Recession International Currency

23. Global Trade Influences on Marketing • Balance of Trade • Difference in value between a country’s exports and imports • Tariffs • Customs charges imposed on imports in an attempt to protect domestic industry • Quotas • Means of regulating imports and exports • Imports • Goods that are brought in from a foreign country to sell here • Exports • NAFTA (North American Free Trade Agreement

24. NAFTA • In 1994, NAFTA created a free market (devoid of import duties) • 560 million people in Canada, the US, and Mexico • Promotes economic growth through the expansion of trade and investment opportunities within the free trade area • Central American Free Trade Agreement (CAFTA) has been enacted • The US also has negotiated trade agreements with • Australia, Chile, Israel, Jordan, Morocco, Singapore, and Sub-Saharan Africa • Working on a Free Trade Agreement of the Americas (FTAA) • Encompasses 34 Western Hemisphere nations as well as several other countries

25. Impact of Technology • Business communication • Computers • Intranet: E-Mail on a closed Intranet network system to share information internally among departments • Internet • Video (videoconferencing) • Fax • Television • Telephone • Web sites • E-Commerce • Research Business Communication Personal Communication

26. Information Systems • Developed based on a companies needs • Product Development • Designers rely on consumer statistics and sales data to track trends • Product Data Management (PDA) and Product Lifecycle Management (PLM) coordinate each step of the design process • In production, goods are given Universal Product Codes (UPC) that identify style, color, size, price, and fabrication

27. Electronic Data Interchange • In attempt to reduce waiting time in ordering and distribution, textile producers, and apparel manufacturers • Automatic Replenishment • Allows manufacturers to automatically ship goods to stores when inventory levels are low • Value Chain Initiative (VCI) • International standards for sharing information among retailers, manufacturers, and suppliers • Covers all aspects of the supply chain

28. The Marketing Chain • The flow of product from concept to consumer • Traditionally companies are separate and independent • Trends • Traditional Marketing Chain • Vertical integration • Full package manufacturing • Manufacturer-retailer appliances

29. Traditional Marketing Chain

30. Vertical Integration • Many companies are combining fabric production and apparel manufacturing • Manufacturing and retailing • A vertical company produces fabrics, manufactures clothing, and sells the finished product • Cutting out distribution costs increases profits and keeps prices down to the consumer

31. The Marketing Chain • Full Package Manufacturing • Manufacturer-Retailer Alliances • Forming informal partnerships to integrate the marketing chain • Work on every step of the process together • Must have complete trust in each other