Market Analysis and Marketing for Diesel Clothing
The clothing and textile industry is currently characterized by a series of factors, like: intensity of labor, low wages, innovation, and dynamism, given the easiness that this industry changes from season to season. However, this is the situation that regards only the largest part of this industry. There is another part of the clothing industry, the high-quality fashion market that deals with modern technology, well-trained designers and workers that are paid accordingly, and a high degree of flexibility (Nordas, 2004).
Competition on the clothing market is very tough and is consisted of numerous producers with tradition and experience in this field. The only way to gain competitive advantage on this market, besides costs and effectiveness, is by creating items that adapt or that influence customers' needs, desires, and expectations. Latest trends on the clothing market show that "consumers spend a smaller share of their income on clothing than in the past, although consumers shop more frequently and buy a larger number of clothing items than before" (Nordas, 2004). This does not mean that consumers' interest in clothing is decreasing, since the number of items bought is increasing. It probably means that customers lost their trust in expensive brands and prefer cheaper clothing that suits their interest and fashion tastes for a while. Given the fact that their tastes change so frequently, consumers only buy clothing items that they only wear for one season only and that they consider unfashionable after that season has passed. In these conditions, they do not want to spend a lot of money on something they will wear for only one season. This way, they choose low price over high quality. This attitude is reflected in the cost structure of the clothing industry. For the United States, in 2001 the cost structure for the clothing industry (per cent of gross output) was the following: 21% unskilled labor, 5.8% skilled labor, 5.8% capital, 32.6% total value added, 67.4% intermediate outputs, 13.8% imported (Nordas, 2004). One can observe the increased percentage of unskilled labor and high total value added. The import share also reaches a high value. Another notable fact is that only 30% of the U.S. textile production is used for clothing. For the United States, the textiles exports reach almost 10%, while clothing exports reach 15%. The number of employees involved in both the textiles and clothing U.S. industry has significantly decreased over the past decade.
When developing a marketing plan, the first thing to do is study the company's targeted customers. The company's success is directly depending on its customers, they are the center of attention, and, therefore, the entire plan relies on the studying the targeted customers.
Diesel Clothing is a well-known innovative, international design company. The company manufactures jeans, clothing, and accessories. Diesel is much more than a clothing manufacturer, Diesel is part of the youth culture worldwide. And even more, "Diesel is a leader in pioneering new styles, fabrics, manufacturing methods and quality control to guarantee an outstanding product" (Diesel, 2007).
Diesel Clothing's target market is consisted of male and female aged between 18 and 25 years. The 2000 United States Census has revealed that of the total population of the United States, 39,184,614 (13.9%) are aged 18-25 (U.S. Census Bureau, 2000). Of the total population aged 3-25, 21.4% are enrolled in high school, and 22.8% are enrolled in college or graduate school.
This customers segment, aged 18-25 is probably the most difficult one to deal with. Needs and tastes of customers segment changes very fast. The factors that influence the buying behavior of these customers are divided into three different categories: personal, psychological, and social. The personal factors that need to be taken into consideration for Diesel's customers are related to age, sex, and race. The age of 18-25 is the most suitable age foe wearing and buying the type of clothing that Diesel is manufacturing and selling. At this age, an important role in the customers' buying behavior is played by friends. Customers aged 18-25 rely very much on what their friends think, and they are therefore influenced by their friends or by other individuals in their close entourage. Culture is a very important factor that influences customers aged 18-25 when shopping for clothing. Another factor of influence that specifically needs to be taken into consideration here is related to income and cost. As shown above, people are spending less on their clothing items. Customers nowadays, especially those aged 18-25 that do not have high incomes, prefer lower priced clothing items, even if this means lower quality also.
Geographic coordinates for Diesel show that although the company's headquarters, regarding design, located in Italy, the largest market is represented by United States' urban area, especially the most important cities. Also, Diesel is present worldwide, opening new stores each year in the most unexpected places in the world.
The secondary target market is consisted of people aged between 25 and 35 years. Of the United States' total population, 14.2% are aged between 25 and 35 years. This secondary market for Diesel has certain traits that make it a little different than the primary one. In the first place, the secondary target is more sophisticated than the primary one. The buying decision for the secondary target market is no longer influenced by fiends, but by social status.
The competition in the jeans sector has started to develop very much over the past 15 years. The list of Diesel's most important competitors includes: AG Jeans, Antik Denim, Blue Cult, Citizens of Humanity, Chip and Pepper, Hudson, Calvin Klein, Guess, Levi's (Wikipedia, 2007).
Probably the most important barrier to entry is the numerous and powerful competition. It is very hard to gain competitive advantage in this industry, where customers change their tastes and outlook on these items very fast. In addition to this, brand loyalty is another factor that influences this aspect. In this industry, when customers find a brand that suits their needs regarding price and quality, they tend to buy that brand only. Therefore, it is very difficult for new comers to steal from these companies' customers.
Regarding the marketing mix, the main focus should be on pricing and promoting. The information presented above showed that people are spending less and less on clothing, but the number of bought clothing items is continuously increasing. This means that most average customers are orienting towards cheaper clothing products, even if this means the clothing items they buy have a lower quality. This means that Diesel should start with a low entry price. This is a very good way to attract new customers and to maintain current ones. Diesel's primary target market is consisted of people aged 18-25, with low incomes, that are not very quality-oriented. For them it is the price that matters in the first place.
When developing a business plan it is very important to identify the company's strengths and weaknesses. Diesel's advantages for the moment are: good quality for the company's clothing items, good supply chain, and tradition on the international clothing market. Another advantage that Diesel has over its competitors is that the company tries to relate to its young customers in a very innovative way, through Diesel culture. Innovation is another advantage for Diesel, shown in the company's manufacturing methods and in its customer approach. Diesel's disadvantage is price, which is currently a little higher than many of the customers aged 18-25 can afford.
The similarities between Diesel and its competitors reside in the range of products, which can be found in any other similar company that manufactures clothing items and accessories. The dissimilarity between Diesel and its competitors coincides with one of the advantages mentioned above, the customer approach. The difference is the way that Diesel tries to related to its customers, through Diesel culture.
The marketing entry strategy will be based on promotion. Public Relations will be the key aspect of entire strategy. In order to get the targeted customers' attention, Diesel needs an aggressive strategy. First of all, the company must establish the product and pricing strategies. For the primary target, the 18-25 years of age customers, Diesel must focus on pricing. Price is the most sensitive aspect for this target of customers. Diesel should insist on the price and speculate this aspect. The lower the price, the more customers Diesel will attract.
For the secondary target of customers, aged 25-35, the situation is a little different. This customer segment is not as price sensitive as the primary segment of customers is. For the secondary segment of customers Diesel should insist more on the product strategy. The 25-35 aged customers are very different from the 18-25 aged ones. They are not easily influenced by low prices or friends. Actually, the low price strategy would probably not be a very suitable one for this second situation. The secondary target is more fashion oriented. Is consisted of people with medium to high incomes, educated, of a good social status, that follow the…