Describe about the Marketing Plan For Leather Bags In UK?
The report focuses on the marketing plan for the tote leather handbag which is being introduced by Bohlux which is a medium scale leather producing company of USA. The company proposes to introduce the product in UK and the major target market consists of high income group of female customers. The report highlights the fact that the company will be able to successfully operate in UK and since the sales trend for leather goods are growing positive hence the company will be able to make profit out of sales of the product. Finally the report shows that for entering the UK market, Bohlux will use pull marketing strategy and opt for Facebook marketing and promotion.
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According to Alaoui, Ezzine and Azzi (2012) advent of social media has helped the marketers to successfully market the products within different segment of target market with least amount of promotional expenses. UK accounts for strong history of leather processing and leather manufacturing. However the industry began to contract during 1980 when majority of the leather producing companies shifted their production to the eastern countries like Africa and Asia. The report will focus on marketing plan for the launch of new leather handbag by Bohlux. The assignment primarily deals with the marketing of the leather handbags in UK through social media marketing tools.
East, Wright and Vanhuele (2013) stated that due to high rate of import of cheap leather goods from the eastern countries, the demand for the local high-class leather goods of UK has been decreasing lately. Thus, the report will focus on analyzing the feasibility of the UK market with regards to launch of the new leather handbag. The report will finally focus on using Face book as the major marketing tool for the promotion of the leather handbags in UK.
The marketing plan will focus on introduction of female leather handbags and clutches by a medium-scale leather good producing company namely Bohlux. The company focuses on combining innovation with ethnicity and style. Bohlux is primarily a USA based leather workshop which aims in providing stylish and luxuriously designed handbags for the female population suiting the needs of the exquisite lifestyle of the female customers (Bohlux.com 2015).
Majority of the products of Bohlux includes clutches, sling shoulder bags, tote handbags, satchels, cross body and Messenger bags. The company has been able to successfully make its mark within the fashion industry of US with the stylish handbags that provides the customers with the feel of Italian and French style quotient. Bohlux, has shifted its focus on introducing the range of leather handbags with British ethnicity in UK. The new range of tote handbags that will be launched with the help of the Facebook marketing in UK will be named as Smartways Leather Bags. Beldona, Lin and Yoo (2012) unlike the USA customer segment, who prefers small to medium sized purse and clutches, female population of UK generally prefers stylish and dignified look and hence they prefer using traditional and large-sized Tote handbags. The company has selected the name “Smartways Leather Bag” in order to promote the smart, urban and classy style incorporated with the handbags. The company will use Cowhide leather which is the best quality leather for production of the new range of Tote handbags.
Bohlux has selected UK for the country expansion strategy for sale of its new range of Tote handbags. Assessment of UK leather industry in context to the demand of leather products shows presence of two favorable factors namely high demand of Leather goods irrespective of the income of the consumers and high availability of best quality hides and skins for production of leather goods (Mullen & Johnson, 2013). The PESTEL analysis conducted on the business operational facilities in UK will help in understanding the feasibility of UK as a new country for expansion.
|
P- political factors |
· Trading relations with UK is highly favorable due to the low level of political, economic and financial risk within the country. · Further, Baker (2014) added that UK government discourages any monopoly in any particular trading sector and promotes free and fair competition · Moreover majority of the large scale leather producing companies of UK are engaged in trading relations with Asian countries thus the export and import duties for the leather goods are low (Solomon,Russell-Bennett & Previte 2012). |
|
E- Economic factors |
· The economic analysis of UK non-food retail market shows that the overall retail market is expected to increase by 15% within the next 5 years (Johnson et al. 2013). · As per the reports of The Guardian, the demand for the luxury products in UK was stagnant even during the recession period which proves to be beneficial for the sale of the luxury goods like Handbags. · Around 3.5% of minimum wage of an individual in UK is spent for the purchase of luxury items like garments, accessories and Handbags (Paul et al. 2013). |
|
S- social factors |
· Around 50% of the UK customers spend one-third part of their monthly income for purchase of luxury products in order to maintain the high social status (the Guardian 2002). · UK is considered as one of the biggest fashion hub where demands for stylish and ethnic products are always high irrespective of the economic condition of the country. · As per the 2011, census report, the total population of UK is 63.2 million out of which 32.2 million consists of female population and thus the demand for the female luxury products like bags, accessories and fashion equipments are high compared to the male accessories in UK (Ons.gov.uk 2015). |
|
T- technological factors |
· Technologically UK has been one of the developing nations and the government’s high level of encouragement to the different entrepreneurs is helping UK in developing the innovation level in different sectors. · UK also accounts for the large volumes of Cow hides and skins that help in production of relevant leather goods for some of the branded leather manufacturing companies of UK (Chaffey, Ellis-Chadwick & Chaffey 2012). |
|
L- legal factors |
· The leather industry in UK is regulated by the norms under the UK leather Safety and Guidance regulations that provides the different terms for managing moral and legal terms during the production of leather goods in different companies of UK. · The leather footwear companies operating in UK are required to obtain legal workplace permits from the UK government before commencing production of leather goods (W-Fowler, 2015). |
|
E- environmental factors |
The leather companies operating in UK are also required to abide by the following environmental directives in relation to manufacturing and production of raw hide and skin for production of leather goods: · Water Framework Directive · Solvent Emissions directive · Norms of Tanneries BREF · Registration, authorization and evaluation of Chemicals Regulation (Ons.gov.uk, 2015) Further, Bastien and Kapferer (2013) added that the tanneries are also required to abide by the norms of Integrated Pollution, prevention and Control (IPPC) Regime for reducing environmental pollution generated from the manufacturing and production of leather goods. |
4.1 Overview of leather goods industry of UK
The luggage and bags market of UK accounts for around 10.6% of the total leather goods market of UK and is forecasted to increase by around £2 billion within 2017 (Chiew, 2015). The luggage and leather goods market includes different leather products like bags, wallets, purses, handbags, suitcases, travel bags and briefcases. However, as per the reports of Euromonitor, the luggage market of UK has experienced poor growth in the recent years and the market declined by -1.5% to -0.8% from 2011 to 2012 (Euromonitor.com, 2015).
However, the unprecedented growth of the luxury sector of UK confirms the fact that the luggage and leather goods industry of UK is also expected to grow in the recent years. The following table shows the market segmentation for luggage and leather goods in UK.
|
category |
2015 (£ billion) |
Percentage (%) |
|
Luggage |
1.1 |
61.5% |
|
Bags, wallets and purses |
0.8 |
38.5% |
|
Total |
1.9 |
100 % |
Table 1: Market segmentation for luggage and leather goods in UK
(Source: Store.mintel.com, 2015)
Figure 1: Market segmentation for luggage and leather goods in UK
(Source: Store.mintel.com, 2015)
The following table shows the forecasted growth rate of the leather goods industry from 2012 to 2017 to highlight the estimated trend of leather goods sales in UK.
Table 2: Forecasted growth rate of the leather goods industry from 2012 to 2017
(Source: Armstrong, 2015)
Figure 2: Forecasted growth rate of the leather goods industry from 2012 to 2017
(Source: Armstrong, 2015)
Gonca Telli Yamamoto (2012) stated that for a new entrant within the leather industry of UK, stiff competition may be faced from the large scale department stores, retailers and specialized clothing and accessories centers. The leather market of UK are dominated by the international and domestic companies like Zara, Louis Vitton, Marks and Spencer, Hermes, Prada, Coach and LVMH. However, in terms of employment, it can be stated that lack of labors skilled in embroidery and ethnic works makes it difficult for all the domestic UK companies to produce innovative leather products. The reputation of leather industry in UK also depends on the presence of high technological innovations for the leather production and presence of Institute of Creative Leather Technologies (ICLT) at University of Northhampton
The assessment of the STO analysis for the target customers of UK will help Bohlux in promoting and launching the new Tote Handbags in UK.
According to Jung Choo et al. (2012) segmentation strategy includes segmenting the total population based on gender, age, and income and purchase behavior. In case of Smartways leather bags, the following characteristics will be chosen for segmenting the overall UK population. Since the luggage and leather bag demand have decreased in the past years hence the company will have to initially focus on the high-income segment of total population. As per gender segment, the company will include only target the female customers since the product is tote handbag. However, Hooley, Piercy and Nicoulaud (2012) stated that selection of a particulars section from among the overall target segment helps in focusing on aggressive marketing for the product. Thus the target segment of Smartways Leather bags will include the female corporate professional, business entrepreneurs, models and actors and housewives of high-end professionals.
Bohlux will target majorly the female population within the age range of 25 to 45 years for the Smartways leather Handbags. Smartways will be designed as Tote handbags with broad and small straps that will allow the user to carry the bag as a hanging hand bag. The size of the bag will vary from large to medium and which will give the female population spacious opportunity of storing various important objects (Westwood 2013).
|
Target segment |
characteristics |
|
Age group |
25 to 45 years |
|
Income segment |
· High income class and urban population · Corporate professionals and wives of high-business class individuals |
|
Gender |
Only female customers |
|
Purchasing characteristics |
· Highly fashion conscious · High demand due to professional needs · The company has focused on making different colors for the bags in order to attract the younger generation of female population in UK |
The product will be promoted based on the online strategy platforms. Bohlux has focused on making tote a part of the luxury handbag segment by differentiating on the basis of heritage, craftsmanship, unique design and high price. Gorp Hoffmann & Coste-Manière (2012) stated that majority of the common female population takes fashion aspirations from the celebrities. Thus, Bohlux will focus on positioning the Smartways leather bags under category of fashionable accessories. In terms of targeting the overall female population of UK, Bohlux will use niche promotional strategies that will target only the high-class female population whose income level is above the average monthly income. Selection of the high income segment will help the company to sale the product in UK, since the customers in UK are highly afflicted towards the luxury product group irrespective of their income level.
|
Strength · Bohlux is a medium scale company and the designer bags offered by Bohlux generally is styled differently than the European bags. · The company uses own handbag patterns and uses best quality cow hides and skins for the purpose of bag production(Hooley, Piercy & Nicoulaud, 2012). · The company also produces customized tailored handbags for high- priced handbag · Bohlux provides the option of online product delivery along with physical product delivery which gives the company the opportunity of catering to the needs of a large customer segment. |
Weaknesses · Sale of the luxury leather handbag is reducing due to reduction in demand for luxury products (Stefan et al. 2012) · Bohlux faces high competition from the international brands like Coach, Louis Vitton and Prada. · Production of leather handbags requires large amounts of cow hides which are unavailable in USA. |
|
Opportunities · Bohux is operating primarily in USA where the numbers of brand conscious customers are high. Thus, Shankar and Carpenter (2012) stated that expansion to Asian countries and UK will help Bohlux to make successful expansion. · The company can introduce low and medium priced handbags for the common income group customers in UK in order to trigger demands. |
Threats · Economic recession may threaten the existence of the overall demand of leather handbags in different countries since leather handbags are considered to be luxury product. · Fluctuations in the taste and preference of the customers will also affect the demand for leather handbags (Lamb, Hair & McDaniel, 2013). · Threat of reduction in demand due to availability of large number of substitute bags at low costs. |
Bohlux plans on using social media marketing for introducing Smartways leather bags in UK market. The company will take the help of Facebook which is used by around 31.2 million UK populations and will promote the new category of Tote handbags through the online marketing startegy of Facebook (Statista, 2015). As per the reports of Mintel, 50% of the female shoppers in UK generally considers leather handbag as a lucrative product and occasionally purchases the bag without any valid purchase intention. Thus the occasional luxury purchases have helped the handbag industry to grow by 9.3% with a sales turnover of around £ 1.3 billion in 2014 (Store.mintel.com, 2015).
Depending on the purchase behavior and the growing trend of the handbag market of UK, Bohlux has estimated the following sales trend for Smartways leather bags for the next six months:
|
Months |
Quantity |
Rate/ price (£) |
Total (£) |
|
1st month |
1000 |
£ 21.80 |
21800 |
|
2nd month |
1100 |
£ 26.80 |
29480 |
|
3rd month |
1200 |
£ 31.80 |
38160 |
|
4th month |
1300 |
£ 36.80 |
47840 |
|
5th month |
1400 |
£ 41.80 |
58520 |
|
6th month |
1500 |
£ 46.80 |
70200 |
Table 3: Sales forecast of Smartways leather bags for first 6 months
(Source: created by author)
Figure 3: Sales forecast of Smartways leather bags for first 6 months
(Source : Created by author)
The table shows that the management of Bohlux will launch 1000 leather handbags initially through Facebook marketing and the company is expecting to increase the quantity by 100 handbags every month with an average sale of 1500 handbags within first 6 months from the launch of the product. The initial rate of the handbag will be fixed at minimum price of £21.80 and the company will increase £5 every month depending on the demand and acceptance of Smartways leather handbags in UK market.
Hooley, Piercy and Nicoulaud (2012) opined that usage of social media platforms as marketing channels currently has helped the majority of the medium scale companies to reduce the operational costs involving high promotional, advertisement and selling costs. As per 2015 survey reports, Facebook currently has over 1 billion users globally in around six continents and 100 countries (Doughty, 2015). As per the 2015 reports, 31 million users in UK are using Facebook and frames around 60% of their purchase decision based on Facebook product promotion. The percentage of women population (51%) using Facebook is considerably higher than the male population (49%) thus; in case of marketing female products the companies will be successful in catering to a large segment of female population. It has been estimated that the number of Facebook users in UK will increase to 33 million within 2018. Thus considering the high relevance of facebook and the influence of Facebook on triggering purchase decisions of majority of the customers, the company can successfully promote its product.
Figure 4: Facebook users in UK
(Source: Statista 2015)
42% of the marketers feel that Facebook is highly important for their business since the number of Facebook users and the frequency of Facebook use is increasing currently. Thus, Shankar and Carpenter (2012) stated that adoption of Facebook marketing strategies will help in creating more in-depth awareness about the product in the mind of the customers.
According to Lamb, Hair and McDaniel (2013) push and pull marketing strategies are the two opposite marketing strategies that aim to attract the customers to the product and also generate awareness about the product within the relevant target segment. In case of Smartways Leather bags, Bohlux will use the social pull marketing strategies to attract the customers towards the product.
Sevitz, Brent and Fourie (2012) stated that the social pull marketing strategy is a combination of both push and pull marketing strategies and helps in successfully attracting the customers towards the products with the help of social media promotion. Marketers get the options of providing information about the product to all segments of customers through the official facebook page and pull attraction of the customers towards the product. According to Phau, Lee and Quintal (2013) pull marketing is a form of inbound marketing where the marketer aims to pull the consumer into business.
Bohlux will use the social pull marketing to attract the high class female population of UK for Smartways leather bags. Assessment of purchase behavior of the female population in terms of leather bags and luxury bags shows the following characteristics:
Depending on the purchase behavior of the UK customers, the pull strategy of Bohlux for Smartways leather bags will focus on following strategies:
The major aim of the pull marketing strategy is to bring the customer to the product rather than going to the customer with product and forcing the customer to purchase the product (Baker 2014). Thus, Bohlux will use search engine optimization, coupon-advertisements, flyers and personalized emails for making the customers aware of Bohlux and its existing as well as new product range. Mitic and Kapoulas (2012) opined that the number of shares and likes over the Facebook page will help an organization to forecast the level of demand for the product. Bohlux is a medium scale brand which does not feature as an immediate finding on the search engine among the different USA brands. Thus, Bohlux in order to pull the UK customers will have to improve the search engine optimization rate by including relevant searching keywords like “leather bags”, “Bohlux Leather bags”, “Bohlux handbags”, “ Popular handbag, USA, Bohlux” and “ Tote handbags- Bohlux”. Further, Bohlux currently has a very simple Facebook page that generally highlights some of the products of Bohlux without any relevant information about any product. However, in order to pull UK customers to make purchase decision regarding Bohlux products, the company will have to enhance the visual look and the content of the official Facebook page. Bohlux should include high quality digital pictures of the new range of leather bags and new Smartways Leather bags with some important information like price of the bags, bag-size and information on discounts, coupons and online purchase links.
Further, Bohlux should also include pop-up advertisements in profiles of all face book users irrespective of the target groups. The pop-up ad at the side of the user profile help the company to promote its product conituonusly for a long time span and generates top-of-the mind awareness for products(Pride & Ferrell 2012). Further, Bohlux can also introduce different discussion links and discussion chain on Smartways leather and invite the friends present within the Facebook profile to contribute their thoughts about the new product range. This will generate product awareness and word-of mouth promotion of the new range of leather bags within the UK target population. Pearson(2013) stated that celebrity endorsements have always influenced female customers in taking purchase decision without any relevant purchase intention. Thus, depending on this factor, Bohlux can also post different videos of celebrities and models advertising and promoting the Smartways leather bags on their facebook page. This strategy will help Bohlux in influencing the high-income group of female customers to purchase Smartways bags in order to enhance their social status.
According to Bastien and Kapferer (2013) major difference between push and pull strategy is that in pull marketing the company will get independent customers who will willingly purchase the product of the company, however in case of push strategy the company will force the customers to purchase the products. Thus, companies using the pull marketing strategy generally benefit more because the willful customers tend to be loyal ad long-term customers of the company. Mullen and Johnson(2013) argued that in case of push marketing strategy the company will use different promotional strategies like inclusion of discounts, coupons, gifts, warranties and guarantees and additional after sales services for marketing the product and making the product attractive for the customers. In case of push marketing thus, the customer may change the purchase preference with the change in the fashion trends. Hence, Phau, Lee and Quintal (2013) stated that push marketing does not generate long-term loyal customers for the company.
In case of Smartways leather bags, Bohlux will use the pull marketing since the company is entering a new market and hence the company requires loyal customers for its product in UK. On the contrary if Bohlux uses the push marketing strategy for online promotion of its new handbag, it will not be able to succeed in the long run due to the presence of large number of competitors dominating the luxury bag industry of UK. Further, use of the push marking strategy will involve aggressive online promotion of leather bags and forcing the UK customers to like the page of Facebook. Application of the push strategy might help Bohlux in securing large number of views and likes for the facebook page and the products promoted through the facebook page, however, the conversion of users liking the page to potential buyers will be limited. Thus, it is advisable for Bohlux to use pull marketing strategy and create product demand among UK customers on a gradual basis.
6. Conclusion
The analysis of the marketing plan shows that although the leather goods market in UK had deteriorated during 2012-2014, however, the gradual increase in market share and revenue of luggage and leather sector in UK confirms the fact that Bohlux will be able to market and sell its products successfully. Within the marketing report the analysis of the leather goods industry of UK shows a positive trend in purchase of handbags and the SWOT analysis of Leather handbags confirms the fact that the company will be able to operate successfully in UK. Finally the report reveals that the marketer will select pull marketing strategy instead of push marketing strategy for making online promotion of the new product.
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