A Case Study Of Cotton On Marketing Essay

Published Date: 23 Mar 2015

My main objective is to learn more about Cotton On as a Company and find out information on how Cotton On became one of the most popular and recognized brand regardless of their fierce and challenging competitors. Moreover, I am going find out what kind of challenges they are facing and how Cotton On overcome them in sustaining their brand name.

Introduction

Company's History

The Cotton On Group started out in 1991 with one store in Geelong, Victoria. Ever since the humble beginnings, The Cotton On Group has quickly evolved into a genuine fashion destination boasting 600 stores and 4500 employees with Nigel Austin as the Managing Director of Cotton On.

Even though The Cotton On Group started with the one store in Geelong, Victoria, it was then expanded with a few more other stores in the other parts of Australia. Gradually, the brand became famous and thus more and more chain stores opened throughout the world such as in Hong Kong, Malaysia, New South Wales, New Zealand, United States of America and Singapore, just to name a few. It is also said that they will open another outlet in Mainland China sometime in July 2010.

Operating for 19 years in business, other than successfully growing in the number of stores throughout the world with more than 600 stores, Cotton On has successfully achieved into expanding their branch into sleepwear, intimates and active wear with Cotton On Body, footwear with Rubi shoes, children's apparels with Cotton On Kids, and stationary and gifts with Typo.

Body

Company's mission

"We will be the dominant value fashion brand globally"

Their mission is to become the most innovative and responsive brand within their market without compromising their values that have made them what they are today. They are committed in providing top quality products at affordable prices, an outstanding customer service and provide a positive shopping experience for every customer. If a customer's wants and needs are met, then they will make purchase and continue to return as long term happy customers. It is because they believe that the success of the business is dependent on providing their customers with a consistently high level of service.

Behind it all - Their Culture

An important factor of the Cotton On success story has been the strength and commitment from their people to maintain and improve the standard of their products and the service to their customers. When customers visit Cotton On, they are not just walking into a store; they are entering a brand.

The identity of Cotton On in the market is based on the quality of the product, how fashionable and affordable casual clothes. For them to uphold this, the product team are constantly open to the elements to emerging local and overseas trends that reflect the lifestyle of their customers.

Their product team travels regularly to Europe, UK, USA, China and India, always sourcing items that reflect their customer. They will then spent weeks working on the fit, colour palettes of the products and price points to make sure that the end result of an item will stand alone in the retail environment. This is the reason why Cotton On is able to sustain their brand name and their quality of the brand.

Their stores have a strong presence and vibe so as their team members. This in turns backed up with the quality of the product. It provides an ambience that has their customer going back to the store for more. The company's corporate image is represented by a high standard of visual merchandising. Thus this creates a unique identity of Cotton On itself so that customers would not get confused with the other brands outside in the market.

Their young teams are all very diligent and take their positions very seriously. Their primary focus is to ensure that all of the customers are left satisfied positively based on their shopping experience. However, in the volume market, it is vital that our products speaks for itself - shopping is done faster currently and decision are made instantly. The product focuses on key elements like touch, colour and price point so the customer will not be confused.

Cotton On invests in the future to make sure that their success continues. They consistently look into areas that they can gradually improve on like the design of the store, the product distribution, the guaranteed quality of their product, and also management and training of their staffs. The presentation of the store is persistently monitored and an ongoing store revamp strategy will make sure that the high standard that was being set will be met and maintained.

The key focus of their real estate strategy is locating and developing stores that provide a comfortable shopping experience and positive store atmosphere that will allow the customer to feel the pleasure of buying fashion and them coming back for more.

Pricing strategy

Cotton On has set itself to be using the penetration pricing strategy. When they first started with their first store over at Wisma Atria, the pricing was relatively cheap. They then improved on the designs and advertised more of their newly launched store by the Internet, Magazines and words of mouth. When it gained popularity and became more known over the years, the pricing has started to increase. At the same time, the quality of the merchandise also increased as more R&D (Research and Development) is put in to cater to the needs of today's customer. Also, more elaborate designs are launched to attract new customers as well as retain existing ones

Apart from that, they also have adopted various ways to pricing too. There is psychological pricing where a bottom may be priced at S$49.90 to give an emotional approach that the merchandise is in the range of 40 something rather than 50. It goes the same way too for a top that may be priced at S$19.95 to give an emotional approach so that a customer may think that it is 'cheaper' in a sense.

In addition to that, for its core selling items, Cotton On uses bundled pricing. Besides giving value for money choice, it advises customer to purchase more amount of merchandise. For instance 1 top may cost S$19.95 but in a bundled price, the same top can get the customer to get 2 of it for S$30.00. This would save them S$9.90. Hence, customers will tend to get 2 pieces instead of 1. This results in the core items being sellable.

Lastly, Cotton On would promote promotional pricing during selected seasons such as the festive season, The Great Singapore Sales and holidays. Due to Cotton being based in Australia, they do follow some of the Australian seasons too like Easter. Thus, Singapore would also have Easter Sales that happen sometime in early April. These common strategies are great depending on how the management carries out the promotions. The promotions could bring in more sales and make Cotton On gain competitive advantage against its' competitors when positioned correctly.

Promotion

Besides pricing, another marketing strategy that was used by Cotton On to reach to more customers was to publicize the brand. One of the common tools used by Cotton On was to advertise on buses, poster and even in papers regarding the special promotions and offers that they carry. Other than that, they also display their latest arrivals on mannequins to entice customers into the shop. Visual merchandising is important as it acts as the face of the company and appeals to people. Other than that, in order to keep up with the ever changing needs of customers, many of its outlets have gone through renovations to bring a different shopping atmosphere. This change in lighting and display brings several different responses from new customers. Overall, this has enhanced Cotton On concept and differentiate itself from its competitors.

Strategies used in the store

Merchandise Greetings

Greeting customers consistently to make them feel welcome

Smiling sincerely and proactively to give a positive vibe

Introduce new arrivals

Share product knowledge

Staff needs to portray positive body language

Advise mix & match of merchandise

So that the customers will purchase more items (a technique used to up-sell)

Invite try-on

Staff should inform the availability of colors so that customer can make their choice

Best is to escort customers to fitting room to enhance their fitting experience and make them feel more appreciated and important

After them trying, make an effort to ask them 'How was it? Do you like it?'

Gives fashion advice & match merchandise with accessories

Suggest what accessories to match with outfit look, cross-selling

WAP Selling

With Any Purchase bought, customers can get slippers at S$5.00 (U.P. S$9.95) or a bag at S$10.00 (U.P. S$19.95)

Summarize merchandise purchased

Confirm number of item bought adds value to the service and also prevent any misunderstanding during the transaction made

When staffs stand to these strategies that were lay down by the company, it could keep customers' pleasure with the way the staffs work. Competition is everywhere in the modern world. Thus, there's a need to give that extra service that will always please the customers.

Charity - Cotton On Foundation

Cotton On has been raising funds for charities since its commencement in 1991. The fundraising process received a massive boost when they initiated the $1 charity bag sale program in 2004. All proceeds were directed to charitable causes and since the charity bag initiative commenced, over $750,000 has been raised.

Other than the $2 charity bag sale program that they are practicing now (it was $1 when it first started), they introduced further initiatives like the popular bottled water campaigns which they are selling at $1.50 each so that they can raise more funds and can be directed to needy causes. As the company opens more stores and expands internationally, so too will the funds rose from water sales.

 

The purpose of the foundation was to help remote and disadvantaged communities around the globe but in 2009, The Cotton On foundation has managed to raise over $1,000,000 to help the needy.

Cotton On in Singapore

Cotton On is a larger than life, vibrant retail giant that is rocking the local and international retail scene. It is famous for fast-paced, cutting edge street wear for girls and guys at easy on the pocket prices. It is a brand which would seem to be having similar features as their competitors like the ones we have here in Singapore such as Hang Ten, Giordano, IPzone as they also cater their brands to almost the same age groups. . Here in Singapore, the primary focuses of customers for them to target on are the 18-30 years old. The first Cotton On outlet that we had here in Singapore was established in 2007 and it was located at Wisma Atria, Orchard Road. Due to the high response from the first outlet, chain stores were then opened in different parts of Singapore. Up till date, Cotton On has a total of 21 stores spread across Singapore with one store opening soon in Bugis.

SWOT analysis

Strengths

Weaknesses

Various locations in Singapore

Distributed evenly across Singapore

Stores have good working/ shopping environment

Prioritise in the importance of Customer Service/ Satisfaction

Staffs would have to undergo compulsory training for 5 days before performing their required tasks in any Cotton On store

They hire young people with good personality in creating the atmosphere at work a fun place to be at

Both full-time and part-timers have their own privileges in working at Cotton On (50% and 30% discount respectively)

They have a Performance Management Program for staffs (designed to support ongoing improvement in overall performance towards customers and development of themselves)

Made use of their official website, twitter and Facebook as Social Media to always update their potential or existing customers (e.g. subscription of newsletter)

Mission statement: "We will be the dominant value fashion brand globally"

Bundled promotions, Sales, WAP(With Any Purchase)

Merchandise Greetings

Different zonings (sections of the store) given to the number of staffs available

Affordable for all

They would have to cut or cancel shifts of part-timers due to the wages and sales.

Therefore, not having enough staffs to handle the whole store

When there are lack of manpower, customer service will therefore decreased

Security wise - lack of it

Consistently changing of the prices

Production in bulk

Poor quality of merchandise (material, faulty items)

Locations might be close to competitors

Bulk production of merchandise

Availability of size

Unclear statement regarding memberships

Opportunities

Threats

Venture to the other Asia Market in the regional

Tapped on spending power

Collaboration with Disney, Cartoon Network and Dutch Artist (Dick Bruna whom created 'Miffy', the popular character in children's books)

Merge with more companies from abroad

Expand product range

Expand suppliers' field

Competitors under the same market

Location (where the store is located at with other competitive stores nearby)

New entrants

Online shopping

Needs of customers are changing

Recommendation

Cotton On has managed to come out with staff that are able to render strong customer service that have clearly impacted customers. Therefore, customers are now expecting the same high level of standard and perhaps even more now. It is very easy to achieve but sustaining it over the years is indeed something that they can be proud of. Since customers are already used to the Cotton On service culture, they will expect more in the near future. The management should be looking through the service strategies constantly and see if there is any revision needed.

One feature that the management needs to look into would be for the merchandise and service wise. Cotton On can actually conduct a short survey or feedbacks regarding their merchandise or their service. This way, Cotton on can consistently search on ways in improving and setting up higher standards for themselves to meet their customers' expectations. They can also actually try to come out with some limited pieces of merchandise and set it at premium price and see the response from customers. Many are willing to fork out extra for quality and unique pieces. Thus they can try it on the local market, maybe starting on a smaller scale to only selected potential outlets(preferably at Orchard Road) and if the response is good, they can expand it further.

Other than that, they can also provide training not only for full-timers but part-time staff as well to gain more knowledge regarding products and the proper way to deliver good customer service to customers. Their knowledge on the product features, fashion advices and beneficial programs are lacking. They are also on the frontline thus it is only fair for them to receive proper care and also training.

Lastly, the management might want to review the Cotton On website. It would be better if the website provides online shopping with their variety of latest or existing apparels. Currently, the website is only showing the catalogue of what's new in fashion in Cotton On. Therefore, setting up a virtual shop for customers to shop online would be a good way to increase sales and also to cater to a larger audience as in the modern world, many of the people are IT savvy. Thus they would spend more time on the Internet.

Conclusion

Over the past few years, Cotton On has proven that it is still a choice among the local customers by the number of stores that has expanded to over 21 outlets ever since its first outlet at Wisma Atria.

Other than that, staff should be competent enough to deliver a service standard that exceeds beyond customers' expectations. Other than closing sales, they have to give fashion advice and go beyond just assisting customers in the shop. Customers should be treated as friends and always be ready to give the helping hand when someone is in need of it.