Managerial Economics Group Presentation

Topic: UNIQLO Business

101205033 彭怡華 101205054 許咨瑩 101205080 王怡方 101205082 林佳欣 101205092 許裕欣 101205084 蔡依珊

��Outline of UNIQLO’s Business

��Marketing/ Pricing Strategies/SWOT Analysis What are UNIQLO’s 8P, 1S, 1B, 2C

�Second line of UNIQLO: GU Are GU and UNIQLO products substitutes or complements? �Compared to another famous foreign brand-ZARA Which company is the winner?

�Future Strategies we advise…

Contents

UNIQLO

Outline of UNIQLO’s Business

UNIQLO Basic Information

source: http://www.uniqlo.com/tw/zh/company/corp_about/index.html

Clothing Industry

source: 行政院主計處

Clothing Industry Supply Chain

source: http://goo.gl/ZJzMvC

UNIQLO Management Ideas

Manufacture and sell clothes suitable for everyone.

Emphasis on the pursuit of reflecting personal features by who they are rather than what they wear.

Fast Retailing

UNIQLO Management Characteristics

Environmental Protection: Recycle and manufacture plastic into polyester fiber as the material of clothes.

Cheap: Shorten the supply chain and sell products directly. The average sell price is 60% lower than costumes of its competitors.

Quality: Roll out various collections for customers; provide several colors for fabric; severe supervision through manufacture process.

Outlet: Fast selling distribution mode plus E-commerce via commercial website.

UNIQLO CSR(Corporate Social Responsibility )

A clip is here! Click right button( 按右鍵 ) and select “Open the link”( 開啟超連結 )

https://www.youtube.com/watch?v=EwLaKuWJYqc

The topic of clip: “The Power of Clothes”It takes you only 7 minutes to watch an interesting clip!

UNIQLO

Marketing/ Pricing Strategies

Product

( 產品力 )

Pricing

( 價格力 )

Place

( 通路力 )

Promotion

( 推廣力 )

Public Relations

( 公關力 )

Personal Sales

( 人員銷售 )

Physical Environment

( 實體環境 )

Processing

( 流程 )

8P

Product(產品力 )

• UNIQLO developed the goods that customer wants and pursue of fashion, innovation, high quality, additional values, sense of design, which touch the heart of customers deeply.

• Their commodities has been described as capable of changing the world in the winter.

Pricing(價格力 )

• Low price but high quality is the pricing strategy UNIQLO insisted.

• The pricing strength create the biggest competence.• Discount– Season discount(per season):UNIQLO will discount when

seasons exchange to reduce products in stock. The products are often off season. Size doesn’t necessarily fit.

– Sale of clearing stock (per month):The products which is launch last month will be on sale. It is usually decreasing NT100 per month。

– Annual Sale(per weekend):it may discount on weekends，the price of products will discount from 10 to 100 dollars。

Place(通路力 )

• UNIQLO set up at various places in response to customer needs, different customer groups, and transform its store style.

• By setting up “large store” to satisfy all kinds of customers.

• By setting up “small store” to mark off district property.

• By setting up “mini-store” to meet customers’ in time needs.

Promotion(推廣力 )

• Advertising is the love letters written by enterprise to customers, which is the strategy of UNIQLO.

• TV advertising, oral transformation, celebrity endorsements announced beyond the borders in the Internet.

• Users like to promote spontaneously to create the brand image of UNIQLO.

Internet MarketingJanpan untill September 2010 founded their officail website.It will often has activities on the website Ex:Buy short and give selfie stick.UNIQLO successfully used the power of the Internet community to promote the brand and local promotional activities.Ex: Facebook & Twitter

UNIQLO LUCKY COUNTER

The Twitter’s activities is “More Tweets ,Lower Price”

Collective bargaining marketing tactics

Cooperate with Line

• The use of discount will hold in different time by notification of LINE.

• They will help each other to advertise.

Advertising for each other(UNIQLO &LINE)

• UNIQLO and LINE launched LINE FRIENDS series of T-shirt.

• If consumers buy the T-shirt on the shop or website of UNIQLO, they can get LINE sticker(貼圖 ) .

Public Relations(公關力 )

• UNIQLO makes good use of the news media, manufacturing-related reports, opportunity for exposure.

• Weekly reports, related UNIQLO book publishing are both topics raised fever, caused by UNIQLO whirlwind.

Personal Sales(人員銷售 )

• When you enter the UNIQLO, employees call sound loud and clear so that the whole store full of vitality.

• “Self-consumption” which let consumers can comfortably walk into the store, without being disturbed clerk selection of merchandise on their own. Employees must figure out the right time, the right to make services and explain to the customer.

• UNIQLO advantage is in store site, the manager and the whole store clerks exhibited energetic advantage.

Physical Environment(實體環境 )

• UNIQLO merchandising, store atmosphere, interior decoration, layout, energetic service staff, providing consumers with a good shopping environment, enhance consumer willingness to buy.

Processing(流程 )

• UNIQLO using SPA processes - from design, production, logistics, sales has been operating, highly integrated design, production and access all aspects.

Service

(服務)Branding

(品牌)

Customer RelationsManagement

(顧客關係管理)

CorporateSocial Responsibility

(社會責任)

1S,1B,2C

Service(服務 )

• UNIQLO creates added value for customers, and have the heart that wanted to develop merchandise customers want.

• In response to customer needs, offering all kinds of stores, providing better services, and call center setting up to provide the fastest service.

Branding(品牌 )

• UNIQLO brand appeal - "cheap, fashionable, high-quality" three pillars, and to establish a flagship store brand, widely recognized by consumers.

• Global business strategy, make UNIQLO to be the international brand.

Customer Relations Management(顧客關係管理 )

• Be sure to listen to the voice of customers.• UNIQLO receive from the customer service center,

shops, webmail reflect views average over 1,000 daily. According to internal company regulations, any clerk, switchboard and customer service personnel received the customers’ reflection should upload on the system immediately.

• These complaints need real-time tracking process, maintaining the best relations with customers at any time.

Corporate Social Responsibility(社會責任 )

• UNIQLO pursued various CSR activities actively, which is the law of survival of enterprises comprehend by the president from Drucker books.

• Commodity recovery plan, the disabled employment, environmental protection and social contribution, UNIQLO hope that through these activities make the presence of UNIQLO bringing more happiness to people.

SWOT分析

UNIQLO

Strengths(優勢 )

• 1. Affordable, high-quality• 2. Fashion• 3. Brand recognition• 4. The products are suitable for all ages• 5. Innovation and varied styles• 6. Diversified products available wild• 7. Good service

Weaknesses(劣勢 )

• 1. The price in Taiwan is more expensive than in other countries.

• 2. There is higher probability of wearing the same type of clothes as the classmates.

Opportunities(機會 )

• 1. The number of potential customers is high.• 2. The global market is large. There is

unlimited space for development.• 3. Can make additional branches in Taiwan• 4. Television advertising, leaflets increase

consumer brand awareness

Threats(威脅 )

• 1. Compete with homogeneous, cheap and popular brands, such as H & M and ZARA.

• 2. Competition with other fashion brand in the Internet

• 3. Low-cost advantage to be tested due to the higher costs now.

The second line of UNIQLO

UNIQLO

Business concept of GU

• 「 Let the fashion be free」 Provide everyone with a friendly price, enjoy

the fun of fashion easily.• Unlike UNIQLO focus on casual and leisure

wear, GU provides more fashionable products. • And like ZARA、 H&M 、 Forever21, which

emphasize「 FAST FASHION」 , GU has sped up its products changing cycle to make the customers always have the feeling of freshness and always rush to purchase.

Pricing strategy of GU

• The Japanese homophone of GU「 nine（Kyu）」 implies the pricing strategy of 990 yen（Kyu-Kyu）

• The price of stall, but the quality of brands

Pricing strategy of GU

(￥ 990 equals around 250NT)

• Strength：• In contrast, the prices are lower than UNIQLO

for about 30%～ 50%.• Weakness：• But the prices in Taiwan are higher than the

prices in Japan for more than 20%.

Discount strategy of GU

• Third-degree price discrimination：Special prices for online members (use it like coupon)Show this membership card when you settle the bill

You will get the special price！

Discount strategy of GU

• Goal： The motive that a company provides coupon is to conduct

price discrimination on different groups of consumers.

「 Those people who use the coupon will have higher price elasticity than those who don’t. 」

People who have higher price elasticity are more sensitive on price changing. So people whose costs on time are lower will have higher usage on coupon, and which means people whose usages of coupon are higher will have higher price elasticity.

So, the company imperceptibly charges lower price on people whose price elasticity are higher, and charges higher price on people whose price elasticity are lower, which forms the price discrimination.

GU VS. UNIQLO

GU UNIQLO

Emphasize the low price of stall Emphasize the image of the brand and the high quality, exuberant function products

Short products changing cycle, create the brand’s survival strength under the cycle of changing the products quickly

Focus on the group of younger customers who consider the popularities more important, and have higher price elasticity

Focus on the group of customers who are loyal to the brand, and have lower price elasticity

GU VS. UNIQLO• Will the substitute goods relation and the complement

goods relation crowd out the profit?   No, because they are neither substitute goods nor complement goods

, and the reasons are：-different price orientation

-focus on different groups of customers

-differentiation strategy on products:

GU launches thematic

products, like products only

on Christmas, and UNIQLO

is more like basic and

classical products.

GU VS. UNIQLO

• Why create GU as the second line of UNIQLO?

• To take down the profit from those potential buyers which are not included earlier

Price of UNIQLO

mc

Q

$

Potential buyers

Q*

P*

Profit of UNIQLO Price of UNIQLO

mc

Q

$

Total profit

Price of GU

if just UNIQLO UNIQLO & GU

UNIQLO

Comparison with ZARA

UNIQLO v.s ZARA-Product-

UNIQLO ZARA

Position Casual, artistic design.(UT--Cooperate with artists)

• Modern, fashion design.• Masstiage ( 平價奢華 )

Strategy • Focus on basic style• Mass production• Guaranteed quality

• Various style • Fast fashion--small stock in

stores.

Price Fair price Higher price

Analysis in Product

• Economic of scope------>ZARA(various products, including shoes, accessories, bags)

• Economics of scale------>UNIQLO(mass production)

• Demand elasticity------>if products of ZARA are considered to be luxuries( 奢侈財 ), demand elasticity will be negative. If considered to be common goods( 一般財 ), the demand elasticity will be lower because the substitutes are relatively fewer.( emphasis on design)

• Supply elasticity------->ZARA’s additional production expenses will be higher( 追加生產要素費用高 )

UNIQLO v.s ZARA-Promotion-

UNIQLO ZARA

Advertisement • Billboard• Print media (ex. Magazine,

newspaper..)• Online media • Network(Facebook,Line…)• Celebrity representative

Very few ad. (0.3~0.4% of total expenses)

Promotion activities

• Anniversary sale• Price-off promotion• UNIQLO lucky counter• UNIQLO lucky machine

End-of-season sale

Analysis in Promotion

• Advertisements have a critical function: increase market share------>UNIQLO

Notes: The cost of advertising should be evaluated.

• In general, clothes are necessities to most of customers, so the demand elasticity will be negative. More discounts will keep more loyal customers------>UNIQLO

UNIQLO v.s ZARA-Place-

UNIQLO ZARA

Stores open in…• Department stores• Suburban districts

Online shopping

Stores opens in …• popular shopping district

Online shopping

Special • SPA:SPA means that UNIQLO produces their own clothing and sell it exclusively (Vertical integration)

• Logistics Integration ---200 km long conveyor belt underground connecting with logistic center and factory which produces the clothes.

Analysis in Place

• It is more convenience for consumers to access (more selling locations) ------>UNIQLO

• Vertical integration can reduce costs and increase the supply elasticity(adjust more quickly)

------>UNIQLO & ZARA

UNIQLO vs ZARA -Performance in 2014-

Resources : Results and presentations from INDITEX

Resources : Annual report from Fast Retailing

The most famous brand of casual clothes in Taiwan

Ranking Brand name scores 網路聲量

1 H&M 2.3 46,892

2 UNIQLO 1.9 16,208

3 GAP 2.1 8,916

4 ZARA 1.7 8,445

Resources: Dailyview

• According to the data in two pages above, UNIQLO has a higher rate of growth in 2014, and they even predict higher rate in the coming years.

UNIQLO

Future Strategies We Advise…

We think… ◆UNIQLO can vary its clothes style, not focusing only on basic style.

◆ Because the profit from $1 advertising depends partly on (P-MC), with comparatively higher cost on advertisements and lower price, UNIQLO should do more detailed cost-benefit analysis.

◆ The reason UNIQLO dominates other fair price brands is that it has higher quality, so it has to maintain its good control on the quality of products.

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