Principles of Marketing Individual Report: AlterEco Jeans Analysis

This report provides a comprehensive analysis of AlterEco's marketing strategies over an eight-quarter period, focusing on their approach to selling sustainable jeans. The report details the company's marketing objectives, including building a loyal customer base and increasing market share. It examines the marketing mix elements, such as product positioning (mid-priced, high-quality jeans with unbiased pricing), pricing strategies (psychological and value-based), distribution (selective distribution through department stores, online platforms, and their own stores), and promotion (a mix of conventional and digital methods, including social media campaigns and breaking the green-feminine stereotype among men). The report also covers the importance of employees and customers, the service design process, and the physical environment (sound, smell, sight, and touch) of their stores. The conclusion highlights the company's performance, including sales revenue and operating profit trends, as well as the individual's performance in completing the assignment.

The best pair of jeans for you, and the
planet.
Principles of Marketing
Individual Report (60%)
24/10/2021
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Word count : 2261
Table of Contents
1.Introduction........................................................................................................3
2. Marketing objectives and strategies...................................................................3
3 Marketing Mix......................................................................................................3
3.1 Product ..........................................................................................................3
3.1.1 Product positioning………………………………... ........................................................4
3.2 Price...............................................................................................................5
3.2.1 Pricing Objectives ....................................................................................... 5
3.2.2 Pricing Strategy ..........................................................................................5
3.2.3 Pricing Methods .......................................................................................... 6
3.3 Place .............................................................................................................7
3.3.1 Stock Management ..................................................................................... 7
3.4 Promotion ......................................................................................................7
3.5 People…………………........................................................................................8
3.5.1 Employees……............................................................................................. 8
3.5.2 Customers ................................................................................................. 9
3.6 Process...........................................................................................................9
3.6.1 Service Design Process................................................................................ 9
3.6.2 Website Service Design Process.................................................................. 10
3.6 Physical environment..................................................................................11
3.6.1 Sound.......................................................................................................11
3.6.2 Smell........................................................................................................11
3.6.3 Sight ...................................................................................................... 11
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3.6.3 Touch ......................................................................................................11
4. Conclusion........................................................................................................11
4.1 Company performance ...............................................................................13
4.2 Individual Performance...............................................................................13
Reference ........................................................................................................ 15
1. Introduction
The marketing team at AlterEco chalked out a fresh outlook to capitalise on the opportunity
to maximise profits, build brand image and increase market share. The report reflects the
performance of AlterEco across 8 quarters showing the marketing objectives, marketing mix
and strategies adopted over the period of two years.
2. Marketing objectives and strategy
Firstly, the team executed a market audit to understand the dimensions of the marketing
environment. PESTEL analysis was carried out to learn about the macro environment
(Johnson 2019). The team recognised the high competition in the jeans industry and
understood it was vital to be distinct from the crowd.
A SWOT analysis was carried out to recognise opportunities for obtaining a market share
with premium product quality and service.
The main objectives based on the market audit were as follows:
● To build a strong loyal customer base
● To increase market share and operating profit
● Equal pricing for men and women.
The team decided on targeting men and women ages between 25 and 32 earning between
€25,000 and €45,000. The psychographic profile being thinker/believer, achiever/striver,
experiencer/maker, innovator or survivor living in urban, rural and suburban areas. The
quality, unbiased pricing and sustainability factor differentiated AlterEco among competition.
3. Marketing Mix
3.1 Product
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The fashion and apparel industry is held responsible for the emission of harmful chemicals in
addition to the consumption of large quantities of water for manufacturing garments. The
team recognised this and wanted to educate the world about sustainable fashion. However,
the biggest challenge faced by eco-fashion is to cater to customers who long for
fashionable, durable and affordable clothes in addition to a lasting shopping experience
(Gwilt and Rissanen 2011).
Figure 1. Source: MMX 2021
Figure 1 depicts the product life cycle of AlterEco over the 8 quarters and the three stages
can be noticed. The product remained in the introduction stage until the end of Q6 and
growth stage was witnessed from Q6 to the end of Q8. It was only from the Q7 that a profit
was incurred and the next period looks promising.
3.1.1 Product Positioning
The product was placed to be mid priced with a high quality based on market research that
showed benefits derived from purchase. The value and economy was what most people
looked for (MMX 2021) and giving them a better quality would exceed their expectations.
The purpose was to build a strong base of loyal and returning customers (Jobber and
Ellis-Chadwick 2020).
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Market Positioning
Figure 2. Source: MMX 2021
In the above figure, it can be witnessed how AlterEco stands out among competitors with
the quality, price and unbiased pricing for both men and women. According to Barney
(2011), product differentiation gives businesses a competitive edge and helps build a loyal
base of customers who understand the value of the product or service provided.
3.2 Price
3.2.1 Pricing Objectives
The team took into account the ethos of AlterEco (eco-fashion and unbiased pricing based
on gender), mission statement, targeted segment, KPIs and buyer behaviour based on
market information (MMX 2021). The goal was to build AlterEco as a bankable brand, selling
high quality products resulting in increased sales revenue and higher market share (Barney
2011).
3.2.2 Pricing Strategy
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According to López (2014), the psychological pricing strategy as the purchase decision
would be driven by emotion and perception and not reason. In addition to the quality and
affordable price of AlterEco’s products, this led the team to opt for the psychological pricing
strategy in 6 out of 8 quarters.
3.2.3 Pricing Method
AlterEco stood out when a comparison was drawn against the quality and price that the
other brands had to offer. This influenced the decision to choose the value-based pricing
method to capitalise on the opportunity. The team took into account the spending power of
target customers, benefits derived from purchase and steady increase in brand loyalty while
aligning with the ethos and marketing strategy of AlterEco (López 2014).
3.3 Place
AlterEco offers high quality jeans which are significantly lower than other players in the
market. The goal has been to create a customer delight for our highly targeted customers
with products and impeccable customer service. Keeping this in view, the team decided to
opt for the selective distribution strategy (Slater and Olson 2001).
In order to reach our targeted segment comprised of men and women aged between 25 and
32, earning between €25,000 and €45,000, the team opted to sell in high market
departmental stores and online through their own online shop as there was an increase in
online shopping trends as per news bulletin in MMX (2021). However, in Q3 and Q4, the
physical store was in a medium or low-market department store to cut costs and
understand. In addition, a large online retail platform was chosen to reach the target
customers in suburban and rural areas. The decisions were then revoked and the team
decided on selling through AlterEco’s online store, a large physical store in an urban area
and a small store in the suburbs, as the majority of the environmentally aware consumers
were from urban (47.1%) and suburban (33.4%) areas (MMX 2021).
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3.3.1 Stock Management
Figure 3 Source: MMX 2021
Figure 3 depicts the stock management across the 8 quarters. At the start, the stock was
managed and a decline can be noticed between Q4 to Q7. However, the team managed to
work on the pain points, understand the demand and distribution channels to get the
percentage higher after the slump.
3.4 Promotion
The team adopted an objective and task budgeting system as for the most part of the
period, the operating revenue remained in negative. This system helped the team set a
budget in alignment with the objectives and tasks to be carried out to meet the objectives
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(West and Prenderghast 2009). A mix of conventional and digital promotional options were
chosen by the team. From billboards, newspaper and magazine ads to fashion shows, social
media campaigns and internet marketing, the team worked on getting the right promotional
mix.
Figure 4 Source: MMX 2021
Figure 4 shows that the brand image for men and brand loyalty for women grew
considerably. Brand image for men was a concern as men avoided an environmentally
conscious and avoided an eco-friendly lifestyle as they considered it feminine (Brough et al.
2016). The promotions were focused towards breaking the green-feminine stereotype
among men by using a footballer as a message source and this helped in the exponential
growth of brand image among men.
3.5. People
3.5.1 Employees
Creating a great employee experience is primal at AlterEco. The team believes happy and
satisfied employees yield positive results for the business. According to Harter, Schmidt and
Hayes (2002), employee satisfaction directly impacts the business with better customer
satisfaction and productivity.
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The following are the ways the team plans on creating a delight for the internal customers
(employees):
● Paid time-offs
● Monthly staff parties
● Employee discounts
● Uniform allowance
● Rewards and recognition
● Career development support
3.5.2 Customers
Through the quarters, AlterEco has invested in providing a high level of personal service to
its customers in addition to training employees to provide impeccable customer service.
Oladimeji, Adebayo and Ognushola (2017) discussed how corporate social responsibility
activities carried out by businesses directly impacts customer retention and loyalty. The
team has focused on educating the customers about AlterEco’s take on sustainable fashion
and advocating for being environmentally aware. The results are seen with the high level of
customer loyalty.
3.6 Process
3.6.1 Service process design
The process remains the same for both men and women
1. Customers enter the store in the quest for a suitable pain of jeans
2. The store will have products categorised sizes available, in addition to arranging
jeans in a soothing colour scheme, making it easy for customers, saving their time
3. The feature wall with denim swatches will give an opportunity for the customer to
understand the look and feel of the fabrics offered
4. A personal shopper will be at the customer’s disposal for any assistance
5. The feature wall with denim swatches in the store will help customers feel the
different fabrics offered
6. Customers could try on the jeans in the fitting rooms
7. In case of any alterations, customers will have an on-site tailor
8. Customers can pay for their desired pair of jeans and the counter where the cashier
would thank the customer for making a difference to the environment with their
purchase
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3.6.2 Website service process design
Figure 5 Source: AlterEco
1. Customers visit the website to see a note educating them about sustainable fashion
and how AlterEco strives to make a difference in the environment
2. The website shall have a search bar and an option to select the gender(as seen in
figure 5)
3. The products will show up in a grid format (as seen in figure 5) with the price and
option to swipe and see the design and texture on the thumbnail
4. Once the customer selects a product, the product page pops up with information
about prices available, size worn by the model and his or her height
5. Here, customers could read and post reviews about the specific product
6. In case of any assistance required by the customer, they could opt to contact a 24x7
live chat and call support (as seen in figure 5) or go through the FAQs
7. Once the desired products are added to the cart, customers will see a link to the
returns and privacy policy adopted by AlterEco when they proceed to checkout
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8. Customers will have multiple payment options such as; cash on delivery, payment
through debit card, credit card or netbanking and an option to choose to pay in
interest-free instalments
9. The order will be placed and the receipt is sent to the customer’s email address with
order and shipping details to track the order
10.Once the order is delivered, the customer will have an option to write a review
3.7 Physical environment
3.7.1 Sound
According to Stratton and Zalanowski (1991), music activates the brain and affects the
mood of the listener. The team decided to play lo-fi music around the store for a calming
effect on the minds of customers (Wang 2020).
3.7.2 Smell
The store keeps the sustainable and organic theme going with the smell of fresh cotton in
the physical stores.
3.7.3 Sight
The store will have white walls with the logo in addition to big mirrors to make it bright. The
mannequins will be dressed in the latest collection following recent fashion trends. A simple
layout is designed for the store with signage to guide customers around their desired sizes,
fitting rooms and cash counter, resulting in a smooth shopping experience.
3.7.4 Touch
The walls are covered in organic cotton and the feature wall with denim swatches. This will
help customers understand the touch and feel of the fabric.
4 Conclusion
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Figure 6 Source: MMX 2021
Figure 7 Source: MMX 2021
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Figure 8 Source: MMX
4.1 Company performance
The figure 6 shows the overall performance of AlterEco across the 8 quarters. The sales
revenue showed an upward trend except between Q4 and Q7 it was around €450,000. The
operating profit remained in negative until the last 2 quarters and the goal to reach the
break even point was not met. This was due to inability to manage demand, understanding
the right distribution channels for the targeted market segment in all areas (urban,
suburban and rural) and most importantly missing having a low markup price per unit.
The KPIs at the start, until Q3 were operating profit, gross profit and sales revenue as the
team was not willing to focus on one gender until some traction and opportunities were
observed. The new KPIs apart from operating profit were brand image for men and brand
loyalty for women.
From figure 7, it can be noticed how AlterEco was successful in building a strong base of
loyal customers among men and women. The team provided a great customer experience
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that led to loyalty eventually helping in building a brand equity that aligned with AlterEco’s
market positioning.
Figure 8 shows the exponential growth in brand image among men and women.
The focus was on breaking the green-feminine stereotype among men who thought an
eco-friendly lifestyle was feminine (Brough et al. 2016). The numbers suggest an equal
trend of growth was the highest with 50% in men and women from Q5 to the end of the
period.
In conclusion, the promotion mix could have been handled better in addition to planning the
selling price to make a higher profit per unit.
4.2 Individual Performance
The MMX simulation has helped me understand the areas of expertise and gaps in
knowledge. Teamwork is vital for a successful undertaking of a business and the experience
has helped me introspect about my contribution and areas of improvement.
Basing on the news bulletin on MMX 2021, helped me recognise the need to re-fit the
website and choose the option to sell on a retail platform. I also suggested focusing on
choosing brand loyalty for women as a KPI because our product stood out among the rest.
Overall, the team displayed excellent time management and communication. Each team
member contributed equally based on his or her strengths and capabilities.
Finally, the simulation has helped me put my learning to practice. This is bound to help me
in my future endeavours.
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References
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Jobber, D. and Ellis-Chadwick, F., 2020. Principles and practice of marketing. McGraw-Hill
Education Ninth edition., 14.
Barney, J.B., 2011. Gaining and sustaining competitive advantage Fourth edition.
López, S., 2014. Value-based Marketing Strategy : Pricing and Costs for Relationship
Marketing.
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Slater, S.F. and Olson, E.M., 2001. Marketing's Contribution to the Implementation of
Business Strategy: An Empirical Analysis, Strategic Management Journal, 1055-1067.
West, D. and Prendergast, G.P., 2009. Advertising and promotions budgeting and the role of
risk. European Journal of Marketing.
Brough A.R., Wilkie J.E.B, Ma, J., Isaac, M.S., Gal, D., 2016. Is Eco-Friendly Unmanly? The
Green-Feminine Stereotype and Its Effect on Sustainable Consumption, Journal of Consumer
Research, 43 (4), 567–582.
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meta-analysis. Journal of Applied Psychology, 87(2), 268-279.
Oladimeji, M.S., Adebayo L.A. & Ogunshola, B.G., 2017. EFFECT OF CORPORATE SOCIAL
RESPONSIBILITY (CSR) ON CUSTOMERS' LOYALTY AND RETENTION. BVIMSR’s Journal of
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Stratton V.N. and Zalanowski, A.H., 1991. The Effects of Music and Cognition on Mood.
Wang, J., 2020. lofi hip-hop radio: beats to relax/study to. The Word: Tha Stanford Journal
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