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ACX707 – ACX708 PROFESSIONAL RESEARCH PROJECT

TITLE: BRAND STRATEGY FOR PENSHOPPE IN AUSTRALIA

Minh Trung Hoang 218215711

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Table of Contents

1.1: EXECUTIVE SUMMARY ................................................................................................ 1

1.2: INTRODUCTION ........................................................................................................... 1

1.3: DEFINITION AND FRAMEWORK: .................................................................................. 2

1.3.1: Fast fashion: ..................................................................................................................... 2

1.3.2: Brand equity ..................................................................................................................... 2

1.3.3: The concept of “Standardisation versus local adaptation” ................................................ 3

1.3.4: Segmentation and positioning strategy: ............................................................................ 3

1.4: PROJECT DESIGN ......................................................................................................... 4

1.5: BRAND ANALYSIS ........................................................................................................ 4 Vision ............................................................................................................................................................ 4 Business objectives ...................................................................................................................................... 4 Positioning strategy and target market: ..................................................................................................... 4 Problems of the brand: ................................................................................................................................ 4 Brand preference ......................................................................................................................................... 5 Marketing 4Ps: ............................................................................................................................................. 5 Internationalisation ..................................................................................................................................... 6 Brand elements: ........................................................................................................................................... 6

1.6: SITUATION ANALYSIS .................................................................................................. 8

1.6.1: CUSTOMER ANALYSIS ....................................................................................................... 8 Involvement: ................................................................................................................................................. 8 Loyalty: ......................................................................................................................................................... 8

1.6.2: ENVIRONMENTAL ANALYSIS: ............................................................................................ 8 1.6.2.1: Political ............................................................................................................................................ 8 1.6.2.2: Economic ......................................................................................................................................... 8 1.6.2.3: Sociological ................................................................................................................................... 10 1.6.2.4: Technology .................................................................................................................................... 13 1.6.2.5: Natural environment: ................................................................................................................... 14

1.6.3: COMPETITOR ANALYSIS .................................................................................................. 14 1.6.3.1: Zara: .............................................................................................................................................. 14 1.6.3.2: H&M: ............................................................................................................................................. 16 1.6.3.3: Uniqlo: ........................................................................................................................................... 17

1.7: SWOT ANALYSIS ........................................................................................................ 20

1.8: DISCUSSION .............................................................................................................. 20

Standardisation ability ............................................................................................................. 20

Market segmentation ............................................................................................................... 21

Target market: ......................................................................................................................... 22

Positioning strategy ................................................................................................................. 22

Brand elements ........................................................................................................................ 22

Brand resonance model ........................................................................................................... 23

1.9: REFERENCE LIST ......................................................................................................... 24

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1.1: EXECUTIVE SUMMARY In the context that Penshoppe – the client brand enters the Australian market, I am about to conduct a research project covering brand analysis and situation analysis to build a brand strategy for the client. There are some key findings from the research. The brand analysis indicates the “cheerful and charming” personality trait of Penshoppe which is in line with its brand elements. The second part of the research is situation analysis which consists of consumer, environment and competitor analysis. Shown from the consumer analysis, customers have a high level of involvement with apparel products, but in an emotional way. The environment research then highlights some key findings about the propitious economy of Australia, demographic, psychographic, cultural values and the current lifestyles of Australian. Competitor analysis, lastly, compares some key attributes of three fashion giants in Australia: Zara, H&M and Uniqlo. Those findings provide adequate information to build a brand strategy for Penshoppe. Regarding brand elements, Penshoppe is recommended to take a local adaptation approach due to its small business size, low level of internationalisation, and significant differences in cultural values between the Philippines – the origin country and Australia. Some brand elements like logo and imagery should be customised according to the local taste whereas brand name, personality, and brand voice can be remained. The brand targets young people who are students, technicians or emerging professionals, living in big cities, and passionate about fashion. Regarding the target market and its point-of-difference compared to other competitors, its positioning statement should be changed to “on-trend, affordable and youthful”.

1.2: INTRODUCTION The client of the research project is Penshoppe - a Filipino fashion brand. As the flagship of Golden ABC which is a fashion giant in the Philippines (Que 2015), Penshoppe has entered several foreign markets in South-East Asia, Taiwan, Hong Kong, and Middle East (Penshoppe 2019). With this foundational position, the next step is to conquer the Australian market in preparation for its entry to the west. When going abroad, brands may have potential risks as a result of market uncertainty (Van Gelder 2005). For this reason, a brand strategy which includes brand equity and positioning strategies is essential (Keller 2013). This strategy is to provide information about consumer behaviour and the necessity to adjust brand elements in the new market (Keller 2013, p. 519). Aaker and Joachimsthaler (1999), in more details, highlight five guidelines for brand building which are the analysis of brand, consumers, and competitors; brand attributes (tangible and intangible benefits, imagery, and personality of the brand); communication; brand equity; and the concept of standardisation/local adaptation. The research, regarding this, will uncover information about the client brand, Australian market, potential consumers, competitors, and environmental factors. Brand equity framework, additionally, will be used as a guide for brand building and the concept of standardisation/local adaptation will be taken into consideration with regards to the Australian context.

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The research has heuristic values for Penshoppe as it is the foundation for further marketing activities (Keller 2013). It also benefits Asian brands having the ambition to become a foreign player in Australia.

1.3: DEFINITION AND FRAMEWORK:

1.3.1: Fast fashion: the term “fast-fashion” refers to a kind of business model offering apparel products based on seasons, and It costs less time of consumers to make purchase decision (Barnes 2013). There are some well-known international fast-fashion giants such as Zara, Gap, Uniqlo, H&M, Top Shop, just to name a few (Wong & Yazdanifard 2014).

1.3.2: Brand equity As a brand is the most valuable asset of a company, many scholars have investigated brand equity from the past decades (Kakati & Choudhury 2013), mostly from 3 different perspectives which are customer, financial market, and product market (Keller & Lehmann 2001). Customers, essentially, are the ones who determine brand equity first (Farquhar 1989). Customer perspective, additionally, is more important to understand consumer decision-making behaviour and identify added values of a brand (Aaker 1991). Keller (2016) therefore suggests “brand resonance model” which is to build a strong brand in customers’ mind (see figure 1). This model bases on brand knowledge and the effects of brand knowledge on customer relationship (Keller 2016). There are, according to Keller (2016), six building blocks in the “Brand resonance model”. “Salience”, the first level, is about brand awareness. It is foundational and should be thought in the right manners. The second level has “performance” and “imagery”. At this level, a brand should clearly identify its point-of-difference and point-of-parity for positioning strategy. Level three is about reactions of consumers which are key inputs into resonance - the last level. In resonance, customers are loyal to the brand.

Figure 1: Source: Keller (2016)

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1.3.3: The concept of “Standardisation versus local adaptation”

As mentioned above, it is essential to identify the degree that global brands should adjust their brand elements (logo, name, imagery, personality, brand voice, and some more visual elements (Keller 2013, p. 142)) in the local context. This leads to debates about standardisation versus local adaptation. This concept has been debated among many researchers over a long period (Theodosiou & Leonidou 2003, Brei et al. 2011, Akgün, Venaik & Midgley 2019, Keskin & Ayar 2014). The controversy has been due to the different pros and cons of each one. Standardisation refers to the global homogenisation of the brand image (Venaik & Midgley 2019). This can improve the control of the brand thanks to its brand image consistency worldwide, eventually gaining economies of scale (Theodosiou & Leonidou 2003). Since brand image is defined as visual and verbal communications (Świtała et al. 2018), brand elements can be understood broadly as parts of brand image. Researchers supporting local adaptation, conversely, argue that the total standardisation approach could be impractical as the audience’s perception towards a certain brand image may vary across different countries (Keller 2013, p. 520, Aaker & Joachimsthaler 1999) and each nation may have particular customer insights, culture, and commercial infrastructure (Terpstra & Sarathy 2000). For those reasons, they suggest adapting brand elements according to the local taste. Local adaptation of all brand elements, however, has some disadvantages due to the difficulty and high cost (Brei et al. 2011). Regarding the impracticality of either pure standardisation or local adaptation approach (Terpstra & Sarathy 2000), seen together, Brei et al. (2011) suggest a hybrid approach which is a combination of these two strategies. This means that some elements will be standardised, and some will be locally adapted. The decision of standardisation/local adaptation will depend on some cultural values such as masculinity, femininity, power distance, uncertainty avoidance, individualism, collectivism and orientation (Roth 1995, Park & Rabolt 2009, De Mooij, M 2010). These cultural values, therefore, need to be investigated further in the Australian context.

1.3.4: Segmentation and positioning strategy: To leverage brand equity, the choices of segmentation and positioning strategy are essential (Hassan & Craft 2012). This is, indeed, a central part of brand strategy (Özsomer & Altaras 2008). Segmentations are groups of consumers based on their similar wants and needs (Kotler & Keller 2012, p. 126). Marketers then will develop positioning strategy according to these segmentations (Hassan & Craft 2012). Positioning is defined as the position of the brand in the mindset of consumers (Keller 2013, p. 79). This process will be adopted in the brand strategy for Penshoppe.

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1.4: PROJECT DESIGN RQ1: What is the positioning strategy for Penshoppe in Australia? RQ2: What is the standardisation ability of the brand when it comes to Australia? RQ3: How can Penshoppe standardise/locally adapt their brand elements in Australia? Desktop research will be conducted in response to these questions. The research consists of 2 main parts which are brand analysis (Penshoppe) and situation analysis. The brand analysis will uncover Penshoppe’s current position, values, brand attributes, and its marketing mix to gain a profound knowledge of Penshoppe. The situation analysis which includes consumer, environment and competitor analysis is to provide an overall understanding of the new market.

1.5: BRAND ANALYSIS Vision Penshoppe’s vision is to hold a high position regardless of any barriers in the scenario of fashion industry (Penshoppe 2019). Core values Que (2015) provides 5 core values of the brand which are supporting innovation and creativity, committing to high standards of professionalism, ensuring integrity in work, guaranteeing high level of satisfaction of stakeholders, and valuing the wealth to develop the company. Business objectives The brand aims to boost its economic value and fulfil personal value for stakeholders and contribute to the society (Que 2015). Positioning strategy and target market: Penshoppe’s best selling points are trendy fashion with affordable price (Philippine Daily Inquirer 2012a). The positioning strategy of Penshoppe is ‘on-trend, affordable, and quality merchandise’ (Penshoppe 2019). It targets the young people and stylish kids who want to express themselves in their own way, complementing their lifestyle (Penshoppe 2019). Problems of the brand: Country-of-origin which is one of non-marketing factors should also be considered for brand equity building in the scenario of globalisation (Mohd Yasin et al. 2007). This can become a competitive advantage (Wang & Yang 2008). Foreign consumers, additionally, are in favour of brands originally from countries that have a positive image (Mohd Yasin et al. 2007). The Philippines, however, is associated with some problems such as corruption, poverty, the lack

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of welfare concern (Que 2015), and it is not a country famous for fashion. The brand, therefore, does not have endorsement from the origin country. Brand preference: The survey of Andrew et al. (2014) shows that 40% of respondents prefer other international brands than Penshoppe and 30% of respondents have neutral attitude towards the brand. Penshoppe, that is to say, does not acquire a high degree of preference among customers. Marketing 4Ps: Product The brand offers a wide range of apparel products for both genders, footwear, and personal care (Penshoppe 2019). As Penshoppe is commonly perceived as a fashion brand and its products are mainly clothes, the research will focus on apparel category of the brand.

Source: penshoppe.com Price: The prices range, equivalently, between $AUD 10 to $AUD 19, and some are up to $AUD 34. The overall price of Penshoppe is slightly lower than other fast-fashion brands. Place Penshoppe has both online and in-store shops. The brand, importantly, provides customers excellent sensory shopping experience in physical stores by cutting-edge lighting and sound system (Philippine Daily Inquirer 2012b). Promotion Penshoppe mainly uses celebrities for their promotional activities (Philippine Daily Inquirer 2012b). It is, however, not so effective as just more than 30% of respondents in the survey of Andrew et al. (2014) agree that celebrity endorsement helps Penshoppe gain more competitive advantage.

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Internationalisation Penshoppe, with regards to its internationalisation strategy, has the ambition to enter both Asian markets like Indonesia, Singapore, Malaysia, and Hong Kong, and some western ones such as the US and Australia (Philippine Daily Inquirer 2012b). Its current position, however, is just in Asia. Brand elements:

Logo:

Source: Penshoppe.com

Lockup:

Source: Facebook.com/penshoppe

Slogan: On-trend fashion at the best value (Penshoppe 2017).

Colour: Red

Imagery: On the website:

Source: penshoppe.com On Instagram:

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Source: instagram.com/p/B1fuLSuneXr/ On advertisements:

Source: arcstreet.com Source: Spot.ph Source: Spot.ph

Visual analysis - The logo of Penshoppe is modern and simple with san-serif style.

- The name “Penshoppe” is a combination of “Pen” and “shoppe” (Que 2015). As pen is

a ubiquitous student stationary (Que 2015), it will be close to students. “shoppe”, in addition, presents the feature of the brand.

- Colour: Red colour represents warmth and energy (Hughes 2019, p. 30). Yellow

means happiness and cheerfulness (Hughes 2019, p. 30). Penshoppe also uses some other saturated colours which generally suggest exciting and dynamic feelings (Lidwell, Butler & Holden 2010, p.48)

- Imagery: Most of the images display the clothes and attract the audiences by

charming models. That is, it is more about showcasing products. The models involved in the images are mainly teenagers and young adults. They also have different ethnicities, however, the white are somewhat more central. Especially with the use of global reputable celebrities for advertisements, the brand obviously attempts to be viewed international.

Brand personality: Brand personality, according to Batra, Lehmann and Singh (1993), can be identified based on their identity (logo, symbol, style), associations and channels. Aaker (1997) categorises some human personality traits to describe a brand. Based on the traits provided by Aaker, the personality of Penshoppe can be a combination of “cheerful and charming”. Brand voice: Brand voice is the tone that the brand communicates to the audience and it is closely linked to brand personality (Manternach 2017). The language that Penshoppe uses

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across channels is dynamic with short sentences. Sometimes they end sentences with exclamations point and question marks. In line with its personality, brand voice of Pensshope can be “passionate and cheerful”. 1.6: SITUATION ANALYSIS: 1.6.1: CUSTOMER ANALYSIS Involvement: Involvement, regarding Blackwell et al. (2006, p. 86), is the importance of the product perceived by consumers. It is an essential part of customer analysis as it affects customer behaviour (Blackwell et al. 2006, p. 86). Michaelidou and Dibb (2006) conducted a research on the involvement level of consumers with clothing products. The findings suggest two dimensions which are interest and importance. This is because they want to express themselves by fashion (interest) and they consider fashion as an integral part of their life (importance). Regarding Belch et al. (2014, p. 131), as categorised in affective group, apparel has a high level of product involvement, but it is more about feeling than thinking. In this group, consumers are likely to change their attitude and can be emotionally aroused. Loyalty: Nordhielm (2008) classifies customer loyalty into hand, heart, and head loyalty. With high involvement level in an emotional way like apparel, it should be considered as “heart loyalty”. The behaviour learning hierarchy of consumers, therefore, is feel-do-learn (Nordhielm 2008). This means that their purchase behaviour will be strongly affected by emotion, suggesting the need to build emotional commitment with consumers. 1.6.2: ENVIRONMENTAL ANALYSIS: 1.6.2.1: Political The laws and regulations for the industry are generally not tight. The ACCC established some regulations for a better fair-trading environment (Do 2019a). There are, besides, some legislations to promote ethical practices such as fair work commission and shop trading hours, and a general industry award (Do 2019a). 1.6.2.2: Economic

Apparel retailing overview: The industry offers accessories and clothing products for all genders with a wide age range (Do 2019a). The industry report of Do (2019a) highlights some figures of the Clothing retail in Australia. As a big industry with 11,095 businesses, the revenue and profit of the industry are $17.1 billion and $547.1 million respectively. After a substantial annual growth from 2014 to 2019 (2.4%), the industry’s performance is forecast to be less considerable in the next five years with just 1.6% annual growth.

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Though the industry has been struggling with negative consumer sentiment index from previous years (Do 2019b) meaning they are less confident and certain about their financial situation (Do 2019a), consumer sentiment index is forecast to be positive in the upcoming years (Do 2019a). This means that they are more willing to purchase goods (Do 2019a). Concerning footwear and sportswear ones, apparel industry led the fashion market with $AUD 19,402.8 million of retail value (RSP) in 2018 which is four times higher than either Footwear’s RSP or Sportswear’s RSP (Euromonitor International 2019a). There are some main segments in the apparel industry which are menswear, womenswear, childrenswear, and jeans (Euromonitor International 2019a). The market size of womenswear has been dominating other segments by accounting for 49.6% of the current year’s revenue (Do 2019a). This was followed by menswear with 20.8% in the same timeframe (Do 2019a). The year 2018, however, saw a modest value growth of womenswear (1%) whereas that of boys’ apparel was relatively higher, with 6%. That is, womenswear is a more mature market and childrenswear has future potentials. Australian dollar is forecast to decline in the following years (Do 2019a) which is propitious for foreign brands to compete on price in Australia.

Disposable income. Along with the growth of Australian economy, according to Euromonitor International (2019c), the average income of people is forecast to increase to above $49,000 in 2030. The growth of household disposable income in Australia had had an upward trend since 2013, and it is predicted to be more rapid in the next 5 years (Euromonitor International 2019a) (see figure 2).

Figure 2: Source: Euromonitor International (2019a)

Store-based retailing versus online retailing: In terms of distribution, apparel store-based retailing made up 82.3% of channel distribution for the industry in Australia, noticeably with 48.9% for specialist retailers and 8.6% for department stores (Euromonitor International 2019a). Internet retailing, with just 17.5% of

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Apparel channel distribution (Euromonitor International 2019a), recently became the disruptor in retailing market due to its convenience and high connectivity (Do 2019a), resulting in the significant reduction of physical stores (Do 2019a). E-commerce, indeed, will even be fiercer with estimated $1 trillion consumers spending globally by 2020 (McKinsey & Company 2018). Some players in the market, thereby, started combining both online and in-store channels (Retail trends 2016) and some only have online presence (Do 2019a). 1.6.2.3: Sociological

Geographic and demographic: Australian citizens, according to Australian Bureau of statistics (2019), are more densely populated in states like New South Wales, Victoria and Queensland. The population is anticipated to rise steadily over the next decades (Euromonitor International 2019a) despite the aging trend (Do 2019b). That is, there are lesser young potential consumers. Regarding apparel industry, Do (2019a) divides customers into three main age groups for behaviour’s comparison.

- 15-34 people, firstly, tend to value brand recognition and have high level of willingness to pay for clothing, especially clothing in the workplace. They are frequent buyers, top trend followers, and some are first time parents.

- 35-54 people have a higher level of affordability for fashion thanks to their stable

career. They have high concerns about fashion trends and have a higher demand for children products.

- The last group is people over 55. They would take price, quality, comfort and

durability into account.

Psychographic and behavioural: According to Fashion market research (n.d.), there are 6 typical types of consumers regarding lifestyle and behaviour. This will be elaborated further for segmentation decision.

Personality and habits Shopping behaviour

Social shoppers - High conscious about self-image. - Have a sense of fashion

Comfortable with shopping online.

Trendsetters - Keep themselves update with latest fashion trends. - Have high concerns about their personal image. - Trend early adopters.

Shopping channels do not matter

Loyal consumers - Have higher concern about quality. - High loyalty.

- Do not shop regularly. - Shop when they really have a need.

Connected consumers

Conscious about their spending Comfortable with technology in their shopping experience.

Price hunters - Into shopping - Shop when they really have a need.

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- Patient - Like to bargain when shopping. - Always want to win.

Retail reluctant - Busy lifestyle - Do not have enough time to go to stores.

- Into just one-stop shopping - Actual online shoppers.

Social class: Sheppard & Biddle (2017) categorise Australian population into 6 groups of social class and put them in a hierarchy: ‘Precariat, ageing workers, new workers, established middle, emerging affluent, established affluent’ (see figure 3 and 4).

- The rates of educational attainment, occupational prestige, social, cultural capital, and income increase relatively with the hierarchy of these social classes.

- With regards to occupation, the first two classes which are “Precariat” and “Aging

workers” have the highest numbers of members working as technicians and labourers. These two also have a high percentage of retirees and students compared to other classes.

- The middle-class (“new workers”, “established middle” and “emerging affluent”) have

more members who are service workers, professionals, managers, and so on. Among these, “new workers” and “emerging affluent” have more full-time and part-time workers.

- The last group is established affluent which is the wealthiest with high a high level of

education attainment. Many in this group are professionals and managers.

Figure 3: Source: Murphy (2017a) Figure 4: Source: Murphy (2017b) Minimalistic lifestyle: With this lifestyle, people are less likely to purchase non-essentials like fashion. Regarding lifestyles survey (2019), the minimalism level of one’s lifestyle is correlated with age. 44.9% of Australian respondents over 60 years old, particularly, tried to reduce their spending for unnecessary items whereas only 27.4% of 15-29 ones did so.

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Sustainability: Due to the environmental issues, apparel firms started putting sustainability into practice (Euromonitor international 2019a). Cotton On, indicated from that report, can be a good instance regarding ethical practice as it aims to bring sustainability into their vision with 100% sustainable sources. This is in line with an international Lifestyles survey (2019) which shows that 62.6% of Australian have a good feeling when shopping ethical or eco-friendly products.

Personalisation: As apparel products are created for personal use, it is essential to find differences in terms of consumers’ wants and needs between groups of consumers. The differences among these markets based on report findings of Euromonitor International (2019a) will be discussed further. Women’s current expectations, in particular, are having personalised shopping experience, interacting with responsive brands on social media, and getting instant help from the company before their purchase. When women sometimes shop in stores for therapy, men, conversely, prefer online shopping. Men normally do some online research to find brands offering good prices. Due to the recent relaxation trends in the workplace, furthermore, men have been demanding more smart casual clothes and less formal suits. Children is different from other groups as their parents can be decision-makers. Since they grow up quickly, customers emphasise more on quality and longevity.

Cultural values: The research, according to Hofstede insights (n.d.), will compare some cultural

concepts between Australia and the Philippines such as masculinity, femininity, individualism, collectivism, power distance and uncertainty avoidance.

Figure: source: hofstede-insights.com

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Australia The Philippines Power distance Australian people establish the

hierarchy mainly for convenience in organizations.

Filipino accept the order of hierarchy; the country has higher levels of inequality and centralisation.

Individualism/collectivism Individualist society. Collectivistic culture.

Masculinity/femininity Masculine culture where people have a sense of achievement and competition.

Masculine culture where people live to work.

Uncertainty Avoidance The attitude of Australian towards this dimension is intermediate.

With a low preference for this dimension, people tend to relax and not threatened by ambiguity.

Orientation (normative/pragmatic)

Normative culture, people have great respect for the national conventions.

Filipino exhibit a similar attitude towards this cultural dimension.

Indulgence/restraint Indulgence culture, people tend to have low control of their spending due to their impulses to enjoy and have fun.

Restraint culture, people have high self-control

Three most significant differences between the two compared countries lie in power distance, individualism and indulgence. When the Philippines is a collectivist and restraint society with a high level of power distance. Australia, conversely, is an individualist and indulgent society with a low level of power distance. These findings will potentially affect the standardisation ability of Penshoppe which will be discussed below. 1.6.2.4: Technology

Physical store: in-store shopping experience has been automatised to enhance consumer engagement (Do 2019a). The use of interactive digital displays at the storefront (Do 2019a) can make the location more engaging and arouse passengers psychologically. To track consumers’ buying behaviour, some stores use Bluetooth technology reacting to customers’ devices for data collection (Do 2019a). Some also set up interactive mirrors in the fitting room (Euromonitor International 2019a). In-store experience is essential since more than 50% of respondents of an international lifestyle survey agreed that it is worth spending on experience (Euromonitor International 2019b).

Digitalisation (Online shopping) Artificial intelligence allows users to get personalised recommendations based on their data, consequently improving conversion rates and customer retention (Euromonitor International

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2019a). Online environment also allows businesses to use big data technology for a massive volume of data gathering, then leveraging personalisation (Euromonitor International 2019b). 1.6.2.5: Natural environment: Seasons and weather should also be taken into consideration as they affect the demand for apparel products (Do 2019a). Queensland, for instance, is warmer than other places in Australia, hence, it has less demand for winter clothes. Since current locations of Penshoppe are mainly in countries having tropical weather, product range of the brand cannot be totally standardised in Australia. 1.6.3: COMPETITOR ANALYSIS Apparel industry has low market share concentration making up below 40% of revenue and this is forecast to remain or have minimal changes in the following years due to the fragmentation of the industry (Do 2019a). Do also highlights some factors helping to cause industry competition which are the intervention of Department stores and the evolution of online shopping. The Australian apparel market has been threatened by international big brands like Zara, H&M and Uniqlo those having advantages in terms of scale and efficiency (Do 2019a. Zara, H&M, and Uniqlo will be chosen as competitors of Penshoppe for analysis as they are all international brands, have the advantage of competitive pricing, and they are competing to one another in apparel market. 1.6.3.1: Zara: As a fast fashion brand with high performance globally, Zara Australia ’s profit before tax reached $17.147 million in 2019 (The Australian 2019). Zara launched e-commerce stores in Australia in 2018 which are expected to boost sales (The Australian 2019).

Strengths: The strengths of Zara lie in manufacturing networks, supply chains, and global expansion (in 50 countries) (Anwar 2017).

Weaknesses: Some weaknesses of the brand are the going up price meaning it will be harder to target low-income customers, quality control difficulties, and potential PR problem since human resources holding senior positions are mainly from Spain (Anwar 2017).

Positioning strategy: ‘beauty, clarity, functionality, and sustainability’ (Anwar 2017).

Brand elements:

+ Logo: Zara recently changed its logo. In the photo below, the new logo is on the right.

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Screenshot from underconsideration.com

+ Current tagline: “Love your curve” (Stone 2017)

+ Colour: Elegant with black

+ Imagery: Zara website in Spain (Origin country):

Source: https://www.zara.com/es/en Zara website in Australia:

Source: zara.com/au Zara website in the Philippines: H&M uses the same website for H&M Sweden and H&M Philippines. The only difference is that they use the national currency of a certain country on the website.

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Visual analysis:

- Images used on the website in Spain are simple and elegant with grayscale and monochromatic colours. The models displayed in these images are generally skinny, fashionable, and have a strong and cool attitude.

- When it comes to the Australian website, however, the colours are warmer, and the

fashion styles of models are more casual. Both websites also show models with professional poses, making the brand appear to have a high sense of fashion.

1.6.3.2: H&M: H&M has been successful regarding its internationalisation approach, with 4420 stores and 49 online markets (H&M 2019).

Strengths: H&M performs well in terms of updating fashion trends, collaborating with designers, and offering affordable products (H&M 2019). The brand also enhances customer experience by image search, next day delivery, scan and buy, in-store mode, online return, just to name a few (H&M 2018).

Weaknesses: It underperforms in stores and it is having lower customer satisfaction (Danziger 2018).

Positioning strategy: ‘price, quality and sustainability’ (H&M 2019).

Brand elements:

+ Logo:

Source: hm.com

+ Colour: Red

+ Slogan: “fashion and equality at the best price” (the H&M way n.d.).

+ Imagery:

H&M website in Sweden (Origin country):

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Source: 2.hm.com/sv_se/index.html H&M website in Australia:

Source: hm.com/au/ H&M, similar to Zara, uses the same website for H&M Sweden and H&M Philippines.

Visual analysis: - Both two websites promote racial diversity by employing models from different facial

backgrounds.

- The images of H&M in Sweden, in terms of colour, have earth tones like brown, mustard orange and dark army green.

- The images of H&M in Australia commonly depict daily activities of people in natural

manners such as chatting with friends, posing with a car, crossing the road, and some more, revealing a sense of community. The colour palette utilised across images is vibrant and dynamic.

1.6.3.3: Uniqlo: The year 2018 saw a great performance of Uniqlo globally. According to Year-end report (2018), the revenue and profit of H&M have gone up to ¥896.3 billion and ¥118.8 billion respectively. Product attributes of Uniqlo, distinctively, are “simple and essential” which means that consumers can create their unique style by combining clothes in their own manner (Uniqlo n.d.). This is somewhat revealed in the name of the brand.

Strengths: The strengths of Uniqlo are high-quality standards, timely online retailing approach, and the great reputation and rapid growth in emerging markets (Anwar 2017).

Weaknesses: Uniqlo does not have high popularity in some global markets and its high product standards may create challenges for the brand to maintain it across markets (Anwar 2017).

Positioning strategy: Make for all. This means that there is no age, gender, ethnicity, and occupation barriers (Uniqlo n.d.).

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Brand elements: + Logo: Uniqlo, in response to their globalisation attempt, has two logo versions, one

is in Japanese character, and one is in alphabet.

Source: Uniqlo.com

+ Slogan: make for all

+ Colour: The main colour is red

+ Imagery: On the website of Uniqlo in Japan (origin country):

Source: https://www.uniqlo.com/jp/ On the website of Uniqlo in Australia:

Source: uniqlo.com/au/store On the website of Uniqlo in the Philippines:

Source: uniqlo.com/ph/

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Visual analysis:

- Uniqlo uses three different websites in Japan, The Philippines, and Australia. The visual presences of H&M are quite different across countries.

- In Japan, firstly, the images are more dynamic, and models are fun and active. The

brand also includes some popular anime characters like Sailor Moon on the website. The colours used, overall, are bold and saturated. Most of the models are Asians which is exactly the racial identification of Japan.

- The colour palette on the Australian website is pale and soft with pale brown, pale

green, and pale sky blue. The general feeling that models bring is fun, sweet, and gentle. Uniqlo in Australia also promotes racial diversity by employing different ethnic models.

- The website in the Philippines also use models from different ethnic backgrounds,

however, the white people are more dominant. With strong colours, the images here are generally bold and eye catchy. The models’ poses, lastly, appear to be fashionable.

Conclusion from analysis of Zara, H&M, and Uniqlo

- Both Zara and H&M standardise their website in the Philippines. Though Uniqlo has a separate website for Filipino consumers, the imageries of these three brands in the Philippines similarly have a western feeling by the choice of models, colours, and language.

- H&M and Zara are originally from Western countries and they standardise their website across different markets. When it comes to Australia, however, all of them locally adapt to the local market. This can show the importance of local adaptation in Australia.

- There are some similarities in terms of visuals among these three brands on their

Australian sites. All three promote racial diversity. The overall feeling is fun, lively, casual, and friendly. There are also more images that the models smile. The colours used are natural and gentle, and none of these brands employ either bold or strong colours.

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1.7: SWOT ANALYSIS The SWOT analysis will highlight key ideas for Penshoppe to consider in Australian context.

STRENGTHS WEAKNESSES - Excellent sensory shopping experience. - Offer cheap prices with a wide range of products. - Trendy fashion. - Brand style and visuals are distinctive from competitors.

- The weather in South-East countries is different from Australia. - Country of origin cannot become a selling point. - Promotional activities have not acquired substantial success.

OPPORTUNITIES THREATS - Lower Australian dollar exchange rate, gaining price advantage. - The industry has an upward trend. - The application of innovative technology will be important. - Online shopping is getting more popular.

- The level of competition is extreme. - The size of Penshoppe is relatively smaller than big fashion giants like Zara, H&M and Uniqlo. - The population of the young is anticipated to decline in Australia. - The sustainability approach in Australia and minimalistic lifestyle of people will potentially threat the fast-fashion industry.

1.8: DISCUSSION Standardisation ability Jeong et al. (2019) suggest some internal and external factors affecting standardisation ability. Internal ones are company size and internationalisation level. As opposed to small firms, standardisation approach is more feasible and suitable with big businesses (Schilke et al. 2009, Jeong et al. 2019). Penshoppe’s size is small and its current market is just in some

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Asian countries, in that sense, local adaptation approach is more appropriate. External factors, besides, are culture values (Jeong et al. 2019) analysed in the environmental analysis. The findings indicate a significant contrast of cultural values between Australia and the Philippines. Penshoppe, therefore, has a low level of standardisation (RQ2). Market segmentation These 6 segmentations are concluded from consumer analysis and environmental analysis above.

Segment name

Social shoppers Trendsetters Loyal consumers Connected consumers

Price hunters Retail reluctant

Principle benefit sought

Stylish designs. Trendy and stylish designs.

Good quality products

- Quality - Shopping experience

Cheap price Convenience

Demographic Young people between 15-34

The young and young workers

Middle-age and older

Young and middle-age people

Middle-age Young workers who are above 25

Geographic big cities big cities rural areas In big cities or nearby

rural areas big cities

Socio-economic

Precariat and middle-class

Middle-class Precariat and Aging workers

Middle-class Precariat and Aging workers

Emerging affluent and established affluent

Occupation Students, technicians, sales, young professionals

Professionals, service staff, administrative

casual workers, technicians, sales, service staff, and retirees

Professionals, managers, service staff, administrative

Students, technicians, sales, and retirees

Professionals and managers

Shopping behaviour

Online and in-store shopping

Shopping channels do not matter

- Do not shop regularly. - Shop when they have a need

Comfortable with technology in their shopping experience.

- Shop when they have a need. - Like to bargain. - Want to win.

- Into just one-stop shopping - Actual online shoppers.

Personality, lifestyle and habits

- High conscious about self-image. - Have a sense of fashion

- Keep themselves update with latest fashion trends. - Have high concerns about their personal image. - Trend early adopters.

- Have higher concern about quality. - High loyalty.

Conscious about their spending

- Into shopping - Patient

- Busy lifestyle - Do not have enough time to go to stores.

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Target market: The segment “social shoppers” is chosen to target for four reasons. First, the two selling points of Penshoppe are trendy products and affordable price, matching the principle benefit sought of this group. As Penshoppe offers cheaper prices than other competitors, second, it should better to target people from low to middle income (precariat and middle-class). Third, Penshoppe has an association with students and its brand personality is “cheerful” and “charming”, hence, people in this group can relate themselves to the brand. Forth, the group “social shoppers” is more conscious about self-image. To sum up, the target market of Penshoppe is young people who are students, technicians or emerging professionals, living in big cities, and passionate about fashion (RQ1). Positioning strategy (RQ1): The current positioning strategy of the brand is ‘on-trend, affordable, and quality merchandise’. As all competitors position themselves as trendy and cheap brands and Uniqlo focuses more on quality (association of Japanese products), the old positioning statement of Penshoppe only mentions the point-of-parity. I would suggest adding a point-of-difference to differentiate the brand. Concluded from the visual analysis of Penshoppe and competitors, Penshoppe appears to be more active and youthful, hence, I will add “youthful” to the positioning statement. “Youthful” is in line with Penshoppe’s brand personality as it is somewhat associated with active, dynamic and cheerful. The word also describes the age of the target market. In addition to this, “Social shoppers” do not seek for “quality” like the “connected consumers” group, thereby, I will remove “quality merchandise” from the statement. Finally, the positioning statement will be “on-trend, affordable, and youthful”. Brand elements (RQ3)

Logo and brand name: Brand name can be standardised since it is still appropriate to the target market (related to students and young workers). As the personality of the brand is not revealed in the current logo, I would suggest Penshoppe to change their logo, using another more dynamic and youthful one.

As the brand can still remain the relevancy to the target market, its personality and brand voice can be remained.

Brand personality: Cheerful and charming

Brand voice: passionate, cheerful, and down-to-earth

Imagery: Penshoppe should locally adapt its brand image for two reasons. First, it has

low standardisation ability. Second, all competitors customise the imagery in Australia. Overall from the Visual Analysis, imagery used in Australia could be more colourful, having natural backgrounds and many models having fun activities in a certain image. As Australian nowadays have concerned more about sustainability, it should also be included in the imagery like environmentally friendly images, for example. In terms of models, Penshoppe should use models from different ethnic backgrounds. The imagery should make sure that it can communicate well the trendy and youthful characteristics of Penshoppe.

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Brand resonance model The model below is concluded from the brand analysis and situational analysis. This contains all the steps for brand building in Australia.

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