Marketing strategy planning- Gymshark PDF

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Table of Contents 1.0 Introduction........................................................................................................................2 2.0 External Analysis...............................................................................................................2 2.1.0 Macro-PESTEL..............................................................................................................2 2.1.1 Political........................................................................................................................2 2.1.2 Economy.....................................................................................................................3 2.1.3 Social...........................................................................................................................4 2.1.4 Technology..................................................................................................................4 2.1.5 Environment................................................................................................................4 2.1.6 Legal............................................................................................................................5 2.2.0 Micro-Porter’5 forces....................................................................................................5 2.2.1 Threat of new entry....................................................................................................6 2.2.2 Threat of substitution.................................................................................................6 2.2.3 Buyer power................................................................................................................7 2.2.4 Supplier power...........................................................................................................7 2.2.5 Competitive rivalry.....................................................................................................8 3.0 Analysis of the competitive environment.......................................................................8 3.1 Competitors map – Center, first and second outer ring..........................................9 3.2 Competitors analysis..................................................................................................10 3.3 Segmentation, Targeting, Positioning......................................................................10 3.3.1 Segmentation- Demographic.............................................................................10 3.3.2 Targeting- Differentiated marketing...................................................................11 3.3.3 Positioning Map....................................................................................................11 4.0 Analysis of customers....................................................................................................12 4.1 Need Recognition........................................................................................................13 4.2 Information Search......................................................................................................13 4.3 Evaluation of Alternatives..........................................................................................14 4.4 Purchase Decision......................................................................................................14 4.5 Post Purchase Evaluation..........................................................................................14 5.0 Internal analysis – 7Ps, 7S Model, Value Chain........................................................15 6.0 Summary of current position.........................................................................................16 6.1 SWOT analysis............................................................................................................16 7.0 Reference list...................................................................................................................18

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1.0 Introduction Gymshark is founded by Ben Francis in 2012 together with his friends while still at university. Currently this business is together led by the business partner Steve Hewit, Steph Green, Dave Parry, Paul Richardson and Richard Chapple. Gymshark is a very well-known online gym apparel company in the fitness industry. The company has a diverse selection of gym clothes for both men and women, including stringers, tank tops, T-shirts, pants, hoodies, shorts, and leggings. Gymshark has been recognized as the fastest growing and biggest brand in gym apparel in the UK. From the beginning they have seen rapid growth and an ever expanding quality customer base. According Gymshark (2017), Gymshark has reached one of the incredible milestones which is the company have officially sent out 1 million of orders. In additional, Gymshark started to connect with some Youtubers and Instagrammers that wearing theirs clothes (Brusin, 2016). Gymshark has sponsored 18 top global Youtubers, Instagrammers and bloggers with a combined social median following of 20 million. The background of Gymshark and customer engagement is slightly unique compare to other retailers. Gymshark has focused employing ambassadors who have large social media followers. The sponsorship about Gymshark is not only about the athlete, it is also about how people can positively influence others (Gymshark, 2017). 2.0 External Analysis 2.1.0 Macro-PESTEL In the first place, PESTEL analysis is a framework for marketer to analyze and screen the external marketing environment. It assesses the macro environment factors of an industry and improves in decision making. There are 6 different types of environmental influence in PESTEL framework which is political, economic, social, technological, environmental, and legal. 2.1.1 Political Operates in the fitness industry should comply with certain political guidelines to assure the business is operating in a legal way. In the event that UK has strong democratic traditions. UK is great in respect for human rights and civil liberties, and the public sector is transparent and accountable. For example, in the 2015 general 2

election David Cameron secured a narrow Conservative majority in the Commons. The result seemed to signal the resumption of ‘normal service’ for peacetime government in Britain (Dunleavy, 2017). So, what are the factors have affected the industry? According BBC (2013), the UK government has designed a campaign “Change4life” to boost the number of people having an active and healthy lifestyle positively. By signing up to Change4life online, families will receive a compilation of healthy recipe with ideas for daily menu. The UK government vigorously promotes healthy living lifestyle; therefore, this is a good opportunity for Gymshark in operating in the fitness industry. 2.1.2 Economy The UK economy expanded 0.3 percent on quarter in the three months to June of 2017, unrevised from the second estimate of GDP and following an upwardly revised 0.3 percent expansion in the earlier period. Fixed investment was the main driver of growth while household expenditure rose at a slower pace. From the production side, the services industries were the only positive contributions to output GDP growth (Trading Economic, 2017).

(Trading Economic, 2017) The country boasts of high per capita GDP and a favorable investment climate, but the government has been challenged by a high deficit and debt, which has forced it to curtail spending. The government cut corporate tax in a bid to spur growth, but the economy continues to struggle due to stagnant growth and a banking sector that remains vulnerable due to its exposure to Europe.

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2.1.3 Social The social-cultural factors tell us that the group of elderly people over the world is increasing. There are more people of higher age are actively going to exercise to keep themselves in healthy condition. In UK, healthcare system is one of the most successful social ventures in the world. This is due to the presence of advanced healthcare infrastructure and private sector involvement. High expenditure on health industry helped to maintain the quality and efficiency. Residents of the UK enjoy a standard of living comparable with those in other developed countries. Decades of solid economic growth have helped in the development of robust social infrastructure. The UK’s education and health care delivery systems rank among the best in the world. The UK’s government is focused on improving income inequality (Taylor et al, 2012). Hence, Gymshark could grab this opportunity to expand the market size. 2.1.4 Technology A report shows that there are 38 million active social media users in the United Kingdom, which 59% of its total population (Rose, 2017). Among all the various social media channels, Facebook is the most used channels with a 32 million user account in the United Kingdom with an age range of 20 to 40 year old as the most frequent user (Rose, 2017). As a result, this is an opportunity for Gymshark to utilise of the Facebook platform to reach out to its target audience more effectively. By using Facebook analytics tools, it would be very easy to monitor the result and feedback from the consumer. 2.1.5 Environment The environmental factors have increased significantly in importance over the last few decades. In UK, consumers are seen to be spending more towards environmental-friendly product alternative some examples are eco-friendly vehicle, energy efficient appliances, and organic food. All companies operating in the industry to consider how big their carbon footprint is (Applebaum,2016). Organisation producing sports clothing should avoid heavy metals and environmental friendly raw material.

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Generally, this serves as a great opportunity for Gymshark, as production of sport wear to be more environmentally friendly compared to other forms of sport apparel with this advantage Gymshark could attract more potential customer. 2.1.6 Legal The legal system in the UK is organized, transparent, and efficient. This makes for an environment that is conducive to business, as legislation is passed in a practical manner, keeping all stakeholders in mind. At the same time, this legislation is enforced in a fair manner by several agencies set up for monitoring areas. According Cross (2017), the clothing industry has generated more than $250 billion each year world-wide, with this huge amount at stake, most of the company tempting to ignore the ethical practice. Therefore, cloth manufacture companies should participate in their manufacturing process, thereby taking into consideration that wages must be comparable with local standards, environment friendly and employee safety. 2.2.0 Micro-Porter’5 forces The Porter’s 5 forces are a framework for industry analysis and business strategy. These forces determine the intensity of competition and hence the profitability and attractiveness of an industry. Porter’s model has become an important tool for analyzing an organizations’ industry structure in strategic processes. Porter has identified five competitive forces that shape every industry and every market. Porter’5 forces model can be represented diagrammatically as follows:

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2.2.1 Threat of new entry Running a business requires lots of terms and condition. There is several of concern to enter the new industry such as the capital requirement, switching cost, advance technologies and economic of scale. The new entry player requires investing a certain amount of capital and resources to entry. Especially the investment requires uncertain and uncovers cost for different kind of expenses. Capital requirements: To creates a barrier to entry especially if the capital require for risky or irrecoverable upfront advertising or R&D, Gymshark require investing certain amount of financial to compete. Economies of scale: This refers to the spreading cost of production over the number of units produced. Research from Endole Suite (2017), with the latest account since Jul 2016, showing there are total £4.8m assets in Gymshark organisation with cash £1.73m. Product differentiation: When existing competitors have a strong brand identification and customer loyalty, differentiation creates a barrier to entry by forcing entrants to spend heavily to overcome existing customer loyalties. For example, Gymshark goes beyond the quality of their clothing to differentiate them from other brands (Lembert, 2017). Gymshark is creating good-looking clothes that work practically at the gym. Switching cost: The larger switching cost, the harder it will be for an entrant to gain customer. A barrier to entry is created by the existence of one-time costs that the buyers faces when switching from one supplier product and services to another. 2.2.2 Threat of substitution Substitute product refers to the products and services that offer similar benefit and function to the industry but with a different process. Competitor may offer the alternate product with lower prices of better performance for the same purpose. The availability of substitutes makers lower switching costs for a customer from one company’s products to other alternative products. Price performance trade off substitutes: Different kind of sport activity, require different type of sport apparel. In sport sector, instead of going to the gym, consumer got other selection such as yoga, Muay Thai, or aerobic lesson.

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2.2.3 Buyer power The term “customer”, here refers to the final consumer of the products or the firms which distribute the industry’s products to the final consumers. Bargaining power of customer refers to the potentials of buyers to snip down the price charged by the firm in the industry or to increase the firms cost in the industry by demanding better quality and service of the product. Consumer has a strong bargaining power only when: 

Perfect competition happens when there are many sellers produce similar product and services.



Consumer able to choose from a wide range of supply firms.



It is very low cost to switch from one service provider to another.



Substitute products are available on the market.

Thus, low buyer bargaining power make an industry more attractive and increase revenues potential for the seller. 2.2.4 Supplier power Suppliers have a great deal of influence over an industry as they affect prince increase and product quality. Research from Hanson (2017), Gymshark has work with the manufacturer to develop the technical fabrics, and new style. Within three months, from designing the apparel to market for sale. According Gymshark case study stated that Gymshark has outsourcing most of the manufacturing in China. Of course it seems to be a great planning that Gymshark been done, this is because there is several of manufacturing operation in China which Gymshark can find a supplier easily. Supplier concentration: If supplier is concentrated compared to buyers if there are few suppliers and many buyers, the power of supplier bargaining is high. Supplier has the power to influence the prices and quality of raw material supplied. Buyer switching cost: The higher switching cost of the supplier, the higher bargaining power for the supplier. The supplier’s products are an important input of the buyer: Ultimately when a product became a core input to the manufacturing industry, it is very challenging for the buyer to influence the supplier.

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2.2.5 Competitive rivalry With an internet business, Gymshark can enjoy maximum flexibility in the working environment. Secondly, the entire world is a potential market for Gymshark to reach as Internet service is widely using by this era. Gymshark faces intense competition from existing and newer player. Price war: These prices war constantly eroding profitability. Consumer was hoping for a piece war to see which organization would go lower as they were branded inelastic in their demand. Intensive promotion: For instance, research from Rodriguez (2017), showing that are many ways for an organization to market themselves especially in the digital connected world that they are live in right now. This innovation, agility, and ability to react quickly to market trends is a key competitive advantage which Gymshark are committed to retaining as this business grows and complexity. 3.0 Analysis of the competitive environment It is good to know Gymshark brand positioning within the market and a complete competitor analysis is very important tools to identify whether it is a good opportunities and threats.

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3.1 Competitors map – Center, first and second outer ring By using a competitor map to find out which organization is providing similar goods and services. For center rings belongs to Gymshark that providing sports apparel, online communities, social media marketing. First outer ring belongs to the direct competitor which is Physiq Apparel, The Upside, FP Movement, Athleta, Lorna Jane, Style Runner, and Aesthetis Revolution.

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3.2 Competitors analysis Competitor Physiq Apparel

List of products

Strengths

For men Tank Tops, Hoodies &

Pricing By comparing the prices of the product with

Jackets, Shorts, Jacket,

competitors, Pysiq Appreal pricing is slightly

T-shirt

lower.

For women Seamless, Hoodies,

Design Unique stretch-fit fabric, zip pocket with

Tank Tops,T-shirts,

lightweight zippers.

Sports crops, tight & bottom Athleta For men Not available for men

Market targeting Targeting narrowly in the apparel market. A

cloth.

concentrated (niche) marketing strategy to

For women (Niche) Yoga, gym & training,

attract only female consumer Diversification Product diversification to expand the

run, travel, hike, tennis

marketing size.

& golf

3.3 Segmentation, Targeting, Positioning In marketing segmentation, targeting, and positioning (STP) is a set of framework that’s summarizes and analysis the process of market segmentation. It is a tool to find out which are the buyers within a market are divided and profiled according to a range of variables, which determine the market characteristics. 3.3.1 Segmentation- Demographic The marketing strategy used for Gymshark is demographic segmentation. There are some criteria under this segmentation which is age, gender, family size, income, occupation etc. Research from Godding (2017), Gymshark organization is targeting in those age between 18 and 25, whose lives revolve around fitness, fashion, and music. To illustrate this factor, for millennial generation experience on certain things and emotion is more important. For instance, the targeted market reelects the characteristic as listed below. 10

3.3.2 Targeting- Differentiated marketing Consumer behavior Age Gender Income bracket

Description From 18-25 (Gen-Y) Male & Female Annual Income SGD20,000-$40,000 White collar, senior/junior executive, junior managerial

Occupation

position Aim to achieve self-esteem under Maslow Hierarchy of

Consumer values

effect. Freedom Fun exciting life Emphasis on work life balance Technology ahead of older co-workers

As a result, grouping consumers are referring to their characteristics is important information for companies to effectively target a segment of the market. 3.3.3 Positioning Map Brand positioning is an important strategic decision alongside the brand pricing of the product. In another words, a brand pricing also have an impact on its own positioning. Based on the position map below, Gymshark clothing designed for cool and comfortable workout apparel and allowing consumer for ultimate performance. With wide range of men, women, and accessories, Gymshark would be able to attract more consumers.

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4.0 Analysis of customers Analysis of consumer will...