Problem Definition
We are a premium brand apparel retailer facing a consistent decrease in market share. We would like you to figure out why this is happening and provide recommendations to reverse this trend.
Case
Premium Brand Apparel Retailer
Comments
The case is designed to be presented to the candidate by an interviewer, who plays the role of a representative of a premium brand apparel retailer.
Short Solution
Key Question 1: Why is the market share decreasing?
Answer: The firm's market share is decreasing as the company's primary distribution channel has launched its own set of apparels which are in competiton with the firm's apparels.
Key Question 2: What should the firm do?
Answer: The firm should open up more self owned stores and consider creation of an online store in order to reverse this trend.
Detailed Solution
Paragraphs highlighted in green indicate diagrams or tables that can be shared in the “Case exhibits” section.
Paragraphs highlighted in blue can be verbally communicated to the interviewee.
Paragraphs highlighted in orange indicate hints for you how to guide the interviewee through the case.
I. Background
Share Diagram 1 with candidate if deemed necessary.
Wait for the interviewee to ask questions regarding the background of the case. A few sample questions/topics are shown below. You could use them to help the interviewee with information, if he's stuck.
1. Industry and Market Share:
- Firm's market share has fallen from 25% to 16%
- Market has been growing
- The industry has not seen any major merger or acquisition
2. Competition
Our competitors are premium retailers in the same segment. Recently we have started facing competition from mid range brands as well.
3. Cost
There has been no change in cost structure or margins.
4. Distribution
- We distribute our products through large retail outlets that stock multiple products (80%) and self-owned outlets (20%). We do not have any online sales channel
- A lot of our distributors have recently started their own premium apparel brands
5. Marketing and Sales
- Prices have not changed
- Our marketing mix has remained unchanged.
- Competitor's prices, marketing mix, etc. have also not changed
6. Customers
- They are not price sensitive
- Their recognition of our brand is low
II. Solution
It can be seen that the company does not have many distribution channels. 80% of the distribution is through large retail outlets that stock multiple products. Now since these outlets have launched their own brands, they must be pushing the sales of their own products over firms' as they earn a higher margin on their own products rather than the firms' products. Our market share is declining as they have control over the shelf space.
To reverse this trend, the firm should consider diversifying its distribution channels.
- The firm could open up more self-owned stores
- The firm could also consider creation of an online store
Since the customer's recognition of the brand is low, the company should also work on a branding program to strengthen the customer pull.
III. Concluding Observations
The firm's market share is decreasing as the company's primary distribution channel has launched its own set of apparels which are in competiton with the firm's apparels.
The firm should open up more self owned stores and consider creation of an online store in order to reverse this trend.
Difficult Questions
Explore the possible impacts of these new channels on the company’s brand.
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