Transcript Chapter 2
Chapter 2 Consumer Demand and Fashion Marketing Consumer Demand • America’s fashion industry mirrors the growth of the American economy: – Originally based on manufacturing, it consumed more than it could produce – Competition increased, leading to better, cheaper products and more consumer influence on production. – Ultimately, the industry shifted from production to marketing. • Life styles and buying behaviors are analyzed. • Advertising and marketing activities aim to establish the identity of a particular brand, making a consumer destination. Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458 Consumer Groups • Demographic trends, or statistical studies of measurable population characteristics, created consumers defined by age groups: – Gray market, born before 1945 – Baby boomers, born before 1965 – Generation X, born before 1980 – Generation Y, born starting in 1980 • At the same time, ethnic diversity will create a much more diverse American society. Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458 Consumer Groups • Psychographics, or lifestyle studies indicate other trends: – Working women, who comprise over 70% of women aged 20 to 54, need ease of shopping for time-poor lifestyles. – Larger sizes are a growing market in America where 68% of the population is overweight. • Mapping allows merchants to translate sales data and purchasing patterns into geographic maps representing the market and pinpointing customers. Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458 The Impact of Economics on Consumer Demand • Personal income is gross amount of income from all sources. • Disposable income is personal minus taxes. • Discretionary is income left over after food, lodging, and other necessities have been paid. • Consumer credit proliferation has greatly extended purchasing power. • Corporate ownership of manufacturers and retailers has encouraged increased efficiency and heightened branding. Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458 The Impact of Global Trade on Marketing • Globalization, in the form of both production and retailing, is an important fashion trend. • Retailers, looking for high quality at low cost, increased the amount of textiles, apparel and accessories imported into the EU and United States. • Cheaper labor in low wage countries fueled this growth. • Balance of trade issues have sprung from this trend, creating large trade deficits for the United States and other net importers. Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458 The Impact of Global Trade on Marketing • Harmonized Tariff Schedule (HTS) classifies all products, speeding customs clearance. • The WTO governs worldwide trade and aims to abolish all quotas as of 2005. • NAFTA created a free trade zone between North America and Mexico in 1994. • The Caribbean Basin Initiative (CBI) followed in 2000 and a Free Trade Agreement of the Americas (FTAA) is in process. Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458 The Impact of Technology on Marketing • The Information Revolution impacted the fashion industry in many ways: – Business communications were not only sped up, they enjoyed enhanced accuracy as well as more compelling images. – Communications with consumers allowed consumers to instantly know what was happening worldwide and pick up trends instantaneously in addition to dramatically raising knowledge levels about apparel. – Manufacturers and retailers were able to mine data to help them make better business decisions. Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458 The Impact of Technology on Marketing – The Information Revolution impacted the fashion industry in many ways: • Electronic Data Interchange (EDI) connected textile producers to manufacturers to retailers at the speed of light. – Out of this came two important advances: • Automatic replenishment, allowing manufacturers to automatically ship goods when inventory falls below agreed upon thresholds. • Value Chain Initiative (VCI) where standardized codes and linkage have been developed throughout the industry. Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458 The Marketing Chain • The traditional chain of textiles to apparel manufacturers to retailers to consumers is blurred. • Many companies use vertical integration, combining fabric production and apparel manufacturing. • Other manufacturers design and have all production sourced out in “full garment packages.” • Manufacturers and retailers also recognized that cooperation leads to quicker product development, production and distribution, and higher profits. • Finally, many retailers have become manufacturers themselves. Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458