Magoosh GRE

Research proposal: Fashion retailer that sells ethical clothes

| March 28, 2015

Introduction:
People had become concerned about chemicals in fabrics. In response to worries about toxics fabrics, labels began to appear on clothes to show they were natural or chemical- free. But some committed pioneers began to understand what a raw deal producers and workers in developing countries were getting.

“Fashion is not something that exists in dresses only. Fashion is in the sky, in the street, fashion has to do with ideas, the way we live, what is happening”. Coco Chanel (1964)

The following research proposal will be divided into eight sections:
• Description of the business and the industry’s background.
• Business objectives
• Motivations
• Personal objectives
• Industry background (Analysis of the market):
• Market shares/size
• SWOT Analysis of the eco-fashion market
• PEST Analysis of the Eco-fashion market
• Trends
• Competitors (market leaders and other operators)
• Actual and potential consumers of the market
• Proposed marketing and selling options
• Growth/growth potential
• Product/price/promotion/place
• Information required
Required knowledge and skills needed to construct the business plan
• Product pricing
• Business location
• Cash flow forecast
• Research methods and techniques used
• Primary research
• Face-to-face interview
• Focus group
• Secondary research
• Desk research
• Timescale
• Resources
• Resources and equipment needed
• Research budget
• Bibliography
1. Description of the business and the industry’s background.

Title: Fashion retailer that sells ethical clothes, both stylish and modern.
a. Business description

The proposed business would sell affordable environmental contemporary, artisan-made, ethical, fair-trade and eco fashion clothing. In order for an organisation to be considered Fair Trade, they must abide by the following standards:
• Eco clothing: refers to all clothing that has been manufactured using environmentally friendly processes including the organic and sustainable textiles.
• Recycled refers to clothes made from recycled clothing including vintage, textiles and other materials.
• Organic clothing refers to clothes that have been made with a minimum use of chemicals and with minimum damage to the environment.
• Fair Trade refers working in unison with marginalised and vulnerable people who are struggling to survive. It is about developing long-term business relationships that are founded on respect rather than exploitation
Unique Selling Point: Affordable and stylish clothes made with ethical and ecological considerations.

“A unique selling proposition is a description of the quality that are unique to a particular product or service and that differentiate it in a way which will make customers purchase it rather that its rivals”. Tim Hindle, 2009. The Economist, NA (November Issue)

b. Business objective

Make profit, employ more staff, introduce more products and expand the business.

c. Motivations

The dream of owning my own business and becoming my own boss

d. Personal objectives

Aspects such as organic food, sustainable products and ethical issues are exhorting a strong influence. Many organizations are promoting green products in various market places. Environmental consideration is essential to businesses globally and as an environmental activist the opportunity has arisen to establish a business opportunity and participate in building a wiser society. The reward is not only financial but contributes to a personal sense of achievement.

2. Fashion industry exploration
Clothing is the fourth largest industry in the world employing a sixth of the world’s population. Although 80% of the world’s clothing is sourced from the developing world, ethical fashion accounts for 1% of the global fashion market. (Mintel)
a. Market Shares
Defra Sustainable Clothing Roadmap 2007
• The leading specialist brands dominated the clothing sector with an estimated 57.3% of sales in 2008.
• Consumer spending on clothing rose by just 10% between 2004 and 2008
Clothing Retailing-U.K –September 2008- Major Non-specialists
Mintel 2007
• Supermarkets’ share of the clothing market increased from around 10% in 2000 to 23% in 2008.
b. SWOT Analysis of the eco-fashion market

Before compiling the marketing plan, a critical self-assessment of where the business is and where it is going is needed.

Strengths

• Fits the ethos of the times – conserving the environment and demanding higher ethical standards.
• Growing awareness of wider issues, particularly production workers’ conditions.
• More widely available online and in the high street.
• Strong media interest
Weaknesses

• Current economic downturn
• Many consumers – especially young – prefer to buy often and buy cheap.
• Limited availability of ethical ranges
• More stylish and varied clothing on offer

Threats
• Competition
• Price
• No concern to ethical issues
• Recession lasts longer.
Opportunity
• Long term spread of positive views and behaviour (as with food products such as fair trade coffee and chocolate.)
• Consumers’ ethical beliefs drive purchases
• Ethical and sustainable choice can appeal longer-term if quality is chosen over quantity.
c. PEST Analysis of the Eco-fashion market

• Political:
• The government’s environmental legislative program (Climate Change Act 2008 and Carbon Reduction Commitment) requires all major businesses to reduce emissions by 26% by 2020 and by 80% by 2050
• The government’s Waste Reduction Strategy sets stiff targets equivalent to a fall of 50% per person from 2000 to 2020.
• The UK government announced in September 2007 that high-energy incandescent light bulbs would be phased out by 2011 and replaced by low-energy bulbs.

Economical:

• The impact of the recession is forcing people to look to cut costs and trade down but high (and rising) levels of concern on these issues suggests that people are happy to be greener and more ethical, but only if it saves them money.
• With money being tight in many households, it is less likely that households will be able to invest in sustainable technology (even if it saves money in the long term) because they cannot afford to spend now and are reluctant to put more equity into their properties due to weak house prices.
• Generating additional revenues from better products enables them to create new businesses
Social:

Big companies are doing their best to tell the world about their good citizenship.
“Society now has higher expectations of business taking on public responsibilities than it did five years ago” McKinsey, the Economist.com/special reports, 2009

• Local community work is increasingly becoming global community work (young staff get month assignments in the developing world to work on worthy projects)
• Coca-Cola has announced an ambitious collaboration with WWF, a global environmental organization, to conserve seven major freshwater river basins
• Companies are committing themselves to ten broad principals such as promoting environmental responsibility and combating corruption.

Technological:

• Only companies that make sustainability a goal are those that achieve competitive advantage, illustrated by the example of HP. (Harvard Business Review, Sep 2009)

• The capacity to ensure that suppliers and retailer makes their operations eco-friendly (Harvard Business Review, Sep 2009)

d. The industry wide trends:

Secondary research from sources such as Mintel, Retail Week and fashion journals (the Economist and financial times) will be conducted to find the trends in the business.

e. Competitors Analysis

There will be an application of Michael Porter’s famous Five Forces of Competitive Position model for a better understanding of the strengths of the position we are looking to move into.
Desk research will also be conducted to identify market leaders and other operators (suppliers) within the market.

f. Potential consumers

Research shows that, ABC1 women and the better educated are prime potential buyers of ethical clothing. Women make 56% of ethical clothing purchases. (U.K Clothing Retailing 2005, Mintel report from the guardian G2, “High Street Fashion’ 2006, p.4)
However, further investigation is required to establish a potential consumer profile using segmentation theory.

3. Proposed marketing and selling options

a. The Marketing mix and the 4P’s

It is the range of marketing activities/tools that an organization combines and implements to generate a response from the target audience. The most typical way of describing this is the “4P’s”-Product, Price, Place and Promotion (E. Jerome McCarty, 1953)
Having the right product, at the right price, in the right place, promoted by the best methods of communication is the basis for the marketing mix.

b. Growth strategy

The Harvest strategy and Ansoff matrix (1965) will be crucial in defining the growth strategy.

The Harvest option will also be considered for long-term options for selling on the business in the future and the Ansoff Matrix to identify the business marketing strategy. The business proposed will fall into product development because it is a new product entering an existing market.
4. Information required

a. Pricing

Price is seen as a barrier to the purchase of eco-fashion clothing, presenting big concern over consumers regarding price and affordability.

Therefore, market research methods based on secondary research will be conducted in order to find the right pricing strategy in relation to the competition.
The price has to meet also our unique selling proposition (affordable, stylish ethical clothing line).

b. Business location

It is fundamental to choose the perfect location to generate the maximum profit for the business, as this will have a major impact on its success. Before deciding on a location it would prove beneficial to conduct predictive research to find out in which area of London would be most profitable to open a new retail outlet ‘place’ that reflects customers’ social class and lifestyle.

c. Sales projection

Secondary research based on desk research will be conducted to make a sales projection, the cost price to set up the whole business.

d. About the Entrepreneur and opportunity recognition

Being a successful entrepreneur requires a range of skills that provide a solid basis for both succeeding and continuing to succeed through a person’s business career. Many of these skills can be taught and acquired through both life and business experience; however in many cases successful entrepreneurs are born with an innate knowledge of the required skill set.

“Entrepreneur are in fact both born and made. Whilst they do have certain personal character traits that they may be born with, they are also shaped with by their history and experience of life.” (Burns, 2007)

In order to produce an effective business plan the author needs to identify which skills are needed to succeed, which of the researched skills they possess and how they can acquire the skills they do not.

e. Business law
As the business will be set up in the U.K appropriate laws and guidelines for operation will need to be researched and implemented in order to meet British business laws and standards.

f. Personal skills

Type of Skills
Skills already processed
Skills that need to be developed

Work Experience in Marketing
Time Management (prioritizing workload, use of diary)
Team work
Creativity
PPD
Interaction (Approachable, culturally aware)

Desktop Publishing (Design programs)
Data analysis
Multitasking
Managing Risk
Leadership and Management qualities (handling conflict, motivating colleagues)
g. Desk research
A mix of desk research and already published materials will be used such as E-journal, trade magazines, books and Mintel. This data will be collected throughout the University and other organizations (trade exhibitions, fair trade).

Rapport from Center Of Sustainable Fashion a leading forum for understanding sustainability in the U.K fashion industry

The report highlighted current levels of activity in the areas of sustainability, the support available, and the needs, expectations and aspirations for sustainability within the whole of the fashion industry.
Journal: Green Tip TIME October 5, 2009

Gives an overview of the issues of climate change, the scientists’ innovations, communities involved and activists who influence government on the issue

Journal: Harvard Businesses Review, September 2009

Why Sustainability is now the key driver of innovation?
The journal demonstrated that only companies that make sustainability goals could achieve competitive advantage in the future.

5. Research methods

Both primary and secondary research will be conducted to gather information.

a. Primary research will be qualitative:

• Face–to-face interviews with owners, managers and business advisers for keeping up to date with new ideas and specific development in ethical fashion industry

“Interviews are a method for collecting data in which selected participants (the interviewees) are asked questions to find out what they do, think or feel. Prompts and probes may be required. Interviews are concerned with exploring data on understandings, opinions, what people remember doing, attitudes, feelings and the like, that people have in common”. (Arksey and Knihts, 1999, p.2)

• Focus groups session with existing and potential consumers in London. The aims of the exploratory study will be to determine the attitudes and behaviour of consumer towards environmental consumerism.

Focus groups are used to gather data relating to the feelings and opinions of the group of people who are involved in a common situation or discussing the same phenomenon. Focus groups combine interviewing and observation, but allow fresh data to be generated through the interaction of the group. (J.Collis & H. Roger, 1997)

“The intention is to arrive at prescriptions and policy recommendations with the theory which are likely to be intelligible to, and usable by, those in the situation being studied, and …often open to comment and correction by them…” (Turner, 1981,p.226)
b. Secondary research will be:

• Desk research:
The research will be a review of the existing data from reports, market intelligence, journals and newspapers, literature on green consumerism such as:

• Market demand
• Seasonality
• Market share
• Revenue growth
• Market segmentation
• Competitors inventory
• PEST Analysis of the company
• Business SWOT Analysis
• Profit
• Decline revenue
Tasks
Primary Research
Secondary Research

Qualitative
Quantitative
Qualitative
Quantitative
About myself
Swot analysis
Career Path Analysis (Psychometric Test)
Belbin, 1995. Theories of teamwork
Covey, 1987.
Time Management theory
Entrepreneur Role Model
Desk Research
Customer Analysis
Focus Group with
Consumers
Desk Research

Competitor Analysis
Face-to-face interviews with owners

Desk Research

Desk Research

Market Testing
Focus Group (potential consumers)

Questionnaires
(Potential consumers)
Growing the business
Face-to-face Interviews with owners
Desk Research

Marketing Strategy
Focus Group
(Potential consumers)

Desk Research

Desk Research

Managing the start-up team (Human and other resources)
Face-to-face interviews owners
Desk Research

Contingency Plan
Focus Group
(Potential consumers)
Desk Research

Pricing Strategy
Focus Group
(Potential consumers)

Recognition of risks and identify alternatives courses of actions
Focus Group
(Potential consumers)
6. Resources
a. Resources needed

• Field research direct from general public, professionals in the industry and similar business owners through a combination of surveys and questionnaires.

8. Bibliography

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Beverland, M. B. (2005). “Crafting Brand Authenticity: The Case of Luxury Wines” Journal of Management Studies 42(5): 1003-1029.
Brunetto, Y. and R. Farr-Wharton (2007). “The Moderating Role of Trust in SME Owner/Managers’ Decision-Making about Collaboration.” Journal of Small Business Management 45(3): 362-387.
Burns, P.(2001-2007). “Entrepreneurship and Small Business” Second Addition
Carter, N. M., W. B. Gartner, et al. (1996). “Exploring start-up event sequences.” Journal of Business Venturing 11(3): 151-166.
Chaston, I. (1999). New marketing strategies : evolving flexible processes to fit market circumstance. Thousand Oaks, Calif. ; London, Sage Publications
Clark, D., N. Berkeley, et al. (2001). “Attitudes to Growth Among Owners of Small and Medium-sized Enterprises and the Implications for Business Advice: Some Evidence from the Clothing Industry in Coventry.” International Small Business Journal 19(3): 72.
Covin, J. G., D. P. Slevin, et al. (1997). “Top Management Decision Sharing and Adherence to Plans.” Journal of Business Research 40(1): 21-36.
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Deakins, D and Freel, M. “Entrepreneurship and Small Firms. Fifth Edition.
Dempster, A. M. (2006). “Managing Uncertainty in Creative Industries: Lessons from Jerry Springer the Opera.” Creativity and Innovation Management 15(3): 224-233.
Fletcher, C. (2008). “Sustainable Fashion &Textile-Design Journeys
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