9.2 Analysis procedure
The analysis should be based on relevant market fluctuations and include elements of both marketing situation analysis and environmental forecasting. The marketing situation analysis consists of market analysis, market segmentation and competitive analysis276. The marketing situation analysis should outline the opportunities for a brand extension into clothing by gathering and interpreting information on fashion trends, demographics, and consumers’ preferences and consumption patterns, etc. Our recommendation is that ECCO validate their segment decision criteria to a younger segment. They should examine what the younger segments want from ECCO and what their needs are, but most importantly what they expect from ECCO. ECCO should outline these expectations by using the above mentioned quantitative and qualitative analysis. What is more ECCO should access whether a bigger focus on the younger segment could seriously hurt the relationship to the older customers as this might prevent ECCO from such a broader segmentation strategy.
Furthermore, they should analyze their competitors and find out what they are doing and their success criteria, by doing so they might call attention to new tendencies on the market and consumers that they would not have discovered or considered on their own. Analyzing these factors should give them a clear picture on clothing consumption on the entire market.
Environmental forecasting is a tool used to predict external changes that the company might be affected by277. It includes elements such as identifying and surveying the consumers and tracking the marketing activities’ effect on the consumers. As ECCO will be making a brand extension they will not be able to make past buying behaviour analysis. However, they should make link test and tracking to find out which clothing line will be best suitable for the target group. These link tests should be made by focus groups where the contestants try on the different clothes samples and share their positive or negative opinions. After finding the right apparel products for the chosen segment based on their desires, needs and expectations ECCO should make an aggressive advertising campaign. This is part of the repositioning and brand awareness strategy that ECCO is in short of.
Therefore advertising and brand awareness effectiveness studies should carefully and consistently be carried out278. The advertising effectiveness studies should first be pre-tested like the clothing lines by e.g. focus groups or survey groups in order to see if it has the intended effect. After being
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276Hair et al. 2003, p. 7-8
277Hair et al. 2003, p. 16
278 Keller 2008: p. 331
launched ECCO should measure the effectiveness of the campaign, among other if the desired brand awareness level has been created.
As pointed out brand extensions have high risk of failing which is why the tracking studies should be made often that is to say on a weekly or perhaps even on an everyday basis especially in the period following the product launch. Tracking studies are based on the frequency of product purchase, on the consumer behaviour and marketing activity in the product category279. Evidently, ECCO should measure the brand associations by using collected data on the consumers. To explore if the brand extension is a success ECCO should use sales tracking. ECCO has a highly developed information and computing technology, which provide detailed information on the sold items.
Additionally, they should use the sales tracking for an attitudinal research. After introducing the brand extension into clothing ECCO should make attitudinal research to spot which clothing line is selling best, i.e. if it is ECCO sport, ECCO casual, ECCO business or ECCO premium that has had the most positive effect.
9.3 Expensive, but necessary analysis
It can be quite a difficult task, not to mention resourceful, to measure the level of brand equity.
Before measuring the advertising campaign and its effect on brand equity ECCO must identify and point out their values in a brand equity charter. Formalizing the company’s views on brand equity will provide the marketers measuring guidelines280. These guidelines should be used in a brand equity report where the marketer can examine the outcome. The equity report is a report where tracking surveys and performance are measured on a regular basis (monthly, quarterly or annually) and should include a description on what has happened with the brand and why it has happened281. Therefore, all necessary internal and external measures of brand associations, performance and outcomes of brand equity should be part of the report282. Besides the market analysis mentioned above, the report should also include, a GAME plan explaining the goal, activity, measurements and evaluation based on measures of both input and output283. ECCO’s goal in this case is to be repositioned as a premium brand and introduce a brand extension into clothing. ECCO’s activity is to find out how the brand extension is accepted by the consumers in comparison to their shoes.
Measurement regarding the sales measures and identifies changing consumer behavior as already
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279 Keller 2008: p. 331
280 Keller 2008, p. 333
281 Keller 2008, p.336
282 Keller 2008, p. 337
283 Keller 2008, p. 337
explained. And finally evaluation of the outputs assessing whether ECCO’s brand extension into clothing is a sales success and whether ECCO has managed to move up the brand building pyramid creating more brand awareness and greater brand equity. Hence, it is advisable, that ECCO sets up a brand value analysis scheme in order to identify the right path to their strategic goal of increased sales and market shares.
By doing so, they will be able to constantly evaluate the consumers perceptions of the ECCO brand and measure ECCO’s brand equity. Making such evaluations and measurements are vital for managing ECCO’s future brand investment and growth of ECCO’s brand equity.
ECCO should base their strategic decisions on these findings. Therefore, it is not solely a strategic challenge, but moreover a managerial challenge, as it is ECCO’s management that decides upon putting funds aside for such analysis.
9.4 Preliminary extension suggestions
Our research is not as exhaustive enough, we have made suggestions on how ECCO should make marketing research and base their decisions upon them. In spite of this we have tried to make some preliminary suggestion based on our empirical material. Our recommendation for which segment ECCO shall target their clothing line to is the younger segment aged 20-29. However, we suggest that ECCO focus on the elder group of the young segment aged 25-29 because of the following reasons; in the middle of their 20s the young Chinese will have finished their education and entered the work force thereby obtaining a more regular and higher income. Also according to Lu (2008) the Chinese elite consist of the 25-45 years old, hence, if ECCO wants to capture the elite they need to focus more on the young part of the Chinese elite aged 25-35 and not only on the segments over 35 which they are currently targeting. Moreover, ECCO should be careful not to scare away their existing customers, which could happen if young students suddenly started wearing ECCO apparel.
Many of our interviewees believed that selling to students would make a premium brand lose its status. After all, there is a difference between high-status business people playing golf with their CEOs earning a lot of money and students without official incomes, living with their parents and normally wearing sports apparel. Hence, ECCO has to be careful not to cater to students (or cater to them but make their products so expensive that the students cannot afford to buy them), but only to young people having entered the workforce.
Which clothing line should ECCO choose? Once again the final decision should be based on profound research where the various clothing lines have been pre-tested. However, our suggestion which is based on our analysis in the extension and the Chinese consumers’ chapters suggests that ECCO should introduce their clothing lines under diverse sub-brands targeting different segments.
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ECCO should begin with introducing the ECCO Casual line which is designed to attract the young Chinese who have just or who is about to enter the job market. Moreover, ECCO could make ECCO Business which should be more formal, whereas ECCO Casual as indicated by the name is for both business and leisure time. All of ECCO’s clothing lines should be Premium lines. However, to reach the elite and to underline ECCO’s position as an upper premium brand ECCO could make an ECCO-Signature line targeting the most affluent consumers such as they have done with their premium shoe line. The ECCO-Signature line should be more exclusive using materials such as cashmere and handmade bottoms. ECCO could also introduce a clothing line for sports under the sub-brand ECCO-Sports. These brand extensions complement and fit well with ECCO’s different shoe collections.
When introducing its new clothing lines ECCO could use Armani as a prudent example. Armani has been successful with introducing his brand extensions as sub-brands as this has been done without compromising the luxury image. Brand extensions modify the relationship between brand and product and indeed between the brand and the product category. Armani’s products for example have more in common than just the Armani name, they possess a certain allure. This allure is a special combination of several values as each product has a special high class value and the product being a natural part of a glamorous lifestyle. He has extended with various sub brands where some are targeted to the young consumers (AJ Armani) at a reasonable price, however, still a premium price, but reasonable compared to the Armani Colleczioni price. Nevertheless, this combination of attributes requires resonance, without this the extension can easily fail like the example of Pierre Cardin. However, Armani’s brand extensions’ resonance is kept due to the kept luxury image in every Armani sub-brand i.e. restringing distribution channels, high prices, etc.284
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284 Okonkwo 2007: 278