Competitor Analysis of Hela Clothing

With the phasing out of the trouble times and difficult market conditions the Apparel Industry has become a challenging issue. The report comprises the recommendations how Hela can create new strategies to cope with the competitiveness.

Company background

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Hela clothing incorporated in 1992 under Hemas Garments. The company soon became the preferred destination for knitted children’s wear with European clothing retailers who valued consistently high product quality, process flexibility & professional service standards. A joint venture with the UK based Monitaine Holdings in 2005 so the company changed its name from Hemas Garments to Hela Clothing (Pvt) Ltd.

Following an emerging global reputation with clothing retailers, new factories were added in 1997 & 2003 taking production capacity to 425 machines and has competence for embroidery design punching, embroidery machines with sequins attaching capability, special embellishment machines and special sewing machines for badge , diamante attaching and heat transfer.

The Company is now under the ownership of Monitaine Holdings, A GBP 100 Million turn over company that supplies Clothing ranging from School wear, Kids wear, Men’s wear, Night wear etc.

to many of UK’s top retailers such as M&S, Nike, Next, Tesco, Reebok etc. And also ventures in garment & fabric manufacturing in Bangladesh & Srilanka along with trading partners in over nine countries. (Appendix1)

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1. Summary of the Audit findings at Hela Clothing.

The Major competitors and their level of influence and impact on the organization.

Stakeholders -“Any group of individual who can affect or is effected by the achievement of the organizations objectives, they may have a direct or indirect influence on the activities of the company. They can be internal or external to the company.” (Freeman-1984)

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Advantages of analyzing the competitors to Hela Clothing:-

Helps to identify the conflicts of interests between stakeholders in terms of implementing new strategies to the company.

Concern on the stakeholder groups and their interests on project objectives.

Be aware of the potential stakeholders and their level of participation on the developments.

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Review the stakeholder’s impact and negative or positive response on the plan.

Classify the ideal stakeholder groups according to their level of influence or power over the company and the control of resources.

Analyzing the competitor’s influences and force on Hela provide both offensive and strategic construction through which to identify opportunities and threats. And also identify the ideal stakeholders, who may affect or be affected by the company issues, moreover to keep a close eye on competitors to keep in step with new innovations in their market.

High Interest and High Power -High importance (The Board of Directors of Hela)

Owners of Monitaine Holdings, the two joint directors of Hela Clothing and the rest of the board of directors are the key players and have a key role in the acceptance or rejection of a strategy.

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Low Interest and High Power -Medium importance (Customers, suppliers and Employees)

This is the most the most important stakeholder group for Hela. As the company is based on Business to Business (B2B) sector Customers play a major role in the Apparel Industry. Without their funds and capital the business will be unsuccessful. As Hela deal with prestigious customers it is a risk to lose the business due to the economical recession.

Direct competitors:-

The Direct Competition in the apparel industry is an increasingly critical issue as lawmakers begin to open the field to alternative providers and in light of the precompetitive stance of the garment industry. The higher competition from the big players such as MAS, Brandix and Hidramani affects Helas’s growth in the industry as they have better resources such as owning washing plants, testing laboratories, embroidery machines and mostly their owning and tying up with packing and sewing accessory supplying factories.

As the competitors are also looking for opportunities where they can find a marketing advantage due to economic recession .Hela should take pre-emptive action to improve their marketing strategies and tactics on a regular basis, competition will leave the company behind in the marketplace.

Indirect competitors:-

As Hela point out their direct competitors, they also need to be aware of the indirect competitors. Such as new developments and their potential bad effects. As the company look in to the direct competitors tactics and new marketing strategies, some of the strategies are for small and medium Size businesses while others are for larger business. Therefore the company’s duty to find the weaknesses that they immensely have compared to the indirect competitors. Hence it is necessary to keep a close eye on Reliance Textiles, Banswara Syntex Limited and Ocean Lanka, as they can be an indirect competitor due to the vast competition in this line.

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Reliance Textiles apart from being a major supplier of fabrics with all the leading US and European brands, Reliance proposes to enter into garment supplies, ensuring a one point solution for their needs.

As Banswara Syntax was only engaged in producing best quality yarn, has stepped in to the garment industry which has an integrated production capacity of 130000 ring spindles and 576 air jet spindles, 206 looms, 6 stenters and 200,000 pieces readymade garments per month.

As there are two ways in which a company can grow as an “Organic growth” or “Inorganic growth” it’s time to implement one or two minor improvements based on this self assessment process. If not the Revenue, profitability, and customer satisfaction will then suffer. Building profitable partnerships between a company will be an added advantage to Hela. Since their major competitors get the profit indirectly as most of their suppliers have build partnerships with the big players.

2. Building long-term mutually beneficial relationships between competitors.

Since the European Union has announced that Srilanka has been remiss in its human rights obligations. The Srilankan Apparel industry is under threat of losing the Europe market due to the non extension of the GSP Plus extension. Therefore it’s time to adhere with the competitors of the garment sector to compete the larger and more competitive apparel manufacturers. Hence to survive the absence of concessions smaller operations may not be that fortunate.

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It is advisable appropriate to form a Joint venture with a supplier with the special technology and vast resources to supply the special fabric required for school wear to satisfy the demands of Marks & Spencer who are Hela’s largest customer.

The JV with Banswara syntax would be significant to increase market reach or to break down barriers to enter in their market. As the Indian garment sector is very powerful with their very many resources thus they could suggest the main buyers to place their bulk orders instead of placing to Hela. Since they are aware of every safety policies and requirements to manufacture the garments, it is a major threat for Hela to lose the orders by letting the Indian apparel sector entering the market with low labor cost and less legal policies.

As Hela bears a big sum on the knitted fabric to import. Whereas the annual markup decreases. Also due to the economical recession, this will allow both the companies to enter related businesses or new geographic markets or gain new technological knowledge.

Figure1 Form of a Joint Venture

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Advantages of forming a Joint Venture with Banswara Syntax:-

Helps to access greater resources, including specialized staff and technology. Therefore Hela will gain a high production capacity and achieve the forecasted output.

As it shares a risk with the venture partner Banswara Syntax, revenues and asset ownership will flow through the JV to the participants while the JV itself has no legal status.

Allows the companies to enter related business or new geographic markets and gain new technological knowledge. Thus Hela will receive a core benefit of reducing overhead costs.

Since JV is a flexible partnership, the cost bear on claiming air freights and penalties would be minimized. Whereas Hela’s operational costs could be reduced and would hardly receive damaged or shortages in fabric. JV has a limited life span and only covers part of what the company does. Thus limiting both parties’ commitments and business contacts.

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Disadvantages of forming a Joint Venture with Banswara Syntax:-

A JV could also occur disadvantages to the company as it takes time and effort to build the right relationship as partnering with another business can be challenging.

As different cultures and management styles result in poor integration and co-operation adopting with the new technologies and customs of Banswara would create problems with the departments.

Therefore for a successful venture the company must depends on research and analysis of the objectives.

Hence embarking on a JV can represent a significant reconstruction on Hela Clothing business as well as it may be risky as the objectives of the Venture are not totally clear and communicated to everyone involved. The risk of Banswara forming up another partnership with another competitor would be uncertain. By building a partnership with an indirect competitor it is essential Hela aiming for a flexible relationship to make the joint venture work. As this will result in more production which will enable Hela to increase its total profits.

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Despite it is paradoxical to enter a JV with a competitor in the same sector as the two parties compete as usual. Collectively, they assemble their resources and develop products therefore the manufacturer of the product is shared among the two partners.

3. Benefits of long-term mutually beneficial Relationship Management between key Competitors.

Relationship Marketing-Establishing, developing, and maintaining successful relational exchange constitutes a major shift in marketing theory and practice. Therefore it is necessary to implement effective relationships with the competing company Banswara Syntax, individual customers, suppliers, employees and other partners for mutual benefits. Also it is essential attracting and maintaining the relationships for a booming output. For Hela to reach the target market with bold customer retention ideas on a regular basis the marketing elements should put into practice.

As Hela being a Business to Business (B2B) sector, it is better to develop the Relationship with Banswara syntax to gain the benefits of the Joint Venture to retain the existing customers as the cost of acquiring a new customer is 3 to 5 times costly. While establishing a relationship with a Competitor gains a great deal on fulfilling a good working relationship to move on with the challenging market.

Relationship life cycle:-

The Customer Relationship life cycle demonstrates how the relationship between the company and a customer moves through a series of seven stages.

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Figure1.2TheRelationship Life Cycle

Awareness – Hela clothing uses this tool to create awareness among its main buyers about their technical abilities and product efficiency in turn to produce a reliable product.

Knowledge – This tool helps to collect information about the customers and their requirements comparing to the competitors. And also the benefits of the new product which is produced under special safety standards.

Consideration- The prospect goes through a decision- making process with the highly complex products, the analysis set out a decision whether to proceed on the order or to reject it.

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Selection Trial – Improving and developing new products using the buyer’s requirements.

Satisfaction- Customer satisfaction depends on the products and services provider by the company. This is an important aspect as satisfied buyers are most likely to be loyal and to make repeat orders and to use a wide range of services obtainable by the company.

Loyalty- A satisfied customer will always bring business to the company. Therefore Hela should focus on growing and hang on to existing customers through incentives.

Advocacy- While growing customer relationships, the customers become a supporter and promoter. Hence Hela gets existing customers and clients while increasing the sales.

The company should be aware of the competitive company’s technological based tools used by firms to facilitate the acquisition and management of their customers, employee’s ideas and concepts, customs and ethics to expand and manage the relationship between the two companies for mutual benefits. Hence in general the main purpose of business partners is to help to create and deliver value to the company. As Hela clothing has entered in to a JV the companies are enabling to co-operate the partners in the development of new products and enter in to a new geographical market in terms of competing the mass market.

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The interaction between the two companies during service encounters should be responsive, courtesy, and empathetic are important contributes to the company experience. This will boost the company capabilities, loyalty, and enthusiasm and will work wonders.

4. Advantages of Developing the Extended Marketing Mix of Hela.

The Marketing mix is the combination of marketing activities that an organization engages in so as to best meet the needs of its targeted market. This consist of elements are the basic tactical components achieve the objectives set in the marketing plan. Analyzing the Extended marketing mix elements the company can alter the quality of the product as well as the price and the other core areas in terms of competing the Apparel market. Furthermore it is important the company understand the needs of the customer, and then create the marketing strategies that will convince the demand and the marketing mix besides will meet or exceed the goals of the company.

Extended Marketing Mix

http://srmark.com/images/Marketing_Mix_Diagram_-_7Ps_L.jpg

Source- Genzmarketing.blogspot.com

Figure1.3Extenderd Marketing Mix

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Hela believes to retain customers by achieving growth and profits by delivering high customer satisfaction. This is done through a process of adding value to the marketing mix. Increasing value in Price, Product, Place and Promotions and it’s service offerings by increasing value in People, Processors and Physical evidence.

Hela Clothing should follow few general conditions to uphold the successful extended marketing mix. Consequently the company will commit to restore profitable growth as well as to eliminate distractions and gain highest impact from the improvements.

The company knowledge and skill levels should be at the fingertips to make the business work successfully.

In order to increase sales the company must meet and satisfy customer wants and needs.

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Hela should carry the objective of gaining the Market leadership. In succession to survive the percent competitive ever increasing apparel sector.

Also to maintain and provide high quality service, assurance and to be on alert with new trends, techniques and developments.

Product –

Product could be considered as the main component in the Marketing mix that furnish the ultimate objective ‘profit ‘ .Hela boasts of a product portfolio that provides a wide range of garments such as School wear, Kids wear, Men’s wear, Night wear, Fashion wear etc. which are formed with safety and health standards followed in all aspects of the manufacturing process.

Figure1.4: Product Life Cycle

In the recent past it could be said that product life cycles are being shorter. But this does not apply on all products as some products appear to go on forever and the Marks & Spencer school wear range is such a product. Similar product portfolio in the apparel market offers high competitiveness as Hela’s competitors also produces comparable products the company should be on alert on new methods and product developments.

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Planning time horizons and technology becomes shortly obsolete due to ever-growing competition .Therefore it is important to do research in new product development to cope with the current trend and fashion to compete the market rivalry.

Despite Hela being the no1 manufacturer for the world’s largest Marks & Spencer School wear supplier, currently the company should focus on retaining this position whilst specializing in other categories .

Helas also should work on effectiveness and efficiency in production in the means of productivity in order to reduce the number of rejects which will provide rich dividends in the long run.

Price –

Pricing clearly helps to generate revenue to Hela which is the ultimate objective of any business organization. As Hela is a Business to Business (B2B) market sector the goods could be considered at the luxury end of garments as the Brand has high value and weight. Therefore high profile brand increases both brand image and the weight to the end price. Moreover this would be determined by factoring in any direct cost as well as indirect cost of providing the product or service. As the company gets orders through intermediaries therefore the margin costs are to be paid. Since Hela upholds these cost disadvantages can be passed down to the customers and suppliers in higher prices. Thus the price can be negotiated related to the order quantity. Considering these regards the company compels to match the pricing with buyer’s costing.

The theory of value: – Value (Perceived) = (Perceived) Benefits – (Perceived) Cost

To manage these costs the company must negotiate with the suppliers for their prices to get down in order covering up the marginal costs.

Amid the company must be keen to decrease the surplus expenditures such as reducing air freight costs and other unnecessary cost in order to be competitive in the garment market and also gain more revenue.

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Place –

This is also known as Channel, Distribution or Intermediary. This should be chosen depending on the nature of the product or the services provided by the company. As Hela follows the subcontracting procedure to make use of more efficient use of land, capital, information technology and resources, the manufacturing process should speed up and to reduce the distributing air freight costs. This brings value to the marketing of the product by bringing in specialization, marketing knowledge, and capacity to segment the market to implement marketing strategies effectively. Hela’s major competitors do follow this process therefore franchising grants the company independent operation rights to distribute main buyer’s products including products, techniques and trademarks. This is an advantage to the company to stick to the buyer and provide their requirements.

Hela should focus on moving into new markets whilst satisfying the current markets.

Promotion –

This consists of a collection of communication tools which are used in order to differentiate, inform and persuade the target audience. Hela should focus on an integrated marketing mix in order to achieve the communication objectives.

Unlike in B2C advertising, the advertising options for Hela are limited. However Hela could use advertising in the means of highly selective print media such as business magazines, newspapers and journals in the aim of creating awareness to potential customers whilst reminding and constantly updating the existing customers.

Further hela should conduct direct marketing using highly competent sales teams as they will have to meet the buyers .They could also work on a newsletter which will be sent quarterly or monthly.

Moreover new media such as extra nets ,co operate website , web banners , viral marketing and 3G communication techniques should be implemented as these methods are highly cost effective methods of promotion to get to the target audience .Additionally Helas also should constantly send the sales team or marketing team for exhibitions where the existing and potential target customers would participate .

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The above mentined methods would be ideal in competing with Hela’s competitors whilst achieving communications objectives.

Service Mix

People –

This is the most important element in any service or experience. Therefore the customer experiences are altered to meet the individual needs. Hela’s knowledge and skill levels should be improved by maintaining high quality of personal service. Also company’s innovativeness and market oriented culture should be developed to compete the market. This could be done by constant training and development.

Process –

These are the different systems within the company which are used to deliver the product to the customer. Also increases the company’s efficiency of the process, delivery of the suppliers , factory troubleshoots etc , therefore this will reduce Hela’s operational cost as well as raise the efficiency in productivity . As the big players in the market such as MAS, Brandix use these aspects to tackle the competitive market

Physical Evidence –

These are the tangible aspects that communicate the culture of the company. As this is the material part of a service. Hela can improve in this area by developing the paperwork (Invoices and Dispatch notes), introducing an eco friendly uniform, updating the Hela website in a regular basis would be an added advantage to the company as it reaches many potential customers rapidly and inexpensively. Also by creating a friendly environment in the company will bring more customers to Hela’s business.

Evaluating and measuring the success of the Extend Marketing Mix.

Product –

As Hela Clothing caters vivid product portfolio, value should be added through product strategies.

The wide range of products used by the company should be evaluated by the number of rejects, defects and customer compalins which occurred throughout the production. Therefore it is necessary the company work on these week points to avoid the mismatch in quality of them.

The use of safety methods and health standards are most important to analyze as these products are produced to the customers along with the concept “Garment without Guilt”. Brands like Marks & Spencer, Next, Nike etc consider this as a great feature. Therefore the products quality level should not be a reason to the customer to lose confidence.

Hela is nominated to produce the largest number of school wear for Marks & Spencer and to be the pioneer of supplying a large quantity without failure. This is an advantage for the company to retain profitable customer relationship.

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New Product Development creates value to the product and satisfies customer requirements. Therefore Hela should act as an extended arm to its customer’s business process, thus products should be planned from development to manufacturing. Moreover the use of eco-friendly materials will innovate by investing money in the R&D Process.

Hela is competent to achieve large number of shares in the UK market by producing products for Tesco, Tesco Blues, Reebok, BHS, Mother Care; M&S are some of them. This helps the company to reach the international market.

Price-

Since this is the only part of the marketing mix that produces revenue. Thus Hela managers it’s costs by negotiating with the sewing and packing material suppliers in terms of recovering the marginal costs. Since the profit generated through sales is insufficient for operational costs thus this will be passed down to recover the expenditures.

Setting up a financial goal in the company will assist to reduce excess expenses such as air freights, garment quality issues, taxes, inflation and economic recession etc.

As the company pricing is based on costs, when introducing certain concepts to the company welfare such as conducting training programs, advertising, new machineries etc. For this company internal developments the pricing strategies should be adopted.

Pricing decision has several unique aspects. As the company holds a product portfolio, thereby should price the entire product line simultaneously. Thus the major influence in product line pricing is the presence of product substitutes and complements.

Yet relationship between price and personal selling is imperative when latter is needed to communicate and augment the product’s value.

Place-

Place is crucial when making decisions in the Marketing mix. Hela could evaluate by comparing the distribution networks against previous years speed up and delivery time. Because the company holds different product segments currently the volume is high yet it is necessary to improve the distribution channels to increase efficiency. Further Hela could evaluate if they have gone into new markets whilst servicing the existing client tale.

Promotion-

Promotion could be evaluated by comparing if the communication objectives have been achieved .Specifically the number of customer inquiries ,website hits ,emails ,sales through exhibitions and personal selling have been achieved .These are vital information to evaluate the success of the communication campaign .The marketing departments needs to evaluate effectively .

As an example if Helas has gained more sales through exhibitions and website, then the marketing team needs to further improved its communication on that area and likewise if emails, e newsletters or magazine advertising has failed, then corrective action needs to be taken as to what went wrong .this could be either product positioning or the target customer itself has not been captured well through the campaign.

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People-

People resource is a vital aspect in any organization .Therefore emulating employees in terms of efficiency and effectiveness , productivity are vital .This will be conducted by the HR department and should take measures according to the deviation .They should decide if more training in terms of on the job or off the job are is necessary .

Further if the employee turnover rates have increased then again the HR should find the root cause for he problems and act accordingly .As an example the root cause might be salary issues, stress or sometimes safety issue. Therefore since people resources are vital it is utmost important for the HR to take corrective action.

Process & Physical Evidence –

This as well needs to be evaluated in terms of efficiency of the processors .Delay in supplies and trouble shoots in production .Further the delivery efficiency also should be considered

Recommendation

Hela should be the best means knowing what the competition is doing. Thus to keep a close eye on the direct or the indirect competitors to build strategies to survive in the crucial industry also to be aware of the strengths and weaknesses.

Make use of environmentally friendly row materials to uphold health standards and quality assurance.

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Make arrangements to reduce technical errors and increase efficiency in order to gain larger markets.

Develop the long term mutual relationship between the companies which formed the Joint Venture. This will help the companies to survive in the vital market.

Analyze new product development and expand the garment development teams as well as to form company designing center.

Setting up financial goals in the company and it will assist to reduce excess expenses.

Conducting training programs and workshops for the executive and minor staff to develop inter personal skills and increase efficiency in terms of targeting high market shares and to increase volumes.

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Implementing the company website as well as to maintain a company annual report to sum up the company capabilities and achievements.

Making advertising more attractive and beneficial by advertising on specialized business magazines, newsletters and export magazines.

Follow the Five S’s program in the company to focus on company cleanliness and standardization to improve profitability.

Conclusion

With the phasing out of the difficult market conditions it is important to analyze the competitors and their level of influence towards the company to survive in the crucial industry. Therefore this report comprise of competitor analysis of Hela Clothing. Thus it is important to identify the company level of the market and the capabilities which could be implemented to make profitable business. This report carries suggestions how to make use of the Extended Marketing Mix in terms of capturing higher market share and how to develop a greater understanding of what competitors have in place in terms of resources and capabilities. Moreover this report demonstrates how to build long term beneficial relationships with a competitor to enter related businesses or new geographic markets or gain new technological knowledge.

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