Unit name enterprise, innovation, and markets an analysis of the brand uniqlo and the introduction to the new innovation

--- Page 1 --- SCHOOL OF BUSINESS TEAM ASSIGNMENT COVER SHEET MINISTRY OF EDUCATION AND TRAINING INTERNATIONAL SCHOOL OF BUSINESS WESTERN SYDNEY UNIVERSITY Enterprise, Innovation, and Markets ER Project: AN ANALYSIS OF THE BRAND “UNIQLO” AND THE INTRODUCTION TO THE NEW INNOVATION … Group 4_ EIM-T224WSB-3 Lecturer: Dr. Huynh Quang Minh Ho Chi Minh City, 2024 TABLE OF CONTENTS I. EXECUTIVE SUMMARY --- Page 2 --- II. EVALUATION OF CURRENT INNOVATIONS 2.1. HEATTECH - Thermal clothing technology 2.1.1. Aspect Heattech is a fabric technology developed by the Japanese brand Uniqlo that generates heat from the human body. According to UNIQLO Vietnam, Heattech is made from biological heat-retaining material, helping to keep warm without being overly thick. The materials used in this technique feature specific fibers that capture moisture emitted by the human body and convert it into heat, keeping its user warm on chilly days. 2.1.2. Type of innovation and dimension of innovation Product Dimension: Heattech''''s proprietary fabric technology combines synthetic and natural fibers to create an insulating and breathable material. Heattech fabric''''s innovation stems from its unique materials and manufacturing processes. Process Dimension: Heattech has successfully entered the global apparel market, meeting the growing demand for versatile and functional winter clothing and gaining popularity among consumers looking for comfortable clothes for cold-weather environments. Position Model Dimension: Uniqlo has successfully integrated Heattech technology into its business model, positioned its brand in the basic, good quality, and affordable fashion segment, and is a critical differentiator in the competitive apparel industry. Uniqlo practices incremental innovation - they do not create completely novel products, but only improve and upgrade existing products, processes, and business models to better suit customer needs. 2.1.3. Sources of innovation Product Dimension: Heattech fabric technology will likely fall under incongruity-related developments, as it addresses the paradox between warmth and breathability in clothing materials. Market Dimension: Heattech is undoubtedly a product of industry and market innovation, as this fabric technology responds to the increased need for comfortable clothing suitable for cold weather. --- Page 3 --- Business Model Dimension: Uniqlo has certainly paid attention to industry and market developments, and as a result, Heattech has been introduced as a distinctive selling point in response to market competition. Furthermore, the company acknowledges the movement in consumer preferences toward functional clothing, which has led to Heattech becoming an innovator as a result of perceptual alterations. Finally, this fabric technology is part of the group''''s breakthroughs based on new knowledge, as Uniqlo exploits advancements in fabric technology to improve Heattech product production and distribution. These sources of innovation offer a framework for understanding Heattech''''s evolution in terms of product development, market uptake, and strategic integration into Uniqlo''''s business strategy. 2.2. AIRISM - Cool fabric clothing technology 2.2.1. Aspect AIRism is a new fabric technology that helps users feel more comfortable thanks to its ability to wick away moisture and heat from the skin. New advances in production technology have helped Uniqlo succeed with its special ultra-thin polyester fibers, the outstanding features of this fabric include moisture-wicking, fast-drying, odor controls, and stretchability, bringing a cool feeling when users wear it (Uniqlo, 2024). This has satisfied consumer demands and introduced a new way of serving existing markets. 2.2.2. Type of innovation and dimension of innovation Dimension of innovation: Product innovation AIRism technology introduces a new type of material, which makes changes in the product provided by Uniqlo by improving the adsorption of moisture for clothing and bringing consumer coolness and comfort with quick moisture wicking, odor control, and anti-odors. Types of innovation: Incremental innovation: Extension The introduction of AIRism helps Uniqlo improve its existing clothing products. Clothing-made materials using AIRism technology are best suited for consumers living in hot weather countries like Vietnam, where 98% of consumers are satisfied with the experience when using AIRism’s product line (Vietnamnet, 2023). 2.2.3. Sources of innovation The development of this technology was driven by the need for a process that could produce clothing that was comfortable, breathable, and adaptable to various weather conditions (Smart Clothing: Future of Apparel Industry, n.d.). Therefore, the AIRism innovation is a direct response to the "process needs". Based on these two innovations, the Uniqlo brand was successful because it created a distinct image. This brand has made a strong mark in the fashion industry, not only because of the quality of its products but also because of the way they approach and meet customer needs. III. CURRENT MARKETING ANALYSIS 3.1 Target market

SCHOOL OF BUSINESS

STUDENT DETAILS

Student name: Phạm Ngọc Thiện Student ID number: 22166944

UNIT AND TUTORIAL DETAILS

Unit name: Enterprise, Innovation, and Markets Unit number: BUSM1006

Tutorial/Lecture:

Class day and

time: Thursday, 8:00 - 11:15a.m Lecturer or Tutor name: Dr Huynh Quang Minh

ASSIGNMENT DETAILS

Title: EIM-T224WSB-3_Group 4 ER Project_Uniqlo

Home campus (where you are enrolled): 196 Tran Quang Khai

DECLARATION

I hold a copy of this assignment if the original is lost or damaged

I hereby certify that no part of this assignment or product has been copied from any other student’s work or from any other source except where due acknowledgement is made in the assignment

I hereby certify that no part of this assignment or product has been submitted by me in

another (previous or current) assessment, except where appropriately referenced, and with

prior permission from the Lecturer / Tutor / Unit Coordinator for this unit

No part of the assignment/product has been written/produced for me by any other person

except where collaboration has been authorized by the Lecturer / Tutor /Unit Coordinator

concerned

I am aware that this work will be reproduced and submitted to plagiarism detection software

programs for the purpose of detecting possible plagiarism (which may retain a copy on its

database for future plagiarism checking).

Student’s signature: Linh

Student’s signature: Thien

Student’s signature: Trung

Student’s signature: Nghi

Student’s signature: Mei

Student’s signature: Thu

Note: An examiner or lecturer / tutor has the right to not mark this assignment if the above declaration has

not been signed

MINISTRY OF EDUCATION AND TRAINING

INTERNATIONAL SCHOOL OF BUSINESS WESTERN SYDNEY UNIVERSITY

Enterprise, Innovation, and Markets

ER Project:

AN ANALYSIS OF THE BRAND “UNIQLO” AND THE INTRODUCTION TO THE NEW INNOVATION …

Group 4_ EIM-T224WSB-3

Lecturer: Dr Huynh Quang Minh

Ho Chi Minh City, 2024

TABLE OF CONTENTS

I EXECUTIVE SUMMARY

II THE BRAND, PRODUCT CATEGORY AND INDUSTRY OVERVIEW

III EVALUATION OF CURRENT INNOVATIONS

3.1 HEATTECH - Thermal clothing technology…

3.2 AIRISM- Cool fabric clothing technology…

I EXECUTIVE SUMMARY

II EVALUATION OF CURRENT INNOVATIONS

2.1 HEATTECH - Thermal clothing technology

2.1.1 Aspect

Heattech is a fabric technology developed by the Japanese brand Uniqlo that generates heat from the human body According to UNIQLO Vietnam, Heattech is made from biological

heat-retaining material, helping to keep warm without being overly thick The materials used in this technique feature specific fibers that capture moisture emitted by the human body and convert it into heat, keeping its user warm on chilly days

2.1.2 Type of innovation and dimension of innovation

1 Product Dimension:

● Heattech's proprietary fabric technology combines synthetic and natural fibers to create an insulating and breathable material Heattech fabric's innovation stems from its unique materials and manufacturing processes

2 Process Dimension:

● Heattech has successfully entered the global apparel market, meeting the growing demand for versatile and functional winter clothing and gaining popularity among consumers looking for comfortable clothes for cold-weather environments

3 Position Model Dimension:

● Uniqlo has successfully integrated Heattech technology into its business model, positioned its brand in the basic, good quality, and affordable fashion segment, and is a critical differentiator in the competitive apparel industry

Uniqlo practices incremental innovation - they do not create completely novel products, but

only improve and upgrade existing products, processes, and business models to better suit

customer needs

2.1.3 Sources of innovation

1 Product Dimension:

Heattech fabric technology will likely fall under incongruity-related developments, as it addresses the paradox between warmth and breathability in clothing materials

2 Market Dimension:

Heattech is undoubtedly a product of industry and market innovation, as this fabric technology responds to the increased need for comfortable clothing suitable for cold weather

3 Business Model Dimension:

Uniqlo has certainly paid attention to industry and market developments, and as a result, Heattech has been introduced as a distinctive selling point in response to market

competition Furthermore, the company acknowledges the movement in consumer

preferences toward functional clothing, which has led to Heattech becoming an innovator

as a result of perceptual alterations Finally, this fabric technology is part of the group's breakthroughs based on new knowledge, as Uniqlo exploits advancements in fabric technology to improve Heattech product production and distribution

These sources of innovation offer a framework for understanding Heattech's evolution in terms

of product development, market uptake, and strategic integration into Uniqlo's business strategy

2.2 AIRISM - Cool fabric clothing technology

2.2.1 Aspect

AIRism is a new fabric technology that helps users feel more comfortable thanks to its ability to wick away moisture and heat from the skin New advances in production technology have helped Uniqlo succeed with its special ultra-thin polyester fibers, the outstanding features of this fabric include moisture-wicking, fast-drying, odor controls, and stretchability, bringing a cool feeling when users wear it (Uniqlo, 2024) This has satisfied consumer demands and introduced a new

way of serving existing markets.

2.2.2 Type of innovation and dimension of innovation

Dimension of innovation: Product innovation

AIRism technology introduces a new type of material, which makes changes in the product provided by Uniqlo by improving the adsorption of moisture for clothing and bringing consumer coolness and comfort with quick moisture wicking, odor control, and anti-odors

Types of innovation: Incremental innovation: Extension

The introduction of AIRism helps Uniqlo improve its existing clothing products Clothing-made materials using AIRism technology are best suited for consumers living in hot weather countries like Vietnam, where 98% of consumers are satisfied with the experience when using AIRism’s product line (Vietnamnet, 2023)

2.2.3 Sources of innovation

The development of this technology was driven by the need for a process that could produce

clothing that was comfortable, breathable, and adaptable to various weather conditions (Smart

Clothing: Future of Apparel Industry, n.d.) Therefore, the AIRism innovation is a direct

response to the "process needs"

Based on these two innovations, the Uniqlo brand was successful because it created a distinct image This brand has made a strong mark in the fashion industry, not only because of the quality of its products but also because of the way they approach and meet customer needs

III CURRENT MARKETING ANALYSIS

3.1 Target market

Demographics Age 18-40 years old 18-40 years old 15-30 years old

Gender Both genders Both genders,

mainly female Both genders, mainly female Income Working class,

middle class, upper class

Middle to high income Low and high income

Psychographic

Behavioral

North and the South ( Ha Noi and Ho Chi Minh City)

Urban areas in the North and the South ( Ha Noi and Ho Chi Minh City)

Urban areas in the North and the South ( Ha Noi and Ho Chi Minh City)

3.2 SWOT analysis:

3.2.1 SWOT Uniqlo:

- Innovative product (Uniqlo, 2024)

- Streamlined and resilient network of

suppliers and production (Roll, 2021a)

- Strong brand image and performance

(Yudhistira & Shihab, 2023)

- Domestic production for the

Vietnamese market (Nguyen, 2023)

- Competitors are cutting prices and optimizing models (Roll, 2021)

- Demand for sustainable fashion (Nayak et al., 2019)

- Rising labor costs (Tran -, 2024)

- High availability of substitutes (Kumbara, 2020)

3.2.2 SWOT Zara:

- Capacity to recognize and adapt to

latest trends (DFreight, 2023)

- High-efficiency production (Liu et al.,

2024)

- Unique and numerous design styles at

an affordable price (Duoyan, 2021)

- The world’s largest clothing retailer

(Danziger, 2018)

- Does not have a plus-size line (Jones

& Sherman, 2020)

- Child labor and exploitation in factories (Jangid, Monu., 2022)

- Limited marketing and advertising (Swifterm, 2021)

(Similar to Uniqlo)

3.2.3 SWOT H&M: (Thư)

3.3 Perceptual positioning of each brand:

3.4 Current marketing mix:

Product Uniqlo is renowned for its

high-quality, well-designed

clothing focusing on comfort,

functionality, and timeless

styles The brand aims to pay

close attention to the

innovation in fabrics and

materials to create clothes that

are both fashionable and

practical

H&M offers various products including clothing, accessories, shoes, and beauty products for both genders and ages (The Strategy Story, 2023) The brand consistently updates its product line to follow the latest trends and styles, targeting family-oriented consumers.

Moreover, H&M also uses organic and recycled materials for

ZARA provides a huge amount of products for diverse customers, including clothes, shoes, bags and accessories (Zara Marketing

Mix (4Ps) Analysis | PDF Agile, n.d.) The brand follows

the fast-fashion concept, which always updates the new products in stores therefore customers can easily access

them (Zara Marketing Mix

its commitment to sustainability, which ensures customers receive value for their money (The Strategy Story, 2023)

(4Ps) - the Strategy Story,

2023)

Price The brand positions itself in

the mid-range price segment,

providing competitive prices

with other clothing brands and

promotions and sales to

affordability

H&M pursues an affordable price strategy, helping its products target customers from the middle-income segment (Juliusson, 2015) Specifically, the brand sets prices based on the odd-even pricing strategy such as 299 or

499 instead of 300 or 500 (Appendix…) This psychological pricing tactic can boost customer purchases by making the price a bit lower than round numbers (Bhasin, 2018) In comparison with Uniqlo and ZARA, H&M products are perceived by customers as comparatively cheaper (Appendix…).

ZARA is widely known for its premium pricing strategy, which balances exclusivity and

trendiness The brand targets middle-income customers but in comparison with its competitors, ZARA is perceived as the price for shoppers who seek unique designs and are willing to pay a bit more (Start.io, 2022) They frequently launch discount programs to help customers with lower income to have affordably sights with their products (Appendix…)

Place Uniqlo is not a new nor small

brand therefore having a global

presence with a vast network

of stores in major cities

worldwide is a matter of

course This allows them to

reach a wide customer base

and cater to local preferences

H&M has more than 5,000 stores

in 70 countries, including flagship locations in major cities such as New York, London, Paris, and Tokyo The brand focuses on e-commerce, providing a

streamlined online shopping experience in multiple languages and currencies H&M's

omnichannel strategy combines

Due to its widespread recognition as one of the most

companies worldwide, ZARA has already established outlets

in several major cities Their wide customer base is attainable due to their accessibility

online and offline shopping, with features like "click and collect."

Promotion To raise brand awareness and

interact with consumers,

promotional techniques, much like any other company This includes content marketing,

partnerships, social media marketing, and conventional advertising

H&M's promotional strategies encompass traditional and digital advertising featuring celebrities, a strong social media presence, personalized email marketing, and engaging in-store promotions

Collaborations with designers and celebrities, and a robust loyalty program further enhance customer engagement and loyalty, emphasizing the brand's commitment to eco-friendly practices and exclusive collections

ZARA spends less money on product promotion than other brands do Rather, ZARA mostly depends on word-of-mouth advertising and well-thought-out store window displays to generate excitement about new products The brand also emphasizes the in-store experience to promote impulsive purchases

IV CURRENT MICROECONOMICS ANALYSIS

4.1 Demand analysis

The Covid epidemic period has had a huge impact on the whole world It impacts the global economy in general, and the fashion industry in particular In Vietnam, the fashion market took a significant hit in 2020, with revenue plummeting by over 10% compared to 2019 (Viet Nam News, 2021) This trend reflects a global shift in consumer behavior, according to Tat (2021), by

2023, three-quarters of consumers have carefully considered a product's true value before purchasing In the Vietnamese market, international fashion brands have a better competitive advantage, accounting for 60% of the entire market, and have a growth rate of about 15-20% (Vũ, 2023) Signs of market recovery after the epidemic have also helped the fashion industry's revenue increase again in 2023 Vietnam is still a market with many development opportunities for the fashion industry due to its large population, with over 68% in the 15-64 age group (The World Bank, 2022), primarily concentrated in Ho Chi Minh City and Hanoi These are the target customers and the locations where Uniqlo, Zara and H&M focus their stores

4.2 Supply analysis

In recent years, several microeconomic factors have influenced Uniqlo's supply curve for Heattech and AIRism products Input prices, such as the 47% surge in cotton prices in 2021, have increased production costs, while labor costs in manufacturing hubs like China and Vietnam have also risen Government policies, including environmental regulations and subsidies for sustainable production, further impact costs The COVID-19 pandemic also caused significant supply chain disruptions, with shipping costs skyrocketing from $1,500 to over

$10,000 per container by 2021 Despite these challenges, Uniqlo's investments in technology and R&D have led to efficiency gains, reducing production costs by 10% in 2022 Additionally, increased competition in the fast-fashion market and the rising demand for casual wear have driven Uniqlo to optimize its production processes