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

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

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Title: EIM-T224WSB-3_Group 4 ER Project_Uniqlo

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MINISTRY OF EDUCATION AND TRAININGINTERNATIONAL SCHOOL OF BUSINESS

WESTERN SYDNEY UNIVERSITY

Enterprise, Innovation, and Markets

ER Project:

AN ANALYSIS OF THE BRAND “UNIQLO” AND THEINTRODUCTION 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 technology2.1.1 Aspect

Heattech is a fabric technology developed by the Japanese brand Uniqlo that generates heat fromthe 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 amongconsumers 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

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 innovatoras 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 termsof 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 towick away moisture and heat from the skin New advances in production technology have helpedUniqlo succeed with its special ultra-thin polyester fibers, the outstanding features of this fabricinclude moisture-wicking, fast-drying, odor controls, and stretchability, bringing a cool feelingwhen 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 productprovided by Uniqlo by improving the adsorption of moisture for clothing and bringing consumercoolness 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-madematerials using AIRism technology are best suited for consumers living in hot weather countrieslike Vietnam, where 98% of consumers are satisfied with the experience when using AIRism’sproduct 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 distinctimage This brand has made a strong mark in the fashion industry, not only because of thequality of its products but also because of the way they approach and meet customer needs.

III CURRENT MARKETING ANALYSIS

3.1 Target market

DemographicsAge18-40 years old18-40 years old15-30 years oldGenderBoth gendersBoth genders,

mainly female Both genders, mainly femaleIncomeWorking class,

middle class, upper class

Middle to high

income Low and high income

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

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

Urban areas in theNorth 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

3.3 Perceptual positioning of each brand:

3.4 Current marketing mix:

Product Uniqlo is renowned for itshigh-quality, well-designedclothing focusing on comfort,functionality, and timelessstyles The brand aims to payclose attention to theinnovation in fabrics andmaterials to create clothes thatare both fashionable andpractical

H&M offers various productsincluding clothing, accessories,shoes, and beauty products forboth genders and ages (TheStrategy Story, 2023) Thebrand consistently updates itsproduct line to follow the latesttrends and styles, targetingfamily-orientedconsumers.Moreover, H&M also usesorganic and recycled materials for

ZARA provides a huge amount ofproducts for diverse customers, including clothes, shoes, bags andaccessories (Zara Marketing

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

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

them (Zara Marketing Mix

its commitment to sustainability,which ensures customers receivevalue for their money (TheStrategy Story, 2023).

(4Ps) - the Strategy Story,

2023)

Price The brand positions itself inthe mid-range price segment,providing competitive priceswith other clothing brands and

(Appendix…) This psychologicalpricing 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 smallbrand therefore having a globalpresence with a vast networkof stores in major citiesworldwide is a matter ofcourse This allows them toreach a wide customer baseand cater to local preferences.

H&M has more than 5,000 stores in 70 countries, including flagshiplocations 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 widespreadrecognition as one of the most

companies worldwide, ZARAhas already established outletsin several major cities Theirwide customer base isattainable due to theiraccessibility.

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

Promotion To raise brand awareness andinteract with consumers,

promotional techniques, muchlike any other company Thisincludes content marketing,

partnerships, social mediamarketing, and conventionaladvertising.

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 exclusivecollections.

ZARA spends less money onproduct promotion than otherbrands do Rather, ZARAmostly depends on word-of-mouth advertising and well-thought-out store windowdisplays to generate excitementabout new products The brandalso emphasizes the in-storeexperience to promoteimpulsive 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 globaleconomy in general, and the fashion industry in particular In Vietnam, the fashion market took asignificant hit in 2020, with revenue plummeting by over 10% compared to 2019 (Viet NamNews, 2021) This trend reflects a global shift in consumer behavior, according to Tat (2021), by2023, three-quarters of consumers have carefully considered a product's true value beforepurchasing In the Vietnamese market, international fashion brands have a better competitiveadvantage, 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'srevenue increase again in 2023 Vietnam is still a market with many development opportunitiesfor the fashion industry due to its large population, with over 68% in the 15-64 age group (TheWorld Bank, 2022), primarily concentrated in Ho Chi Minh City and Hanoi These are the targetcustomers 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 forHeattech 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 andVietnam have also risen Government policies, including environmental regulations andsubsidies for sustainable production, further impact costs The COVID-19 pandemic also causedsignificant 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 andR&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 havedriven Uniqlo to optimize its production processes

4.5 Price elasticity of demand

The price elasticity of demand for clothing brands like Uniqlo, Zara, and H&M varies based onfactors such as clothing type, market conditions, and consumer preferences Uniqlo, known forits affordability and quality, experiences somewhat elastic demand, meaning consumers areresponsive to price changes Increases in Uniqlo's prices may prompt consumers to switch toother brands or reduce purchases Zara's elasticity varies by market and product line; its strategyof offering fast fashion at affordable prices appeals to price-sensitive consumers seeking trendyitems However, Zara's unique styles and brand loyalty also influence demand elasticity.Similarly, H&M, operating in fast fashion with a wide range of affordable clothing, faces elasticdemand, particularly for basic items Consumers readily switch between H&M and other brandsin response to price adjustments or promotions.

V PROBLEM IDENTIFICATION

VI THE NEW INNOVATION AND TARGET MARKETPROFILE

VII THE NEW MARKETING MIX STRATEGY

VIII REFERENCE LIST