Strategic management in garment industry - tài liệu ngành công nghệ may

[ 60 Strategic management in garment industry ] Số trang: 211 trang Ngôn ngữ: English ------------------------------------------- Description Strategy implementation in the garment industry requires a special kind of expertise. Formulating a strategy requires an entrepreneurial focus and emphasizes the ability to conceptualize, analyze and weigh, whereas applying strategy has a primarily managing focus. All fashion companies must, regardless of their current situation, develop a long-term strategy. There is not a single strategy that would be optimal for all companies, because each of them must determine a strategy in accordance with its objectives, capabilities, resources and market position. Strategic management in the garment industry illustrates advances in business strategy in the garment industry for current and future managers, students of textile technology and engineers. Contents 1 Strategic management 1 1.1 Strategy 1 1.2 Strategic management 7 1.3 Vision, mission and goals 10 References 12 2 Garment industry 14 2.1 Garment industry 14 2.2 Development 17 References 20 3 Strategic marketing in garment industry 21 3.1 Marketing 21 3.2 Market analysis and segmentation 23 3.3 Marketing strategy 49 3.4 Management of retail, wholesale and logistics market 70 3.5 Diversification 78 3.6 International marketing 78 3.7 Internet marketing 81 3.8 Knowledge management and innovations 82 References 88 4 Strategic management in garment industry 91 4.1 Strategic business conditions 91 4.2 Strategic planning 95 4.3 PEST analysis 100 4.4 Portfolio analysis 103 4.5 Strategic control 109 4.6 Benchmarking 113 4.7 Brand strategy 119 References 126 5 Strategic methods 128 5.1 Introduction 128 5.2 SWOT 130 5.3 Scenario method 139 5.4 Gap analysis 143 5.5 Ansoff’s matrix 146 5.6 Five Forces Analysis 149 5.7 The McKinsey “7–S” framework 153 5.8 Balanced scorecard 155 References 162 6 Organizational behaviour 164 6.1 Organizational behaviour 164 6.2 Organization structure 170 6.3 Organizational culture 178 6.4 Motivation 184 6.5 Work teams 192 References 195 Index 197

in the

garment industry

Strategic management

in the garment industry

Gordana Colovic

New Delhi ● Cambridge ● Oxford ● Philadelphia

Woodhead Publishing India Pvt Ltd., G-2, Vardaan House, 7/28, Ansari RoadDaryaganj, New Delhi – 110002, India

First published 2012, Woodhead Publishing India Pvt Ltd

© Woodhead Publishing India Pvt Ltd., 2012

This book contains information obtained from authentic and highly regardedsources Reprinted material is quoted with permission Reasonable efforts havebeen made to publish reliable data and information, but the authors and thepublishers cannot assume responsibility for the validity of all materials Neitherthe authors nor the publishers, nor anyone else associated with this publication,shall be liable for any loss, damage or liability directly or indirectly caused oralleged to be caused by this book

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Woodhead Publishing India Pvt Ltd ISBN: 978-93-80308-22-7

Woodhead Publishing Ltd ISBN: 978-0-85709-582-4

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Printed and bound by Replika Press, New Delhi

After projecting Management of Technology Systems in the Garment Industry in a new way, the logical sequence after conducted researches imposed the need to create a new paradigm for Strategic Management in Garment Industry.

The essence of this book is in the development and survival of products

in garment industry The book represents a milestone and applied conceptfor a modern environment that is characterized by permanent changes due

to rapid development of technology and information systems This requires

a multidisciplinary approach to strategic management in garment industry,

as the author presents through six areas of this unique book

Chapter one shows what influenced the need to use strategicmanagement in garment industry The influence of environment, abilitiesand constant innovations in production–business system directly affectthe existence, survival and success of the company The answers to strategicquestions where we are now, where we want to be and how to get there aregiven in other chapters of the book

Garment industry employs millions of people around the world, andprofits are measured in billions of euros In this way, the industry followsthe increasingly complex consumer desires, demands and fashion trends

in the world The basic tone in terms of growth rates, design, fashion,functionality and wide range of products is given by the centres with highconsumption i.e the richest states The second chapter discusses thenecessity of garment producers to invest in the professionals who will beable to explore the market, management strategies and methods for newproduct development and optimization of technological process of makingclothes

In garment industry today there are major problems in terms of marketresearch, monitoring competition, investing in one’s own development,making original creations and scientific approach to introducing fashionproducts in the market The third chapter describes the sequence analysis

of marketing methods in which the first step is the analysis of consumers,the study of sales data and estimating fashion trends It is necessary todetermine the size and purchasing power of consumers, the acceptability

of garment products in the market, eliminating weaknesses in the saleschannels, distribution and promotional activities Marketing strategies withexamples of famous fashion companies give examples of how to useinformation technology in the globalization of markets, and how to applyknowledge management where necessary and when necessary.

The fourth chapter deals with efficient operations which, in conditions

of high competition and global economic crisis, make quality clothingproducts possible to exist Therefore it is necessary to know and plan thestrategy of garment production, analyze and adjust to market and businesschanges and apply it adequately: strategic business conditions, strategicplanning, PEST analysis, Portfolio analysis, strategic control,benchmarking, brand strategic

Organization in modern environment is characterized by continuouschange The fifth chapter discusses how to do business which requiresmore flexible organizational structure, process approach and work teams.Methods and techniques for predicting scientific and technological progressare described in details, so it is possible to use, within strategic management

in garment industry, the methods and techniques by which the effectivenessand efficiency in realizing planned goals are achieved: SWOT analysis,Scenario method, Gap analysis and Five Forces Analysis

The sixth chapter describes a modern company that has organizationalculture as a part of organizational mission Modern organizational structureshould be a successfully modelled complex system with the characteristics

of flexibility, dynamics as well as cohesion The study of organizationalbehaviour provides obtaining the competences required for successfulworkers, work groups, work team leaders or managers, together withtalented individuals

Dr Danijela Paunovic

The dynamics of international strategy for garment industry is acceleratingwith development of concepts and new demands of rapid changes in themarket The whole world is seen as a potential source of production, andsimultaneously as a single market of garments The final goals should beultimate success for those manufacturers whose products are inexpensiveand better than the competition.

With the development of markets and increased competition, there aremany fashion producers who want to sell their products and impose on theworld market Garment producers are forced to be even more initiative inthe field of innovation and further reduction of operating costs Socialdevelopment has changed the lifestyle of consumers, and due todemographic changes there is an increasing number of consumers withdifferent demands and needs, thus requiring from garment manufacturers

to develop new marketing strategies and methods

Developing strategic marketing orientation is a long-term process andrepresents a unique form of investment This investment involves a change

of organizational culture and organizational climate in a way that thecommon values, expressed through the satisfaction of consumer needs andensuring the quality in all activities, strive to be the motto of all employees

In order to sustain garment industry it is necessary to meet consumerdemands concerning the quality, price and delivery time These criteriacan only be met through restructuring of existing production–businesssystem, introducing new technologies, changes in organizational forms,i.e finding organizational design that will enable using all potentials ofemployees and motivate the entire organization

Turbulent environment, as a result of rapid development in technologyand diversification possibilities, meets the increasing needs of consumerswho seek for even more original and unified products and forces modernmanagement to dynamic adjustment of production–business systems andchanges in the environment

The survival of garment producers increasingly depends on the ability

of management to understand and manage changes A strategic changeshould be viewed as a continual process that takes place in certain

circumstances Carrying out changes depends largely on the nature ofactivities to be performed as well as the expertise and skills of employees.The success of a garment producer is determined by his ability to achievedynamic harmony with the changing environment, i.e it is a result offlexibility (efficiency) and adaptability (effectiveness) of business.Strategy implementation and moving garment producers in a desireddirection requires a special kind of expertise Formulating a strategyrequires an entrepreneurial focus and emphasizes the ability toconceptualize, analyze and weigh, whereas applying strategy has aprimarily managing focus All fashion companies must, regardless of theircurrent situation, develop a long-term strategy There is not a single strategythat would be optimal for all companies, because each of them mustdetermine a strategy in accordance with its objectives, capabilities,resources and market position.

The philosophy of global management approach focuses on exploitingmarket opportunities and identifying opportunities for acquiring resources

in other countries, aiming to achieve full synergy in realizing mission andgoals of a company Organizing business in the international market differsfrom one company to another and depends primarily on the goals and tasksset by the company, available resources, management and marketingstrength, competitive position, the degree of involvement in internationalaffairs and market attractiveness of fashion production and sales program.This book is the author’s attempt to show advances in business strategy

in the garment industry for current and future managers in garment industry,students of textile technology, engineers and top managers in garmentindustry

I would like to thank Professor Dr Danijela Paunovic for her professionalsupport, and Professor Sladjana Milojevic for editing

Dr Gordana Colovic

Strategic management

Abstract: Modern society which is characterized by large turbulence

and complexity of environment, as well as rapid and massivechanges due to sudden development of technique and informationsystems influence the necessity of using strategic management Thevery existence and success of production–business system depends

on environment, abilities and constant innovations

Key words: strategy, strategic management, schools of strategy

formation, vision, mission

1.1 Strategy

The term “strategy” (Greek: stratos = army, ago = lead, strategos =

general) was taken from military terminology; it implies the armyleadership, together with appropriate course of action towards which

appropriate activities are directed Strategy and tactics (Greek: taktikos = readiness for line-up, takto = orders) are closely connected Both of them

refer to a regular usage of certain devices in time and space, where strategyrefers to the aim and tactics to the ways certain goal is achieved.Strategy establishes the course and shape of organization for a longperiod of time It’s aim is to establish competitive advantages in thecircumstances of changeable business environment through adequateconfiguration of resources and competences aiming to fulfill theexpectations of key interest groups Business strategy is a term used ineconomy not before the mid-1950s Every company anticipates changes,responds to challenges and tries to survive in changeable environment.Below are few definitions of strategy:

and purposes of a production–business system (PBS), the choice ofcourses of actions and allocation of devices necessary to realize itsaims

of aims, purposes, and main policies and plans for achieving these

goals, thus giving a precise definition as to what the company is, or

is not, at that moment (in business sense) and what it wants to be/achieve in the future

management which gives a detailed explanation of company’sposition in the market, directions in which the company tends to growand develop, instruments to be use in the competitive fight, devices

to search new markets, the way to shape its devices, the power to try

to use up and the weaknesses to try to overcome

It refers to the systemic choice of set of activities aiming to achieve

a unique mixture of values

According to Alfred Chandler, strategy is a concept defined by themanagement about:

(2) strategy and structure develop through many phases,

(3) production–business systems do not change its structure until theirown inefficiency forces them to

Based on Chandler’s study, there have been many other works, such as

“broadened Chandler’s model”, shown in Figure 1.1

Chandler gave four specific studies of development of US companies:(1) Growth within local area

(2) Expansion out of local area

Richard P Rumelt (1974) confirmed Chandler’s hypotheses of strategy–structure and set a ‘universal thesis’ according to which organizationalstructure also influences the structure

Strategy can be observed in a narrower or in a wider sense Talkingabout a wider meaning of the term “strategy”, most of the authors imply

an essential managing decision which includes aims and policies In anarrower sense, they think that forming a strategy starts after the aims andpolicies of PBS are defined It is a certain planned decision which sets theways of realizing the aims of PBS

Henry Mintzberg (1992) defines strategy from different aspects or, to

be more precise, “5 Ps for strategy”, where Ps refer to starting conditionsfor strategy:

● Plan – Strategy is a plan or a course, a marker of the directions of

future activity, the path to follow in order to go from one position toanother, i.e to achieve strategic aims, mission and vision oforganization

certain period of time

organization in its market or some other environment

main vision of a strategist and the way on which an organizationworks

the opponent or competition

Ralph Stacey’s (2007) concept of strategy is not based on “traditionalwisdom”, which is a dominant approach of the managers in the West today

In Stacey’s opinion, strategy is not about decreasing the level of surpriseand increasing the level of prediction thus improving the ability of a topmanagement, but is about facing the unpredictable and its usage, colliding

with non-complementary cultures, lack of consensus, contradiction, conflictand inconsistency.

According to many authors, there are four basic components of strategy:

compete

way of their allocation in different areas (into which areas to investand how much, or not)

opponents These are basic competences that give competitiveadvantage – superiority in researches, leadership in technology,efficiency in production and distribution, etc

arrangement of resources and specific competences In that sense, itshould show how different areas of business can be complementary,creating the additional effect

Basic types of strategy, concerning the organizational level on whichstrategies are made, are the following:

(1) Social responsibility strategy – the concept in which companies

integrate to take care of society and environment with their efficiency It

is the key element of the strategy of company aiming to maintain andimprove competition, thus making new partnerships and spreading existingcooperation within companies concerning social dialogue, gaining skills,equal possibilities, predictions and managing of changes It strengthensthe economic and social cohesion on a local or a national level On a globallevel, it contributes to the protection of environment and respecting basichuman rights

(2) Corporate strategy – the strategy of establishing the mission of PBS

as a set of organizational goals which give a detailed description of thepurpose of existence and a desired direction of PBS It is connected to thechoice of business orientation of PBS, i.e to choose the ways of “entering”the system into business activities, as well as ways of doing business in achosen activity

This level of strategy is characterized by two approaches: main strategyand business portfolio

Main strategy is a general set of activities developed on a PBS level It

is mostly used when a PBS competes in a market or in few connectedmarkets There are three types of it:

(a) Stable strategy – it is directed towards maintaining and is a

characteristic of PBS which forms its future on a solid continuity,

without changes That is possible only within a stable or slowlychangeable environment.

(b) Strategy of growth – it is a characteristic of PBS trying to increase

the scope of business activities (production, selling, activa, market,etc.), having the motto “growth is the condition of survival”

(c) Degressive strategy – it is a characteristic of reduction of scope and

level of business activities by decreasing production abilities,withdrawing from some markets and stopping some production lines

It is directed towards decreasing of current operations, reduction inall fields or complete elimination of unprofitable operations.Business portfolio is a characteristic of PBS which has many differentjobs (often not connected) It coordinates the flow of resources withdiversification of risk among strategic business as whole It is necessary

to secure a relatively permanent existence and development of each ofthese units, as well as the whole system There are four types of businessportfolio:

within which there are strategic business units It shows a presentrole or a potential future role of each strategic business unit

are three subareas, differentiated on the basis of two criteria: marketattraction and competitive forces of a strategic whole

strategic advantages of PBS and their strategic wholes by combiningtwo dimensions: number and size of strategic possibilities

strategic business unit, related to the answer of two questions: “Where

to compete?” and “How to compete?”

(3) Business strategy – a specific type of strategy which establishes

norms and actions of PBS aiming to achieve goals within a chosen businessactivity It is directed towards achieving strategic competitive advantagesusing different models, among which the most famous ones are Porter’smodel and a model of life cycle of product

(4) Functional strategy – a strategy which deals with operationalization

of business strategy It is formed on the level of certain business(organizational) units, as well as on the level of strategic business units:

marketing mix, distribution channels, selling promotion and pricepolicy

● Financial strategy Capital structure, capital acquisition, capital

allocation, dividend policy and activa management

equipment location, control and quality

development, organization development, technological prediction,patents and licenses

development and promotion of employees and compensation policy.Figure 1.2 shows basic types of strategies

While doing business every PBS must choose its strategy which willrespond not only to its goals, but also to its abilities Most commonly usedstrategies are the following:

(1) Offensive strategy – the aim of this strategy is to enable PBS to take

the lead in the production of clothes offering a new product to themarket This strategy can make a big profit but is highly risky

(2) Defensive strategy – the aim is to defend PBS from competition and

to keep its market share This strategy does not make a big profit

(3) Imitation strategy – PBS wants to keep its position behind the leader

in the production of clothes, i.e to copy the models of new clothes

(4) Subordinate (dependent) strategy – one producer depends upon the

other

(5) Traditionalist (conservative) strategy – PBS does not want to change

the characteristics of its product but it tends to keep it in its old,recognizable form

(6) Opportunistic strategy – PBS demands for some free space on the

market to use up the opportunity that market gives

1.2 Strategic management

The term strategy is connected to the term strategic management, i.e.

strategy is an inseparable segment of strategic management Once-plannedand applied strategy often requires modifications in accordance withchanges in environment or organization itself These changes are tough oralmost impossible to predict, therefore it is necessary for the managers tocarry out strategic management

Strategic management was defined as a new scientific discipline back

in 1950s due to the need of organizations to exist, grow or develop in aturbulent and complex environment Sub-processes of management werenot possible without a defined organizational strategy In that contextRobert Kreitner (2004) defines strategic management as:

Strategic management = Strategic planning + Implementation of strategic

plans + Strategic control

Strategic management is a process through which managers establishlong-term directions of PBS, set specific goals of future performances,develop strategies in order to achieve these goals which include all relevantinternal and external circumstances, and take actions aiming to carry outgiven plans, i.e the process in which organizations estimate their strengthsand weaknesses, identify present and future needs of customers, andauthorize managers and employees to ensure products and services tosatisfy all these needs Management should answer the following strategicquestions:

Samuel Certo and Paul Peter (1991) are the authors who define strategicmanagement as a continuing, interactive process whose aim is to keeporganization fully capable of meeting the demands of its environment,including (Figure 1.3):

Igor Asnoff, an eminent professor, who is widely known as a guru ofstrategic management, defines strategic management as a system approach,main and increased important responsibilities of general management:position and connection of organization with its surroundings on such waythat will ensure its continuing success and avoiding surprises.

According to Bill and Roy Richardson (1992) strategic management isthe management of changes, whereas Dess, Lumpkin and Eisner (2007)see strategic management as a set of analyses, decisions and actions thatsome organizations undertake in order to create and maintain competitiveadvantages Cole (1998) defines strategic management as a procedurecontrolled by top management, which makes fundamental directions andgoals of organization in order to ensure the achievement of these long-term goals and directions He suggests a model for defining the process ofstrategic management, which consists of the following six phases:(1) Strategic analysis

(2) Prediction of future

(3) Defining of mission and strategic goals

(4) Forming and choosing strategy

(5) Application of strategy

(6) Control of application of strategy

The task of strategic management is to enable organization to respondrationally and promptly to the changes in its surroundings Strategicmanagement includes strategic planning as its essential part (strategicanalysis and strategic choice), as well as strategic change (strategicimplementation and control)

Key attributes of strategic management are the following:

Stra te gic co ntro l

M ain steps in strategic m anag em ent process

1.3 Main steps in strategic management process.

● It includes short-term and long-term perspectives.

Strategic management usually opposes to operative management.Operative management is basically short-term and detailed; it takes place

in the context of immediate or close future events Strategic managementincludes ideas and actions focused on future of whole organization, carriedout in conditions of significant uncertainty Strategic management is, aboveall, the responsibility of top management, whereas operative management

is the responsibility of intermediate and operative management

All the functions of strategic management are done by managers, sotime and effort dedicated to each of them depends directly on the level ofmanagement and personal abilities and skills of a manager (hisconceptional, individual and technical knowledge)

In recent years there have been many different schools of strategyformation Schools of strategy formation are a model of thinking aboutthe process of strategic management, strategy, its importance, role andinfluence on business Differences among these schools of managementare different understanding of components which are the main ones informing the process Mintzberg, Ahlstrand and Lampe (1998) are theauthors who suggest 10 schools of strategy formation:

The evaluation of choosing a school helps PBS in better understanding

of the rules of doing business in certain environment, and it serves as astarting point for adjusting to trends of competition in a modern businessworld PBS which does not accept such understandings appears in themarket as a “lone player”

1.3 Vision, mission and goals

Vision is the first assumption of strategy direction of PBS While being aframe to the development of main goals and policies of PBS, the means ofcommunication according to interest-influential groups has a directinfluence on employees’ motivation By giving out an image of an idealfuture of PBS, vision is defined as an idea of future events, i.e a long-term expected result

Vision should help PBS to foresee itself in the future and start preparingfor it by changing a current organizational structure Creating a good visionrequires serious researches, with the emphasis on connecting vision withthe essence of competence of PBS Strategic vision of PBS should:(1) be turned towards the future,

(2) identify the essence of competence of PBS and critical factors ofsuccess,

(3) take stakeholders’ priorities seriously,

(4) stimulate consistent action of management of PBS,

(5) be specific, permanent and flexible

Mission is the main function or main task of PBS, intention, reason ofexistence, actions and development It is the base for setting aims, policiesand strategies of a new business venture It is the mission that differs PBSfrom other business participants, especially from competitive producers

of clothes Mission gives identity and directs decisions on strategic vision,goals and strategies

Mission must be:

resources of PBS,

Mission should give answers to, at least, four questions:

of customers)

reliability, profitability, market orientation)

According to Philip Kotler (2002), mission of organization consists offour key elements:

● Development of PBS,

Goals of PBS are the results that PBS wants to achieve, the way how torealize it and the time required for that They are the future expectations,something the effort or ambition are directed to

Goals of PBS mark the aspirations undertaken to satisfy the mission ofPBS, future-expected states and results which are necessary to realize byplanned and organized activities of PBS structures They are primary-planned decisions in development of PBS, and individual plans andprograms are submitted to them Aims make a total activity of PBS tomove on, and it is a device which controls work efficiency On the basis

of duration, goals can be divided into:

and

Goals and actions which result from mission are most frequently related

to a 2 or 3-year period, but they are to be thought over and revised everyyear due to the changes in a dynamic environment of PBS and itsorganization PBS is a complex economic, technological and sociologicalsystem and for that reason they must be made for every organizationalunit and for every employee Goals which are set rationally and are easy

to achieve can

viewpoints on contributions to goals,

Goals can be basic (general), such as: quality of life of employees,existence and development of PBS in the market and so on; and particular(specific), such as: growth of PBS share in the market, growth of socialresponsibility, realizing conditions for making an image of PBS, etc Well-presented goals must be precise, measurable, describing the result whichwill be visible for the employees, i.e they must give answers to thequestions below:

● What is the expected outcome?

While setting goals special care should be taken about the interest groups

of the outer and inner environment interested in business activities of PBS,such as owners, syndicates, workers, managers, banks, customers and thestate Therefore it is important for PBS to make good relationships withthem in order to achieve its goals more successfully

In recent years, some authors have connected mission and goals into aunit, and named it “strategic intent” due to the exceptional connectionsand interdependence Creating a strategic intent as an element of strategicvision enables management to:

References

McGraw-Hill College.

American Industrial Enterprise, MIT Press, Cambridge.

Competitive Advantages, 4th edn., McGraw-Hill/Irwin.

of Management Thought), Dartmouth Publishing Group.

Mintzberg, H and Quinn, J B.), Prentice-Hall International Editions, Englewood Cliffs New Jersey.

Tour Through The Wilds of Strategic Management, Free Press

and Competitors, Free Press.

Strategic Management, 2nd edn., Financial Times/ Prentice Hall.

Research.

16 S TA C E Y , R D (2007) Strategic Management and Organisational

Dynamics, Prentice Hall.

and Cases, McGraw-Hill, Irwin.

and Cases, 13th edn., McGraw-Hill, Boston.

decision, Bobbs-Merrill.

IZIT.

Learning Business Press.

vol 25, no 5, pp 18–28.

Garment industry

Abstract: Garment industry employs millions of people all around

the world, and profits are measured in billions of Euros To keep themanufacturers in the market, it is necessary to educate experts whocan be capable in researching the market, managing the strategy andmethods to develop new products and to optimize technologicalprocess of making clothes

Key words: garment industry, development

2.1 Garment industry

Fashion industry is a multimillion industry Garment industry is dividedinto the production of clothes and fashion products It is focused onachieving optimal results concerning supplies, preparation, production anddistribution of fashion products It is characterized by development offashion trends, brands, development of distributive network and storesand optimization of logistics from production to retail stores

Technical–technological development in the last 40 years enabledgarment industry to implement new methods and procedures and to increaseproductivity while using new textiles and knitting On that way the industrykeeps up with more complex wishes of consumers, demands and fashiontrends in the world The most important tone concerning the rate of growth,design, fashion, utilization and size of assortment is given by centers oflarge consumption, i.e the richest countries

In the recent years the position of garment industry and the tasks it has

in the economies of certain countries have become quite clear There aredifferences in their production tasks, the role they have in the countryitself, especially in international exchange The dynamics of export ofgarments shows a significant breakthrough of PR China into the worldmarket of clothes, the role and prestige its garment industry has both inthe country and in the world It is expected that the largest importers ofgarments, having in mind the moving of capital, cheap labour and CMT(cut-make-trim) jobs or John system, will be the very developed countries

of Western Europe and North America

As the world’s second largest producer of textile and garments, India hasgarment export of totaled US$10.17 billion during the year 2008–09, giving

an enviable market share of 2.99% The United States, European Union,much of Asia, Middle East and South Africa are India’s clients India’s totalapparel export to the United States for the period of 2010 was US$3111.8million and exports to Japan are expected to touch US$125 million.European Union is 27th largest world market in consuming textile andgarments European industry is second largest world exporter of textileand third largest exporter of clothes Its annual turnover exceeds •167billion and it has 28.000 PBS that employ more than 2 million workers.The capacity of clothes production in European Union was graduallydecreasing since 2000 to be 30% lower in 2008 Garment imports inEuropean Union have risen for more than 36% in the last decade (China,Turkey, India and Bangladesh) Countries in North and South Americaproduced just 1.3% of the EU’s clothing in 2006

According to the European association EURATEX, the number ofemployees has fallen for almost 850,000, which is one-quarter of allworkplaces in European garment industry European garment exports,despite negative effects, have increased their value in this decade but,having in mind smaller capacity and larger costs, producers see their chance

in individual smaller markets

Since the beginning of 2009, the trading of textile and garments hasbeen completely liberalized and European Union puts no limits to the exportand import of textile and garments As a result of this liberalization, Chinabecame the biggest supplier of EU (41%), as well as of Turkey (13.3%),India (8%), Bangladesh (7.2%) and Tunisia (3.3%) Besides China,European Union is second largest world exporter of textiles (31%),including the trade among the countries of European Union

European Union dominates the global market of textile and garmentswith the export of •30.4 billion The biggest exporters are Switzerland(12.7%) and Russia (11.9%)

The focus of work of European committee for textile and garments since

2001 is on resuming the approach to global market as well as on the fightagainst forgeries New world market is full of risks, but at the same timefull of great possibilities due to consumption growth at new markets:

understanding, technology and management,

number of collections per year,

● possibility to increase Internet sale,

political situation all influence the growth or slow-down of industry,and

be treated as the art in itself, although this attitude can be mostly found inFrance and Italy The majority of items that were sold do not fit into thiscategory, but the inspiration for designing various fashion products comesfrom art Fashion affects our society and culture and, in a way, influencesthe way people see themselves Fashion is everywhere around us.Mass market or mass fashion is the kind of market where most peoplebuy clothes New fashion trends can soon be seen in shops What consumerslose in exclusiveness can be compensated by money worth At thebeginning of the twentieth century, mass production of certain items led

to accumulation of supplies, fall of production activities and workers beingredundant

International political situation affects fashion industry very much.Unique European market put some pressure on fashion industry of countrymembers which are forced to compete at few levels, i.e design, qualityand production costs due to strong competition Social and culturalenvironment can cover a wide range of questions, but basically it refers tosocial influences, values and changes which can influence the market.Changes in capacity and type of activities in free time resulted in movingfrom formal clothes to more informal one Casual clothes, particularlysportswear, became a style which is worn all day long, for all ages andsocio-economic groups Almost everybody wears a kind of sportswear: T-shirt, sweatshirt, tracksuit or polo-shirt In some parts of the world,tracksuits are almost social uniform for various daily activities and sport.Talking about customers’ occupation, clothes meant for men and womenare too different Occupation not only influences the types of garmentsbut also sets the price The growing womanpower, day by day, and thewish to be dressed nicely together with better financial status will lead tospending more money on clothes for different occasions

Highly developed and highly competitive markets of Western Europeand North America have a differentiated structure in regard to economicposition of customers, their social status, lifestyle, etc All thesecircumstances define strategic marketing within which garments for certain

target markets or groups of customers are designed and produced.Well-known names in the fashion industry have made their own market:some of them offer quality at acceptable prices, others offer style and qualityfor old-age customers, then clothes for leisure activities but with styleappropriate for the young, etc Wherever a new shopping center shows

up, there will be stores of some of producers or trade companies Producersand traders usually count on a big turnover and profit, so various modelswould be made in order to keep customers interested

2.2 Development

Garment industry throughout the world has the same problem: largesupplies of finished garments cannot find their customers The industry ofhighly or less-developed countries faces many crises and constant fall ofproduction, loss of markets, workers being redundant, closing-up factoriesand moving production into countries with cheap manpower

Developed countries were forced to intensify researches of automaticsystems of technology processes, thus leading to progress in the field ofmehatronics, automatization and robotics and inventing new so-calledintelligent sewing machines Therefore, it is necessary to pay attention tothe education of engineers for garment industry and try to mastertechnology production processes by applying the latest productiontechniques and technologies in order to adjust and survive in the market

We are all witnesses to new types of knowledge in garment industryowing to general development of informatics technologies Automatization

of production processes is inevitable Rapid change of fashion trends, newfabrics and more demanding customers impose the need for flexibleproduction which must be adjusted to all changes of production parametersfor various garments We see the future in the production of clothes withoutwarehouses full of finished garments, i.e production for a known customer.Producers of clothes today do their business in conditions of rapiddynamics of change and unstoppable trend of globalization, with manyinnovations and large competition Whole world is treated as a potentialsource of production, and at the same time as a unique market of garmentswith the following characteristics:

needs happen very quickly, thus strengthening their influence onbusiness,

item is just a “temporary monopole”),

cultures change potentials and needs,

● Purchase – producers of clothes are getting more dependent on the

chain of supply due to continuous changes and matching the offer tothe customers’ needs, and also because of compulsory increasing ofefficiency and decreasing of costs as the basis of competition (nosupplies, no mistakes, no delays…),

and trends of competition are hard to follow

Fashion industry is very fast, whereas life cycle is very short Wholeindustry is based on latest fashion trends and consumers’ pleasure Forthat reason, the market is extremely inclined to competitions But the future

in fashion industry has been planned maybe more than in any other period

of history Taking successful world fashion companies into consideration,

we can conclude the following:

1 Large, vertical integration of PBS in order to shorten the process ofmaking clothes

2 Companies with 200–500 employees produce only for known buyers

in fashion seasons, particularly basic fashion items (e.g shirts andtrousers)

3 Those who are very operative are producers of wide range ofgarments, i.e those who produce so-called high fashion, large sizes,medical clothes, unique items and high-tech sportswear They have

a developed network of stores throughout the world selling productsaccording to individual orders and their production and sale are veryflexible, of good quality and 4–5 times faster than of other producers.The future of these producers of clothes is “possible”, but stability andsuccess depend on current wishes and needs of a choosy market The EUmarket is the fastest changing market in the world Influences ofdemographic structure, taking care of environment and further acceptance

of new technologies are inevitable These factors could impose morecomplex challenges to fashion designers and producers of clothes.Garment industry in the world will not give any results unless it strivesfor necessary improvements that will lead to productivity growth, morerational usage of all natural resources and cost reduction, i.e it does notsee the necessity for changes in management, capacity and planning Itimplies applying new solutions in production, together with applying newinformational systems, management techniques and modern design It isnecessary to add new values to garments by applying new fabrics andtechnologies:

● Temperature regulating fabrics

Beside purchasing power, disposal of clothes in Europe is currentlyunder the influence of:

population is over 60-year old and it is expected to rise to 27% by

2020, and they are of high purchasing power)

considerably and they have less time for shopping

part in marketing

Europe

sportswear and clothes made of natural fibers which are easy to carefor

The size of clothes differs from one country to another; so many peoplecannot find suitable clothes The largest part of anthropometrical data, thesystem of sizes, is out-of-date in many countries Measures of averagebody dimensions changed drastically, mostly due to eating habits, whereasolder population has frequent body deformities The future of garmentindustry also lies in solving the problem of sizes Those consumers whorequire special measuring are moving to garment producers who with thehelp of latest software adjust standard cuts and sew a garment which can

be delivered to a buyer within a few hours Program software “Made ToMeasure” is one such example of software Non-contact body measures(3D body scanner) are used, as well as these measures are adjustedaccording to a simulated human body while moving Three-dimensionalbody data are taken for two-dimensional shapes of clothes cuts It is

assumed that only in Europe production of “Made To Measure” clotheswould enable doing business up to few billion Euros.

Successful existence in the market requires taking control over otherphases of production cycle such as supplies, selling, promotion activities,logistics, setting the price of final product, etc

Garment producers must be: flexible; quick to respond; reliable(communications, production, delivery); strength in design skills; qualityproduction; able to demonstrate strong influence over third party suppliers;can show evidence of willingness to collaborate with competitors ifrequired; and ecologically aware

Many associations and societies of textile and garment industry shouldwork on strengthening the awareness about the importance of garmentindustry in the world, creating the image of garment industry, improvingtechnology and stimulating innovations and new way of thinking

Srbije u skladu sa EU’, DTM’10, pp 206–210.

at http://www.euratex.org/ [accessed on 10 January 2011]).

[accessed on 9 March 2011]).

Cloth Market, India, pp 39–45.

Strategic marketing in garment industry

Abstract: Garment industry today deals with many problems

concerning market research, competition follow-up, developmentinvestments, making original creations and scientific approach ofintroducing fashion products into the market Therefore the first step

is consumer analysis and studying data about sales and estimate offashion trends It is necessary to establish size, purchasing power ofconsumers and acceptability of garments in the market and toeliminate weaknesses in channels of sales, distribution and

promotional activities

Key words: marketing, analyse, consumer, segmentation, marketing

strategy, sales, diversification, knowledge management, innovation.

Marketing is a set of business activities that direct the flow of product andservices from producer to consumer It is a business concept of economicprocess regulated by business functions and goals There are manydefinitions of marketing:

communicating, delivering and exchanging offerings that have valuefor customers, clients, partners and society at large (AmericanMarketing Association)

obtain what they need and want through creating and exchangingproducts and value with others (Kotler)

satisfies customer requirements profitably (The Chartered Institute

of Marketing)

Marketing finds its place in economy as a coordinating function informing and realization of economic processes of exchanging productsand their transfers It can be seen from economic aspect as a businessfunction, business concept and scientific discipline

The very marketing that showed up as a part of industry is a newdiscipline for PBS It is used to be thought what to produce and who tosell a certain product, whereas now the starting point is the market, i.e.the consumer, and there are four basic marketing procedures:

(1) Sell old fashion products to old consumers – least risky

(2) Sell new fashion products to old customers

(3) Sell old fashion products to new customers

(4) Sell new fashion products to new customers – most risky

Marketing system is a series of flows of connecting business subjects

to the market In the scope of marketing macrosystem, there are institutionsand PBSs irrelevant to the activities they deal with, but must be connectedinto a whole unit

Macroeconomic marketing system includes all production, assistant,servicing and regulative-control subjects Microeconomic marketingsystem includes product, price, promotion and distribution, i.e marketingmix Four groups of variables (4 P’s of marketing), according to E JeromeMcCarthy, are the following:

competitive; brand; packaging; development of new products;

pricing;

inventory management, warehousing, transportation, logistics;

advertisements, promotional sales, games of fortune;

5P model adds people as the fifth function, whereas 7P adds processand physical evidence (in servicing activities)

According to Kotler (1999), 4P’s represent a seller’s point of view, andmarketing should be turned towards a customer (4C’s):

setting a good basis for successful business of whole marketing systemwhich, in fact, has four alternative goals:

Strategic marketing is a process by which marketing managers createand apply strategies, owing to achieving goals in given conditions ofenvironment and PBS itself It is a modern approach to marketingmanagement which implies a continuing process of adjustment of PBS tochangeable environment Strategic marketing consists of:

(1) Analysis of macro factors of environment and market, strengths andweaknesses of PBS

(2) Strategic marketing planning

(3) Defining and choice of relevant marketing strategies

(4) Carrying out strategy

(5) Control and revision of marketing

Marketing in garment industry is closely connected to the term ‘fashion’.Fashion as a part of culture sets trends and influences demands, productdesign and sale Garment industry marketing is full of conflicts betweendesigners and marketing experts, and it is only their cooperation and mutualunderstanding that can ensure success in the market

3.2 Market analysis and segmentation

Changes in environment, in both domestic and world market, demand thatcreating and leading of developing policy should be based on identifiedcustomers’ needs The assumptions of strategy development of fashionindustry are evaluation of market potentials, strengths and weaknesses, aswell as well-adopted marketing information system

Consumer needs are one of the bases for creating garments; therefore,the information which a designer receives from marketing department must

be real, clear and precise together with the recommendation for a garmentquality level and timely so that new collection should be available in themarket at the right time Ideas for new creations can arise from varioussources: consumer suggestions and opinions, achievements in science andtechnology, keeping up with competitions in fairs, fashion shows, fromInternet presentations, experiences of sellers, etc The most successfulproducers in fashion industry are those with organized teams of expertsfor design and marketing since they dictate the fashion cycle and present

new creations, thus surprising their competition.

The influence of fashion dictated by fashion designers throughout theworld is very important Modern design at the beginning of the twenty-first century longs for refined lines of geometrical forms and aerodynamicsurfaces burdened by the demand of assembly-line and mass production.This is not the case with fashion industry that dictates a great number ofmodels and different styles with indefinite construction parameters oftextile surfaces the garments are made of On the other hand, there areproducers who want to increase productivity and standardization ofproducts and at the same time want to satisfy the consumers’ needs as far

as the quality and diversity of products are concerned

Consumers today have real possibilities to satisfy their needs forproducts in a better way than in the past, thanks to the standard, socio-economic development, technical–technological progress, moderninformation systems, cultural and educational progress Depending on theirpurchasing power, consumers react to fashion Fashion trends haveeconomic, psychological and sociological influence on consumers.Consumers will often buy a new and prestigious product which is abovetheir purchasing power, especially a branded garment, hoping to identifywith a certain social group by doing so, and try to achieve a certain status.They want to be different – but not too much – so for that reason theyaccept certain features of a fashion trend, improvising and expressing theirpersonality at the same time

There are two types of garment producers in fashion industry: leadersand imitators Leaders create a new product, impose and dictate new fashionwith the help of powerful creative centers and modern technology, as well

as marketing campaigns Imitators are late with production, but they findtheir place in satisfying the needs of a large market They do not oftenhave a quality product, but there is a real competition among them.The concept of analysis and research must cover the interest in design,consumers and profit, improve creative process of designers, use marketresearches to gain new information about consumers’ demands or theirreactions to offered garments in order to make the basis for doing business

in the future, define aims and strategies Therefore it is necessary to dosome researches and explain all the phenomena and legalities related tomodern production – market, in order to get the information which point

to the fact as to what kind of products should be made to be accepted bythe market, and that a design as a creative discipline can make productswith largely different characteristics demanded by consumers Marketanalysis requires a series of data, such as:

● analyze competitive prices,

symposiums, magazines, Internet and other available sources,

Prediction of future products and technological solutions is a moredelicate job, but exquisite results can be achieved by using new methods,such as Delphi method, brainstorming, reverse brainstorming, solostorming, brainwriting, simulation models, pattern method, paneldiscussions, etc Further research is usually carried out on the basis ofthese predictions

3.2.1 Market research

Market research is a crucial element for a producer, his development,business policy and finding optimal solutions All these activities requirenot only his knowledge, experience and intuition, but also a whole range

of information from the market Market research serves to recognize theneeds, wishes and demands of consumers, thus influencing the planningand development of product, its sale, distribution and price formation.Market research is an activity directed to studying all the factors relevantfor bringing those decisions which should secure efficient business onone side, and successful satisfying the needs and demands of consumers

on the other side

Market research is a basic form of activity which helps the campaign togain information on consumers and non-consumers, competition anddistribution channels, prices and promotional activities, which serves asthe basis to identify the needs and possibilities of finding the market forproduct and its positioning in the market, for identification of businessproblems and business control The main purpose of research is to reduceuncertainty in bringing business decisions

Market research is a standardized procedure based on the principles ofscientific methodology used to gather, analyze and interpret data, aiming

to get the information necessary in decision-making and problem-solving

in the field of marketing

Market research is a feature that connects consumer, buyer and the publicwith the seller, using information Various information enable

● follow-up of the actions of marketing, and

Market research also means the choice of methods for gatheringinformation, managing and carrying out the process of gathering data,analysis and interpretation of results

Marketing research includes the analysis of problems and phenomenafor managing marketing activities of PBS and goals obtained by combiningmarketing mix that do the research of product, price, ways of promotionand sales All these things are the basis for researching of buyers andconsumers and their needs, researching of existing products, market, itssegments and competition and researching of communication and theirtesting through analysis of advertising in the media and measuring theseperformances

Market research is a team work In most of the cases, teams must bemultidisciplinary There are two possible types of research approach:

the product,

opinion of the market about that product is to be researched

It is necessary to research the functions of a product, design, quantity,quality (in relation to the price) and other specific factors for that fashionproduct The intensity of a certain phase of research largely depends uponthe type of research The research can be:

(1) directed – when one knows precisely what he wants to achieve andhow to do it, and

(2) applied – there is a tendency to apply new scientific knowledge inpractice in order to improve the product

Methods of checking in phases of research are necessary, so the idea isfollowed by the plan of research where certain phases are defined, thenthere comes the checking The scheme of research can be realized by some

of network methods for following dynamic methods In this way theresearch can be followed very successfully Methods of marketing researchare carried out through internal and external research of PBS

Internal research is used for realization and solving of all operativemarketing problems within PBS, aiming to manage production In order

to ensure efficient internal marketing research, it is necessary to realizefully the quality of information and marketing decisions within PBS,problems related to the quality of product, delivery deadlines and placinggoods in the market, buyers’ complaints and so on PBS that accepted

marketing conception should spread data, on the basis of their decisions

of internal character, around the flows of internal efficiency Thereforethe process of marketing research outside the very PBS becomes lesscomplex

By considering the problems of creating new product, it is necessary to

be primarily aware of the skills, training and attitudes of marketing team,fashion designers and technologists, the structure of PBS organization,the existing system (CAD/CAM system), relationships and communicationamong the employees In order to create a product, real costs (textiles,quality of garment production) must be estimated to enable longer lifecycle of fashion product without neglecting technical–technologicalcapacities of PBS The rhythm of technological development is faster thanthe development of human generation (life cycle of technologicalgeneration is 4–5 years, which is 7–8 times less than working cycle of anengineer in garment industry), thus requiring constant education ofproduction-technical staff

External marketing researches are more complex and the application ofcomplex methods and procedures is necessary, as well as more creativityand time in order to be finished within acceptable time limits The researchputs an emphasis on product research, i.e accepting the product from theconsumer, comparative studies related to competitive product withinevaluation of competition in the market, identification of presentconsumers, market research and market activities

External evaluation also includes analyzing possibilities and dangers

of a fashion product which needs to be designed or redesigned inaccordance with a fashion trend It is necessary to see the real situation inthe market, set target groups and categories of consumers Producers ofclothes who do not invest into development of product and productiontechnologies can face the danger of not being able to “keep up with” afashion trend, despite all their efforts Good distribution network, besidesdisposing clothes on a domestic market, should also have a foreign market

as its goal Due to small economic power and big competition in the worldmarket, there is a danger of failure of certain small and medium enterprises– SMEs The only real possibility is a good distribution network whichneeds to enable joint breakthrough of many fashion producers in the foreignmarket

There are one or more than five principal methods used in researchingthe market of PBS:

For producers of clothes, most widely used are survey, focus groupsand personal interviews.

Survey is a very widespread technique of gathering data A person who

is to be questioned fills in, on his own, a prepared form with questions or

it is done by Internet or email

According to their goal, surveys can be general and separate Generalsurveys gather data relevant for general business organization, whereasseparate ones are mostly directed to products, i.e the opinion and taste ofconsumers

There are two approaches in product research:

Omnibus survey with more arbitrary number of questions is the easiestand the cheapest way of gathering data about consumer market, such as:

consumers of certain products,

Focus groups is the most widely used method in qualitative research,where the aim is to find out more about the attitudes of consumers, theirbeliefs, motivation, behaviour, emotional relationship with certainphenomena and products Focus groups are often used as an initial phase

of field research with a less known topic, and its aim is to gather necessaryinformation for making a questionnaire The number of focus groups in astudy varies, depending on the topic of research, and there are usually 3–

5 focus groups Optimal number of the people questioned is 8–10 One ofthe main advantages of focus groups in relation to other methods of research

is the possibility of applying different projective and encouragingtechniques which provide a better perception of consumer behaviour,motivation and emotions

Personal interviews ensure a deeper insight into a certain problem which

is tested (testing new product, evaluating brand image, lifestyle, etc.).Researches of product prices and consumer satisfaction are carried outby:

product characteristics, combined with demographic analysis, is usedfor market segmentation as well

of buying and using of a product

● Van Westendorp’s price model – questioning buyers and consumers

about the optimal product price

products

Example of polls for analyzing sale of tracksuits is shown in Table 3.1

Table 3.1 Polls for analyzing sale of tracksuits

Questions Answers

1 Do you wear tracksuits? Yes No

2 Do members of your household wear tracksuits? Yes No

3 How often do you buy tracksuits? Once a

month Once in 3 months Rarely

4 Do you buy whole tracksuit (top and lower part)? Yes No

5 Do you buy just the lower part of tracksuit? Yes No

6 Are you more interested in children tracksuits? Yes No

7 You feel most comfortable in tracksuits made of: - cotton

- synthetics

- combination of cotton and synthetics

- it’s all the same to me

8 Where do you buy tracksuits? .

9 Do you buy only certain brands of tracksuits? Yes No

10 Which brand is that? .

11 Is the price of 60 € for adult tracksuit suitable for you? Yes No

12 Is the price of 35 € for lower part of tracksuit suitable

13 Is the price of 40 € for children suitable for you? Yes No

It is also necessary to research the competition in the market (how muchthe competitors produce, how much they sell, what are the prices of theirproducts, what are their advantages and disadvantages), trends in thesesegments, as well as the possibility of adjusting their products with those

of other producers

Special analyses, i.e detailed market analyses directed to behaviourconsumer characteristics are as follows:

trademarks, garment producers or commercial chains

before and after certain marketing activity

trademarks, garment producers or commercial chains

producer or commercial chain on the market: attractiveness, loyalty,and consumption intensity