Currently, Hugo Boss relies on production orientation, which is a philosophy that requires a company to produce the products they can efficiently. In return, the markets cater for themselves. This strategy is most efficient in areas where there is a huge unfilled market gap. It was preferred in the 1920s when the main production was that of basic necessities. Companies that still use it have an advantage of low cost of production and produce products better than those of their main competitors. This concept does not care about customer needs. It only strives to deliver an acceptably quality product at a cheaper price. It also thrives in developing countries where consumers at are just focused on obtaining a product than on its features.
The marketing concept used is the idea of researching the market to determine what customers really want and then delivering on those needs better than its competitors. Usually, this is done by exploiting marketing orientation. The Hugo Boss Company does not employ this method of marketing. For this reason, it is bound to miss out on the trends in its market. There are various reasons tied to performance why Hugo and every other company should adopt marketing orientation and the market concept (Özturan, Özsomer, & Pieters, 2014). First, research has shown that companies that practice market orientation are also known to use market segmentation, maintain clear and superior marketing efforts and strategies, and adopt proactive strategic posture in marketing. Marketing orientation often gives a company an advantage over its competition. This is due to the fact that one delivers to the needs of the consumers while others instead work towards better products to achieve superior products in the industry. In the case of those who use marketing orientation, consumers have a need they wish to satisfy and are often obliged to make the purchase (Özturan, Özsomer, & Pieters, 2014). This increases sales and the rate of growth. Moreover, a company that uses market orientation often saves money that would be otherwise used in production of products that are useless to the consumers. By reducing unnecessary losses, it increases a company’s profitability (Carrizo & Silva, 2013).
Finally, the marketing concept often prompts innovation. It has been found that companies that are open to the needs of their customers usually put up measures to reduce the cost of production. One such way is by creation of systems that may be used in the production of multiple products. This way, a change in demand of a product still leaves the systems in use.
Options for Hugo Boss
Hugo Boss has a lot of potential it fails to use. The company should consider using the developmental mechanisms already in place together with the marketing orientation to exploit its full potential. For instance, the company can continue investing on improving product quality as it has always done, but this time round, adopt this strategy for specific target markets. Research shows that when both approaches are used, they could increase the performance of the company by far. This method is takes advantage of innovation to produce products that are above their competitors’ (Carrizo & Silva, 2013). It would require that Hugo Boss invests in a great research team to ensure that this is achieved.
The company should identify potential markets for its products, after which it should employ a marketing strategy. Since the company manufactures superior quality products, it should concentrate on expensive clothing and target the rich people in different communities. The company should adopt the 7 Ps so as to be able to command its market. It should also study the trends in its target market and make sure it is always ahead of the competition in terms of design and innovation. In regard to marketing structures, the company should train its marketers so that they may act as both marketers and market researchers. This way, the company will save on the money that would be used to fund research. This also means that it will be able to mount a continuous research that will lead to higher performance.
Segmentation, Targeting, & Positioning
The needs, satisfaction levels, and aspirations of customers are unique. There are, however, those needs of customers that can be grouped together due to their similarity. Determination of segment markets involves the identification of those customers who have similar needs and developing a product that is satisfactory for them. Once producers determine which segments to target, they position their product with an image with which the consumer identifies. Marketing segmentation, targeting and positioning are vital for a proper marketing strategy. It is often necessary for a company to target its customers precisely. This way, a company is able to tell which customers fall within its market command. Customer selectivity is an issue that most management teams are usually reluctant to accept. It often means turning a blind eye to some customers and revenue and giving most of the attention to those who are most likely to become loyal and satisfied.
Marketing segmentation, positioning, and targeting are the critical components of this marketing concept. Nowadays, positioning implies value proposition. Some time back, positioning meant placing the product in the mind of the consumer better than the competition. Today, it implies defining the value strategy and delivering this information throughout the competition and to the customers (Claudiu, Ionel & Tudor, 2008). The definition clarifies the target consumers, the product, its benefits and the need being met by the customers.
Customer selection should be a careful process as the company intends to be committed to its market in return for their loyalty and mutual relationship.Today, segmentation, targeting and positioning is an approach of strategy that is gaining a lot of popularity with many companies. According to a poll by Smart Insights (2013), it was found that it is the most used marketing strategy after the SWOT method (Hanron, 2013). It is a useful method in creating a marketing strategy that is customer-based. It helps marketers to create and deliver communication that is personalized for different audiences. Thus, it is an audience-based approach that focuses on communications that deliver relevant information to commercially viable audiences.
Use of STP
Through segmentation, a company like Hugo Boss can identify groups with similar needs, ripe markets to explore, and convey more focused and efficient marketing information. The approach is far much better than creation of products with a mentality of one size fits all. In this approach, consumers are grouped in segments according to their needs, capacity and habits. Once this is done, the marketer devices a means to deliver a message about the solution to their needs (Hanron, 2013).. Various methods have been used to segment consumers, as discussed below.
In this approach, a company obtains demographic data about age, occupation, gender, income, and marital status to determine the most suitable products for the consumer (Claudiu, Ionel & Tudor, 2008)s. This method can be employed by Hugo Boss by obtaining customer data and then following up with some form of advertisement to obtain new consumers and consumer loyalty.
This is the method of using personality and emotions, which are based on consumer behavior and linked to purchase decisions such as attitude, lifestyle, personality, reading magazines, and hobbies.
This refers to hobbies, recreational activities, vacations, and other pursuits that are not related to work. Companies such as those that produce magazines will target those consumers who have similar lifestyle orientations (Hanron, 2013).
Beliefs and Values
These are nationalistic, cultural, religious, political values, and beliefs. For instance, a bank will only target Muslims for its Sharia compliant account services.
Some products may also be marketed to specific consumer age groups. This is most usually so if the product is unsuitable for other age groups. A good example is supplements, which may be targeted on different age groups according to their nutritional requirements (Ebitu, Mbum & Okon, 2012).
Market targeting should always be done with caution. If mistakes are made, both the targeted and the untargeted markets are not netted. The criteria of targeting should be such that consumers ensure that the business within that segment is profitable to the business. First, the company should determine the population size of their target market. If a population size turns to be too small, the marketer should be prepared that the population will drop lower due to customer erosion. Second, the company should ensure that different segments have measurable differences. Third, the venture should be profitable. The profits should be able to surpass the costs required for additional marketing. Fourth, the marketing team should be able to reach the market segment and to send product information. Finally, different segments should focus on different needs (Hanron, 2013). Once market segments have been identified and a target market chosen, the final step is that of positioning. Positioning involves placing the product in front of the consumer for consideration. It involves the selection of methods of ensuring that the consumer is convinced that the product is the best one to serve his need (Hanron, 2013).
For marketing to be successful, a company must address a number of key issues. They include: the product of the company; the cost of that product, the delivery method of the company, and the methods used by the producer to tell the customer about its products. These considerations were traditionally four: the product, the price, the place, and promotion. This combination was referred to as the 4 Ps of marketing. With time, a fifth P was introduced, namely: people. Recently, two more Ps have been useful for service industries: physical evidence and process. This combination of seven factors has been conventionally known as the seven Ps of marketing or the marketing mix (Kent & Brandal, 2003).
It is pointless to produce a product that no one needs to buy. It has been noted that most companies, however, prefer to choose the product they want to sell and then work towards making it successful in the market. A successful market using the marketing concept, on the other hand, first identifies a need in the market and then develops a quality product to meet that need from then on (Luan & Sudhir, 2010). The right product must meet certain standards.
First, the product must be value adding to the customer. This value should be seen in the customer’s perspective. It is the role of Hugo Boss to identify the needs of the customers and deliver to them. Note, it is not what the company thinks the customer needs, but rather, exactly what the customer wants.
Second, it does not have to be tangible. A good example of an intangible product is an insurance policy, a bank account, or a transport service. In the clothing industry, while most services are tangible, repair, cleaning, delivery, and consultation services are products too (Luan & Sudhir, 2010). Hugo Boss should also put into place a system that regularly checks on the needs of the customer to see if their needs are changing and if so, to what direction. The customer’s opinion of the company’s product should also be considered at this point (Kent & Brandal, 2003).. It is always necessary to make sure that a company delivers a product that meets the needs of the customers at an affordable price. A target market should not be strained beyond its means to acquire a product from Hugo Boss. If a customer finds himself strained, he will opt to substitute the new product being offered.
The price of a product should be set such that customers are willing to pay for it. It should also be competitive, while not necessarily the cheapest. A small business may offer an extra service with the product to be able to compete with rival giant companies. Since it is the only source of revenue in the marketing mix, the price of the product should be able to provide a profit (Constantinides, 2006). It is important for the producer to look at cost as an exchange for the needs met rather than seeing it as a cost to the customer. The latter approach would make Hugo Boss to underscore its product’s value.
One good reason why it is advisable to maintain old customers is the fact that they are often less sensitive to price than new customers. If a high price is settled on, it is often necessary for one to offer a better quality of product than one’scompetitors. For instance if Hugo Boss is selling its products at prices that are higher than those of its competition, customers will always assume that it has better quality products. Failure to deliver on the hope of the customer would prompt customer erosion.
The location where customers get access to one’s product is also an important aspect of a business. It is often necessary to have a supplier who is able to deliver these products to places close to the target market. It is often the role of this supplier, and the company, to ensure that consumers have access to their products. While doing this, the following aspects should be considered and kept acceptably low: inventory, storage, and distribution costs. The place also implies the means in which products are displayed to the customer in shops and even in the internet.
Promotion activities include branding, personal relations, advertising, corporate identity, sales management, exhibitions and special offers. It comprises all the methods a company uses to communicate its product to its customers. Promotions must get the customers’ attention and appeal, and must be consistent and give a reason for the consumer to choose the product (Kent & Brandal, 2003).
Good promotion is two-way. It should provide a platform for communication between the customer and the consumer. It should also give the feature and benefits of the product. A good promotion should also be easy to understand. However, promotion also comprises communication between the company and all other shareholders. It keeps them aware of the changes that are taking place within the company. This way, they know what to share with the customers.
A positive or negative impression is always made when someone comes into contact with customers. Those people who come into contact with the population have power to influence the reputation of a company’s brand. For this reason, they must be properly trained, motivated and of proper attitude. It is necessary that those employees who come into contact with customers be, not only properly trained, but also, the right people for the job (Kent & Brandal, 2003). Often, customers do not separate the product from the person who delivers it. This shows how important the people at the frontline are.
After-sales support and advice are often a way of adding value to the product that has already been sold. It can give Hugo Boss an edge over its competitors. Once a customer discovers this aspect of a business, a big chance is they will stop giving much weight to the cost. The products that account for the highest percentage of sales should always be reviewed to ensure that enough customer support is offered for them (Kent & Brandal, 2003). While traditionally the last two Ps are reserved for service industries, it is important to review them for products, especially for business to business relationships.
The way a service is given and the behaviour of delivery people are vital to customer satisfaction. The time a customer is kept waiting, the information offered, and staff helpfulness are all crucial in maintaining a happy customer. Customers are not overly interested on how your business works. It is, however, important that a company’s system works optimally. This process is often overlooked by producers. Customers are often kept holding on phone while waiting to be served. Such customers are business opportunities waiting to be exploited. However, keeping them on the phone gives them a negative image of the company and they often have to give up and seek assistance elsewhere. When a customer gives up on a company, they are so upset they may be a threat to further customer erosion.
These systems are usually not made by marketers and are, therefore, put up for the benefit of the company. They should, however, be put up for customer benefit. A happy customer is often a future source of business (Luan & Sudhir, 2010). If Hugo Boss utilises this segment of the 7Ps, they are likely to have a competitive advantage over other companies in the clothing business.
It is impossible to experience services before they are delivered. Choosing services is often a risky activity since what is being tested is intangible. To solve this challenge, a company needs to device means in which the customers get reliable information about the service. Preferably, this information should be given by independent third parties rather than people affiliated to the company (Möller, 2006). Companies exploit this idea by conducting case studies and obtaining testimonials from customers to prove that they deliver on their promises. Other methods that may be use are maintaining a hospitable and welcoming environment at the workplace (Kotler, 2011).
The physical evidence presented must confirm what the customer knows about the company. Although customers cannot experience the product first hand, they should be able to get a good image of the company by consulting. Another option is for the company to ask for feedback. This information is then shared with other customers as reference.
None of the ingredients of the marketing mix can be used in isolation. They should instead be used together to the advantage of the customer. While a product is being manufactured, Hugo Boss must decide on the best price for the product and the way it is going to reach the customer.
The Domain of Digital Marketing
The changing needs of consumers have left producers no option but to meet the shifting and evolving customer demand trends. The inception of the digital technology has armed most consumers with smartphones and tablets and unlimited access to the internet. There has been a worrying trend to meet their demands by reaching them through all the channels that are most convenient. Big companies have increased their reliability by enabling consumers to reach them from wherever they are at will (Kumar, Jones, Venkatesan, & Leone, 2011).
The internet favours many consumers due to its low cost and its ability to reach an unlimited number of consumers. It has been adopted on various platforms including email marketing, social media promotions, and printed coupons. These forms of marketing have been further exploited by using modern innovative methods that rely on customer data such as age, occupation, and shopping habits. The use of loyalty programs like the Tesco’s Clubcard has made such progress easier by using the card’s analysed data. This has also enabled companies to communicate directly with the consumers within their market segment. Since the promotions are based on the card’s information that only the company has, the company has a competitive advantage over its competitors (Järvinen, Tollinen, Karjaluoto, & Jayawardhena, 2012).
For big manufacturers like Hugo Boss, digital promotions are easy to run due to the availability of resources. Hugo Boss would need to devise a method of obtaining customer data, like the use of loyalty cards, and using this information to market to their customers using digital coupons, social marketing and email marketing (Wind, Sharp, & Nelson-Field, 2013).
Mobile Promotions and Location-based Applications
Another way that organizations can make use of the digital trends is by the use of mobile promotions and applications. Location-based applications like Foursquare and Shopkick have been used in the past. The applications are set such that once a customer checks into a store, the applications update their information. The updated information is then passed to the retailer’s systems such that a retailer is able to take advantage of this information. Once a retailer knows that a consumer is in their store, they send promotional messages to the consumers about offers and promotions. Coupons may also be sent to the consumers to prompt higher purchases (Fulgoni, 2013).
To prevent the consumers from switching off their devices or uninstalling their applications, the retailers may also opt to indulge their consumers by awarding them points once they check in to the shops. Hugo Boss has two ways of taking advantage of this form of technology. First, it may opt to take advantage of this offer in its retail outlets. Secondly, it may give other retailers who use their services discounts on all goods bought on the ground of these applications.
still uses traditional concepts. For this reason, while it manufactures
superior products, it fails to outperform its competitors. To resolve this
issue, it should adopt more innovative methods of operation. First, the company
should do away with its production concept and instead adopt the marketing
concept, which is more likely to win consumers. This is a concept that seeks to
satisfy consumer needs that have been positively identified. The consumer
continues to observe its market to note any changes that arise in the course of
the consumer-producer relationship. Hugo Boss should also concentrate on
certain segments of the markets that are bound to produce high sales and
profits. It should adopt modern marketing methods like the utilization of the
internet to satisfy its consumer needs. In the course of doing this, the
company should keep in mind the 7Ps of the marketing mix. This way, it should
be able to obtain a better consumer loyalty and following, as well as
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