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Closing Strategic Gap

After closing the tactical gap, we came up with several future growth strategies for Denizen in terms of product innovation, improving retail experience and improve communication to close the strategic gap.

Product Innovation

Based on our survey results, consumers perceived Denizen to have limited product offerings and designs. As such, Denizen should improve and increase its product offerings and designs to attract its desired target consumers. Riding on the Korean and Japanese trend, Denizen will engage dedicated design team to update their designs of tees regularly and seek collaboration  with celebrity designers to launch trendy designs to entice the youth to purchase Denizen products. 

Improving Retail Experience

Photo Booth

To make the retail experience more exciting and to help Denizen attract the correct target group (a younger crowd), we would set up a photo booth in selected stores.  After  trying on the jeans, consumers can choose to take photos in the store.  Thereafter, we would display the photos in a LCD TV in the store. We would also be posting the photos on Facebook after obtaining their approval to drive traffic to our Facebook. To goal is to enhance the overall retail experience by evoking more excitement to allow the customers to stay in the store for a longer period of time. This would encourage them to make a purchase eventually. 

Mobile Application

(1)Body shape Analysis:

Part of the retail experience would be the use of this mobile app to help analyze customers body shape. This would be to help consumers find the right fit and to bring across Denizen’s focus on Asian cuts.

(2) Catalogue of latest collection:

This would be to help create a virtual retail experience to engage the consumers continuously. This can also serve as a platform to reach out to the consumers regarding the latest product launches and offerings.

Customer Service

To complement the retail experience, customer service is one of the important touch points. Training has to be provided for all retail staff in areas such as offering professional recommendations for jeans and other apparel. Denizen will seek to achieve the Service Excellence Award by SPRING Singapore in the next 5 years to come.

Improving Communications

To assist Denizen in improving the products and services, it is important seek feedback from the consumers through continuous engagement. This can be done through the various online platforms that she has. For instance, with the launch of Denizen Singapore Facebook page, it would be easier for the local team to make use of this platform to gather opinions from the Singapore market.

Strategic Challenges

Challenges faced in Singapore retail industry

Non Critical Challenges

The common strategies to build and expand the brand typically consist of two major areas - to expand geographically and to extend the brand. However, Denizen is in a unique position as an endorsed brand from Levi's and thus, these strategic options will not change the due course of the brand's future greatly. 

Brand Extension

Denizen is only a year old brand in Singapore and has yet to build any form of substantial brand equity to differentiate itself from its competitors. Denizen itself is an endorsed brand from Levi's with the aim to leverage on the strong associations as a jeans specialty. It is not common from a brand extension to form its own extension as it would have to align many differing brands together. 

Additionally, the apparel industry is saturated and has little room for expansion. By expanding wrongly, sales might be cannibalized from the parent brand. 

Geographical Expansion

Denizen has different brand positioning for both the western markets and the eastern markets. In the west such as USA, they are sold to the value conscious family with advertisements featuring family members wearing Denizen jeans. In the east, they are sold to youths and position itself with a unique selling point of Asian cuts. Having a well penetration into diverse markets in Asia, it will take a few years for Denizen to achieve a strong foot hold in these countries as part of its brand building process.

As such, we can see that Denizen has strong localization in the markets where it operates thus far. Hence, our main coverage of strategic options will only cover the Singaporean aspect.

Future Brand Management

In view of Denizen’s goal to compete in the Brand Relevance  rather than the Brand Preference segment of the jeans industry, we have proposed a 3 pronged approach to help propel Denizen forward. The 3 areas are in integrating marketing communications, adopting a product strategy and enhancing the overall retail experience.

These approaches are aimed to increase the brand awareness and enhance the brand image of Denizen. Through product design and improving the retail experience, Denizen will be able to perform better in Feelings and Judgement in the CBBE Model. Consistency in all the marketing programs will help to reinforce the brand and the messages communicated to the target market. Through constant evaluation, Denizen will be able to position themselves competitively in Singapore in the long run.

With all the recommendations in place, we hope that if Denizen ever head down the path of diminishing brand value, it will be able to rely on its feedback channel to identify changing consumer trends and their flexible product innovation and interactive, customer-centric retail teams to react quickly to the ever-changing  competitive landscape.

Brand Valuation

Stage 1 - Segmentation

Stage 2 - Financial Analysis

According to Euromonitor, retail growth in the past 5 years has been at a decline of 5.7% and has been estimated to growth at less than 1% for the next 10 years. However, with Denzien as a young and growing brand, we assumed a slightly higher than average growth for the target segment and used the normal growth rate for the remaining segments


Stage 3 - Role of the Brand

Segment 1: The youths are more brand conscious and the product attributes appeal less to them. However, from our survey findings, Denizen fare rather poorly in the emotional dimensions of the CBBE pyramid and hence the role of denizen in influencing point of purchase is rather low compared to other brands with strong brand identity such as H&M. However with our promotional efforts, we believe we can turn around this negative sentiment and utilise this section's high RBI to its maximum potential. 

Segment 2: This segment market is not the main targeted segment for Denizen as the image seems to be too young and trendy for them. The higher purchasing power of this segment market means they are generally looking at more up-market brands. This results in a low RBI for the consumer segment as those who purchase Denizen are the budget conscious consumers where values matter more than the brand during the point of purchase.

Segment 3: This consumer segment are the most value conscious (assumption) and looks more for product attributes such as price and quality rather than the brand when purchasing denizen products. This results in a very low RBI for this segment.

Stage 4 - Brand Strength

Leadership 2 : 
As 1 year old brand, Denizen has to work on gaining greater market share.
Stability 4 :
The brand has a short history and fares poorly in the salience segment of the CBBE pyramid. Only time will tell if Denizen is able to retain its image and consumer loyalty over long periods of time.
Market 7 :
Denizen placed emphasis on emerging markets such as China, India etc. which are avenues of high growths. However, being in the fashion industry, Denizen is susceptible to changes in consumer taste and fashion trends.
International image 9 :
Denizen's parent company, Levis is an international brand which plays a part in helping Denizen to build her brand presence in the foreign markets.
Trend 7 :
Denizen is up to date in terms of the cuts of the jeans. However, there are room for improvement in areas of the jean's wash and design. They are currently working on introducing new cuts
Support 8 :
Given the parent company, Levis's intention to grow Denizen in the future to tap on the emerging markets, we believe that she will receive strong support from Levis.
Protection 10  :
Denizen brand elements are strongly protected by legal trademark.


Stage 5 - Calculations

Click here to download our valuation spreadsheet:

Tactical Gap Analysis

The following analysis on the current brand image is based on our interviews and survey results. We concluded that despite Denizen positioning itself as a high quality, value for money jeans brand; much of our respondent positioned them on the fair value line. The lack of communication on the jean’s quality for Denizen’s marketing communications coupled with the lack of emphasis on being a jean’s specialty brand, lead to the first tactical gap that we identified, which is comprehending and agreeing with information. Using the laddering technique on our respondents to find out more about the brand image, we realized that this gap actually stems from the current usage of marketing collateral. 

We analyzed the approach taken by Denizen on their current marketing strategy and discovered a recurring cycle of widening tactical gap which is illustrated by the diagram below.

Initially, this gap occurs due to the inherent quality gap that most consumers have about the parents brand and the sub brand, which is Levis’ and Denizen in this case. They would perceive Levis’ jeans to be of better quality than Denizen. However, after our interview with Jay Gee, we discovered that it was not the case for Denizen.  The management is keen on having their target market try on the jeans to experience the quality of Denizen themselves. This led to the lowered price of jeans to increase the trial rate among the target market. The sales promotion such as price bundling eventually led to the wrong target market being attracted to the store. Teenagers do not want to be associated with a brand that attracts the older age group or foreigners (dissociative group). Furthermore, with Denizen located in heartland malls next to other ‘budget brands’ like Giordano and HangTen, respondents are thus comparing Denizen to those ‘budget brands’ despite Denizen competing with the likes of more premium brands like Uniqlo.

Using the Consumer Processing Model as shown above, the gap actually lies in the comprehending and agreeing with the information that Denizen wants to communicate to the target consumers. 

Comprehending attended information: The current promotion of “2 for $99” is currently available at all Denizen stores. After our interview with Jay Gee, we realized that the promotion was set in place for customers to bring their friend or family along to experience the promotion together. This was in line with their brand to be inclusive and promoting the spirit of brotherhood. However, our in-depth interview participants never had this idea in mind. Most people would just buy 2 sets for their personal use. This shows that the message was not fully comprehended by their audience.

They have recently stepped up their efforts on the promotion by further offering a price of $20 for the 3^rd jeans purchase. Our group sees this as a step backwards towards their brand identity of a premium but affordable jeans brand. This further price promotion dilutes the brand equity.

Furthermore, being located among cheaper apparel stores does not help in its aim to be a slightly premium brands among the heartland mall brands such as Giordano and Hang ten.

Agreement with what is comprehended:  Their celebrity endorsement with Jay Park has recently ended in August 2011. Without an endorser, its symbolic value as a young and hip brand is not clearly communicated to the customers. Consumers are only left with in store displays to be exposed to their message. Furthermore, without their Asian endorser, the Caucasians images portrayed in the stores do not convey their Asian cut jeans expertise that Denizen identified as one of their unique selling point.

Timeline and pre-event phases 1&2

Timeline

The following timeline show how the various mediums will work in conjunction to form a seamless and meaningful campaign to address Denizen’s tactical gap.

Campaign Highlights in Chronological Order

1.      Creation of Denizen SG Facebook page

2.      Magazine SMS Contest

3.      Institutional visits by D Truck

4.      Facebook Photo Contest

Phase 1 of “What’s your cut?” Campaign – Creation of Denizen Singapore Facebook page

       From our interview with the brand manager of Denizen from Jay Gee, we realized that the current Denizen Facebook page is managed by the parent company on an international basis. This does not provide the Denzien Singapore team to micro manage the account so as to provide a more localized and relevant content to the audience here. Hence, before the launch of the “What’s your cut?” campaign, we would propose to launch a Denizen Singapore Facebook page. This would allow Denizen Singapore to customize the content to suit the needs of her audience here. This new page created will be promoted and used widely throughout our campaign as we work on raising awareness and driving traffic to it.

Phase 2 of “What’s your cut?” Campaign – Magazine SMS Contest

In-store Sales Promotions

Since its inception, dENiZEN has launched several in-store promotions island-wide in all of its stores. As a young brand that spins off from a premium jeans brand – Levi’s, dENiZEN hopes to leverage on the jeans maker specialty of Levi’s. Has it been successful? Maybe, maybe not.

In-store sales promotions are highly visible outside and/or in the stores with board displays and rack displays. By capturing attention of any customers that walked pass the shop, the hard-to-miss-out promotion messages will entice customers to step into the store and give a try on the jeans. dENiZEN aims to encourage the customers to try out its jeans and thereby judge it quality by themselves. 

Given its current brand positioning in Singapore, dENiZEN is facing a few challenges and dilemma when designing sales promotions. At one end, it wished to encourage more trial rates among new and potential customers, yet another, dENiZEN aims to build a strong brand that resonates with the aspiring youths. By running intensive sales promotions might in fact be hurting the brand equity of dENiZEN, to the extent that the wrong group of customers are forming the core customers base.

As a 1-year-old brand, dENiZEN is currently still trying to achieve a high level of brand awareness. Moving on, it is crucial that sales promotions are only launched on a cyclical basis instead of a regular basis. By lowering the prices of jeans when bundled together, customers will probably perceive the quality of dENiZEN jeans to be as low as what they pay for. Customers may only purchase when there are sales promotions as they do not see the premium in the higher prices they pay during non-sales period. The price-quality inference of dENiZEN jeans may not be as favorable as it aims to be. 

Sales promotions might be a useful tool at the initial stage of creating brand awareness, but it is a double-edged sword which can in turn dilute the brand equity. In this case, dENiZEN might not be able to leverage on Levi’s brand values given its current brand image in the eyes of the customers in Singapore.

Leveraging on Social Media

Given that more than 64% of internet users are on social media, Denizen also rode on this social media bandwagon to leverage on its impact. According to our survey, social media was the 3rd most common platform for consumers to find out about brands and their promotions. As their target market is between 18 – 28 years old where this age group has the highest usage of social media, it would be appropriate for denizen to make use of this.

However, many of denizen’s social media platforms are not interactive with generalized content. Furthermore, they are often not integrated with one another to encourage interaction between the followers and the brand. As a result of this, it does not lead to purchase intent of the consumers.

Celebrity Endorsement by Jay Park

 

Riding on the Korean wave, Denizen engaged Jay Park as their brand ambassador for the first half of this year. During this period, he was involved in photo shoots for Denizen’s advertisements, DD dance as well as a music video. The DD dance was a flash mob that was quite well received in Korea.

Recognising that his personal traits and style was a fit for Denizen’s brand personality, Denizen outlets  in Singapore also used the marketing collaterals with him in it and played his songs in the stores. His presence did created a hype in Singapore, especially amongst his fans, when he was in Singapore on 23 July 2011.

However, from our survey of 65 respondents, there was a low level of awareness that Jay Park was Denizen’s brand ambassador. When we showed a photo of Jay Park in the survey, only 19% of the respondents could recognize him. Furthermore, there was only 3 respondents who knew that he was Denizen’s endorser. However, from our interview with Denizen’s brand manager from Jay Gee, they found that Jay Park was suitable as brand ambassador thus they introduced Jay Park into Singapore.  Nonetheless, there was a lack of awareness as the campaign only ran for a few weeks with them putting up some of the advertisements with Jay Park and playing Jay Park’s songs in Denizen stores. A longer period of campaign would be required for it to take effect.

A Review on Current Marketing Strategies

When dENiZEN first launched in Singapore 1 year ago, traditional advertising was used in promoting the brand as well as its in-store sales promotion. Jay Park was selected as the Brand Ambassador as he possess the values of a young and vibrant celebrity and he definitely made a great fit to bring out the brand values of dENiZEN – the outfitters for the bright future!

Social Media platforms were also adopted by dENiZEN through Facebook, Twitter, YouTube Channels and Blog. dENiZEN also launched the Start Up campaign  - a self-empowered challenge to act, to express, to be, to transform thoughts into actions among the targeted aspiring youths.

Just recently, dENiZEN has collaborated with McDonald’s Monopoly Game and heavily sponsored 150 dENiZEN vouchers worth $200 each. It was indeed a bold and remarkable move by dENiZEN given the amount of outreach and exposure the monopoly game has established through McDonald’s over the years. Furthermore, this would definitely raised the brand awareness among all Singaporeans who patronize McDonalds.

Competitor Analysis

In April 2009, Uniqlo, a Japanese casual wear retail chain opened its first store in Singapore as part of a franchise owned by Wing Tai Holdings and continue to expands to a total of 5 retail stores. Uniqlo debuted in Singapore with an integrated marketing campaign, “ Uniqlo surprises Singapore” to raise brand awareness and engage its target consumers through the infusion of Japanese culture in various touch points.

Large mural walls of Uniqlo were seen at various train stations, as well as online advertising website that brought the brand’s culture from Tokyo to Singapore.

Uniqlo Surprise

Uniqlo brought in the iconic “gacha gacha” vending machine online to dispense various Uniqlo surprises (vouchers, ringtones, wallpapers) daily to the users who visited that website. The brand successfully captured its target audiences and data collected through the web became a strong consumer database for Uniqlo Singapore. The brand also made strategic collaborations for T-shirt designs with brands, such as anime one-piece, Cath Kidston, Disney, which were well-like by  their target group.

Uniqlo Singapore has been leveraging social media platform such as facebook to continuously engage its target group with product updates, competitions and prizes to create buzz as well as brand loyalty. 

Recently, Uniqlo goes local globally and appointed local celebrities, such as Rebecca Lim and Pierre Png in Singapore to endorse its product to have a direct appeal to each country’s demographics and consumer reference.

References:

http://www.marketing-interactive.com/news/12094

http://bus4411.blogspot.com/2009/03/uniqlos-unique-way.html

http://www.beauterunway.com/2011/05/uniqlo-singapore-vivocity-opens-t.html

http://www.uniqlo.com/sg/corp/pressrelease/2011/09/uniqlo_casts_local_celebs_for.html

http://www.brandchannel.com/features_profile.asp?pr_id=324

From the comparison above between Denizen and Uniqlo in terms of their 4 Ps (product, price, place and promotion), Uniqlo seems to be performing better than Denizen in many areas.

In terms of product, both Denizen and Uniqlo strives to provide good quality apparels to their customers. However, Denizen is lacking in variety in terms of product offerings and style of the jeans. Uniqlo is able to constantly push out new products and remain updated in terms of the designs of their t-shirts. In view of this, both Denizen and Uniqlo were able to make their apparels affordable to their customers. Yet, from our survey conducted previously, Uniqlo was perceived as more value-for-money as compared to Denizen. Both of their store outlets are equally distributed between the town and heartland areas with Denizen having more than twice the number of outlets than Uniqlo. Denizen took on a quick penetration as they took over the Levi’s Signature stores. Nonetheless, Uniqlo’s strategic penetration plan with ideal store location in malls, enabled them to be more prominent and viewed more favorable. Lastly, considering their promotions, Uniqlo has a more integrated marketing promotion as they constantly engage their customers through several platforms with localised and appealing content. On the other hand, Denizen’s marketing promotions seems more disconnected as there was little attempt to sustain the interest of the customers in Denizen.

In conclusion, Uniqlo has a overall more consistent and focused brand campaign by first building awareness, then communicating their brand image and performance, next to work on judgment and feelings and finally to obtain resonance (I.e. through CBBE) There was an effort to constantly innovate and renovate to remain relevant to the customers. Conversely, Denizen  infiltrated the market quickly but lack the marketing efforts to sustain salience and work on building positive brand image and feelings. In the end, they were placing too much emphasis on using price promotions to entice customers to patronise their store instead on building a relationship with them. The lack of communication (with the not integrated marketing platforms) further widens the gap.

Consumer & Industry Trends

Consumer Trends

With a higher disposable income to spare these days, most youths are seeking quality over price in their purchase.  Youth in Singapore are often seen wearing the latest trends as they are brand conscious. They have the tendency to be influence by their peers when making purchases.

Magazines catered to the youths are seen promoting latest fashion trends, celebrity news, restaurants that help shape the overall purchase habits.

Singapore is still strongly influence by a westernized culture but in the recent years,  Korean and Japanese fashion are gaining their presence in the country as Korea and Japanese dramas and music are becoming increasingly popular.

For the young adults who have entered the workforce and enjoy a  greater financial freedom , they started to own credit cards and are seen purchasing higher end fashion labels.

There has been an increasing trend in youths purchasing digital gadgets such as MP3 players, phones with data plans for web browsing , as for the teens, such spending have exploded in recent years and is expected to grow rapidly.

Youths are often seems using social media sites and playing online games with the prevalence of computers and internet in households these days. Other activities such as dining in restaurants like Pizza huts, Swensens are common for youths and these companies have since offer students discounts to capture this group of consumers.

Industry Trends for the Denim Industry

1.  Asia Pacific Spending Trends

Total jeans sales in Asia Pacific amounted to US$23 billion in 2010 with men’s jeans taking up 56% of the total market share[1]. In general, Asia Pacific trends in jean are more skewed towards the economy jeans segment, however, with the rising affluence of the middle class, most of them are willing to switch to high end designer labels or mid-priced but well established international brands. Hence, we do see a potential growth in the premium segment in jeans in Asia Pacific as people get more affluent. However, the most important cause for growth of jeans in Asia Pacific is due to westernization of Asian cultures and the growing acceptance of jeans over traditional costumes.

2. Economy Jeans

2/3 of the worlds’ jeans are economy jeans, contributing to 39% of the total market value of jeans[2]. Although the market share for economy jeans has been shrinking due to the switching of consumers to the premium jeans market, the decrease in unit price per jeans has hidden the fact that economy jeans segment is still growing.

Economy jeans are typically the entry point for many companies into emerging economies, with premium jeans more significant in developed countries. Asia Pacific has the largest market for economy jeans with India and China getting more and more receptive to western cultures and abandoning their traditional costumes.

3. Move towards Sustainability

With the emphasis on sustainability and being green by the general consumers, there is a growing concern on not just the environment friendliness of the cotton (organic cotton). Organic cotton is cotton grown without the use of harmful chemicals such as pesticides and fertilisers. However, companies are placing their attention beyond just the use of cotton, but extending the green idea of sustainability across all their operations, including manufacturing techniques, water use, dye impact, soil health, labour issues and fair trade. Across the industry, we see a trend for companies to do the right thing in an economically viable way and to make a difference in the environment.

4. Rising Raw Material Costs

Rising raw material costs is a huge concern for the industry[3]. Unfavourable weather conditions has caused cotton yield to decrease, shrinking supply in the market, driving price increase. As cotton prices continue to increase, it presents a huge squeeze on the margins on the various brands in their bid to keep their prices low to guard against competition. They may have to pass on the increase in prices to the end consumers who will go longer in terms of purchase and thus impacting volume sales.

5.  Move towards Online Shopping

Although internet retailing represents only 4% of the total market, the figure has doubled over 2005 to 2010 and it is likely to continue growing and is unlikely that the trend will change as internet access and download speed continues to grow, especially in the Asia Pacific region[4]. Internet retailing gives one distinctive advantage, and that is to reach remote places where it is hard to set up a store. Cult following on blogshops in Asia, indicating that there is still much growth in this area where large brands and retailers have not tapped into.  Furthermore, brands will be able to use the online retailing presence to enhance their brand value as social network marketing becomes an increasingly more important part of brand image. One flipside for online retail is that consumers in general are still concerned about fit, which may impede sales online. However, online store extends the brand presence across geographical differences, pushing the brands into the comfort of consumers’ home, thereby increasing store traffic when consumers want to try out a particular piece of denim they see online.

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[1] Adapted from Global Denim Trends: Will the growth fade away published by  Passport on August 2011

[2] Adapted from Global Jeans Market Sees Fruit of Economic Recovery but There Are Still Challenges Ahead published by Euromonitor in May 2011

[3] Adapted from Global Jeans Market Sees Fruit of Economic Recovery but There Are Still Challenges Ahead published by Euromonitor in May 2011

[4] Adapted from Global Denim Trends: Will the growth fade away published by  Passport on August 2011