University of the Arts, London Tara Premnath A Case Study On The Globalisation And Strategic Reign Of ASOS Subject: Retail Branding and identity Abstract This report analysis the strategic branding policies of the online retailer ASOS and comprehends its position in the global market. It evaluates the standardisation and adaptation techniques ASOS employed to become the no. 1 online retailer in the world. The company vigilantly practices standardisation and adaptation in its brand architecture and distribution channels. Its branding policies have made way for its accomplishing market dominance.
ASOS approaches the market with a faultless differentiation technique through its unique services and product categorisation. It gives its customers an inimitable shopping experience with its ingenious website design. Analysing the 4 p’s marketing mix and critically absorbing the SWOT analysis, the brand can ascertain its current market position and prospects for future expansion in the global scenario. Enhancing its CSR (Corporate Social Responsibilities) activities and bringing it out into the retail front, ASOS can capture the attention of ethical consumer groups and thus work on the company’s benevolence and future expansion.
Employing a canny approach and by detecting possible threats and risks, ASOS performs brand extension strides to cement its place in the industry. Table of Contents Introduction4 Methodology4 Globalization by Theodore Levitt5 About ASOS6 Standardization and Adaptation6 The Four P’s of ASOS8 Differentiation and competitive advantage9 ‘The Five Forces’ Model of Michael Porter11 Experiential branding11 SWOT Analysis12 Conclusion and Recommendations13 Bibliography14 Introduction ASOS is an online retailer who has taken over the virtual shopping sector in the current market.
They have proved their methods of marketing and branding with their reign in this sector and through high sales and market growth. The application of globalisation along with standardisation and adaptation techniques to analyse and take over a particular market is part of the success story of ASOS, the most visited online store globally (daily 2012). From Levitt to Gates, globalisation has been defined in many terms and has been given many theories but what companies like ASOS and NEXT have made pragmatic and seen victory is the real, definite and concrete form that is more accurate.
This report looks into the thought-provoking schemes of branding and retailing and how ASOS has altered the rulebooks of retailing to take-over the market. Methodology Primary data for this report was collected from the original website of ASOS. Their strategies and accomplishments were supported by other accredited sources like emerald insight and the times along with the guardian and daily. The report states the significance of globalisation and how it has affected the online fashion retailer ASOS. The analysis of branding and its policies in the global retail environment is a key part of this report.
The impact of globalisation and localisation and the various strategies organisations had to adapt has affected the overall branding, marketing and retailing techniques in this era. Michael Porter’s differentiation and competitive advantage theories are used to understand ASOS and its success over similar retailers in the industry. This report will cover the various features of a successful marketing session like marketing mix, segmentations, SWOT analysis, brand architecture, policies, values and portfolio.
It will point out the various roles of ASOS in the current market and how it has seen success. Recommendations on how the brand can expand its success through brand extension method have also been given supported by diversification theories of Ansoff matrix. Globalization by Theodore Levitt Theodore Levitt, a former professor at Harvard Business School was the first to coin the term Globalization and to give several theories to it. He termed it as a process of seeing the whole world as one by internationalising products and services in the market.
He suggested the method of seeing the political, social, cultural and technological differences as a collective and to approach it with the same technique. “Globalization in his words is the process that integrates and joins different nations and different people in various factors such as economically, politically and culturally to make one larger community. And this was possible with the help of technological advance as it is the job of breaking down the barriers consisting of distance and time”(Levitt 1983).
Throughout the years, globalisation has developed into, not just a technique of market approach but rather a necessity. With ever increasing improvements in transport, communication, and reduced trade barriers, international trading which was once considered a luxury is now a necessity in many sectors (Vrontis, D. et al 1999). Organisations cannot sell previous season clothes or products to less developed markets. Countries all over, expect companies to approach them with the same products as services as the rest of the world.
Thus organisations have realised that they have to standardise their products throughout the globe in order to get recognition. Technological advancements have been at the highest rate ever since Levitt’s theory. The path of technological movement has been so far-reaching that organisations have used this path to approach markets and hence have led this into a technique of entering a market or launching a new brand. ASOS, similarly, launched its website in 2000 as an online store (ASOS. com 2002). The company manipulated the movement of globalisation during that year, predicting a strong future for online retailing.
They used the technique of standardisation in order to meet customer demands in the global scenario through technology. About ASOS ASOS. com is one of the leading global online fashion retailers and was conceived in June 2000 by two innovative men Nick Robertson & Quentin Griffiths. ASOS. com website offers 50,000 products and adds upto 1500 new products every week. Besides their own label they also sell nearly 250 other brands like Balenciaga and YSL with product lines varying from menswear, women’s wear, footwear, jewellery, accessories and beauty products.
They are proved to be UK’s top most independent retailer in their genre, concentrating on a target market segment of young (16-34) consumers who comprises 20% of potential online shoppers (Mintel 2011). ASOS has been very successful so far and have acquired to penetrate into different markets like UK, USA, Germany, France, Spain, Australia and Italy and also maintains regular shipping of their products from the central distribution unit that is located in the UK. They have shipping to over 195 countries so far from its distribution warehouse in UK. (www. asosplc. com 2004).
ASOS has been successful in the Global move and boast of having a Global pool of followers since the time they expanded. They began as just an online store to emerge as one of the most preferred Global fashion destinations for millions. ASOS is the second most visited online store in UK, after Next (Hitwise 2012). Standardization and Adaptation These are two major factors involved in globalization and internationalizing of products. Standardization means penetrating into new markets using the same product without any change and using a standard method of entry and market sustainability.
This also helps in larger distribution and lesser production cost. Adaptation strategy consists of designing the product to suite the requirements of a particular market. Adaptation implies in, changes due to cultural and technological differences. Multinational Companies (MNC) like ASOS actually needs marketing strategies that integrate both Standardization and adaptation. Every organisation emerges into a new market with globalisation as their key factor. But they are always forced to incorporate adaptation techniques in order to fit every market’s product demand.
But the degree to which they can standardise or deign to adaptation should be closely analysed by each company (Paliwoda, et al, 1998). But every global organisation employs a rather integrated standardisation and adaptation marketing strategy (Vrontis, D. et al 1999). For e. g. : ASOS entered China with a standardised approach with similar products and services but had to adapt itself for its Chinese customers. The company offered products like Chinese jackets and accessories and also had promotional activities and sale during Chinese New year and other popular festivities.
ASOS explored and expanded the Global reach with a lot of innovate concepts proving their standardisation and adaptation proficiencies: 1. World wide delivery 2. Culture defined products 3. Regional promotional activities 4. Domain structure 5. Geo-Selector 6. Currency ASOS has a brand identity of a user-friendly online store. It uncovers its triumph in its service and quality products. The company has gained customer appreciation, which is evident from the various credits and recognitions they have received over the years. ASOS claims them as a ‘customer obsessed’ brand (ASOSplc. om). They keep customer satisfaction as high priority rate in all their activities, which reflect their brand values, policies and personality. The 4 p’s analysis indicates how they use their strategies to communicate their brand image to their target consumers The Four P’s of ASOS Product | ASOS is not only a one-stop shop for any high street latest look but they also sell many more designer brands such as Fcuk, Miss Sixty, Chloe, Republic, Firetrap, Rock (www. asosplc. com 2004). These products are not only sold by ASOS but also styled based on celebrities.
The products are categorised into men’s wear, women’s wear, kids wear and accessories. They also provide customers their monthly magazine with a lean charge, which talks about the latest fashion trends, outfit regulations and the dos and don’ts and updating people about the ever-changing fashion. | Price| ASOS uses a reasonable pricing strategy. The company has streamlined their prices as affordable with reasonable delivery charges. They sell products that are categorised as high street at a lower cost. | Place | ASOS does not have a physical store as such but their head office is located in London if the customers need to visit.
The website is their place of sale (www. asos. com) which offers all the information that a customer may require. Adding on to this is the customer care service which in always ready to help customers. | Promotion | ASOS proves to be very market orientated and using their CRM system they try to understand their customers’ mind-set. They use the selling point i. e. their websites, as the main medium of promotional activities. By this they have a clear idea of the time and product customers are driven to and apply their promotional offers.
They offer discount codes and send mails and alerts to their loyal customers to keep them updated on the latest collection and offers. They also employ their magazines with the promotional updates. They have created a network for their consumers through portals like YouTube, Twitter, Facebook etc. to interact with them. Facebook itself has 12% of all-traffic of ASOS. They also recently assimilated one of their e-commerce stores into a Facebook page. This allows customers to shop at ASOS without leaving their Facebook page and also share their purchases. They encourage customer interaction through blogs and other social media. Fig: 1 4 P’s ASOS has so far been able to achieve brand loyalty and awareness through various categorisation and brand extension in the right direction. Adapting a wise marketing stratagem, they have been skilled to retain loyal customers and craft brand responsiveness and awareness by manipulating their branding policies in correlation to the existing market circumstances. In 2012 they launched their iPad version and products like men’s supplements to boost their advertising standards and in turn benefit through better customer loyalty and brand awareness (ASOS. annualreport. om 2012). ASOS deliberates their product range and extensions like ASOS White, ASOS Black, Africa and Reclaim, crucial to the brands growth as it portrays price strategies, brand strength and brand values (Costa 2011). Nick Robertson reveals his interest in brand extensions by collaborating with reputed brand like H&M and Zara and also their interest in extending into home wares. As they keep going more international, they believe it isn’t all about brand extension but aiming at the same customer globally (Costa 2011). Differentiation and competitive advantage
These characteristics of the brand give ASOS comprehensive advantage over its competitors through differentiation. Porter defines differentiation as the fruit of specific activities a firm performs and how these activities affect the buyer (1985 p: 120). An organization can in turn gain competitive advantage by contributing to its strategic goals and by considering increase in performance and productivity (Turban et al, 2001). Being an online only corporation ASOS is at benefit here, as they are exempted from cover costs incurred from store space, store staff and vendors.
These can be achieved through various industrial characteristics like: * Absorbing Demand Fluctuations: Michael. E. Porter points out how a company can benefit from having the right competitor by manipulating the demand-supply situation of the market (1985). A company can attain competitive advantage by meeting the demand in the market, which cannot be met by its competitors. ASOS currently has over 50,000 products and introduces 1500 new products every week. This strategy adapted by the brand gives it superiority over similar retailers who fail to meet customers’ demand.
Habituating this trend prepares ASOS for any unexpected demand in the market. * Enhance the Ability to Differentiate: A company realizes advantage over it competitors when it meritoriously provides them with a standard of comparison. ASOS has been able to provide similar services with better benefits, which make it easy for customers to compare and decide. For e. g. : The brand provides free next day delivery and free pick up of returns to premium or privileged customers. This criterion makes it distinctive from the contender Next. co. uk who implies a reasonably higher price for these services. (Porter 1985).
Michael Porter suggests the use of Competitive Forces Model (fig: 3. ) to identify rivalry within the industry that can endanger and challenge a company’s existence. The customers power to bargain or to demand for more products or even a change in their demand will affect the company’s brand portfolio. As far as suppliers are concerned, keeping them happy is a crucial part as they can rupture the demand supply balance with inadequate supply to the retailer. In the case of ASOS, if one of their external links like River Island stops providing them with the products it will disturb in their normal sales figures.
Many new companies are exploring the sector of online retailing, which puts ASOS in a critical state. This forces the brand to come up with new and innovative ideas to create differentiation for market sustainability and also to overcome the threat of new substitute products. Five Forces Model Fig: 3. Competitive forces Model (Porter 1985) Experiential branding Being a virtual shopping destination it is very important to provide customers with a unique and creative experience. ASOS also been very prosperous in designing a distinctive fashion experience for their customers, as a retail trader.
It aims at providing its target audience with sensory interactions to emotionally influence them and to mould their perception of the brand. Through experiential branding strategies, they have given the customers a feel of something that cannot be attained from stores or retail outlets. They have set an example for detailed page presentation of fashion products. They provide accurate information on care, delivery and also their return policy. They employ transparency and give a boost to customers when they come across the interactive global navigation system which tracks the products movement until it reaches the customer. SWOT Analysis
Strength| * Direct online selling * Diverse range of products and categories and impressive rate of new product introduction * Utilization of the technology * 24/7 customer service * Concentrates on a smaller market segment * Use of social media (Facebook) as a shopping destination * High street garments at affordable price| Weakness| * No physical experience * Limited target customers * Comparatively less cosmetic products although being a women oriented brand * Limited to customers with internet facility * Wide product range restricts focus on each category| Opportunities| * The inflammation of online shopping * Increase in women’s working class and financial independency in-turn increases sale of core product category (women’s wear) * Effective market segmentation * Better internet facilities across the world * Reach more developing countries through their reasonable pricing strategies| Threats| * Increase in competition * Economic fluctuation * Limited life cycle of products due to the pace of change fashion * Ever changing demand * Market saturation by potential competitors * Changing customer behaviour| Fig: 2. SWOT
Conclusion and Recommendations Through effective SWOT (fig: 2. ) analysis and comprehensive research ASOS can explore the segments they can manipulate for future expansion through an improved brand portfolio. By increasing the age criteria of their potential consumers and by concentrating on a bigger target audience they can attain effective expansion and market growth. Ansoff recommends the use of diversification to gain a grip in an existing dominating industry and therefore reduce risk that arises in business portfolios. But he also points out the risk factors the company will have to face by diversifying through the introduction of new products or categories.
Thus he points out the importance of choosing the products and planning the extension wisely in order to achieve a good rate of return instead of a tainted brand image (1957). Implementing a credible market extension policy, ASOS can introduce a wider range of cosmetic and related products for the interest of their core customer category (women). They can make use of the current working class among women and introduce a wider range of women’s formal wear therefore increasing their turn over in women’s wear category. Introducing a range of more affordable clothes and better website interface that enables sectors with bad Internet facilities to use the website will help them to reign the market of many developing countries.
Enhancing their CSR activities will help them in building a better brand image and to boost up their goodwill. Creating products or categories that aim at profit donation to charitable trusts will boost up their brand image. Summarising all the above topics, it is evident that ASOS has been successful in portraying themselves as a business conscious brand. With their effective and tactical approach and by crucially following the market rules laid out by experts they have proved to be one of the most affluent online retailers. Bibliography 1. Aaker, 1991. Managing Brand Equity: Capitalizing on the Value of a Brand Name. Jossey Bass. 2. Aaker, D. , 2010. Building Strong Brands. Pocket Books. 3. Anholt, S. , 2006.
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