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FAST FASHION IN CHINAAn Empirical Study /By Nan Shu & Zhang Lin
Introduction• Background – Gap – Objective
• Literature Review
• Model & Hypothesis
• Methodology
• Analysis of Descriptive Data
• Business Analysis & Implication
• Limitation & Conclusion
2
3
Background – Gap - Objective
4
Background
Fast Fashion Competitive advantage –
affordable price
Has developed in western countries
for many years
Still in developing stage in China
Gap - Objective
5
Intensive demand of Chinese consumers
Problem in meeting Chinese consumers demand
Gap
Objective• Reduce the gap• Giving more advices to companies on
meeting consumers’ preference• And improving operating performance
in China
6
Literature Review
Literature Review
7
• SG. Hayes and Nicola Jones (2006) – Results shown on financial report or annual report reflected fast fashion corporates’ financial performance.
• Choi, Liu, Mark, and To (2010) -- Consumers’ attitude incurred effects towards brand extension.
• Caro and Martınez-de-Albéniz (2014) -- Fast fashion business model included: (i) fashionable clothes mostly for consumers under 40; (ii) affordable prices in the mid-to-low range; (iii) quick response; and (iv) frequent assortment changes.
Literature Review
8
• Cachon & Swinney (2011) -- short production and distribution lead times enables customers to actively buy trendy products; Fashionable design could increase market share and customer value.
• Cheng and Chi (2009) -- Brand loyalty of Chinese customers to fast fashion is considered a little, but it is a necessary factor of Chinese customers' preference.
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Model & Hypothesis
Model
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Corporates' Performance (from
Companies' Perspective)
Corporates' Performance (from
Consumers' Perspective)
Quick Response
Brand
Affordable Price
Fashionable Design
IV DV
Warehouse theory
“4P” marketing theory :Price
Model of Caro and Martınez-de-Albéniz (2014)
Part Ⅰ Part Ⅱ
Hypothesis
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H1 From consumers’ perspectives, if other factors are equal, the quick
response has a positive correlation with the corporates’
performance.
H2 From consumers’ perspectives, if other factors are equal, consumers’
brand loyalty has positive correlation with fast fashion corporates’
performance.
H3 From consumers’ perspectives, if other factors are equal, the
affordable price has a positive correlation with the corporates’
performance.
H4 From consumers’ perspectives, if other factors are equal, the
fashionable design has positive correlation with fast fashion
corporates’ performance.
Methodology
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Methodology
PartⅠ
PartⅡ
Factors affecting
Chinese consumers’
preference on fast
fashion products
Apply the result of
customers’
preference back to
companies’
operation
13
• Descriptive
Findings & Analysis
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Findings & Analysis--Descriptive
70%
30%
years old25
20%
80%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
never a little some very
Knowledge of the term “fast fashion”
0 1 2 3 4 5 6
Benetton
Others
Mango
Gap
MUJI
Uniqlo
H&M
zara
Scores assigned
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Findings & Analysis—Linear Regression Model
Model Summary
R
Square
Adjusted R
Square
Std. Error of the
Estimate
.711 .708 8.614
a. Predictors: (Constant), Quick response,
Fashionable design, Affordable price, Brand
ANOVAb
ModelSum of
Squaresdf
Mean
SquareF Sig.
1
Regressio
n72,406.76 4
18,101.6
9243.935 .000a
Residual 29,460.15 397 74.207
Total101,866.9
1401
a. Predictors: (Constant), Quick response, Fashionable design,
Affordable price, Brand
b. Dependent Variable: The degree of customers' preference
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Findings & Analysis—Linear Regression Model
Coefficientsa
Model
Unstandardized
Coefficients
Standardized
Coefficients
t Sig. B Std. Error Beta
1 (Constant) -4.250 2.444 -1.739 .083
Brand 6.510 2.365 .128 2.753 .006
Fashionable
design
3.791 2.138 .075 1.773 .077
Affordable price 10.391 2.512 .184 4.137 .000
Quick response 25.915 2.448 .530 10.587 .000
a. Dependent Variable: The degree of customers' preference
The degree of customers’ overall preference of fast fashion brands =6.510Brand + 10.391Affordable price + 25.915Quick response.
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Business Analysis & Implication
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Fashionable Design
Observation-mainly in Yale Shopping Mall
▪ The most crowded shop is H&M ▪ More people walk around in basic product area in MUJI & Uniqlo▪ The style of H&M: fashionable; the style of MUJI & Uniqlo: simple and basic
Annual report
H& M: A strategy “fashion for all”
Implication▪Clarify strategy & Position▪ Who provide various kinds of fashionable products: insist creating fashionable products which are accepted by most of people as fashion. ▪ Who provide simple basic products with high quality: do not need to invest too much on fashionable designs
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Brand
Observation QuestionnaireThe most crowded shops is H&M
Annual report H& M: A strategy “increase presence in China”
People have purchase experience
Implication▪Brand loyalty(Singh &Pattanayak, 2014). ▪ Expansion--encourages customers to interact with the brand (Kozinets et al, 2002) –improve brand loyalty▪ Increase presence-have more purchase experience-improve brand loyalty
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Quick Response - Findings
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Q: frequency of distributing new arrivals?A: Normally replenish inventory and receive new
arrivals once a week.
Twice ormorethan
twice aweek
Once aweek
Once ahalf ofmonth
Once amonth
Once aseason
Once ahalf ofyear
Once ayear
Lessthan
once ayear
No newproduct
Consumers Believe 31 90 114 101 50 9 2 1 4
Consumers Hope 39 89 123 98 46 2 2 0 3
31
90
114101
50
92
14
39
89
123
98
46
22 0 3
0
20
40
60
80
100
120
140
Nu
mb
er
of
Pe
op
le
Frequency of Providing New Fast-fashion Products
Consumers Believe Consumers Hope
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Quick Response – Findings
Chart 3: Weekly new arrivals in the Women section in Fall 2013. (Caro and Martınez-de-Albéniz , 2014)
Quick Response - Implication
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Company should consider consumers’ expectation but it cannot be the reason to limit the ability of quick response
Implement quick response based on own market position
Insist in adopting quick response to provide various kinds of products
not give too much component on quick response
Affordable Price
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<= 300 RMB < 200 RMB
Average spent:
Through Questionnaire:
Average amount per month spending on clothes
201 ~ 500 RMB
Acceptable highest price of a normal coat
201 ~ 400 RMB401 ~ 600 RMB
Accept that charge more for products’ other excellent features
Implication▪ Normally the amount of a normal coat below 600 RMB is safer for company▪ Companies would better to try to charge less than 400 RMB if possible▪ Unwise to charge as low as possible
Limitation & Conclusion
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Limitation
Lack of resource and information about China The information of
the brand we used reflects the situation of its parent company instead of the brand itself
1
2
3
Limitation of language of official materials
Limitation
4
5
7
6
The distribution of questionnaire may mot be very randomly
The design of questionnaire may have some influence on respondents’ answering
The position of observation and interview was limited
Some factors are too subjective to measure
Conclusion
Chinese consumers are influencing by fast fashion brands no matter whether they are aware of
- Fill the gap between customers & operators in Chinese market. - Obtain factors affecting customers’ preference
Brand, affordable price & quick response all provide important implications to company
- Regression model: brand, affordable price & quick response are important factors- fashionable design still provide guidance
Fast fashion industry in China market should be further studied
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Reference
Cachon, G. P., & Swinney, R. (2011). The Value of Fast Fashion: Quick Response, Enhanced Design, and Strategic Consumer Behavior. Management Science, 57(4), 778-795
Caro, F., & Martınez-de-Albéniz, V. (2014). Fast Fashion: Business Model Overview and Research Opportunities. To appear in retail supply chain management: Quantitative models and empirical studies (2nd ed.). New York: Springer.
Cheng Yu, S., & Chi Leung, H. (2009). Salespersons' service quality and customer loyalty in fashion chain stores: A study in Hong Kong retail stores. Journal of Fashion Marketing & Management, 13(1), 98-108.
Choi, T. M., Liu, N., Liu, S. C., Mak, J., & To, Y. T. (2010). Fast fashion brand extensions: an empirical study of consumer preferences. Journal of Brand Management, 17(7), 472-487.
SG Hayes, M., Metropolitan University, & Nicola Jones, M., Metropolitan University. (2006). Fast fashion: A financial snapshot. Journal of Fashion Marketing and Management, 10(3), 282-300. doi: http://dx.doi.org/10.1108/13612020610679277
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