SWOT Analysis of Uniqlo in India

The report is on marketing in an international environment. The focus is on a company by the name of Uniqlo’s. It is a Japanese based company whose product line is the apparel industry.  It was established in 1949 and has Fast Retailing as its parent company. Uniqlo’s deals in the manufacture, retail and designing of Japanese casual wear. Following the growing trend of globalization in the business industry, Uniqlo’s has identified an international opportunity for a market specifically in India.  . To successfully penetrate and establish itself in the Indian market, Uniqlo’s has to come up with an adequate marketing plan. International marketing theories will be used to come up with a marketing plan. The market plan based on the theories such as S.W.O.T. analysis and marketing strategies is as discussed in the literature review that follows.

A S.W.O.T. analysis simply stands for strengths, weaknesses, the opportunities to be exploited, and threats associated rival companies in the same industry. The strengths and weaknesses are usually internal, that is; the company has control over while the opportunities and threats are external and are beyond a firm’s influence. For Uniqlo’s to be a success in the Indian market, it must consider these factors and come up with appropriate resolutions and marketing strategies where possible. Brooks, Heffner, and Henderson (2014).

The company strengths are as follows:

• Uniqlo is an already well established firm both locally and globally. With regards to global marketing, Uniqlo has a great expertise and experience rate in penetrating new making and translating the same to success.
• Uniqlo utilizes labor that is capital intensive rather than labor intensive. This has helped it to scale up or down its operations with regards to demand without causing much inconvenience.
• Looking at their supply chain, Uniqlos has a reliable source of raw materials that are consistent thus negating the problem of supply chain bottleneck.
• The company working on producing apparel that is sustainable, that is; they use natural fiber for manufacturing their garments and also utilizing recycling.

These are the hindrances that Uniqlo’s faces and can be improved upon. They can be generated vy answering the following questions:

1. How would Uniqlo’s improve?
2. What should Uniqlo’s avoid?
3. What makes Uniqlo’s loose sales?

The weaknesses are as follow:

• The profitability ratio and Net Contribution % of UNIQLO are below the industry average
• The company is capital intensive which replaces a lot of labor. This is not ideal for the Indian economy as it limits its employment capacity given that the country is labor intensive and well-endowed with the same.
• Uniqlo’s only produces apparel form one line only, that is; casual wear.
• Limited success outside core business – Even though UNIQLO is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.

This will be related to the business opportunities that can be exploited in the Indian Market. The opportunities are as follows:

• India is the second most populous country in the world which therefore translates to a huge market for Uniqlo’s finished good.Celly, Kathuria, and Subramanian, (2016).
• Also, due to the high populous, Uniqlo’s can save on capital involved in  setting up capital intensive labor and use the cheap cost of human labor in India as demand for labor is less than the supply.
• The Indian government has a green drive which Uniqlo is currently practicing and thus it will also receive incentives and subsides.Dev, N.K. and Shankar, R., 2016.

These are as follows:

• There already exists well established apparel companies in India, that is; Raymond, Reliance Retail, Aditya Birla Fashion retail, Future Retail and Tata Group who are the main rivals.Venkatkistareddy, and Kumar (2016).
• No regular supply of innovative products – Over the years the company has developed numerous products but those are often response to the development by other players. Secondly the supply of new products is not regular thus leading to high and low swings in the sales number over period of time
• Given the global inflation, the cost of labor is gradually increasing and this could be a major impediment to the profitability ratio of Uniqlo.

This is a plan on how Uniqlo products will be modified to suit the need of the target audience. Cant, Wiid, and Kallier (2015). As mentioned earlier, Uniqlo specializes in men’s’ casual wear. This means that Uniqlo must study the target audience tastes and preferences in clothing and what other companies are doing in production. In this case scenario, the target audience is the Indian market a people who are rich in culture and also connected to it in terms of their mode of dressing. Most of the people in India wear traditional wear (Saree for women and dhoti for men) while in the urban areas, there is a mixture of traditional wear and western wear. Also, India there is national dressing code and also official wear. The Indian dressings code both national (traditional) and formal wear is as follows; for men, Lungi, Dhoti, Kurta, and pants and shirt while for women; Salwar suit, Lahenga Choli and saree. Saikrishna, (2017).

It should also be noted that the dressing code of India, though similar in style varies depending on the geographical location, ethnicity, culture, and the climate. To acclimate to the current situation and be genuine competitors in the industry, Uniqlo must change its production strategy to suit the needs of the target audience which in this case is the larger Indian adult population.

The company will no longer produce men’s casual wear in India as opposed to Japan but instead will produce traditional and formal wear. However, there will be a mix of sustainable fiber and synthetic fiber. Apparels will be specifically for the adults but the style will vary depending on the geographical location, climate of the target audience, their ethnicity and culture.

Market Segmentation for Uniqlo in India

There is a variety of dressing code that Uniqlo can exploit but currently they are not producing any of them. For this reasons, Uniqlo will now specialize in both men and women clothing.

Also, India is embracing sustainability fast. To be ahead of other companies, Uniqlo’s will both sustainable and synthetic fiber. The reason for producing apparel using synthetic fiber is that it is readily available in India thus cost of the materials will be cheap.

Segmentation is how Uniqlo will divide the potential market. Craft, and Hassan (2015). The market can be divided into:

• Differentiated marketing – this is when diversity is small in the market.
• Undifferentiated marketing –. This is where a company chooses several segmentations in the market, that is; diversity in their target audience.
• Concentrated marketing- this is when a company selects a specific market segmentation and direct all their efforts towards it
• Customized marketing – this is where the target audience is diverse but the company offers to satisfy the unique needs of each customer audience.

Uniqlo will use the customized marketing strategy in segmentation since the Indian market is segmented into diverse sectors. Each sector will need a different kind of apparel to acclimate with the prevailing conditions.

 There are four types of market segmentation as follows:

• Behavioral segmentation
• Demographic segmentation
• Geographic segmentation
• Psychographic segmentation

This involves dividing the market into locations, for example; city, rural or urban areas and regions. Uniqlo’s will divide the market into rural and urban areas. It can also be used to segment a market in terms of climate. In the urban areas, Uniqlo’s will target sale of formal wear in the urban areas while in the rural areas it will target the sale of traditional clothing since this the main dress code in both areas. Gunter, and Furnham (2014).

This is dividing the market according to religion, ethnicity, income, gender and age. Uniqlo’s will segment the market into various demographic segments. First, the market will include both male and female adults for their apparel. Also, due to religion, which is dominantly Hindi in India, Uniqlo’s will seek to produce and sell attire that is of Hindu culture. Moss, (2017).

This is segregation of the market according to the customers buying behavior in terms of frequency, brand loyalty, during major occasion etc. for this reason,  Uniqlo’s has divided the market in relation to frequency of buying. For this reason they will focus a bit more of their effort in the urban areas where residents are frequent buyers of clothes. Also, they buy both traditional and formal wear. Dietrich, et al (2015).

This is dividing the market according to the consumer lifestyle, attitudes and interests. In using this segmentation, Uniqlo’s will consider the population that embraces fashion which is in cities thus they will have to keep up with fashion which is ever changing. Gunter, and Furnham, (2014).

Justification of decision

India is a country with a large population of women and thus this must be exploited. Also, India is embarrassing and encouraging sustainability and this will be a plus in the further as other companies not using sustainability try to catch on. Also, different consumers have different tastes and preferences thus the practice of customization with regards to target audience in terms of climate which is associated with geographical location, culture and ethnicity.

This is concerned with how a company brands its products in relation to how their rivals brand their products. Roll, (2015). Customers tend to associate themselves with a brand. In connection to this, Uniqlo’s will have to come up with a unique brand that will make their products look more appealing and superior to their rivals. Also, if the brand creates an appealing look and sense of superiority, then customers will want to be associated with the brand. For example, people tend to relate with Gucci as their brand creates a sense of superiority and that is their main selling point. Virvilaite, Tumasonyte, and Sliburyte (2015).

Marketing Strategies for Uniqlo in India

Customers tend to associate themselves with a brand and thus to attract them to make repeat purchases, then product branding will be essential. Also, branding makes customers assume a product is more superior to other similar products.

This is how a company in

 this case Uniqlo’s will attach monetary value to their products. While considering pricing, it will be done incorporating the 4p’s strategy (place, promotion, price and products) and also other factors such as demand, completion, economic status and quality of the products and other products in the market. Kienzler, and Kowalkowski, (2017).

There are four main pricing strategies that Uniqlo’s will consider, they are as follows;

• Competitive pricing – this involves pricing a products according to what other rival firms in the same industry have priced their similar goods.
• Cost plus pricing – this involves the calculation of the cost incurred when the product enters the market for sale and putting a mark-up.
• Price scheming – this is charging a high price for as product when it is new in the market and lowering the cost as the market changes.
• Penetration pricing – this is charging a low price for as product when it is new in the market and increasing the cost as the market changes.

Since Uniqlo’s will be entering an intentional market, the pricing will not be based as that of Japan but instead it will be based on the Indian market. After considering the above pricing strategies, Uniqlo’s will use the penetration pricing strategy and also considering cost plus pricing to ensure that the business breaks even but doesn’t make a loss. Uniqlo’s will analyze what other rival firms are charging for similar products and charge a lower price.

In using penetration pricing, the lower monetary value charged to the customer’s for similar or more quality customers will aid in luring customers. Spann, Fischer, and Tellis,(2014). Since Uniqlo’s will have branded their products, customers will tend to attached to their apparel. Once customers are attached to Uniqlo’s products, then the prices will be increased gradually. This will not change sales much as the customers are already loyal to the Uniqlo’s brand which they are already have an attachment with.

This is the plan which involves the process or channel (supply chain) via which the customer will be reached by a product. Solomon, et al (2014).

There are three main strategies to be considered in this case scenario, that is;

• Indirect distribution – this is a chain of distribution that involves middle men like wholesalers and retailers before the product reach the customers.
• Direct distribution – this is where there are no intermediaries and the producer will sell directly to the customer.
• Intensive distribution – this is where a company sells its products via numerous outlets such as supermarkets, stores, etc.

For uniqlo’s, it will use all the three channels. In the urban areas and cities, there is a high percentage of internet users and internet connection is quite adequate in this areas. In this location, Uniqlo’s will resort to direct distribution. This will be achieved via establishment of a website where customers can purchase their apparel and also establishment of their own physical or offline store. This is also relevant as it will reduce the cost incurred in involving middle thus justifying the market penetration pricing strategy. Also intensive distribution will be used in these areas; Uniqlo’s will also supply their products to supermarkets also cancelling out middlemen.

In the rural areas where there are low internet connectivity and very few or no supermarkets, Uniqlo’s will have to use distributors so that the goods can reach the rural areas. Justification for this is that they will negate the cost of establishing and running their own stores in rural areas, which are the largest areas geographically and they would need many stores. Fennell, et al (2016).

Urban areas are have are teach savvied and tend to use internet more often. Also, unlike rural areas, urban areas are well connected to the electricity grid thus the use of the two methods of distribution strategy.

Justification of Decision

This is communication to the customers in a bid to make them aware of the existence of a product in the market. For promotion, Uniqlo’s will use various methods with consideration of geographical location. Allegranzi, and Pittet (2017).

There are various modes of promotion which include:

• Sales promotion
• Public relations
• Personal selling
• Direct marketing
• Advertising

In this case scenario, the most suitable method for Uniqlo’s to promote their apparel will be In the urban areas, Uniqlo’s will use the electronic media to advertise. This will include social media, television adverts and radio. Majority of the population in the urban areas use social media in India thus ensuring the adverts will reach as many people as possible. Also, in the urban areas, majority of the households have electronic media devices in their homes or place of work.

In the rural areas, there is inadequate usage of the internet and also connectivity to the power grid. For this reason, Uniqlo’s will use print media such as posters and newspapers to promote their apparel in these areas. Ryan, (2017)

Communication to potential customers on entry of a new product is essential in order to make and reach targeted sales. However to ensure communication reaches the target audience, it must be done appropriately. Thus, since communication will be done via media, it will be essential to consider the media at the disposal of the population. For this reason, the target population will be divided into rural and urban.

Uniqlo’s did a market survey to establish the potential problem it may face both pre and post introduction of their products in to the Indian market. The problems and possible solutions are as follows:

• Infrastructure – Infrastructure in India is either of substandard quality and those of stand quality have a higher demand than supply thus creating a shortage.  This also drives the rental prices to the roof. For this reason, the short-tern solution will be to look for building space in buildings under construction. In the long-term, Uniqlo’s will lease a building for many years.
• Recruitment – while as there is a large labor force in India who will apply for jobs, only a few of them are talented professional. For this problem, Uniqlo’s will train their recruits to suits their need for success.
• Price centric customers – India is a country where its citizens are more inclined to price when purchasing goods and services and don’t have brand loyalty.  For this reason, Uniqlo’s will try to base their prices in a consumer friendly manner.Das, (2014).

For future management control is concerned with measuring the performance of the business. Uniqlo’s target in the first year is to break-even. If this is achieved, then that will be a success. In the long term, Uniqlos tend to make profits and establish themselves firmly in the Indian market. This will be measured by a survey to indicate their market share in India.

• It is cheaper to lease a building than to acquire land in a foreign country and build one. Also, disposal of building in case of failure may prove problematic and losses.
• Uniqlo’s will have to train their employees so as to mold them as per their requirements.
• Given that Indian citizens are price eccentric, then they have to attach prices that are reasonable and in close harmony to rivals for more sales.

Conclusions, Recommendations And Timeline

Uniqlo’s is an already well established company in Japan with a lot of experience in the apparel industry. From the report, it has been established that marketing strategies will be very crucial for Uniqlo’s to establish them in the Indian market. If the strategies indicated are followed to the letter, then it would be more than a guarantee that Uniqlo’s will be a success. However, this success will be in stages. The first stage is the short term where their aim will be to break even. In the long run which is three years; their aim will be to make a profit. However, Uniqlo’s should also consider production of apparel for all age set rather than adults only. Also, they may take over other companies in the same industry to cement their dominance and thus in the long run be in a position to dictate their prices.

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