Being a ready-to-wear company, Caroll offers a range of products divided into two parts: clothing and accessories. Clothing is actually its main activity and it gathers blouses, coats, dresses, jackets, pants, and sweatshirts. Among accessories, we can find bags, jewels, and shoes. Two things can be point out here: the fact that Caroll sells accessories is a clear way of rapid adaptability to markets which is one of the elements of its mission statement. The second is that thanks to the purchasing of Caroll by the group Vivarte (ex-André) in 1988, the brand enjoyed the know-how of this group about the shoe business.
We will now position Caroll’s products on the Boston Box and develop on our selection:
No Caroll’s products are positioned as Dogs products because the clothing and accessories markets are not declining even if the competition is rude in those markets. Accessories can be considered as Question Marks products simply because it is a relatively high competitive market but opportunities are numerous and if investments are dedicated to them the return on investment is potentially high and that is why accessories could rapidly become Stars products bringing a lot of money to the company. Concerning clothes, they are more classical products which are working well since a long time, not needing significant investments to survive while being profitable for Caroll. Depending on the type of clothing (blouses, coats, dresses, jackets, pants, and sweatshirts), necessary investments can be higher from one to the other and that is why we put clothes between Stars and Cash Cows products.
Now that Caroll is positioned on a higher quality market thanks to the brand renewal, it can concentrate itself in the innovating process of its product range. Caroll is constantly renewing its products and especially accessories aiming to keep its customers’ brand loyalty.
- Caroll’s Target
Caroll addresses its products to a specific market target which is the executive and dynamic woman between 25 and 45 years old, active and urban, appreciating the simplicity of forms, worked materials and small details like net effects, point games, muslin, and embroidery (Distrijob.fr, n.d.). This type of woman worries a lot about her presentation and image. This woman also has a relatively high purchasing power not because Caroll’s products are expensive (because they are not) but more because the objective of quantity is followed by Caroll. A woman with high purchasing power can buy more reasonably priced products from Caroll. This target brought success to the company because of two factors: first, the woman is getting more and more independent and thus she can decide by herself when she wants to go shopping and how many she wants to spend; the second one is about the increasing purchasing power of women, more and more women take part of the active population in France (Distrijob.fr, n.d.).
- Caroll’s distribution network
Caroll’s distribution network is based on a system of franchises located in cities of more than 100,000 inhabitants. Since 1993-1994, the network is composed of branches and affiliated independents commissioned on ready-to-wear clothes’ sales. Caroll’s stores have a size between 100 and 150 meters squared proposing a clear, modern, and discrete installation where the beige color and enameled wood dominate. In very big French and European cities Caroll has bigger shops (between 200 and 500 meters squared). Stocks and provisioning are managed by the central station. The brand is also present under the form of corners. Several partnerships have been created entailing 2,500 additional points of sales such as with Galleries Lafayette in France and El Corte Ingles in Spain (Distrijob.fr, n.d.).
About international sales through the brand name “Caroll Paris”, we saw that Caroll is already implemented in French bordering countries like Spain and Switzerland and further countries like Dubai and Tunisia but a first important drawback for the company appearing here is that it is not present in emerging countries where its competitors already are. It could be a real threat for Caroll entering that new market because it could be very difficult to become better than those well established ready-to-wear companies.
- Competitive and price positioning analysis
Knowing that the clothing market is a very competitive market, we will focus on the two main competitors of Caroll within the middle class market position which are H&M and Zara in France. They can be considered as the current leaders of the worldwide fashion retailing.
Zara owns 850 stores all over the world. It has adopted the same business model as Caroll which is providing high quality products sold at accessible prices. Nevertheless, it has a lower quality and lower price than Caroll. Its promotional strategy is nearly null knowing that the company keeps a maximum of credit to open new stores faster.
To promote its brand, H&M adopted a different strategy based on supports made by pop stars in order that customers compare themselves to them. Concerning its positioning, we can consider that H&M’s quality is even lower than Zara’s. It is the same for pricing. But with a 556 million Euros turnover, H&M is the French middle range retailers’ leader, directly followed by Zara with 340 million Euros in 2006. For Caroll, it is around 222 million Euros. Other competitors can be cited here like GAP, Mango, and Gerard Darel.
With the previous analysis, we can create a price/quality positioning between the three leaders of the French middle class clothing market as follows:
- Caroll’s promotional plan
The first thing to know about Caroll’s promotional is that in order to boost its sales and to retain its clients, Caroll uses a very particular technique: no fidelity neither card nor products promotions nor gift checks used and it works. To increase its turnover, Caroll chose to bet on pure direct marketing. Female customers are invited to discover new collections by mail or to come in their local shop to get a free gift like an umbrella or bag. This is also a way to create a customer database because clients fill a contact list while receiving their gift. Caroll uses nearly 25 percent of its communication budget for direct marketing (the average market rate being 10 percent) dedicated to increase the customer loyalty (Masson, 2001).
The remaining 75 percent are spent for Medias. This part of the communication budget is directed to increase the brand notoriety. Every year, Caroll plans a very big communication campaign mostly targeting female French magazines like Marie-Claire, Marie France, and Mme Figaro. For example, this year, Caroll chose to participate in an official partnership within the framework of the special operation called “La Rose Marie-Claire”: this is a rose, symbol of worldwide little girls’ education, sold aiming to provide financial aids for association in favor of the scholarship of disadvantaged little girls in France and in the rest of the globe. The television promotional events are organized with famous and popular TV shows in order to talk about this action and all La Rose’s representatives wear Caroll’s clothes and accessories (Caroll's_Staff, The latest news, n.d.).
- Summary – Caroll’s SWOT analysis
To conclude, we can see that Caroll is facing very critical issues for the future of its business. First of all, Caroll has to choose a new position within the French market as the middle market is weakening. Second, the positioning needs to take into account that the French clothing market is getting more and more competitive. Third, it has to develop itself in emerging countries where competitors already made a great penetration and it could be very difficult to enter those markets so late.
Added to a penetration in the Chinese market targeting the middle class market, it is critical that Caroll changes its positioning. Finally, knowing that the purchasing power of European female is increasing and also with the booming of new technologies, it could be a very great idea to develop an online purchasing platform.
- Caroll’s marketing program – Focus on the Chinese market
- Caroll’s marketing opportunities
- Overview – Caroll’s Ansoff matrix
- To update its positioning inside the French market
Watching the three main actors of the market, H&M, Zara, and Caroll, we saw that Caroll had a problem of positioning within the French market: Caroll was a little bit more expensive and customers were not making any difference of quality between Caroll and its competitors. Then, it is obvious to say that women preferred to go to the competition thinking to have a better price/quality ratio somewhere else other than Caroll’s stores. Caroll’s position was right in the middle between low priced brands (examples: H&M and Zara) and higher end brands (examples: Gucci, Vuitton). Moreover, we already know that women who have a restricted clothing budget prefer to buy in low priced stores and that wealthy women go to high end ones. The French middle class market is weakening. Consequently, Caroll had to reposition itself in this market and decided to play the card of quality launching its new brand “Caroll Paris”, synonym of high end brand. Additionally, Caroll created a new range of accessories like shoes and bags aiming to the same objective: to reach the superior quality market.
- To penetrate new abroad markets
The second opportunity for Caroll is to sell its clothes and accessories within new countries where it is not implemented yet. This international development strategy is already followed by the company but mostly in boardering countries like Spain, Switzerland, and Portugal with its around seventy stores open abroad. Potential countries are eastern European countries, the United States, and all emerging countries like in South America and in Asia, knowing that those countries have the fastest growth of the world. The Republic of China is the fastest one over all emerging countries and it is the most valuable opportunity for Caroll to penetrate this market because China is going to be as much developed as western countries soon. This is the reason why we are going now to discuss about a penetration strategy of the Chinese market by Caroll.
- Penetrating the Chinese market
- The strengths of the Republic of China
Several figures can influence Caroll to enter this skyrocketing market: first of all, the Chinese economy is marked by a double-digit growth of 11.1 percent in 2006 (ranked 11th by the CIA) with a GDP per capita of 7,800 dollars in 2006 (ranked 107th by the CIA). Those figures are taken from the CIA’s Internet site (CIA's_Staff, 2007). As we can read in the electronic article of Mustapha Kessous from LeMonde.fr, the objective is clear: to allure the Chinese middle class estimated at 300 million persons representing 23 percent of the national population. It represents almost the same number of customers than the whole American market. The Shanghai province is even more populated than the United Kingdom (Kessous, 2007). It is said and said again that China is going to be the major economic power in a maximum of two decades.
As we can see on the following chart from the National Bureau of Statistics of China, Mc Kinsey Global divided the Chinese population into five parts. Since 1985, when 95.2 percent of the population was considered poor, earning less than 25,000 Yuan Renminbi a year, one category is always increasing and it is the one of upper middle class, passing from 1.2 percent of population to 24.2 percent in 2005. The category is also expected to reach 51.1 percent of the population in 2025. Thus, it is the most emerging class of China and people from it earn between 40,000 and 100,000 Yuan Renminbi per year. Thanks to this income increase, Chinese clothes purchases have increased of 15 percent last year.
This enormous potential has already been detected by the two major competitors of Caroll we talked about in the competition analysis of the previous part of this paper: H&M and Zara. The competition being already there, Caroll has to review all its marketing mix in order to be efficient in this market penetration.
- Caroll’s three V’s
Value Customers: the emerging Chinese middle class.
Value Proposition: you can wear French fashion clothes from Paris at reasonable price.
Value Network: Local franchises
The whole marketing mix of Caroll penetrating China will stand in those three V’s and all must be adapted to this framework.
- Competition analysis in China (with SWOT analysis)
As already said, the two main competitors of Caroll in Europe are the same in China: H&M and Zara. Thanks to Mustapha Kessous’ article, we understand that Zara penetrated China very carefully: they started with a restricted number of stores which allows seeing what the possibilities of a specific country are aiming to gain a substantial number of clients. The first store was located in Hong Kong and launched in May 2004. Thanks to the Chinese welcoming, Zara decided to expand its business in the continental China in 2006. Today, Zara has nine stores in the country of which five are in Hong Kong (Kessous, 2007).
This cautiousness translates a good adaptability to the market which H&M didn’t have when it started its business in China in April of this year: its first store has been launched in Shanghai but H&M forgot to offer products under the size of 32. But actually, the medium size for Chinese women is 30. Two other H&M stores have been open so far (Kessous, 2007).
Marie-Chantal Piques, chief of the sector of goods’ consumption at the economic mission in Shanghai, tells us that “if companies want to succeed in China, they have to upgrade their products range”. Because Chinese people are were “occidentalized", Zara decided to use the western fashion notoriety to make the difference while selling its merchandize at the same prices practiced in Europe (Kessous, 2007).
- Porter’s Five Forces
Thanks to the IfM’s Internet site and its page about the Porter’s five forces, we can assess the power of the different actors of the market and draw the following diagram applied to the current Chinese ready-to-wear market:
For the threat of new entrance, the following elements need to be taken into account, showing a high level of difficulty to enter the market:
- Brand identity
- Capital requirements
- Access to distribution
- Cost advantages
- Proprietary low-cost product design
- Government policy
The only two elements on which suppliers could have power on are the presence of substitute inputs and the impact of inputs on cost or differentiation. Consequently, the power of suppliers in this market is quite low.
To determine the buyer power, we can think about the following elements leading to a quite high power of buyers in China:
- Buyer volume
- Buyer information
- Substitute products
- Price Sensitivity
- Price / total purchases
- Product differences
- Brand identity
- Impact on quality / performance
To evaluate the current rivalry among the existing competitors, several determinants demonstrate that it is actually strong in this sector in China:
- Industry growth
- Fixed costs/value added
- Product differences
- Brand identity
- Diversity of competitors
Finally, potential substitutes are not so numerous and thanks to the French fashion’s brand image, we can only think about cheaper products still attracting lower classes in China (IfM's_Staff, n.d.).
- Caroll’s seven P’s in China
- Product issues
The idea is to keep the French fashion in creating clothes and accessories for China. Thus, products mustn’t be changed but just adapted concerning their size (the average size for Chinese women is 30), their colors (warm for young people and dark for older), and the Chinese conservation (no cut off but large proportion of short skirts).
- Price issues (with Porter’s Strategies Matrix)
This is a big issue because Caroll has to target the middle class of China which is not so very rich for the moment and at the same time Caroll must keep its brand image selling expensive French fashioned clothes. Knowing that Zara has applied its European pricing strategy to the Chinese market producing its products in Europe, Caroll could have a competitive advantage by producing locally and selling its products at the same prices as in Europe.
- Porter’s Strategies Matrix
- Place issues
Because Caroll is penetrating China, it has to be cautious and it should follow Zara’s strategy by opening few stores across the country to test the local reaction concerning its brand and products. The system will be the same as in France based on franchises to take advantage of local know-how and culture. Stores should be localized in big cities like Beijing, Hong Kong, and Shanghai.
About the production, we recommend to Caroll to produce locally, at least partly, to take advantage over the competition. A big warehouse could be built in China to stock all local production and importations.
- Promotion issues
Another competitive advantage can also be reached here: to create a successful advertizing campaign. This could give Caroll a very good reputation added to the “French touch”. A big show could be organized for the first store’s opening, an intensive posters’ campaign in big cities especially downtowns could also be planned. It is important that Caroll take advantage of the Olympic Games of Beijing in 2008 by signing partnership with local sportswomen.
- Process issues
Two main points in this section need to be clarified: first, Caroll’s shops will be open during local working hours during the week (from 9 a.m. to 8 p.m. between Sunday and Thursday) and a little bit later during week-ends (for Friday and Saturday until 10.30 p.m.). The CRM (Customer Relationship Management) will be organized locally in each franchises to ensure the customer’s involvement and satisfaction.
- People issues
Employees in stores will be real French fashion’s ambassadors. They will be trained in consequence. They also have to speak English and the local language, that is why the staff will be composed of locals. This staff will wear French fashion clothes.
- Physical evidence issues
Shops will be organized and arranged like in France: Caroll’s stores have a size between 100 and 150 meters squared proposing a clear, modern, and discrete installation where the beige color and enameled wood dominate.
List of References
Boursorama's_Staff. (2007). Vivarte (ex groupe André). Retrieved November 13, 2007, from Boursorama.com: http://www.boursorama.com/profil/profil.phtml?symbole=1rPCSS
Caroll's_Staff. (n.d.). historique. Retrieved November 13, 2007, from Caroll.com: http://www.caroll.com/en/caroll/historique.php
Caroll's_Staff. (2007). The company. Retrieved November 15, 2007, from Caroll.com: http://www.caroll.com/en/caroll/societe.php
Caroll's_Staff. (n.d.). The latest news. Retrieved November 15, 2007, from Caroll.com: http://www.caroll.com/en/actu/news.php
CIA's_Staff. (2007, November 15). The World Factbook - China. Retrieved November 19, 2007, from CIA.gov: https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html
Distrijob.fr. (n.d.). Dictionnaires des enseignes de la grande distribution. Retrieved November 15, 2007, from Distrijob.fr: http://www.distrijob.fr/enseignes/dictionnaire.asp?enseignes=caroll#
IfM's_Staff. (n.d.). Porter's Five Forces. Retrieved November 20, 2007, from ifm.eng.cam.ac.uk: http://www.ifm.eng.cam.ac.uk/dstools/paradigm/5force.html
Kessous, M. (2007, August 6). Prêt-à-porter - les marques européennes à l'assaut de la Chine. Retrieved November 19, 2007, from LeMonde.fr: http://www.lemonde.fr/web/article/0,1-0@2-3234,36-942267,0.html
Masson, D. (2001, October 19). Actualité - Veille Relation Client. Retrieved November 15, 2007, from Strategies.fr: http://www.strategies.fr/archives/1209/120904003/caroll---promo--ma-non-troppo.html
Yahoo!'s_Staff. (2007, August 19). Europe's largest clothing retailer looks to expand in China. Retrieved November 20, 2007, from Yahoo! Finance Singapore: http://sg.biz.yahoo.com/070819/1/4aohj.html
