MARKETING ASSIGNMENT

PGDM –A
Group 9

Group Members

12 Asha Raman
33 Varsha Gore
34 Khushboo Gupta
35 Erina Harding
52 Roma Mohapatra
60 Karthik Murthy
TANG REPOSITIONING STRATEGY
Tang is a sweet and tangy, orange-flavored drink, from the United States. Named after the tangerine,
the original orange flavored Tang was formulated by William A. Mitchell for General Foods Corporation
in 1957 and first marketed (in powdered form) in 1959

It was initially intended as a breakfast drink, but sales were poor until NASA used it on Gemini
flights in 1965 (researched at Natick Soldier Systems Center, which was heavily advertised (the
drink was first used on John Glenn’s Mercury flight).Since that time, it has been associated with
the U.S. manned spaceflight program, so much so that an urban legend emerged that Tang was
invented for the space program.

History

Tang was famously used by some early NASA manned space flights. In 1962, when Mercury
astronaut John Glenn conducted eating experiments in orbit, Tang was selected for the menu, and
was also used during some Gemini flights. A NASA engineer working on Gemini explained how
and why it was used (paraphrased):
"There was a particular component of the Gemini life support-system module which produced
H2O (water) among other things. This was a byproduct of a recurring chemical reaction of one of
the mechanical devices on the life-support module. The astronauts would use this water to drink
during their space flight. The problem was, the astronauts did not like the taste of the water
because of some of the byproducts produced, which were not harmful of course. So, they added
Tang to make the water taste better.

Apollo 11 astronaut Buzz Aldrin has stated that Tang was not used on his lunar landing mission:
"We... instead chose a grapefruit-orange mixture as our citrus drink. If Tang was on our flight, I
was unaware of it." Neil Armstrong has also stated that Tang was not used on the Apollo flight.
However, Tang has various flavors so it is possible the grapefruit-orange drink was also Tang.
They did not label the drink items “Orange Tang,” but orange aid or drink, as an example. So, it
is possible the astronauts did not know the fruit drinks were Tang.

The inventor of Tang, William A. Mitchelle also invented Pop Rocks.

Other uses

 A household tip says Tang is an excellent dishwasher cleaning agent due to its high citric

acid content, although Kraft does not recommend it or advocate such use. Kraft's web site
says:

"We have heard that some consumers have used TANG Drink Mix to clean their
dishwashers. TANG does contain citric acid which can act as cleaning agent. TANG
 Drink mix is intended to be a food product and Kraft Foods does not advocate its use for
any other purpose.”

 At one time, Philadelphia authorities attempted to deter addicts from misusing doses

of methadone by packaging it in combination with Tang; this was carried out under the
reasoning that nobody would be foolish enough to intravenously inject the combination. This
was not the case. There was also at least one reported case of accidental methadone overdose
from family members who found a jar of mixed Tang in the refrigerator.
 Tang was a component of the liquid explosive allegedly intended for use in the 2006
transatlantic aircraft plot (along with hydrogen peroxide and Hexamine, to produce HMTD

TANG is a relatively premium brand of powdered beverage . Powdered beverages are classically
a cheaper option to ready to drink juices and other drinks in bottles). TANG is owned by US
based Kraft Foods Inc and it has been a category leader in China (over 50% market share) for the
past over 18 years.

The product is not natural but it has always contained Vitamin C as an ingredient and in the last
5-7 years it has also been fortified with the goodness of Iron and other minerals. The product
comes in refill packs and sachets (50 gms to 500 gms). In 2007 was launched TANG on the go
single serve sachet. This could be mixed in a 500 ml bottle of water and prepared on the
go/outdoors

TANG was launched in China in late 80s, targeted at kids from 6-12 years of age and was
positioned as the drink of Astronauts (Astronauts could not take liquid juice in a space flight – so
they used a powdered beverage and that was TANG). The brand was very successful.

Over the years TANG was repositioned as a family drink that could be enjoyed cold in summers
and hot in winters. The focus shifted from Astronauts and only kids to Mom as the customer and
family as the consumer.

In late 90s and early 2000s, TANG was repositioned to target Moms as the customer and kids (6-
12) as the consumers. The benefits continued to be great fruit taste and fruition (fruit taste +
nutrition).
China’s Market Share
 2008, in the Chinese fruit, vegetable and soft drink market, the shares are:
Huiyuan: 8.5%

12%

9%
Coca-Cola Huiyuan
Master Kong Tongyi
7%
Daneng (including Wa Ha Nongfu Guoyuan
54% Ha)
7% Ye Shu Pepsi
Others
6%
3%
1% 2%

Coca-Cola: 11.8%
Master Kong: 7.0%
Tongyi: 6.6%
Daneng (including Wa Ha Ha): 5.7%
Nongfu Guoyuan: 2.7%
Ye Shu: 2.0%
Pepsi: 1.4%
Others: 54.3%
The market share of Coca-Cola increased from 9.7% to 11.8% in 2008, whilst Huiyuan’s share
decreased from 10.3% to 8.5%.
Considering just the soft drinks market (excluding fruit and vegetable juice), Coca-Cola had a
market share of 52.5% in 2007, with Pepsi in second place on 32.8% and third place Daneng a
long way behind on 1.7%
Now, the key question is, whether the Chinese authorities acted out of legitimate concern about
Coca-Cola’s market power, or whether they acted out of nationalistic concern to protect a
domestic firm from a foreign takeover.
It’s not clear what the Chinese government’s definition of monopoly power is but one way to
think about the problem is to use a definition of monopoly power used in the US.
Repositioning Strategy:
Revamp recipes to add fruitier tastes and vitamins- add flavors based on indigenous or
popular exotic fruits: mango combinations in the Philippines; tuna -- a type of cactus fruit -- and
tamarind in Mexico; and maracuja, also known as passion fruit, in Brazil. 

In China, where Tang was first sold 22 years ago, mothers surveyed believed their children
needed about six glasses of water a day to be properly hydrated. Children, however, viewed
water as “boring” and “bland,” 

That led to a new marketing campaign and slogan: “Tang makes water more exciting.” In
stores, Tang was promoted with bottled water and Kraft made liberal use of water images in
graphics. 
The Chinese also prefer powdered drinks by the glass, rather than by the pitcher, Kraft
researchers learned. Urban families there are generally smaller because of the country’s so-called
one-child policies. Kraft developed a box of single- serve powder sticks in place of pitcher
packs, which also had been too expensive for some Chinese consumers.

Energy Drink

China is famous for sports .With the product output continues to expand, China Energy Drinks
industry enjoys a rapid development in the year of 2008, the national industrial policy
encourages Energy Drinks industry to develop towards the direction of hi-tech products, at the
same time, domestic investment has gradually been increased. As investors pay more and more
attention on Energy Drinks industry, the market demand for researches on Energy Drinks

industry development increases day by day. 

2009-2012 is a critical period for the development of China Energy Drinks industry, it is also the
transitional period for China stepping from the "11th Five-Year Plan" to the "12th Five-Year
Plan". In the context of global financial turmoil and severe domestic economic situation, a series
of new policies are about to be introduced which will undoubtedly have a significant impact on
the development of Energy Drinks industry. A number of major national construction projects
have started to be constructed which are bond to play an important role in driving the demand of
Energy Drinks industry market. 
Tang should be repositioned as an energy drink as the demand for energy drink is increasing in
Chinese market.

Re-packaging

Packaging can be done in small packets of single serve. The packaging can also be made
attractive by putting some cartoon character so that the children are attracted. Tang can also get a
brand ambassador for the product.

Advertisement and Distribution

They can use push strategy by distributing tang sachet with kraft cheese so that people get used
to the taste and start consuming. Chinese children get attracted by sport and cartoon, So cartoon
character like chinchan should be used to promote tang. Olympic winner can be the brand
ambassador so that more children get attracted

Instead of targeting mothers , now the children should be targeted as they are the influencer.
COCA COLA
Case Objective :

Understanding the coke strategies and its growth in india . Also understanding what problems
did coca cola faced during 2003 and affect on its sales .

Introduction :

In 1993, Coca-Cola entered India, a promising emerging market. But in its hurry to overtake the
first mover, Pepsi, Coca-Cola made a series of mistakes. In 2000, Coca-Cola had to write down
investments to the tune of $400 million.

Since then Coca-Cola has made a remarkable comeback, posting profits in 2003. The case
explains Coca-Cola's turnaround in India and brings out the unique challenges which
multinational corporations face in developing countries

Coca-Cola's reentry into India was driven by both competitive factors and Coca-Cola's own
global plans. Pepsi had entered India in 1990 and by 1993 had garnered a 25% market share.
Coca-Cola could not stay behind. Moreover, the parent company had realised the need to expand
its presence in emerging markets as growth was tapering off in developed countries. In late 1993,
to make a quick entry into the market and neutralize Pepsi's early mover advantage, Coca-Cola
decided to buy out a local soft drink company, Parle, which had a 60% market share.

But Coca-Cola found itself facing several problems. It focused on establishing the Coke brand
quickly, positioning it as an international brand and not emphasizing local association.
Coca-Cola was the leading soft drink brand in India until 1977 when it left rather than reveal
its formula to the government and reduce its equity stake as required under the Foreign
Coca-Cola India no. 1-0000

Exchange Regulation Act (FERA) which governed the operations of foreign companies in
India. After a 16-year absence, Coca-Cola returned to India in 1993, cementing its presence
with a deal that gave Coca-Cola ownership of the nation's top soft-drink brands and bottling
network. Coke’s acquisition of local popular Indian brands including Thums Up (the most
trusted brand in India21), Limca, Maaza, Citra and Gold Spot provided not only physical
manufacturing, bottling, and distribution assets but also strong consumer preference. This
combination of local and global brands enabled Coca-Cola to exploit the benefits of global
branding and global trends in tastes while also tapping into traditional domestic markets.
Leading Indian brands joined the Company's international family of brands, including Coca-
Cola, diet Coke, Sprite and Fanta, plus the Schweppes product range. In 2000, the company
launched the Kinley water brand and in 2001, Shock energy drink and the powdered
concentrate Sunfill hit the market.

Resistance & issues in india market :

In 2003, the Centre for Science and Environment (CSE), a non-governmental organisation in
New Delhi, said aerated waters produced by soft drinks manufacturers in India, including
multinational giants Pepsico and Coca-Cola, contained toxins including lindane, DDT, malathion
and chlorpyrifos — pesticides that can contribute to cancer and a breakdown of the immune
system. Tested products included Coke, Pepsi, and several other soft drinks (7Up, Mirinda,
Fanta, Thums Up, Limca, Sprite), many produced by The Coca-Cola Company.

CSE found that the Indian produced Pepsi's soft drink products had 36 times the level of
pesticide residues permitted under European Union regulations; Coca Cola's 30 times. CSE said
it had tested the same products in the US and found no such residues.

Coca-Cola and PepsiCo angrily denied allegations that their products manufactured in India
contained toxin levels far above the norms permitted in the developed world. David Cox, Coke's
Hong Kong-based communications director for Asia, accused Sunita Narain, CSE's director, of
"brandjacking" — using Coke's brand name to draw attention to her campaign against pesticides.
Narain defended CSE's actions by describing them as a natural follow-up to a previous study it
did on bottled water.[21]

In 2004, an Indian parliamentary committee backed up CSE's findings, and a government-

appointed committee was tasked with developing the world's first pesticide standards for soft
drinks. Coke and PepsiCo oppose the move, arguing that lab tests aren't reliable enough to detect
minute traces of pesticides in complex drinks like soda.
The Coca-Cola Company has responded that its plants filter water to remove potential
contaminants and that its products are tested for pesticides and must meet minimum health
standards before they are distributed.[22]

Coca-Cola had registered a 11 percent drop in sales after the pesticide allegations were made in
2003.[23]

As of 2005, Coke and Pepsi together hold 95% market share of soft-drink sales in India.[21]

In 2006, the Indian state of Kerala banned the sale and production of Coca-Cola, along with
other soft drinks, due to concerns of high levels of pesticide residue[24] On Friday, September 22,
2006, the High Court in Kerala overturned the Kerala ban ruling that only the federal
government can ban food products.[25]

Coca-Cola is in trouble in India. Ever since the first allegations arose in Kerala, India, of water
scarcity and polluted water resulting from its bottling operations, Coca-Cola's public relations
department has churned out denials, insisting that the charges are false and that it is the "target of
a handful of extremist protesters."

Coca-Cola's global website carries their position on the issue and claims that the "local
communities have welcomed our business as a good corporate neighbor."

Nothing could be further from the truth.

It is time for Coca-Cola to seriously examine and address the adverse impacts of its operations in
India. In fact, Coca-Cola needs to stop treating the issues in India as a public relations problem
and assign it to the appropriate department that will genuinely address the issues of over-
exploitation of water (leaving the community with scarce water resources) and pollution of water
sources as a result of its operations. Hindustan Coca-Cola and Bharat Coca-Cola are the Indian
subsidiaries of Coca-Cola.

To highlight these issues, we are profiling a series of community struggles against Coca-Cola in
India, all of which point to a pattern in the company's operations. The communities are left
thirsting as Coca-Cola draws water from the common water resources. Its operations are
polluting the scarce water that remains. The emergence of local, grassroots struggles against the
cola giant's operation in India should also serve as a reminder to Coca-Cola's bosses in Atlanta
that this is not a public relations problem that one can just "spin" and wish away. Rather, the
heart of the issue is a serious concern about control over natural resources and the right of
communities to determine how business is done in their communities.

Close to a year after our report on Coca-Cola's operations in Plachimada, Kerala, the
communities in and around Coca-Cola's facility continue to hold the factory responsible for their
water woes. In fact, the local panchayat (elected body at the village level) decided in April NOT
to renew the license issued to the Coca-Cola factory, on the grounds of "protecting public
interest." Protests, led primarily by Dalits (formerly untouchables) and Indigenous Peoples, have
continued for over a year against the factory, and new data validates the charges that Coca-Cola's
bottling operations have depleted and contaminated the ground water. Surendranath C visited the
area and filed a report on the latest stage of the struggle in Plachimada, Kerala.

Local residents in Mehdiganj, near the holy city of Varanasi, are also gearing up for a struggle
against Coca-Cola. Coca-Cola has illegally occupied a portion of the common property resources
of the village and was found guilty of evading payment of land revenue by a local court.
Protesters were met at Coca-Cola's factory gates by about 200 police personnel, sent to "protect"
the plant along with 50 gun-toting private security guards. This was not all for show-- the
demonstrators were beaten up. The Coca-Cola plant in Mehdiganj enjoys heavily subsidized
electricity and is accused of spewing toxics into surrounding agricultural fields as well as causing
serious water shortage as a result of its operations. We have a report from Mehdiganj.

In yet another community, this time in Kudus village in Thane district, villagers are forced to
travel long distances in search of water which has dried up in their area as a result of Coca-Cola's
operations. Villagers are questioning the subsidized water, land and tax breaks that Coca-Cola
receives from the state, only to leave them thirsting for water. Coca-Cola has built a pipeline to
transport water from a river to its plant, and an activist opposing the pipeline was detained by
police authorities for a week. We carry a story from the Times News Network.

And in a proactive move, more than 7,000 people, mostly women, turned out to protest a
proposed Coca-Cola factory in Sivaganga, Tamil Nadu. Residents are justifiably worried that
Coca Cola's operations in the area would lead to scarcity of water and contamination of water.
We carry an article from Frontline.

For Coca-Cola to claim, after being made aware of the community protests all over India, that
"local communities have welcomed our business as a good corporate neighbor," is nothing short
of arrogance. But then, Coca-Cola's arrogance should come as no surprise as it is accustomed to
having its way with governments.

Under the rules of entry for Coca-Cola into India, it was agreed that Coca-Cola would divest
49% of its equity stake in India within 5 years. In an unprecedented move, the government of
India seems to have given in to Coca-Cola's pressure, and is on the verge of changing its policy
in this regard to suit Coca-Cola's interest. We are faced with a situation where Indian investors
will own 49% of Coca-Cola's Indian operations, but have no vote whatsoever! Just like in the
Enron case, the US government played a significant role. Robert Blackwill, the US ambassador
to India, in a letter to Brajesh Mishra, Principal Secretary to the Prime Minister of India, stated
that, "I would like to bring to your attention, and seek your help in resolving, a potentially
serious investment problem of some significance to both our countries. The case involves Coca-
Cola, one of the largest single foreign investors in India."

For a company that has had its way and has access to top US officials, things are not so rosy after
all. Coca-Cola may very well be the most recognizable brand name in the world but it is also
increasingly becoming the target of ire of local communities around the world as a result of its
disregard for communities and the environment. Community struggles in India against Coca-
Cola are just a few of many that exist and are emerging. Coca-Cola was also identified as a target
of boycott to protest the US led invasion of Iraq. Sales of Coca-Cola plummeted in certain areas
in India, such as Kerala.

In an extremely significant case, Coca-Cola's main Latin American bottler is facing trial for
allegedly hiring right wing paramilitary forces (aka death squads) to murder and intimidate trade
union organizers, especially from the union, Sinaltrainal. The suit has been brought under the
Alien Tort Claims Act, which allows corporations to be sued in the US for crimes committed
overseas.

Coca-Cola is also the target of an international campaign demanding that Coca-Cola guarantee
access to care and treatment for all their employees and their families living with HIV/AIDS,
especially in the African continent where Coca-Cola is a major employer.

Holding Coca-Cola accountable for its pollution, as various communities in India are trying to
do, will not be the first such instance. In May 2003, Coca-Cola de Panama was fined
US$300,000 for polluting Matasnillo River in Panama.

Coca-Cola, it seems, is on its way to soon earning the reputation that Enron enjoyed in India.
Both Enron and Coca-Cola top the Foreign Direct Investment list from the US in India. Enron's
Indian operations (Dabhol Power Corporation, a joint venture with Bechtel and General Electric,
among others) was the single largest foreign direct investment in India and became the target of
activists across the country due to irregularities in its manner of carrying out its business,
including the use of armed thugs to suppress opposition. Indians had shut down Enron long
before the financial scandal in the US brought the entire company down.

Coca-Cola could soon join that list.

The India Resource Center will focus on supporting community struggles against Coca-Cola in
India. Check back regularly for updates

Marketing of Cola :

Coca-Cola CEO Douglas Daft set the direction for the next generation of success for his
global brand with a “Think local, act local” mantra. Recognizing that a single global strategy
Coca-Cola India no. 1-0000
6
or single global campaign wouldn’t work, locally relevant executions became an
increasingly important element of supporting Coke’s global brand strategy.
In 2001, after almost a decade of lagging rival Pepsi in the region, Coke India re-examined
its approach in an attempt to gain leadership in the Indian market and capitalize on
significant growth potential, particularly in rural markets. The foundation of the new strategy
grounded brand positioning and marketing communications in consumer insights,
acknowledging that urban versus rural India were two distinct markets on a variety of
important dimensions. The soft drink category’s role in people’s lives, the degree of
differentiation between consumer segments and their reasons for entering the category, and
the degree to which brands in the category projected different perceptions to consumers were
among the many important differences between how urban and rural consumers approached
the market for refreshment.32
In rural markets, where both the soft drink category and individual brands were
undeveloped, the task was to broaden the brand positioning while in urban markets, with
higher category and brand development, the task was to narrow the brand positioning,
focusing on differentiation through offering unique and compelling value. This lens,
informed by consumer insights, gave Coke direction on the tradeoff between focus and
breadth a brand needed in a given market and made clear that to succeed in either segment,
unique marketing strategies were required in urban versus rural India.

The two famous tag lines “Life ho to aisi” & “Thanda Matlab Coca-Cola” won Advertiser of
the Year and Campaign of the Year in 2003.

Cola also participated inCSR activities . Like its parent, Coke India’s Corporate Social
Responsibility (CSR) initiatives were both community and environment-focused
In addition to outreach efforts, the company committed itself to
environmental responsibility through its own business operations in India including39:
1. Environmental due diligence before acquiring land or starting projects
2. Environmental impact assessment before commencing operations
3. Ground water and environmental surveys before selecting sites
4. Compliance with all regulatory environmental requirements
5. Ban on purchasing CFC-containing refrigeration equipment
6. Waste water treatment facilities with trained personnel at all company-owned
bottling operations. Energy conservation programs. 50% water savings in last seven years
of operations
Coca-Cola Principles of Corporate Citizenship:
Marketplace ,Workplace ,Environment ,Community

Some facts :

Since August 5, 2003 the quality and safety of Coca-Cola and PepsiCo products in India
have been called into question by a local NGO, the Centre for Science and Environment
(CSE). The basis of the allegations are tests conducted on products of Coca-Cola and
PepsiCo by CSE’s internal unaccredited laboratory, the Pollution Monitoring Laboratory.
In India, as in the rest of the world, our plants use a multiple barrier system to remove
potential contaminants and unwanted natural substances including iron, sulfur, heavy metals
as well as pesticides. Our products in India are safe and are tested regularly to ensure that
they meet the same rigorous standards we maintain across the world.
The result of these allegations has been consumer confusion, significant impact on the sale
of a safe and high-quality product, and the erosion of international investor confidence in the
Indian business sector. This situation calls for the development of national sampling and
testing protocols for soft drinks, an end to sensationalizing unsubstantiated allegations, and
co-operation by all parties concerned in the interests of both Indian consumers and
companies with significant investments in the Indian economy.
Success story :
Comprising 74% of the country's population, 41% of its middle class, and 58% of its
disposable income, the rural market was an attractive target and it delivered results. Coke
experienced 37% growth in 2003 in this segment versus the 24% growth seen in urban areas.
Driven by the launch of the new Rs. 5 product, per capita consumption doubled between
2001-2003. This market accounted for 80% of India’s new Coke drinkers, 30% of 2002
volume, and was expected to account for 50% of the company’s sales in 2003

ASOS CASE STUDY

ASOS (As Seen on Screen) is one of the leading fashion and beauty store for both men and women in UK.
It specializes in selling affordable versions of outfits worn by celebrities. ASOS was launched in June 2000
by Nick Robertson was voted as “Best Trendsetter” by Sunday times in December 2000. Besides this it
has also won numerous awards including Retail Week Online Retailer of the Year 2007 & 2008,
Cosmopolitan Retailer of the Year 2008 and In Style Best Online Shop 2008 to name a few.

Asos.com has 9000 products available, with 500 new products added every week. This includes women’s
fashion, menswear, accessories, jewellery and beauty products. According to Hitwise, it is the second
most visited online fashion store in the UK, behind Next. It attracts 3.3 million unique shoppers every
month and has about 1.8 million registered users.

Asos’s 70% of sales are still own label, and they are also selling nearly 250 brands, including luxury labels
such as Balenciaga and YSL. It receives 200,000 orders a month, averaging £60 a time. Menswear makes
up 15% of sales; beauty and cosmetics ranges account for another 3%.

Four years ago the shares were changing hands at 5p. But today they are nudging 282p, valuing the
business at £206m and Robertson's stake at £28m - with an annual turnover of £80m.

Briefing of Strategies Employed by ASOS

 The customer base i.e., organic growth was the main strategy by with ASOS benefited. It
had number of products and brands available to buy at any time.

 They were accepting foreign currency for five years and international sales. ASOS has
reported a 107% increase in sales for the six months to 30 September. Year on year their
active customer base has grown by 95% to 947,000. Their international sales rose
by 252% and now represent 17% of their turnover.
 It runs a fashion blog at blog.ASOS.com. The blog posts articles related to celebrity and
entertainment whilst linking clothes worn by or similar to the people featured on the main retail
site.
 Asos uses the smartFocus software as a marketing platform to put the customer at the centre of
its business. The partnership with smartFocus is part of an integrated sales and marketing
strategy, centred on customer communications, including advertising campaigns, press events
and customer magazines. This smartFocus platform, which is based on Microsoft .NET
archiecture, helped Asos to maintain customer data and realise the value of customer
information by profiling customers accurately. By building sophisticated segmentation models,
Asos was able to apply precision marketing techniques and offer each group highly relevant and
timely marketing messages, helping Asos to reinforce and enhance the existing relationship it
has with its customers.

 Another project, codenamed Asos Red, was introduced in the site offering designer end-
of-lines at knockdown prices.
 They also followed planned campaigns include refer-a-friend viral activity, a reactivation
strategy to re-engage former customers and loyalty programmes to reward Asos’s best
customers.
 ASOS also has its own print magazine, published by Seven Squared, which is used to drive more
sales. It’s sent to about 400,000 female customers a month and a men’s version has just been
launched. Costs are mitigated by advertising revenue from the brands already featured on the
ASOS site.
 Asos works with Unipart and uses its systems to support its logistics function. However, with its
quickly growing supply chain – and about 50 per cent of products sold are own-label – another
likely project will be to choose a product lifecycle management system. The company already
deals in fast fashion and with the support of a system to manage the process of getting product
designs from conception to stock in the warehouse,
 Asos launched LTD 100 design collection in association with London College of Fashion, was an
instant sell-out when it launched online at 1pm on 16 June 2008. Within the first few minutes of
going live, the 100 one-off pieces were snapped up by quick clickers eager to secure a piece of
design history.

 The website sells affordable versions of celebrity-inspired outfits that appeal to its largely
under-25 customer base. Its young fans relish the variety and relative affordability of the
merchandise.
 Asos is working with some of the brands that sell through the site such as Religion and Ringspun
to get them up and running with e-commerce quickly.
 STRATEGIES

Product Strategy

The product line of ASOS is defined. The company knows exactly what they want to up out in their
website. As the former name of the company suggests, the product line of ASOS is composed of clothing
articles as well as other fashion related items that have been seen on celebrity fashion icons or
trendsetters. The company’s decision to extend their product line to include beauty products can still be
deemed as within the original intentions of the company. This is the case beauty products are now being
considered by many, as a fashion must. A good skin is needed in order to make a certain look work.

Since the products of the company focuses on products that must be appealing to the eye of the
customers in order to be bought, visual merchandising is important in conveying the aesthetics of the
products that they are offering. Customers need to see that the clothing items that are being offered in
the website were indeed “as seen on screen”. Like the conventional retail clothing outlets, ASOS does
have a window to display their products. The pages of their website serve as the windows where their
customers can see the products. 

Positioning Strategy

The target market segment of ASOS is as defined as their product line. They target people who are
eighteen to thirty years of age and who are internet savvy. Based on the questionnaires prepared and
used for this research, the biggest bulk of ASOS customers are eighteen to twenty-two years. This age
group represents fifty-five percent of the total ASOS customers. It is followed by people who belong in
the age brackets twenty-four to twenty-nine and thirty to thirty-five who twenty percent of the ASOS
customer population each. Lastly, people who are thirty-six to forty-two years old complete the
population representation five percent of the total.

The result of the survey concluded that ASOS targeted the right age group for the products. This is the
case since the surveyed revealed that eighteen to thirty year old customers are more open to buying the
products that ASOS offers. Another reason for the bulk customers on the said age bracket can be
attributed to the fact that people within this age group are more adept at with using computers as well
as navigating the internet. In addition, they are also the ones who are part of the corporate world where
everything is fast-paced that they do not have the time to go down town and shop for the clothes and
other fashion items.

In relation to gender, eighty percent of ASOS shoppers are women, while only two percent are male as
shown on figure 3 below. This is still according to the survey conducted for this research. This may be
the case since most of the items that are being offered online are for women. In addition, the marketing
activity of ASOS focuses on disseminating information to more women than men. 500,000 emails are
sent to females twice a week compared to 100,000 emails sent to males only once a week.
Offer Strategy

The success of ASOS is being owed to their ability to offer trendy clothes at significantly lower prices.
However, there are still other factors that need to be considered when discussing the success of ASOS as
an online retail clothing store. Aside from the price of the products, the seasonability of the products
being offered is also crucial. It is a fact that the fashion industry is always on its toes when it comes to
innovation. Various collections come out on a regular basis depending on the season. There are winter
and summer collections as well as spring and fall collections.

Timing Strategy

Based on the discussion earlier, the sales of ASOS increased significantly during the holiday season of
2004. This is the case because orders for products that will serve as gifts were in demand. In addition, a
series of events take place during the holidays. Family reunions and countless parties are set to happen
during this time of the year. This means that people will always be on the look out for clothes that they
will be able to use during these events.

However, it is also expected that during the holiday season discounts abound. This means that
consumers are also on the lookout for bargain deals. In the case of ASOS, they are able to meet the
needs of their customers for ideal apparel at reasonable prices. As such, during the holiday season ASOS
must be able to get the word going that they will be able to provide quality yet affordable wares for the
people.

Customer Care and Service

According to Ross (1999), Total Quality Management is the incorporation of all the functions and
processes of the organization to be able to develop the quality of the services and or/products that they
offer. With this, it can be stated that customer relationship management programs are included in total
quality management. The need to develop an effective total quality management is important due to
various reasons. However, these reasons are still geared towards providing customers with the great
business experience with the company.  It is also the case that total quality management views
customer satisfaction in relation to customer retention and increase in the profits.

These are being considered by ASOS when they designed their website. They wanted to give their
customers the kind of shopping experience that would lead them back to the website and make more
purchases.

Competitive Positioning

The main competitors of Asos are JP Boden & Co, NEXT, Marks & Spencer, New Look and
Topshop. The other retail outlets
Brand positioning and uniqueness of offer, profile of target customers, product segment
authority, pricing strategies, marketing activities, service levels and benchmarking against key
competitors

Asos' burgeoning publishing operation means that Mudie has a "huge creative and production
team" to cater for. He says the company is looking at systems to support this, as Asos' women's
magazine now has the third largest circulation of any women's magazine in the UK.

SWOT ANALYSIS

Strengths of ASOS

The strength of ASOS is its utilization of the Internet. Through the Internet, it has formed a definite
market segment that is composed of mainly Internet users. A firm that limits its attention to fewer
market segments can better serve those segments than those firms that influence the entire market.
Moreover, its core focus, which is apparel, as worn by celebrities at affordable price gives them a
marketing edge for it attracts customers right away. It also gives huge discounts and has broad category
coverage.

Weaknesses of ASOS

Online retailing in general is getting bad publicity nowadays such as poor delivery performance. Another
weakness is that ASOS cannot guarantee specific product or brand presence. Internet selling is unlikely
to be successful, as consumers like to try on clothes and see the quality of fabric and workmanship.

Opportunities for ASOS

Ecommerce channels now represent 11% of the total UK retail business, and record numbers of
products are being procured vie the internet (Thomson et al, 2005). People are attracted by low prices
and convenience.  In addition, they have integrated their everyday activities to technology and the
Internet, including shopping. As the number of working women, who are ASOS core customers,
continues to increase, they will not only need more clothes for work but are also more likely to be
financially independent to purchase clothes.

Threats for ASOS

Online clothing chains from overseas are successfully invading UK and at the same time, branded
apparel such as Diesel, Guess and Zara are still popular among the market. Other purely online fashion
etailers such as Yoox.co.uk, Brandalley.co.uk are also their main threats. Downturn in the economy
could also cause buyers to cut back on overall spending.
QUESTIONS FROM THE CASE

1. What do you understand by the term ‘product life cycle’? Illustrate your answer using an example
of a fashion item that you have bought.

We define a product as "anything that is capable of satisfying customer needs. This definition
includes both physical products (e.g. cars, washing machines, DVD players) as well as services
(e.g. insurance, banking, private health care). Businesses should manage their products carefully
over time to ensure that they deliver products that continue to meet customer wants. The process
of managing groups of brands and product lines is called portfolio planning. The stages through
which individual products develop over time is called commonly known as the "Product Life
Cycle".

Pencil Skirt

A pencil skirt has a very straight and narrow cut that hugs the curves of a woman's body. Usually
a pencil skirt ends just at or slightly below the knee and they are very popular in the women's
workforce.

Product life cycle

1940s - pencil skirts popularised by actress Joan Crawford

1950s – decline in popularity as full skirts are in vogue

1980s- popularised by power dressing

2006-2009 – in fashion

2010 – declining as skirts are moving away from pencil to volume.

2. How is knowledge of the product life cycle useful to managers in planning the launch and ongoing
support for new products?

How is knowledge of the product life cycle useful to managers in planning the launch and
ongoing support for new products? Knowledge of how the life cycle works is particularly
important for a company like ASOS.com. The fashion industry is fast-moving and the individual
product life cycles may be seasonable. This means that some items will only sell well during
parts of the year. In addition, the lead time on the production and buying process means that
ASOS.com must plan a season ahead. Fashion designers launch their new clothes collections in
the same way. So, during winter 2008, ASOS.com would already have chosen and been planning
for the promotion of its summer 2009 collection. However ASOS.com enjoys an extended
product life cycle due to the fact that the business has a large international market. In the
southern hemisphere the seasons are the other way round to the UK. This, combined with an
increasing trend to take winter holidays in sunny countries, means that summer items, such as
swimwear, sell right through the year. Other items sell at unexpected times. For example, Ugg
sheepskin boots would normally be considered a winter product. However, a few years ago,
celebrities wearing them at pop festivals in the summer means they now sell all year round.

Understanding the product life cycle also gives ASOS.com managers greater control. • They are
able to predict when revenue will flow in and calculate the profitability of product lines.

• They can plan the introduction and withdrawal of products. Some product lines will be highly
seasonal. Other products such as classic blue jeans will have much longer life cycles and provide
regular long-term revenue for the business. Managers therefore need to plan the appropriate type
and level of promotion for different products.

• They can support products through the entire life cycle. They can plan pricing strategies to
extract as much revenue as possible at every stage. For example:

- promotional discounts can be used to encourage large numbers of people to purchase a new
product when it is launched

- premium pricing may apply to a new limited edition dress price reductions are often used at the
end of the life cycle when the item is less popular and sales are declining. ASOS.com regularly
introduces new products as customers demand the latest trends they have seen in magazines and
on fashion catwalks. Introducing a new product involves considerable costs:

• New stock needs to be purchased.

• The website needs to be updated with pictures of the new fashionable items.

• The ordering system needs to be updated.

• The items need to be promoted through the website, newsletter and magazine.

• There is the risk of an item selling poorly.

3. Analyse the types of approaches that might be adopted when promoting a clothing range online.

Some of the promotional strategies that are already being adopted by asos.com are: Supplement,
e newsletter , magazines, the look show etc. Some of the other ways in which it could promote a
clothing range are:
A software that would allow the customer to see their image wearing the clothes they want to
buy before they buy it. This would prove to be a strong competition for actual stores and would
attract customers who wish to try out the clothes before buying them.

Asos.com could also have special offers such as the customer could get a discount on a particular
range of clothing on their birthdays. Proof of the birthday could be taken at the time of
registration or separately. Another Alternative could be sending the customer a free gift or free
voucher on their birthday.

They could also arrange online bidding sessions on particular days where customers compete to
buy coveted items at a lower bid than the regular price.

Since clothes look different on different figure types they could have Models of various size and
not only size 0 wear the clothes for customers to get a better understanding of the garment.

If the clothing range is for students, there could be a special students discount. Also, asos.com
could affiliate with few universities and distribute discount coupons. Discount coupons are a way
to attract customers to spend in order to use that coupon.

They could collaborate with NGO`s and show that a certain amount of their profit goes to the
NGO. For instance, buy a dress and educate a child.

They could award gift hampers to the highest spender every month to attract customers to shop
more.

4. What considerations should ASOS.com take into account when deciding whether to spend more on
promoting particular products?

Promotional activity helps a business to provide potential customers with information about its
products with a view to making a sale. ASOS.com is a market-orientated company. ASOS.com’s
Customer Relationship Management system helps it to understand its customers and their buying
patterns. This means how different age groups and most importantly, how different attitudes
affect what appeals to customers and influences how they will spend their money. User
information enables ASOS.com to target its promotional activity. ASOS.com gathers
information about its customers and what types of fashion they like from its website
registrations. For example, two women of the same age can have entirely different purchasing
habits and fashion styles. This information helps ASOS.com decide where and how it will
promote its products. ASOS.com’s Public Relations department will target advertising to a broad
range of publications simultaneously, such as Harper’s Bazarre, Vogue, Elle, GQ or The Times
newspaper. As part of online registration, customers provide email addresses. ASOS.com sends
out email newsletters with updates about new products and offers twice a week to over 2.7
million customers.
By analysing a database of what its customers typically buy and how often they purchase,
ASOS.com is able to target promotions directly at particular segments of customers. Example: a
younger customer who has in the past bought low-rise jeans may also be interested in buying a
fitted leather jacket. Measuring the response to promotional activity is very important. A number
of key performance indicators are used to measure effectiveness. When ASOS.com sends
customers emails about a new product, such as blazers, it needs to know:

• how many of these emails are opened

• whether they are clicked through (read to the end)

• how many of these convert into sales.

The Boston Matrix Classifies Products into four simple categories:

Stars – products in markets experiencing high growth rates with a high or increasing share of the
market Potential for high revenue growth

Cash Cows: High market share Low growth markets – maturity stage of PLC Low cost support
High cash revenue – positive cash flows

Question Mark: Products having a low market share in a high growth market Need money spent
to develop them May produce negative cash flow Potential for the future?

Dogs: Products in a low growth market Have low or declining market share (decline stage of
PLC) Associated with negative cash flow May require large sums of money to support

The product portfolio – four products in the portfolio

(1) ‘A’ is at maturity stage – cash cow. Generates funds for the development of ‘D’

(2) Cash from ‘B’ used to support ‘C’ through growth stage and to launch ‘D’. ‘A’ now
possibly a dog?

(3) Cash from ‘C’ used to support growth of ‘D’ and possibly to finance extension strategy
for ‘B’?
Leading clothes designers and fashion houses choose to sell their clothes through ASOS.com
because they know that this is a good way to reach a wide, international audience and generate
revenue. ASOS.com is continually seeking to outperform its competitors and increase its market
share. It does this by providing customers with choice, value, service and fashion credibility. It
also needs to be aware of how the life cycle of its entire product range can be managed and
extended to maximise revenues. ASOS.com’s challenges are to: • convert the Question Marks
and Stars into Cash Cows of the future by increasing or extending promotion • manage the Dogs
either by removing the item and cutting costs or reducing the price to sell quickly or re-using the
materials in these garments to make new ones. The profits earned from Cash Cows can be used
to develop and promote Stars and Question Marks.