University of La Verne – BUS 567 Service Sector Marketing| Giordano | Positioning for International Expansion| Sheng-I, Chang (Becky)Chang-Ta, Yang(Frank)Chieg-Chiung, Chen (Jeff)September , 15th, 2011 | Introduction Giordano established in 1981 by Jimmy Lai. It is a Hong Kong- based retailer of casual clothes targeted at men, women and children via its four company brands, Giordano, Giordano Ladies, Giordano Junior and Blue Exchange (Bitner & Zeithaml, 2011).
Giordano is one of the best known and established apparel retailers in the Asia Pacific region, employing over 8,000 friendly staff with over 2,400 shops operating in 30 territories worldwide (About Giordano, 2011). They are committed to delivering quality products and service to their customers in the worldwide market. Their vision is to be the best and the biggest world brand in apparel retailing with the mission of making people “feel good” & “look great”. This paper starts with a corporate profile of Giordano.
The main part of the case is positioning the international expansion of Giordano and a detailed analysis of its competitive environment and alternative solutions. Furthermore, the company’s growth strategies are discussed with recommendations provided to conclude the case. Company Profile The Giordano Group is a leading international retailer of men’s, women’s and children’s apparel and accessories. Giordano’s success is measured by the company’s relentless focus on its five corporate business values of quality, knowledge, innovation, simplicity and service.
The company has its own apparel manufacturing division where many of its own clothing styles are produced. Giordano is also renowned for its basic and practical men’s, women’s, and children’s T-shirts and trousers, especially denims. In comparison, Giordano is very similar to the American based popular retailer The Gap. Responding to the slow sales in the past, Giordano changed its positioning strategy in 1987 which the company decided to shift its focus to maximizing sales instead of maximizing price margin via a “value-for-money” policy with selling discounted casual unisex apparel, and increased commitment to customer service.
The shift in strategy was successful. The management values and style leads Giordano to be successful, which including a willingness to try new and unconventional ways of doing business and to learn from past mistakes, and considering front-line workers to be its customer service heroes. Giordano’s commitment to service began with its major Customer Service Campaign in 1989. There are three tenets in this campaign which is ” we welcome unlimited try-ons; we exchange – no questions asked; and we serve with a smile”.
Giordano’s philosophy of quality service could be observed not only in Hong Kong, but also in its oversea outlets. There are many companies in the market selling casual apparel. The way in which Giordano differentiates itself from other companies to gain competitive advantage is critical to its success. Giordano’s Strategies Giordano distinguishes itself from the others through its high-quality service and superior customer value. However, Giordano is still a long way off from being well known brand compared to other international brand.
Giordano is a label that doesn’t shape opinion, After 2005, when the garment quota is abolished, imports into the Asia region will become more competitive. This change could affect Giordano’s position and growth potential. Philosophy And Value System Regarding to Giordano’s philosophy and value system, they believe that mistakes are unavoidable because of the rapid changes in the market. The critical thing is to learn from the mistakes. Giordano has made his employees comfortable about making mistakes.
They believe in empowering people through providing a supportive, participative environment in which employees feel safe when mistakes are made. In Giordano philosophy, they feel that with contribution and participation of all employees, mistakes will be minimized. People only make mistakes when they have decision-making ability. Employees As An Asset Training is an important part of Giordano’s strategy. It is provided on a continuous basis in order to support Giordano philosophy that employees are key to the company’s success.
However, even the most sophisticated training program will not guarantee the best customer services and satisfaction. It is the people who deliver that gives it from and meaning. Giordano has stringent recruitment and selection procedures to match its value and service requirements which continues to maintain top-level service to customers. Performance Evaluations Performance evaluations are conducted frequently at the store level, as well as for individual employees. Stores are evaluated for customer satisfaction twice every month, while individual employees are evaluated once every two months.
Internal competitions are designed to motivate their employees and stores intend to do their best in serving their customers. Product Strategy & Quality Services Giordano is able to incorporate a high level of customer service as part of its products through a concerted effort, which involved every employee of the company. The company focuses on the concept of value-for money which constantly improves the value of the products and what the products mean to their customers.
However, it is also essential to recognize the importance of the management and leadership’s commitment to be customer-oriented and to provide high quality service. Product strategy is to sell a small number of core products in its stores. Giordano’s limited product line is seen as a strength. It has no more than 100 items and no more than 17 core items in the store while other retailers have 200-300 items. Because the company believes that merchandising a wide range of products will affect retailers to take a longer time to response to the market changes.
Simplicity, flexibility and speed as values at Giordano is reflected in several ways which allowing company to react rapidly to the market changes, and quick decision making and well communication through its flat organizational structure. Competitive Advantage The competitive advantages those worked as key success factors for Giordano to achieve a distinct position in the competitive markets are as following: * Computerization – The POS terminals that are used to record and transmit flows of stocks to a mainframe computer which then aids in controlling stock flow of inventory. A tightly controlled menu – It mainly focus on a few items whose demand and desirability can be closely monitored. * Frugality – Curbed spending on advertising and tight inventory control * Value pricing – Value for money apparel. * A dedicated workforce in all outlets that provides quality service: In order to maintain this Giordano follows stringent selection procedures to ensure only desired employees are chosen, conduct workshops on “attitude training”, follows rotational on the job training method and performance related pay systems on the basis of periodic performance evaluations. Simplicity and speed of operations: Giordano maintained a flat organizational structure and this facilitated easy communication between people within the organization, helped to make speedy decision and to manage the project efficiently. * A recognized brand: Giordano has received awards such as: The American Service Excellence Award, ISO 9002 Award and People Developer Award which helped Giordano to establish their brand as a familiar one in over 30 countries.
All these competitive advantages and sources should be maintained by Giordano in order to keep its current competitive position and there are some other competitive advantages that should be developed by Giordano in future. The future competitive advantages can be gained through investment into the development of employees and continued development of a learning organization which may not be gained by the other competitors. (Giordano K-10, 2010) Giordano’s Problems We have indicated some problems and considerations regarding to the position for international expansion.
If at all, Should Giordano reposition itself against its competitors in its current and new markets, and should it have different positioning strategies for different geographic markets? Does the company need to apply different HR strategies to suit different countries? Analysis & Solutions I. Should Giordano reposition itself against its competitors in its existing and new markets, and should it have different positioning strategies for different geographic markets?
Regarding to the Giordano’s positioning of international expansion, should Giordano reposition itself against its competitors in its existing and new markets, and should it have different positioning strategies for different geographic markets? According to Osama Taha- “A positioning strategy results in the image you want to draw in the mind of your customers, the picture you want him/her to visualize of what you offer, in relation to the market situation, and any competition you may have” Giordano’s current positioning strategy is based on providing “value-for-money” or quality merchandise of discounted casual unisex appeal.
The company also emphasized on the merchandise that is relatively mid-priced which means “inexpensive yet contemporary and trendy”, and offers quality, value and excellent customer services. The reasons for Giordano’s success in market place are filling a gap in the market for trendy with reasonable price and quality unisex apparel, and the delivery of quality customer service. Now the fact is whether or not Giordano should reposition itself against its competitors in its current and new markets.
Moreover, after thirty years of operation, Giordano’s brand name and value have been in the customers’ mind clearly. If Giordano changes its positioning strategy, it will be very difficult to obtain high-end customers acceptance in this intensive global apparel competition, and may lose the existing low-end customers at the same time. Therefore, we believe that Giordano should not change its existing positioning strategy. Repositioning is not necessary for the entire company because Giordano’s relatively mid-priced positioning worked well in the past decades. The Inexpensive Yet Trendy” clothing appealed to Asia’s frugal customers in the Asia market. However, Giordano could alter their brand image into a more high-value, high-quality, and high-end market. This could mean primarily repositioning Giordano as a higher priced and higher value brand in particular markets in the world. The price may can increase within 5 ~ 10 %, but not too high. According to the statistics, adjust the middle range of clothing prices within 5 ~ 10% will not affect the consumer’s sensitivity of the price. Giordano must continue to be creative in their promotions.
Perhaps they should spend more on traditional advertising, as they spend less on advertising and promotion than close competitors. However, compared to other international brands, Giordano still doesn’t shape opinion. One of the Giordano’s competitors is Esprit who are seen as more up-market than Giordano, while being stylish and trendy. Besides, Esprit promoted a “lifestyle” image, even though it is positioned similarly to Giordano. Therefore, Giordano could re-launch its image, to be more stylish and thus promoting a lifestyle and not just a brand.
It is not necessary for Giordano to follow same positioning strategies for different market but it will depend on the market condition of a particular whether to follow standardized or customized strategy. The company can go after with standardized positioning strategies “value-for-money merchandise” for different markets within the same region like South East Asian countries. But before implementing this standardized positioning strategy Giordano needs to understand the particular market on the basis of consumer’s tastes and preferences about the products and promotional activities.
On the other hand, the other successful strategies of Giordano in proving excellent quality customer services, information system and efficient logistics and human resource policies and practices should be implemented tactically for different markets. It means customized strategies should be developed for different countries even within Asia because there are some variations between countries in terms of their economic, cultural and social factors. II. What are Giordano’s key success factors and sources of competitive advantage?
Are its competitive advantages sustainable, and how would they develop in the future? The company is establishing a good key success factors. They serve their clients with good quality service and having other company as a reference for bench mark. The company emphasizes the service and the value-for-money which has a big impact to the company source of success. When they are selling their products, they are selling service which is half the price and the other half goes to the production cost. They are not only for goods but they also sell services.
Moreover, Giordano have other key success factors like short product development cycle and fast market-driven new product development, excellence in management’s swift cost-control strategies, good in marketing and strong brand positioning, excellence service with “no questions asked exchange” and “unlimited try-on” policy, good location primarily in good ground-floor areas, drawing high-volume traffic and facilitating shopping, browsing, and impulse buying. By all of these key successful factors, they have strong competitiveness in the clothing retail market.
However, in the long run, sustainability of key success factors of Giordano highly depend on creativity and innovative of the organization. Some competitive advantages can be Giordano key success factors now, but it may not be in future. For example, information was disseminated to production facilities in real time by IT system but if Giordano’s competitor installed the similar system as Giordano did, it will no longer Giordano’s competitive advantages and cannot become the key success factor of Giordano.
Giordano should never satisfy itself in such rapid changing current market situation. As the results, Giordano should look into new ways of improving and strengthening its competitive advantages. Creativity and innovative play an important role in continue to gain competitive advantages as “people are the key” to create value to organization or so called “organization culture” which is difficult to adopt by its competitors in market.
Although Giordano might lose some of competitive advantages in future, investment in human resources will help Giordano to create new competitive advantages to contribute in the key success factors of Giordano and stay ahead in future market. Besides this, Giordano should keep on commit to its excellent customer service orientation philosophy and well monitoring with their market competition. These key success factors would develop in certain training and more research about the service and the products the target market wants to have.
Innovation of product and service is a must for a company to develop and gain profit in a long period of time. Also, Giordano should rapidly development in Internet and Intranet technologies, solutions such as MS Office, point of sale (POS) and enterprise resource planning (ERP) software, and supporting telecommunications service (e. g. broadband Internet access), Giordano’s competitor could acquire integrated IT and logistics technology more easily and more cost-effectively than ever before. III. A third issue to be considered was Giordano’s growth strategy in Asia as well as across continent.
Would Giordano’s competitive strengths be transferable to other markets ? Would strategic adaptation to IT strategy and marketing mix be required or would tactical moves suffice? Giordano Company’s main competitive strengths which can be transferred to other market are: the experience of the employees, inventory controlled system, HRM practices but the policies should be different for each country and can use the established distribution, marketing and inbound channels members in order to market their product outside the home country.
IT strategy which is currently used by Giordano, it should not adopt the same strategy for other countries where they are planning to expand their business. Because the IT infrastructure for each country in Asia and other continents may not be the same and the current IT strategy of Giordano may not be supported by that particular country’s technological structure. Giordano needs more efficient, cost effective, and secure internal communication platform which will link its many sites in Hong Kong and other host countries.
As the cross border business of Giordano is increasing, the company needed a comprehensive communications tool that would help Giordano employees conduct multisite management meetings, share documents and collaborate for fast business decisions and quality customer service. In such scenario Giordano can go for partnership with the IT company (Like Microsoft), through which they can install such a server and software through which they can equipped their staff with real time teamwork and presence capabilities that dramatically increased productivity.
At the same time they can decrease its multi-national direct dialing and travel cost, as well as IT management costs. The marketing mix strategies that are followed by the Giordano for the existing market should not be the same for new markets where the company is willing to enter. The marketing mix strategies mainly deal with arrangements of the 4 Ps’. So the strategies regarding product price, price, place and promotion should not be the same for all target countries as the market differs in terms of their economic, cultural, social and political environment.
But the successful strategies which are currently used for other market can be used by Giordano as guidelines and can develop tactical strategies for different market according to the market situation and customers’ requirements. Recommendation In the past, Giordano has relied on a consistent strategy across retail outlets in the Asian countries that it transacts with. The success strategies include the company’s positioning and quality service, recruitment and selection policy, training and development, above-market reward and compensation system, flat structure, quick decision making.
We believe that the same brand in different regions should not apply different positioning strategy, which should keep the same business strategy consistency. Due to the intensive competitions in the global market, same brand name with different positioning strategy will cause the confusion of customers worldwide. Customers in these markets may become confused as to what Giordano stands for, and this inconsistency makes effective service strategy implementation difficult, particularly as consumers are becoming increasingly mobile and travel more frequently between Giordano’s core markets.
Moreover, Giordano might can develop a new high-end brands in order to satisfy the demands of high end markets. From the above analysis we have some recommendation for expansion in the international market for Giordano. First, it is essential to start promotions to increase brand awareness when starting businesses in new market. Second, the location and site selection for establishing Giordano’s outlet in different country will be critical. The company should carefully select the site to position their stores which will be convenient for the customers. Third, customer is the key and main factor for differentiation is customer care.
The company needs to follow customized customer service strategy for each market segment. Fourth, Giordano needs to find out possibility of outsourcing to maintain low costs. Fifth, extensive market research is needed to investigate designs and fabrics required by the target customers. Giordano has perfectly focused in the value-for-money concept and everything they do is managed at a world-class standard. The management conducted their business in such an excellent and professional manner which helped this brand to reach from Asia to the Middle East and India, Australia, Eastern Europe, and now in North America.
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