Caroll is a subsidiary

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Introduction

Caroll is a subsidiary of the Vivarte group since 1988. This brand is one of the ready-to-wear sector's successes, which has been known and appreciated by many women for over 40 years. Caroll is particularly renowned for the quality of its products.

With over 350 stores, about 100 of which are abroad Caroll is a brand that is ever growing both in France and internationally.

Caroll's culture is based on a shared brand vision:

§ Strong product identity,

§ A high degree of adaptability,

§ An innovative brand/distributor concept.

The company's niche was knitwear only. The 1970s were boom years! In the 1980s, Caroll began to evolve…In 1980, it added a ready-to-wear collection and its first franchise shops in France. In 1984, Caroll opened its first branch shops. Four years later, Caroll International was listed on the stock exchange and the André group, which was to become Vivarte in 2001, purchased a large share in the company.

The 1990s were revolutionary! In 1994, Caroll International defined a new positioning for itself, creating the “Caroll Paris” brand and introducing new strategies with a view to becoming a key player in the world of fashion, for a targeted yet sizeable female clientele, well informed and with high standards. In just a few years, Caroll International succeeded in completely changing its image and significantly increased its market share. After having transformed its network in France, Caroll International began to expand in other countries in 1997.

Since 2000, Caroll has strengthened its image by taking on a huge challenge: the application of luxury codes to distribution. With a wealth of experience in its sector, the Brand is now particularly appreciated for the quality of its products, its expertise and its style.

Part One: Marketing Audit

A. Corporate Level

1. The company mission

Caroll has its styling bureau in Paris. This bureau detects trends and creates collections it able to react quickly and design new products. Caroll missions are to design fashion clothes women, staying at the top of the fashion each seasons. The second mission is to sell this clothes and accessories by franchising new shops all around the world.

2. Company objectives & goals

In order to faced with constantly evolving fashion, Caroll has chosen to continuously renew itself and launch new models, new colours throughout the season. The goal is to keep up with the latest looks. Caroll has to answer to the women wants. So, clothes are perfectly cut, the choice materials are an important part of its renewed. Caroll doesn't offers only clothes fashion, it also sells accessories: scarves, jewellery, belts, bags, shoes, etc.

B. Marketing Mix: 4 P's

§ Product:

Caroll has a large range of products. All the products are based on three same styles that are based on the “details finishing” and the “high quality material” used. The silhouettes are really important:

o 3 trends

o 3 styles

o 3 lines

All the product's shapes are well defined and cut in chosen materials, which offers a very elegant to order outfits.

Caroll collection:

§ Blouses

§ Coats

§ Dresses

§ Jackets

§ Pants

§ Skirts

§ Sweaters

The Accessoires:

§ Bags

§ Jewels

§ Stole

Caroll's activity is based on stitch and the brand has successfully diversified its product thanks to chain and weft. It's a great benefit for the brand because it allows to sell more products. In other words a customer comes into a shop with the idea to find a coat. But when the customer comes out the shop sure he buys a coat but he already leaves the shop with several accessories. Caroll knows how work with noble material like silk or Kashmir. Colours are also important because the brand has created specific range of colours. More than that with an international implantation the firm has to be aware of the cultural importance accorded to colours and she is.

Caroll answers every women need or desire “clothes” & “accessories”. The range of product is large and diversified: this is a good way to attract more and more customers and to enlarge at the maximum the profile of customers. But the range can be “City”, “Sportswear” or “Diva” it is always quite classical and modern. So every woman customers who belong to the middle class who like fashion and style can be seduce by Caroll's products.

§ Price:

Caroll launches large range of price in order to attract every woman with a middle purchasing power. In that way the price is adapted to the purchasing power of customers.

The price is totally in correlation with the target customers. Caroll is offering a good quality-price ratio.

Place

At the beginning, Caroll sold its products in retail shops. They start to open Caroll franchises in 1980. The decoration is simple but stylish to give an atmosphere of elegance. The stores are whites, black and grey. Those three colours are the symbol of sophistication and chic.

In France, you can find the Caroll store in “chic” places; for example you will find a store in Paris Rue Vaugirard which is a street know for it chic stores. Places have to be on the same line that style of the stores. In France, Caroll possesses 70 stores which makes France the first place implantation (in terms of numbers of stores). The second one is Spain. The brand is also represented in Japan, Lebanon, Portugal, Martinique, Reunion Island, Spain, Switzerland, Tunisia... We can say that Caroll is already internationally well developed, with shops in many countries and in the most European Capital!

Promotion

Caroll communicates through well-know press magazine like « Biba », « Glamour », « Mme Figaro », « Marie-Claire », « Gala », « Elle, Marie-France ». Those are French magazine for woman readers aged between 25 and 35 years old. That shows that Caroll targeted a special group of woman.

The SWOT Analysis underline that Caroll has a strong experience in international market. One of the main opportunities for Caroll is that this brand profit from the Glamour image of Paris. Despite the international crisis the growth rate in developing country is stile positive (the Chinese growth rate objective for 2009 is 8%). So it exist strong opportunities for an implantation of the brand in developing country and especially in China. For instance the Chinese middle class is not able to buy the Caroll' s clothes but more than 10% of Chinese have a purchasing power equal of European countries. So it represents at least more than 100 millions people. And in a close future it will touch much more.

Caroll has to develop a strong communication with a good marketing strategy. But the Chinese market has its own cultural specificity and the company Caroll has to be conscious of that.

D. Market Positioning

E. Boston Matrix

If we take a look at the three Caroll's division, Clothes, Accessories, and customized Services, we can see that the first department generates the cash that is used to pay the several costs of the company, the salaries, taxes, supplier, etc. It means that the cash created is used for “the daily work” (or short term). The growth rate of Caroll is almost the same as the sector level.

Accessories and bags also generate cash and have a higher growth rate than the clothes sector. The level of cash generated is lower but those products are the best growth of the brand. The return on investment is high for the stars and for the cash cow products.

But actually the customized service does not have a lot of market share and the activity is decreasing.

The Question Mark, it linked with the special materials that they are using. For example the silk which is used for a specific range of clothes. But this specific range is a trend and the special materials are not gone be used next season (or trend). That's why they have to be aware of new trends and anticipate them in order to adapt materials to the future trends.

Part Two: External Audit

A. Chinese Colours Analysis

The I-Ching regards black as Heaven's colour. White represented gold and symbolized brightness, purity, and fulfilment. White also is the colour of mourning.

The Chinese people, both ancient and modern, cherish the colour red. Red is everywhere during Chinese New Year and other holidays and family gatherings for it symbolizes good fortune and joy.

Blue-green indicates spring when everything overflows with vigour and vitality. Yellow symbolizes the earth. The old saying, "Yellow generates Yin and Yang," meant that yellow is the center of everything. Colour embodies an even richer culture in Chinese folk traditions. Yellow is the colour for emperors. Yellow often decorates royal palaces, altars and temples.

So Caroll's main problem is the colour that they are used normally for the brand. And black and white clothes are not a good colour code for Chinese implementation. To conclude Caroll has tow choices. They can adapt colours clothes to Chinese taste or it can count on the western countries fashion influence.

Another option is to use both colours style. Of course this colour positioning will be the most expensive strategic choice. That's why Caroll has to really take into account the cultural differences! Maybe hire local employee in order to create the most adapted range of product is the best option that they have to minimize risk of mistakes.

B. Chinese Population evolution 2006

The age pyramid in 2006 shows that people between 25 and 49 years old represent the most important part of the Chinese population. It is exactly the target that Caroll has.

C. Chinese Key figures

One person on five of the planet is a Chinese.

China counts more than 20 metropolises of more than 5 millions inhabitants.

With 752 millions active Chinese, China is a reservoir of inexhaustible manpower.

The current income per inhabitant is 1090 dollars (100th world rank) but increases very fast.

300 000 Chinese have a heritage exceeding 1 million dollars.

China: 651 TV channel and 1000 radio stations. It is the 2nd market behind the United States.

D. Caroll's Target

Caroll has an advantage it is a French brand. French brands are known as good taste in term of fashion. Chinese women like the “French Touch” so a French brand has a crucial advantage in comparison with non-French competitors. French clothes in Chinese women mind means: fashion, good quality.

Actually, in China the middle class represents 80 millions persons. But in 2010 the Chinese middle class will represents more than 200 millions people! A huge and wide market in constant growth is opening for Caroll.

According to the national office of China's government statistics the income of the Chinese population doubled between the year 2002 and 2006, evolving from 1.100 dollars to 2.010 dollars.

More precisely Caroll segment is composed by active woman. These women have between 25 and 40 years old. They are described as active woman working in megalopolis cities.

F. Porter's Five Forces

 Threats of new Entrants:

Threats for Caroll to be faced with new competitors are high. As every one knows China is gone be the first world economy. More than that we have to bear in mind that one person on six of the world population is Chinese. In that way China is a new market opportunity and Caroll's company is not in a situation of monopole. New inteznatûÿnao entranus hmve clso the0wil|ingness to take&a syt in th} Chonese market. Move dungerous it's the apparition&and$devmlopment,of ýocal fiöm!

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•+Absoluto cost aovantage• Qrop{ietiv}p{owwwu~ve— Acess&to }otwus• Governmeþv policy• economie{ of"scale •!Capktal,reqy{emn}O×Branä$identiô{ ­Bargainyno sowev of#Suppliess:

If?Caroll necives wocwrk tive{tywwitx {hingsw wu|poiur{ yn5ordgr,for e}amp|ebto reduce the costs of transportation, the branf will'bm gboe to reduce the product's price in order to be equal to$the price market. Indeed working with the local supplier pezmkts o.rudco many costs and most of all to satisfy at best thu gustomers' needs.

There are a lot of potential Chinese supplie~s, so Carlo will be in a strong bargaining power compare to suwpoiwrw.$ oBwyerlPowerz

The Caroll's target is, at the launching of"the%braodbin China, working women with a high purchesing power.pB}t-rap{dmy`witl uhg mconomic g~owth of China, more and more women would be able to buy Caroll clothes. So rapidly what was a niche market for Caroll will began a mass market.

Threat of substitutes products:

Clothes don't have threat to see enter substitutes products. Everybody needs clothes. But there is an important phenomenon that is counterfeiting. Chinese have a strong knowledge on counterfeiting. Chinese industry is known to copy everything especially clothes, shoes and accessories. The main risk for Caroll is to see its product ranged copied and sold at a very low price.

Caroll rivalry among firms:

In China Caroll's main competitor is Alain Manoukian who is well established. Other fashion houses are also present. Caroll might find it hard at first, it will have to convince the Chinese customer of the quality of the product and also underline the French aspect of the range since the Chinese is very fond of French fashion.

Part Three: Caroll Strategic Marketing Plan

A. Product

Caroll has to base his marketing product on developing special colours for Chinese woman. Caroll style is based on elegance and simplicity and the new products have to have the French Touch in order to seduce Chinese woman. They have to do marketing research on the customs, traditions and religion of Chinese people in order to avoid intercultural problems and sales decrease.

The most positive colour is red so Caroll should develop a red range of clothes. Despite the superstition, black is getting more and more popular thanks to the western influence. The white colours should also be avoided in order to stay away issues on sales. The environment analysis shows us that Caroll should also take care of the climate that changes from one region to another.

B. Price

Caroll has to adapt its products prices according to the target. So to begin the brand should keep a high price to attract women with a high purchasing power. But rapidly (Less than 10 years) Caroll could get more customers thanks to China growth. This country will get more women with middle class purchasing power. So in order to catch this new population, Caroll could decrease a little the range price.

C. Place / Distribution

How to choose the opening of Caroll stores? One answer is based on the repartition of the population according to the purchasing power. A map of the different density can help Caroll to decide where to implement their store.

China has an important density in the big cities like shanghai, Beijing, Canton, Hong- Kong, Schuan, Henan and Shenzhen. The east coast of China is the must interested part of china because the middle class population is there concentred. In the close future, the middle-class population will migrate to the big metropolis cities and a new class will appear. This target is the key success of the next five years. In the rest of China the population is very scattered. Opening stores there will be a waste of time and money. People are poor and are not very concerned by fashion.

In China the most famous distributor place is mall, which is an American influence. As a result, Caroll should open its store in this mall in the biggest cities of the East cost. These malls create a fashion image and Caroll positioning will be higher. The target chosen is the common customer in those shopping centres. A French brand in this shopping place is certain to find the clients. It is a trendy place where the French touch will be appreciated. Chinese customers will be curious about a new brand of quality.

Maybe Caroll could create a partnership with Carrefour (a French hypermarket group). The idea is quite simple, open stores in these hypermarket areas (not all off them of course). Hypermarket attracts people and Carrefour is actually well implanted in China. But these establishments could be harmful for the “Chic” image of Caroll…

Stores

As we know Caroll stores decoration is white and grey. We saw that those colours are negative in the Chinese customers' minds. The best colours could be red and black, we also saw that black is getting used and the negative impression decreased.

Logistic organisation

The production centre has to be in a city very accessible by airport or boat. The city has to be in the middle of the east cost in a city like Shanghais. The goods' redistribution will be easier and also reduce costs. A study has to be made considering the local rent, the transportation plan, and the place of the different store.

D. Promotion / Advertising

In France, Caroll only uses magazine. In China, the company has to advertise a lot more because the brand is not very known. At first I think that the objective is to be known! The brand should use television ad, and continue the press magazine. Woman from Chinese middle class love read press magazine. The first store opening has to be a big event as Louis Vuitton, Caroll should organize a big private sales and a big party to promote the brand.

To be well known in China, the TV campaign has to be strong at the launch of the brand. Caroll can also communicate trough billboard and trough Internet. Today feminine web sites are very developed and advertising in those sites is a good way to touch a lot of potential customers. The campaign has to be class by showing a group of modern workingwoman wearing Caroll outfits. The group will be composed on European and Chinese woman working together and having fun together. The ad message is that everywhere in the world, at work, or during the night, all nationality girls can were Caroll and be class during all day long. The ad will be in Chinese with French subtitles for example.

Conclusion

Even if the potential target is now small (a niche), we can forecast that in ten years, the middle class will have a purchase power multiplied by ten. So, it seems profitable to target this audience right now in order to be an established brand in couple of years. Especially in this case the marketing function is a determinant point of the long term strategy for Caroll.

The company will also have to be cautious concerning the market environment and not enter it without studying the culture closer, the political environment… The brand will have to adapt its products if it wants to answer the customers' needs. Not only will it have to adapt its products, but it will also have to invest in advertising. Communicating the brand through specialized magazine will not be enough to gain notoriety, bill boarding, posters in bus stops and in subways, would be the best way to introduce the brand. This major advertising campaign should take place before Caroll opens its first shop. Endorsement will also be very important to implant the brand rapidly. There is no reason that Caroll should not succeed in the Chinese middle class market, because its competitor Alain Manoukian is well-established!

ð Caroll does a good marketing strategic choice to launch its brand in China and if the marketing mix is well respected, Caroll will have good opportunities to be present in Asia the future biggest continent in term of economy.

Bibliography

http://www.iiasa.ac.at/Research/LUC/ChinaFood/data/anim/pop_ani.htm

http://www.sinoptic.ch/textes/articles/2007/2007_Projection.population.Chine.pdf

http://www.caroll.com/

http://www.quickmba.com/strategy/matrix/ansoff/

http://www.12manage.com/methods_porter_five_forces_fr.html

http://www.marketing-etudiant.fr/

http://www.societe.com

http://goliath.ecnext.com

http://www.transnationale.org

http://chineseculture.about.com/

http://chinese-school.netfirms.com/businessculture.html

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