Cross-case Comparison between the Demand-side Elements

The results of the cross-case comparison in terms of the demand-side elements are presented in Table 6-1. As demonstrated, all firms intended to expand sales capacity by developing multiple retail networks, and this was delivered in various ways. With the popularity of e-commerce and online shopping in China, some apparel firms attempted to leverage sales capacity by working with third- party e-commerce platform players, i.e. Companies A and E; others endeavoured to develop own online store, i.e. Companies B and D. Among the five interviewed companies, four launched online networks. Companies B, D and E took a step further by launching mobile applications and social media platforms. Besides this, the majority of them, i.e. Companies B, C and E, encountered the problem of high operational costs occurred from a non-direct holding network, i.e. franchise stores located in the tier-two and -three cities of China. In response to that, these companies launched a gradual transfer of the franchise network to direct holding. However, considering the performance of building various distribution channels, only two companies have made a successful internal transformation in response to the external market dynamism. For instance, targeting the high-end, less-competitive market segment, Company C was able to deliver a series of high-end design products in a mix with limited market reach, by building all-in-one experience stores in few tier-one cities, as opposed to building online stores like the other companies. Similarly, targeting a highly competitive market segment, Company E worked with several third-party platform providers in an attempt to develop wide market coverage, and adopted store fulfilment to control the downstream product flow.

In terms of market emphasis and promotion, the marketing and sales methods have become increasingly diverse. In addition to the traditional method, e.g. commercial TV advertising, a series of new promotional methods appeared, for instance, using social media and online platforms for augmented brand image and sales promotion, and implanting viral seeds for higher web exposure. As shown in Table 6-1, many companies, mainly the private ones, adopted a test-and-go mentality with sales promotion, and utilized various marketing methods under multiple channels.

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Table 6-1: The Results of the Cross-case Comparison for the Demand-side Elements Demand-side

Elements Company A (SOE) Code Company B (Franchised) Code Company C (SPA) Code Company D (B2C) Code Company E (Multi-channel) Code External market

conditions after the fourth structural change

Shrinking profit with increasing cost. The product market has changed into conditions with higher competitive intensity.

P

High competitive intensity and high risk. Market differentiation emerged in the growing market. _P

Aiming towards a market share with low competitive intensity but high uncertainty. The product segments are augmented in a protected environment.

I

This segment became increasingly competitive under the fourth structural change. Other competitors share the market, which means there are many different products under the same niche.

P

This segment became increasingly competitive under the fourth structural change. Other competitors share the market, which means there are many different products under the same niche.

P

Internal company environment Product mix  Trying to imitate designs for _{profile differentiation, but}

lacking profile consistency. N

 Studying other product mixes and supply chain strategies; however, it found it difficult to re-identify itself through upgrading its product mix.  Unable to fulfil its new customers

with its current product range. N

 Focusing on improving fabric designs and techniques.  Improving the efficiency of

product development; strengthening the design cycles with the market lifecycle.

I

 Expanding product lines dramatically into other industries.

 Degenerating quality and design. N

 Expanding product styles based on various occasions.

 Seeking product differentiation by matching them with accessory products for specific themes and occasions.

 Improving on customer service. P

Market emphasis  Regarding itself as a high-_{end brand; however, brand} cannot match with product mix and customer

expectations. N

 The products failed to reach the new youth generation.

 Gradually losing its brand identity.  Investing significantly to create

another youth fashion brand expecting high growth; however, the return on sales is not promising and also causes brand confusion with its main brand.

N

 Aligning brand image with the product development.  Opening all-in-one experience

stores to market its brand culture and upgrade the brand

equity. I

 Making online advertisements and blogs for extensive social media exposure and brand awareness.  Creating memes to boost the online

click rate. N

 Marketing online.

 Using mobile platform to enhance social media exposure.

P

Customer segmentation

 Losing previous clients as cost increased.

 Opening retail stores to target high value-added local consumers; however, product mix cannot fulfil the customers’ needs.

N

 Gradually losing the connection between its products and customers.

N

 Upgrading to target high-end VIP customers.

 Strengthening VIP services, such as organising various reward activities and discounted prices.  Developing a community to have a strong bond with its loyal customers.

I

 Losing target niche.  Negative consumer reviews.

N

 Funnelling down the network to inland consumers.

 Reaching a large amount of new users through online and mobile

channels. P

Channels of

distribution

 Opening online channel.  Attempting to reduce the

dependence on selling through the internal

network. P

 Withdrawing franchise stores.  Investing in building online store.

P

 Downsizing retail stores from 100 shops to 60 shops; most are direct ownership.

 Working with franchise stores collaboratively, with clear KPI standards.

 Opening a few all-in-one experience stores.

I

 Opening mobile/tablet platform.  Integrating the mobile network with

online commerce for higher social

exposure. _P

 Withdrawing franchise ownership, and fully adopting direct ownership.  Launching online store.

 Opening mobile shopping and social platform to reach new users.  Adopting store fulfilment for

multiple channel distribution in order to control product flow.

P

Promotion and price regime

 Discounting the prices for the online sales campaigns.

N

 The product cannot sell well and maintain a competitive price, as costs have increased.

N

 With more innovative collections and quality released, price scales are upgraded from RMB500–800 to RMB1,000– 1,500

 Special discount, only for VIPs.  Having annual sales campaigns

one or two times.

I

 Using the online platform for sales campaigns not only for its own brand but for other brands to get rid of

inventory. _N

 Launching a series of sales campaigns through online and mobile networks.

 Releasing a high number of promotional activities throughout the year for a quick turnover.

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Although significant resources were delivered in this area, as in Companies B and D, some results were not expected. Many mentioned in the interviews that these results were attributed to inadequate product development and demand management. Only Companies C and E have successfully identified their market emphases with aligned marketing methods and product mix. In summary, companies eager for extensive sales capacity expansion, and only focusing on building sales contact points and promoting infrastructures, could more easily find themselves losing their brand features and product niche during the structural change period. In addition, private companies have been more willing to react to the external changes in demand-side elements, as opposed to the stated-owned enterprise with a less-motivated corporate incentive.