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1 FAST FASHION IN CHINA An Empirical Study /By Nan Shu & Zhang Lin

Final Year Project Oral Pre PPT

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Page 1: Final Year Project Oral Pre PPT

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FAST FASHION IN CHINAAn Empirical Study /By Nan Shu & Zhang Lin

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Introduction• Background – Gap – Objective

• Literature Review

• Model & Hypothesis

• Methodology

• Analysis of Descriptive Data

• Business Analysis & Implication

• Limitation & Conclusion

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Background – Gap - Objective

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Background

Fast Fashion Competitive advantage –

affordable price

Has developed in western countries

for many years

Still in developing stage in China

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Gap - Objective

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Intensive demand of Chinese consumers

Problem in meeting Chinese consumers demand

Gap

Objective• Reduce the gap• Giving more advices to companies on

meeting consumers’ preference• And improving operating performance

in China

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Literature Review

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Literature Review

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• SG. Hayes and Nicola Jones (2006) – Results shown on financial report or annual report reflected fast fashion corporates’ financial performance.

• Choi, Liu, Mark, and To (2010) -- Consumers’ attitude incurred effects towards brand extension.

• Caro and Martınez-de-Albéniz (2014) -- Fast fashion business model included: (i) fashionable clothes mostly for consumers under 40; (ii) affordable prices in the mid-to-low range; (iii) quick response; and (iv) frequent assortment changes.

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Literature Review

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• Cachon & Swinney (2011) -- short production and distribution lead times enables customers to actively buy trendy products; Fashionable design could increase market share and customer value.

• Cheng and Chi (2009) -- Brand loyalty of Chinese customers to fast fashion is considered a little, but it is a necessary factor of Chinese customers' preference.

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Model & Hypothesis

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Model

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Corporates' Performance (from

Companies' Perspective)

Corporates' Performance (from

Consumers' Perspective)

Quick Response

Brand

Affordable Price

Fashionable Design

IV DV

Warehouse theory

“4P” marketing theory :Price

Model of Caro and Martınez-de-Albéniz (2014)

Part Ⅰ Part Ⅱ

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Hypothesis

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H1 From consumers’ perspectives, if other factors are equal, the quick

response has a positive correlation with the corporates’

performance.

H2 From consumers’ perspectives, if other factors are equal, consumers’

brand loyalty has positive correlation with fast fashion corporates’

performance.

H3 From consumers’ perspectives, if other factors are equal, the

affordable price has a positive correlation with the corporates’

performance.

H4 From consumers’ perspectives, if other factors are equal, the

fashionable design has positive correlation with fast fashion

corporates’ performance.

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Methodology

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Methodology

PartⅠ

PartⅡ

Factors affecting

Chinese consumers’

preference on fast

fashion products

Apply the result of

customers’

preference back to

companies’

operation

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• Descriptive

Findings & Analysis

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Findings & Analysis--Descriptive

70%

30%

years old25

20%

80%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

never a little some very

Knowledge of the term “fast fashion”

0 1 2 3 4 5 6

Benetton

Others

Mango

Gap

MUJI

Uniqlo

H&M

zara

Scores assigned

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Findings & Analysis—Linear Regression Model

Model Summary

R

Square

Adjusted R

Square

Std. Error of the

Estimate

.711 .708 8.614

a. Predictors: (Constant), Quick response,

Fashionable design, Affordable price, Brand

ANOVAb

ModelSum of

Squaresdf

Mean

SquareF Sig.

1

Regressio

n72,406.76 4

18,101.6

9243.935 .000a

Residual 29,460.15 397 74.207

Total101,866.9

1401

a. Predictors: (Constant), Quick response, Fashionable design,

Affordable price, Brand

b. Dependent Variable: The degree of customers' preference

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Page 17: Final Year Project Oral Pre PPT

Findings & Analysis—Linear Regression Model

Coefficientsa

Model

Unstandardized

Coefficients

Standardized

Coefficients

t Sig. B Std. Error Beta

1 (Constant) -4.250 2.444 -1.739 .083

Brand 6.510 2.365 .128 2.753 .006

Fashionable

design

3.791 2.138 .075 1.773 .077

Affordable price 10.391 2.512 .184 4.137 .000

Quick response 25.915 2.448 .530 10.587 .000

a. Dependent Variable: The degree of customers' preference

The degree of customers’ overall preference of fast fashion brands =6.510Brand + 10.391Affordable price + 25.915Quick response.

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Business Analysis & Implication

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Fashionable Design

Observation-mainly in Yale Shopping Mall

▪ The most crowded shop is H&M ▪ More people walk around in basic product area in MUJI & Uniqlo▪ The style of H&M: fashionable; the style of MUJI & Uniqlo: simple and basic

Annual report

H& M: A strategy “fashion for all”

Implication▪Clarify strategy & Position▪ Who provide various kinds of fashionable products: insist creating fashionable products which are accepted by most of people as fashion. ▪ Who provide simple basic products with high quality: do not need to invest too much on fashionable designs

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Brand

Observation QuestionnaireThe most crowded shops is H&M

Annual report H& M: A strategy “increase presence in China”

People have purchase experience

Implication▪Brand loyalty(Singh &Pattanayak, 2014). ▪ Expansion--encourages customers to interact with the brand (Kozinets et al, 2002) –improve brand loyalty▪ Increase presence-have more purchase experience-improve brand loyalty

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Quick Response - Findings

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Q: frequency of distributing new arrivals?A: Normally replenish inventory and receive new

arrivals once a week.

Twice ormorethan

twice aweek

Once aweek

Once ahalf ofmonth

Once amonth

Once aseason

Once ahalf ofyear

Once ayear

Lessthan

once ayear

No newproduct

Consumers Believe 31 90 114 101 50 9 2 1 4

Consumers Hope 39 89 123 98 46 2 2 0 3

31

90

114101

50

92

14

39

89

123

98

46

22 0 3

0

20

40

60

80

100

120

140

Nu

mb

er

of

Pe

op

le

Frequency of Providing New Fast-fashion Products

Consumers Believe Consumers Hope

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Quick Response – Findings

Chart 3: Weekly new arrivals in the Women section in Fall 2013. (Caro and Martınez-de-Albéniz , 2014)

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Quick Response - Implication

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Company should consider consumers’ expectation but it cannot be the reason to limit the ability of quick response

Implement quick response based on own market position

Insist in adopting quick response to provide various kinds of products

not give too much component on quick response

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Affordable Price

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<= 300 RMB < 200 RMB

Average spent:

Through Questionnaire:

Average amount per month spending on clothes

201 ~ 500 RMB

Acceptable highest price of a normal coat

201 ~ 400 RMB401 ~ 600 RMB

Accept that charge more for products’ other excellent features

Implication▪ Normally the amount of a normal coat below 600 RMB is safer for company▪ Companies would better to try to charge less than 400 RMB if possible▪ Unwise to charge as low as possible

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Limitation & Conclusion

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Limitation

Lack of resource and information about China The information of

the brand we used reflects the situation of its parent company instead of the brand itself

1

2

3

Limitation of language of official materials

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Limitation

4

5

7

6

The distribution of questionnaire may mot be very randomly

The design of questionnaire may have some influence on respondents’ answering

The position of observation and interview was limited

Some factors are too subjective to measure

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Conclusion

Chinese consumers are influencing by fast fashion brands no matter whether they are aware of

- Fill the gap between customers & operators in Chinese market. - Obtain factors affecting customers’ preference

Brand, affordable price & quick response all provide important implications to company

- Regression model: brand, affordable price & quick response are important factors- fashionable design still provide guidance

Fast fashion industry in China market should be further studied

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Reference

Cachon, G. P., & Swinney, R. (2011). The Value of Fast Fashion: Quick Response, Enhanced Design, and Strategic Consumer Behavior. Management Science, 57(4), 778-795

Caro, F., & Martınez-de-Albéniz, V. (2014). Fast Fashion: Business Model Overview and Research Opportunities. To appear in retail supply chain management: Quantitative models and empirical studies (2nd ed.). New York: Springer.

Cheng Yu, S., & Chi Leung, H. (2009). Salespersons' service quality and customer loyalty in fashion chain stores: A study in Hong Kong retail stores. Journal of Fashion Marketing & Management, 13(1), 98-108.

Choi, T. M., Liu, N., Liu, S. C., Mak, J., & To, Y. T. (2010). Fast fashion brand extensions: an empirical study of consumer preferences. Journal of Brand Management, 17(7), 472-487.

SG Hayes, M., Metropolitan University, & Nicola Jones, M., Metropolitan University. (2006). Fast fashion: A financial snapshot. Journal of Fashion Marketing and Management, 10(3), 282-300. doi: http://dx.doi.org/10.1108/13612020610679277

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