
3 Tips to Build a Stronger Fashion Brand
Building a strong brand is not something that only large companies can do, even smaller firms can do it. Let’s see how!
Home » Fashion Firm Competitor Analysis Criteria
CEO and Founder,
440 Industries
When defining a strategy for your fashion brand, a competitor’s analysis is a good starting point in terms of identifying niches of untapped value. In other posts, we addressed the criteria to segment customers both from a demographic and behavioral perspective, but we are now taking a different look, by comparing and contrasting firms by looking at their strategic decisions as well as their organizational structure.
In this post, we are going to discuss what types of criteria can be identified in order to segment the firms operating in the fashion industry and compare them with each other. These are the main criteria we are going to address:
Traditionally fashion firms would identify a brand strategy oriented towards positioning their products according to the “Fashion Pyramid” which is split into 5 levels (haute couture, ready-to-wear, diffusion, bridge, mass). According to each market\price tier of the pyramid, companies would manage their supply chain, in order to align their brand with the expectations of the market. For each positioning statement, a brand would manage its production pipeline to create the right balance between quality and quantity.
This model, however, is not surpassed because in reality what companies are doing is focusing more on the intangible values of their brand as opposed to building assets into the company. A high-value brand can be monetized in a much wider set of scenarios, amplifying the types of products that can carry the brand and the price point of each item. Let’s see them in detail:
However, it has to be noted that for each segment, a fashion firm doubles its product development, its staffing, its operations, etc. This is why, even if the value associated with the products is still mostly drawn from its brand or griffè, at the same time only very large and global companies can afford this ‘all-in’ strategy. This means that start-up companies and new entrants need to start with operating on a niche, before expanding in neighboring segments.
If we look at the price range and to a company’s brand image as a reflection of their positioning onto the fashion pyramid, we have to take into account the fact that the simplified contract between cheap\expensive price points reflects externally to the organization as well as internally.
The contractual tool to manage your brand as it operates in different products, or different industries, is licensing. If you’d like to find out more about this topic, here’s an article for you. If instead you’re looking into more information on the fashion pyramid and the business models of fashion firms here’s an article you might be interested in.
The second factor we are going to address is a firm’s fashion content. This criterion relates to how a company addresses the element of time. Let’s start with a clarification: time in fashion and time in luxury are two radically different things.
According to these two different time-orientations, fashion firms can follow four different paces, the first two are more typical of luxury and heritage brands, the last two are more typical of more fashionable firms, or even fast-fashion retailers.
The decisions regarding the fashion content of their production will be related to the international strategy pursued by a company. In this sense, as the fashion content is a cultural relative, finding the right balance of fashionability according to the specific market a firm wishes to enter can provide a competitive edge. More classic lines will fit more general taste and will be easier to export with little – if any – adaptation, more stylish collections will need to be carefully planned if they are to interject the taste and preferences of foreign markets. We’ll discuss this in more detail in the next paragraph.
An international company will generate revenue in international markets, and according to where most of the revenue will come from, it will change and tailor its growth to the needs of its evolving customer population. As we discussed in the previous section, this will have a lot to do with the fashion content of the collection, or its style and creativity. At the same time, the international presence of a firm will give us a lot of information in terms of how its value chain is managed.
The value chain is a simplified representation of the processes happening within a company, usually, we break down the value chain into four segments: research and development, production, marketing, distribution.
A globalized value chain will be likely to respond to the business logic of a company that is pursuing global expansion and is looking at location advantages in order to find efficient sites where locating production, or countries where to acquire raw materials.
In the past 30 years, companies have been exploiting the financial and cost benefits of a globalized value chain in order to gain higher profit margins by keeping the costs of production low, but this has had a very high impact on the environmental cost of fashion. As a consequence, now many firms are going back to managing a more transparent, and when possible, domestically managed value chain in order to show accountability for their production pipeline. By looking at the way in which firms manage their value chain we’ll also collect important information regarding their size.
Last but not least, we can look at the way in which fashion firms manage their operations. Here are some additional criteria to segment fashion firms. By looking at vertical integration, we can look at whether companies manage their value chain through relationships that involve organizations owned by a firm, as opposed to organizations that are bound to the fashion firm through a contractual relationship.
In this sense, we split firms according to their use of outsourcing or insourcing strategies.
Another element to take into account is the logic of interaction with the market. We can both have either push or pull systems, and combinations of the two.
An additional element of differentiation pertains to distribution. In the value chain, in fact, we can argue that the last segment, distribution, is one of the most important, if not the most important given that customers may transition their shopping experience from being product-based to being experience-based. Even if the retail\wholesale segment is the last mile for the company, is still the first point of connection with customers, and adds a lot of value to the product. Let’s compare the two models or retail and wholesale.
Of course, now there are many ways in which retail and wholesale find new combinations of value, like in the case of flagship stores and omnichannel distribution as discussed in this post.
Here are the four most prominent business models in the fashion supply chain:
As a result of the complexity of the fashion industry, it’s impossible to find two companies that are exactly alike. As seen in this post, there are so many elements of differentiation that firms will always find some degree of freedom and novelty in the way they are going to grow internationally.
As we’ve discussed there a variety of criteria that can be adopted in order to segment firms operating in the fashion industry. With these criteria, we can run a competitor’s analysis and add a strategic interpretation of the simple collection of data. This is very important because markets are never static, and its no use simply taking a snapshot if we can make a time-lapse.
Another use of these criteria is to help entrepreneurs look at some organisational elements in their companies and evaluate what can be done in terms of growing their business. In the creative industries, we often find ourselves navigating uncharted territories, and in this context, our competitors are oftentimes our greatest allies.
I am an Anglo-Italian business lecturer and consultant based in Florence, Italy. In 2017 I started 440 Industries, an education and training company focused on fashion, music, and technology. Our mission is to help students, entrepreneurs and managers in overcoming the challenges of starting, developing and scaling their business in the creative industries. When there's a will, there's a way!
MORE ARTICLES FROM OUR BLOG
Building a strong brand is not something that only large companies can do, even smaller firms can do it. Let’s see how!
How can your brand impact its word-of-mouth reputation? Simple, by focusing on these 6 activities which maximise brand reputation.
Emotions are central to managing a luxury brand. In this post, we’re looking at all of the implications of your customer’s emotive side.
Purchase intent is key to identify the most effective strategies to manage your fashion retail store, here’s our best tips on the matter
Our website uses cookies to improve your experience. Privacy policy.