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1. 01. Introduction: In this report I will analyse Country Road Clothing Company (CR) and the CR customer. Specifically, I will be analysing the marketing environment and Country Road’s approach to this environment and how CR market to their customers. I will look it why the marketing in Australia is so successful but how this same success was not translated in overseas markets. I will also discuss the different macro and micro environmental influences to this failure in the U. S. markets and make recommendations on how CR might have learnt from previous marketing mistakes and show how they are striving for success in the future. . 02. Critical evaluation of the chapter: Kotler describes the Marketing environment as ” The actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful transactions with its target customers” (Kotler 2010) Figure 1. ( www. marketingteacher. com, 2010) Before embarking on new ventures, a company should analyse the marketing environment to gain a more solid understanding of any opportunities or possible threats that may influence the success of the proposed venture. The organisation’s marketing environment can be divided into the microenvironment and the macro environment”. (Kotler, 2010). By analysing the microenvironments and macro environments before undertaking major changes in business, companies will have a better understanding of what their customer is looking for, and how the customer behaves within the marketplace. It can also determine trends in buying behaviour and possibly minimise losses due to potential competitor threats or may even reveal cultural occurrences that may make the venture impractical.
Companies that choose to enter into new markets without this research can suffer major financial losses. This is not only a crucial factor when starting out but it will also assist in maintaining success and ensuring longevity in the global market place. 2. 01. The microenvironment: This involves aspects of marketing that have a direct relationship to the market, for example, its customers and the marketing channel it operates within, suppliers and all other external factors that have an immediate contact or effect on the success of the business.
When talking about marketing in this microenvironment we consider building our client base, advertising, performing market research and increasing our customer profile. “Micro tends to suggest small, but this can be misleading. In this context, micro describes the relationship between firms and the driving forces that control this relationship. It is a more local relationship, and the firm may exercise a degree of influence” (www. marketingteacher. com, 2010). 2. 02. The macroenvironment:
This area consists of those elements that are not directly related but can still have an effect on the business, for example culture, economy, technology and political forces. These elements are sometimes referred to by the acronym PEST (Political, Economic, Social and Technological). These factors can have a very strong influence in the success of a business, yet they can be very hard to predict. For example a new government can slow down consumer spending until confidence is re-established in the marketplace. Some macroenvironment elements can be one or more PEST factors. A prime example of this is the terrorist attacks on September 11.
The effects of this were so major they affected business in countless ways and will surely continue to do so in future. “The terrorist attacks of September 11 therefore hit the USA ??? but not only the USA ??? at a moment of economic instability, and have led to considerable intensification of the anxiety felt among economic agents on all of the industrialised countries” (Weinert, 2002) 2. 03. Country Road Clothing Company: In 1974, Jane Parker and Steve Bennett saw a gap in the Australian fashion marketplace and seized the opportunity to produce ladies shirts, most notably chambre shirts.
At a time of low price, low quality fashion in Australia the brand took off and enjoyed quick success. Thus, Country Road was established. The women’s fashion range became a look that epitomised Australian style and Country Road quickly grew from a basic manufacturer and small time retailer, to a leader in Australian fashion retailing. In just 6 years, Steve Bennett secured distribution in retailing giant Myer Emporium and opened 10 retail stores. In 1981, the Myer Emporium purchased the company (Kerr ; Sarina 2007).
CR expanded to include a menswear range in 1984 and they made the first move into an overseas market and opened stores in New Zealand. They continued to go enjoy financial success and tried to capitalise on growing market share by expanding into accessories, which was followed 2 years later by launching a range of home wares. Country Road had now become a major retailer, creating a one stop shop for your entire home and clothing fashion needs, a mini department store that dominated the retail sector and offered a “quintessential Australian” style (Country Road 2009). 3. 01.
The Country Road Customer in Australia: CR worked very hard at capturing the essence of the Australian lifestyle and design clothing that reflected it. They developed the brand on providing “simple, uncluttered clothes” (Women’s Wear Daily, 1997). Since Country Road inception, marketing focus has been directed towards middle to upper socio-economic demographic, this hasn’t changed in 36 years. Country Road continuously talk to a “modern Australian style” when referring to their brand. CR targets a young (20-40 year old) demographic, with an active lifestyle and fashionable personality.
CR has even named their target customers ‘Zoe’ and ‘Josh’. They are both relaxed and confident and successful in their pursuits. It is clear that Country Road has put a lot of time, effort and money into developing and analysing this microenvironment in Australia. As an Australian company operating within Australia, it is much easier to asses this market and find out exactly whom the customer is and their motives for shopping in store. Even before Country Road was established, Steve Bennet picked the target demographic by choosing a shirt to produce.
By making it of a higher quality and setting the price at a certain level, a demographic is already in place. Over the years this was just broadened to include men’s and children but the socio-economic status and age group were already very much in place. Also once the company was established Country Road then had began to create a history, which gave consumers confidence and allowed Country Road a reputation as being a brand that delivers, style and quality at a certain price. Country Road became a household name in Australia and a reflection of a certain status.
Country Road enjoyed great success from simple tote bags emblazoned with the Country Road logo. It was synonymous with style, fashion and in some parts an elitist thinking, “cultural environment shows long-run trends towards the use of branded products as a means of self-expression” (Kotler 2010) Their success on the domestic front inspired the CR directors to expand their operations offshore. 4. 01. The Country Road customer in America: Country Road marketed their clothing and brand in The U. S. just as it did in Australia.
Reinforcing its “Iconic Australian Style”(Country Road 2009), marketing loose shirts, casual tee’s, shorts and ranges of denim, quality made and delivered with excellent customer service. They conveyed an image or chic without effort and tried to impart the idea of “well dressed Australians” Although this was lost in translation in America. “The underlying problem was that it had lost its focus” (Women’s Wear Daily 1997). Americans had an idea in their minds that Australians all dressed like Crocodile Dundee, with ‘Akubra’ hats and ripped sleeveless shirts and the iconic ‘Stubbie’ shorts.
So the idea of well groomed men in linen shirts and tailored chinos, wearing leather boat shoes and expensive accessories did not translate. Even more so women in Australia weren’t thought of as style icons, as the idea of Australian women were farmer’s wives working in remote sheep stations. Country Road used images of Australians wearing their clothes, taken in Australian locations doing very Australian things and yet the U. S. market was still confused. The Australian market did not need to be educated about the typical life of Australians, yet the American consumer most definitely did.
This was the first error for the marketing team. Kotler stated, “Each nation has specific and different buying habits” Strong beliefs by the general media at the time were that Country Road was positive that they would enjoy similar success to that in Australia without the need for change and therefore didn’t amend the campaign to include a new demographic. It wasn’t just that the American consumer was different to Australia but also and maybe more importantly the marketplace was different. The Australian marketplace was a relatively small market where Country Road enjoyed a dominant stance.
Heritage, reputation and the product was manufactured primarily for this consumer, however in America the marketplace was flooded with literally thousands of brands, companies and fashion houses vying for a share in the market. Without a detailed analysis of this microenvironment, marketing success was improbable. 4. 02. How did CR operate in the U. S. market? In 1987 Myer Emporium listed CR on the Australian Stock Exchange but left the current operations managers at the helm. The decision was made to break into the U. S. market and this was done on a grand scale. The venture into the U. S. arket was done quickly and aggressively. Country Road did enjoy some success overseas, “between 1988-1993, the company opened 29 stores, but was forced to downsize operations from 1994-1995, the down size left a remaining 16 stores”. (DNR 1996) In 1996, the CR director, Michael Warner, believed that major expansion and “a major U. S. presence was a vital component of Country Road’s expansion program”(DNR 1996) They had hopes of expanding this number to 100 stores across the U. S. Michael Warner stated “Looking at it right now, for a relatively small specialty chain, Country Road has a wonderful identification in the U.
S. in the market’s we’re in” (DNR 1996) The major reason for the downsize was a lack of customer focus. Country Road embarked on a total re-branding project and a clarification on where they placed themselves within the U. S. market. Fred Panetto, company director at the time, said, “Country Road had trouble communicating it’s Australian Heritage and unique point of view to American audiences” (Women’s wear Daily, 1997) 5. 01. Country Road’s exits U. S. : Country Road managed to grow its retail presence in the U. S. to 20 stores. But in 2001 a major event unfolded that took the future of the company out of its control.
Terrorism in the infamous September 11 attacks hit the United States. As mentioned previously this macro environmental factor could not have been predicted and the flow on affects it would cause. In January of 2002, Country Road announced its exit from the U. S. market. Country Road blamed “Poor merchandising, sales and profit losses, a lack of strong identity in a competitive market, September 11 and the recession to bring the business down”(Women’s Wear Daily, 2002) As Kotler states, “Although core values are fairly consistent, cultural swings do take place”.
In this case Americans became extremely patriotic and were very cautious in their spending ways. Businesses that were ‘Made in U. S. A’ were favoured as backlash against other cultures took effect. Americans saw buying locally made produce as a way of defending their soil and such many international businesses had to withdraw. This compounded the problems that Country road were already facing. 5. 02. What went wrong? As mentioned earlier, Kotler believes that having success in future business ventures, you must have a full understanding of both micro and macro environments.
CR had an excellent understanding of their domestic market but failed to translate this into the U. S. marketplace. Country Road branded itself in America as an iconic Australian fashion house but didn’t explain to the American consumer how we got there. They didn’t convey the heritage of the brand or the elements that made it successful, they merely conveyed the heritage of Australia. All it did was confuse the customer and no amount of market saturation or mass expansion plan was going to help. This fundamental microenvironment issue was disregarded and CR never gained adequate market share.
Although the macroenvironment is not easy to control or prepare for, when the global economy faced a downturn after the September 11 terrorist attacks. CR didn’t have the foundations necessary to survive in an anxious marketplace. Without buyer confidence and brand awareness, there was no option for Country Road but to for close and exit the United States market. 6. 01. Where is Country Road now? Country Road’s majority owner, Woolworth’s South Africa have taken considerable steps to improve the company’s marketing environment since making the decision to exit the U.
S. in 2002. The Woolworth’s CEO stated that “we are confident that the strategic decision to focus on Australasian business and to produce a single range will result in significant cost benefits and improve ranges. We Believe management are taking the necessary action to insure the business is returned to sustained profitability. ” (Women’s Wear Daily 2002) In 2007 Country Road expanded aggressively once again but this time they used knowledge from previous ventures to make a more educated and clever foray into a larger market.
They went from 52 stores to 102 over night by opening concession outlets in Myer and David Jones nationally. By broadening CR exposure but not undermining the brand, Country Road was able to restore market share and become the dominant retailer they were in the past. Country Road did not have to market to a different demographic and this made this expansion smarter ad more successful. “Consumers responded sales volume increases of nearly 70%” (Herald Sun, 20/01/2007), and in the same article the CEO, Ian Moir commented that “we have a very clear vision of what we wanted to do for five years. We wanted o be a much bigger business and to be the most prominent, most desirable apparel brand in the market place”. Country Road’s target customer ‘Zoe’ and ‘Josh’ are still very relevant and Country Road continuously reassesses their place in the current market place and adapt accordingly. 6. 02. Conclusion: It becomes increasingly clear that having successful future gains and sustainable growth in a company, you must first analyse the marketing environment. If Country Road had used their financial equity in research into the American marketplace and looked into how Country Road was perceived in the U.
S. market, steps could have been taken to make the consumers aware of what CR offered and work out a better way of marketing to them. Marketing as a lifestyle brand that epitomised clean, fresh and easy fashion with quality would have had more success than attempting to market CR as ‘Australian style’. This was not relevant and the customers found it confusing. If they had adapted the brand to fit in as a fashion brand they would have enjoyed more financial success and this in turn would have created better financial security.
This could have been enough to carry CR through the economic down turn after September 11. List of references: * Country Road 2009: Country Road Brand Blue Print, 2009, NSW, Moon Communications Group, see appendix 1. * DNR 1996: DNR, New Country Road U. S. Exec plans Big Store Expansion, 28/03/1996, Fairchild Publications, USA * Herald Sun 20/01/2007:http://www. news. com. au/getting-back-on-track/story-e6frfh4f-1111112859365#ixzz10uJewaV0, accessed September 2010-10-04 Kerr and Sarina 2007: Leanne Cutcher and Nick Wales, Cases in Strategy and management, McGraw Hill Australia P/L, 2007, page 42, Case Study 3: The road less travelled:Country Roads venture into global markets, Melissa Kerr and Troy Sarina, accessed through google books: http://books. google. com. au/books? id=HKWQawF8BPgC&lpg=PA42&ots=MYqkqWLGfZ&dq=kerr%20and%20Sarina%20Country%20Road&pg=PP1#v=onepage&q=kerr%20and%20Sarina%20Country%20Road&f=false * Kotler 2010: Kotler, et al, Marketing 8th ed. Pearsons, NSW, 2010, pages 132-161 * Figure 2. ttp://marketingteacher. com/lesson-store/lesson-marketing-environment. html * www. marketingteacher. com 2010: http://marketingteacher. com/lesson-store/lesson-marketing-environment. html. Date viewed, October 2010 * Weiner 2002: http://resources. metapress. com/pdf-preview. axd? code=e45127418l6737p1&size=largest, Date viewed, October 2010 * Women’s Wear daily 1997: Women’s Wear Daily, A Bumpy Road, April 23, 1997, Fairchild Publications, USA * Women’s wear Daily 2002: Women’s Wear Daily, Country Road Out of America, January 17, 2002, Fairchild Publications, USA