CeeCee Case Study Analysis
School of Business & Humanities
Institute of Technology Blanchardstown
Bachelor of Business Studies
Strategic Marketing Management
1. INTIAL OBSERVATIONS
* Fashion Industry
* The fashion retail industry has grown rapidly. It is reported in the case study that sales revenue in the European clothing market has increased by almost 20% over the last decade. * There has been substantial price deflation caused by the increasing market share of value retailers and the reduction of production costs as manufacturing is moved to cheaper wage countries such as Asia * Increasingly competitive markets as large grocery supermarket retailers are now offering non food products including clothing. (e.g. Tesco’s F&F fashion line) * Current trend in the industry is the introduction of online shopping
* Innovative Business Model
* The company’s business model uses product exclusiveness to encourage recurring customer visits and impulse spending. * CeeCee utilises a fast fashion concept
* CeeCee prices its clothes in a competitive way in each of the countries in which it competes, instead of using the cost plus principle. * The company has established a long term working relationship with its suppliers
* Extreme IT Reliance
* CeeCee invests heavily in IT systems.
* The company uses advanced technology to allow its Just in Time (JIT) fast retail model to work. * The company uses a fully integrated IT system known as CCIPL to manage inventory, productions and logistics. An IT system known as CCF is also used to control and manage company accounts. * All shop managers uses a handheld Personal Digital Assistant (PDA) to review sales data and amend orders, an upgrade which costs the company over €40 million. * The company has also invested over €10 million in the launch of a website which will offer online shopping to its customers.
* Marketing Strategy
* Marketing is not an essential business component at CeeCee therefore only 0.5% of sales revenue is allocated to marketing. * CeeCee does not market its products through the mediums which its competitors would use such as TV and fashion magazines; instead the company uses store locations and display of few clothing items in shop windows as advertising. * CeeCee has a successful marketing strategy as it has more customer repeat visits when compared to its competitors.
* The company operates in an intensely competitive environment * Customers are more likely to switch to ‘value’ retailers due to the current economic downturn which resulted in less disposable income * CeeCee is most comparable with competitor 3 in the case study in terms of number of stores and sales area. In comparison to competitor 3, CeeCee is performing better as its sales revenue is 8% higher.
* Financial Performance
* The company is in a solid financial position
* Revenue in 2008 grew by 14.05% and operating profit for 2009 increased by 2.92% * As of December 2009, share price has decreased by 25% but dividend payout rate is still the same as 2008. Keeping dividend payout rate consistent is essential, mainly because investors do not like surprises.
* Consumer Familiarity
* CeeCee is responsive to trending consumer behaviour
* European surveys of ‘consumer wants’ shows that consumers do not associate cheap with quality. The company responds to this by carefully pricing their clothes to avoid appearing as low quality. * The survey also shows that consumers are increasingly turning to online shopping. CeeCee invested over €10 million in the launch of its website which would offer online shopping to its customers.
2. KEY ISSUES FACING MANAGEMENT
i. Expansion: CeeCee has approved a five year expansion plan. The company plans that its...
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