This Brand Marketing Plan is developed to specifically assess the viability of expanding Topshop, a British high-fashion brand into the mainland China market. As a matter of fact, this plan aims to help Topshop whether mainland China is a market that worth reentering, because Topshop once made a strong presence on Chinese e-commerce platforms, including T-mall and Shangpin, but the brand has never opened offline stores and its online stores in China were closed in 2018. From a perspective of a Chinese consumer and a Fashion Marketing major, this report is developed to evaluate whether Topshop should re-extend the brand in China.
Based on the analysis of the current fashion market landscape, the overall marketing environment and the consumers responses to high fashion in China, it is argued that China has a fiercely competitive but generally friendly business environment for Topshop to expand the business. From the review of the performance of Topshop, including its visions, target market, brand identity, image, equity and so on, it is summarized that this brand has competitive advantages, competences and resources that attract Chinese consumers. Therefore, it is recommended that Topshop should consider restart the brand extension in mainland China.
Table of Contents
Topshop is a sub-brand of Arcadia group established in 1964, focusing on the design, manufacturing and marketing of female clothes, accessories and beauty products of various styles. By virtue of the diverse-and-inclusive-based vision and the great variety of products, Topshop has built a strong presence in global fashion market. Currently, Topshop has more than 500 stores around the world in forms of both online businesses and offline outlets (Topshop, 2018). However, the majority of Topshop stores are operated in European market, less presence has been established in Asia. Taking China as an example, even though it is the world’s populated country with a rapidly growing consumer purchasing power, at present, Topshop only opens stores in Hong Kong, with no presence in mainland China. In the following report, based on the review of the Chinese market environment as well as Topshop’s internal resources, a business plan will be developed to help Topshop extend the brand into mainland China market.
To evaluate the viability of re-extending Topshop into the mainland Chinese market, in this section, the Chinese fashion market situations will be critically evaluated. Considering that clothes is the major product line of Topshop, this section focuses on the discussion of Chinese garment sector.
As the most densely-populated country in the world, China has a huge market for garment and this market is growing rapidly in recent years. According to the industrial report released by the Euromonitor (2018), in 2017 China’s adult garment market valued approximately RMB 1,457 billion, which is a 5.2% increased compared 2016. By the end of 2019, Euromonitor (2018) estimated that the value of this market will reach RMB 1,529 billion. To be more specific, from the Euromonitor’s report, it is found that women’s garment was valued at RMB 923 billion in 2017, increasing by 5.7% over 2016. Euromonitor (2018) remarks that Chinese consumers’ demand for young female clothes with personalized styles is on the rise. In particular, Chinese consumers’ passion for limited edition, niche brands and designer labels increased dramatically. These figures not only suggest that garment is a dynamic business sector in China, they also demonstrate that fashion retailer have great opportunities to develop new source of revenue through offering limited and unique product series to Chinese consumers.
From Marketing China’s report (2018), it is learnt that the Chinese garment market can largely be divided into two major categories. The first category consists of upmarket brands targeting consumers that have high income and strong purchasing power. For fashion retailers, the key to acquire consumers in this category lies in developing products with unique design, high quality and providing all-rounded shopping services (Marketing China, 2018). The second category is made up of fast-fashion brands that target the mass marketing, including ZARA, H&M, Uniqlo and so on. According to Marketing China (2018), consumers in this category focus much on whether clothes are trendy in design and affordable in price. This division of market implies that the Chinese fashion market is diverse; consumers in different walks of lives have different demands and expectations for clothes. Therefore, fashion that are oriented by diversity and inclusiveness can better integrate into the Chinese fashion market.
Since the 1970s when China started the Reform and Opening Up, the Chinese governments of all levels have engaged in building a market-oriented economy, so as to deepen China’s participation in international trade and capture more opportunities in globalization. For fashion industry, the following governmental motives and behaviors create a generally sound political environment.
First, a large number of special trade zones have been established in costal areas, including Shanghai, Shenzhen, Guangzhou and Dalian. In these areas, foreign brands not only enjoy special tariffs, they can also store their goods and not subject to import taxes until shipped into the domestic market. Second, the Chinese government has issued the Transfer Pricing policies (Zhang, Gale and Eckert, 2018), which facilitate to deduct tax for over-valued goods purchases, hence reduce the taxes payable for businesses. For foreign brands that intend to export goods or extend the brand into the Chinese market, these policies are favorable.
By virtue of the rapid growing GDP rate and the increasing consumer purchasing parity, China takes the lead among developing countries in terms of economic growth. According to BBC’s report (2018), China’s economy increased by 6.9% in 2017, making the nation a key driver for the global economy and a primary destination for foreign direct investment.
On the other hand, the robust economic performance of Chinese economy has contributed to the stable growth of Chinese consumers’ purchasing power. From the report released by Boston Consulting Group (2018), the average of a luxury consumer in China is 28, which is 10 years younger than other countries in the world. In addition, Chinese young consumers’ spending in other categories is also on a continuous rise. McKinsey reports that Chinese consumers’ consumption of semi-necessities has grown by 7.2% between the periods of 2010 and 2020. These facts and figure suggest that Chinese consumers are not only large in size, but also generous in spending. This creates a good marketing environment for fashion retailers.
Over the past years, changes taken place in demographic structures have fundamentally changed the social environment for fashion retailers. In Cano, Doyle and Zhang’s study (2018), it is argued that the sharp rise of middle classes has led to the emerging shifts in terms of consumption values and behaviors. For example, consumers are showing increasing preference for consumerism as a new lifestyle. In an early study conducted by ACNelson (2007), it is found that nearly 30% of the mainland Chinese consumers responded that shopping clothes is one of their favorite activities, and this figure is 20% higher than the global average in 2007.
This finding suggests that the consumerism-oriented lifestyle creates a sound social environment for fashion industry, which creates windfalls for global fashion retailers to tap into these consumer behaviors.
Along with China’s deepening in Reform and Opening Up, it has witnessed a remarkable progress in technology development. For the past few decades, China has transferred from a poor country that lagged behind others in terms of technology into a modern nation that can independently research, develop and apply advanced technologies in various industries. Fashion industry is the one that benefit a lot from the continuous improving technological environment in China. The wide coverage and easy access to the Internet not only allows consumers to shop clothes and accessories online, but also facilitates retailers to sell products, make advertisements and interact with target consumers via digital methods, including webpages and social media. In Cano, Doyle and Zhang’s recent study (2018), it is found that many retailers introduced the latest Virtual Reality, Augmented Reality and Artificial Intelligence into retailing and customer service, which improves the efficiency of operation and effectiveness of marketing. The highly digitalized fashion market in China doubtlessly creates a favorable environment for foreign retailers.
As a native British brand, Topshop was established on the basis of fashion experimentation and street style movements. Topshop worships individuality and diversity, with a vision to delivering personalized fashion to females of different nationalities, ethnics and cultures. Driven by this vision, over the past decades, Topshop has been undertaking the mission to design, manufacture and market trend-led fashion items with a wide variety of sizes, ranging from petite to tall and maternity. In addition, to make fashion easily accessible for females in all walks of lives, Topshop not only offers basic models at medium to low price, it has also launched premium lines, including Topshop Boutique, a contemporary and luxurious product series, as well as the Topshop Unique, a high-end collection designed by world-class designers and shown at London Fashion Week.
From the vision and product lines of Topshop, it is not difficult to find that this is a brand that pursues diversity, inclusiveness and innovation. This pursuit can be transferred into a value proposition that facilitates Topshop to expand the brand to more countries and cultures around the world.
In the practitioner study conducted by Lawrence (2014), it is mentioned that from an interview with then Topshop Brand Manager, Jane Shepherdson, she learnt that Topshop’s official target market is young women aged between 15 to 30 years old, but internally, Topshop focuses on everyone that has a strong passion for fashion, regardless of age and income. This is convincing because the introduction of Topshop’s vision and mission demonstrates that it is a highly diverse and inclusive brand. These demographic and psychological features of target consumers suggest that Topshop’s target market is young, energic and dynamic.
Lawrence’s findings have been further complemented in Mortimer’s research (2015), as he claims that Topshop is particularly attractive to students, young professionals in the workforce and fashion taste makers. Motivated by their strong desire for the latest forward-thinking trends, these consumers prefer both Topshop’s easy accessibility and exclusive cult status. Based on Laurence and Mortimer’s findings (2014;2015), it is argued that the most distinctive feature of Topshop’s target market is the high-level fashion savvy and the overboard pursuit of personal styles.
In Keller’s Strategic Brand Management (2001), the Customer-Based Brand Equity (CCBE) Model is proposed to interpret the viability of a brand’s identity, image and equity when it comes to integrating into a target market or consumer group. According to Keller (2001), in order to build a strong brand, retailers or marketers should shape the way consumers perceive the brand and creating the right types of experience for consumers. Only in this way, will it be possible for brands to deliver specific and positive perceptions and evoke the desired purchasing behaviors (Boo, Busser and Balogl, 2009). To achieve this purpose, a four-step CCBE model is outlined as follows. Based on the review of practitioner studies and market researches about Topshop, it is found that this brand has created a widely-accepted trendy identity and positive images in the public.
Figure 3.1. Customer-Based Brand Equity Model
In Keller’s study (2001), the primary step of building a customer-based brand equity is clearly defining the brand identity, informing target customers of “who are you”. In terms of Topshop the identities are shows to the mass public include “fashion”, “high street” and “high trend”. These identities serve to help target consumers categorize Topshop into the right brand communities that can meet their needs.
As is shown in Figure 2, the second step in building CBBE model is delivering the meaning of a brand to the target market, telling customer “what are you”. In this step, marketers are supposed to focus on performance and imagery of the brand. In Cifonelli and Blackshaw’s study (2016), based on empirical study conducted among the British consumers, Cifonelli and Blackshaw (2016) summarized that when it comes to Topshop, the image occurs to most consumers is “black and white”, “Kate Moss” and “Polka Dots”. These imageries suggest that Topshop has established its own personalities and symbols. On the other hand, the above imageries represent fashion and modern, which, to some extent, indicate that Topshop has a high-profile image in the public. Another finding of Cifonelli and Blackshaw (2016) reveals the performance of Topshop in the UK market. According to Cifonelli and Blackshaw (2016), a large number of consumers investigated responded that Topshop is an affordable and durable brand, and they prefer the brand for its high cost performance. Cifonelli and Blackshaw’s findings (2016) suggests that the generally good image and performance are competitive edges of Topshop in its exiting market.
In the past few years, Topshop has tried to build a presence in the mainland Chinese fashion market through cooperating with local e-commerce platforms, including T-mall and Shangpin. However, due to the adjustment of international business strategy, Topshop terminate its flagship stores on T-mall and cleared out all inventories on Shangpin.com., marketing the retreat from mainland China. Nevertheless, based on the overview of the Chinese fashion market and the brand equity of Topshop, it is argued that reentering into the Chinese market could be viable.
First, China has a macro business environment that is friendly and favorable for foreign retailers, which offers political support, economic foundation, social acceptance and technical assistance for Topshop. Second, Chinese consumers’ attitudes towards shopping, their increasingly strong purchasing power and the growing consumerism sentiment are consistent with the demographic and psychological features of Topshop’s target market. Third, in existing marketplaces, such as the UK and the Europe, Topshop has built clear identities and positive images, which, as Conti (2018) states, has helped attract fans in other regions in the world. According to Conti (2018), after Topshop retreated from mainland China, a growing number of Chinese consumers seek purchasing agents to buy Topshop clothes overseas, even though they have to pay additional allowance or taxes.
To facilitate Topshop to re-extend the brand into mainland China, the following marketing plan is proposed for the brand.
The overall purpose of this marketing plan is to help Topshop enter the mainland China fashion market. During this process, the following objectives will be achieved.
First, Topshop will not only rebuild the online presence on T-mall, the largest business-to-customer e-commerce platform in China, it will also establish its official website in Chinese, allowing mainland consumers to purchase online and pay via Chinese local payment methods (Tencent and Alipay).
Second, Topshop will open brick-and-motor stores in mega cities, including Shanghai, Beijing, Shenzhen and Guangzhou. In the following ten years, if Topshop performs good in mainland China, more outlet stores will be opened in first and second layer cities.
Third, Topshop will build a large and solid consumer base, acquiring and retaining loyal consumers. This objective can be measured through conducting customer survey on a quarterly or annual basis, rating customer satisfaction in percentage. In the first three years of re-extension, it is proposed that Topshop maintain the customer satisfaction and loyalty above 90%.
Based on Laurence and Mortimer’s findings (2014;2015) about the demographic and psychological features of Topshop’s target consumers, a pen portrait for Topshop in mainland China is outlined as follows.
Ethnicity: Chinese, Han
Occupation: University Student
Study: Custom Design
Sally is an outgoing girl born in Beijing. She has a strong passion for art and custom design since young. Sally starts learning painting at the age of 7, and this habit as well as skill make her capable of matching colors, which also helps her develop a unique taste for fashion. Through her choices in clothes and accessories, Sally shows her personality and individual styles. She is not afraid of the so-called “odd apparel” in the eyes of earlier generations in China, and she like experimenting with wacky clothes and makeups. Sally enjoys shopping together with friends every weekend, and she spend nearly 30% of her monthly living expenses on clothes and accessories. In addition to offline shopping, Sally also shop a lot on T-mall. As a highly extrovert person, she often shares her experience with dressing and opinions about different brands’ design on social media, including WeChat, Weibo and Xiao Hong Shu.
Figure 5.1. Positioning Map for Topshop
From Figure 5.2., it can be found that compared with the majority of fast fashion and high fashion brands that have a presence or brand name in China, Topshop has a relatively high quality and high price. Therefore, it is recommended that Topshop should target young females that not only pursue short-term trends in design, but also quality, durability and cost performance in the long run, such as young professionals in the workplace, young housewives and so on.
- Topshop should maintain the diversity in product design, offering the “petite” series to Chinese females who are relatively small in size
- Topshop should provide both basic line and premium line to Chinese consumers, because many Chinese millennials have the affordability for up-market series
- Topshop should keep products offered in China updated. For example, releasing new collections every two weeks on Friday night. This can be an attraction for consumers to visit stores regularly
- Using a penetration pricing strategy for products in the basic product line, so as to gain price advantages over ZARA, Uniqlo and other competitors
- Pricing Topshop Boutique and Topshop Unique high, informing Chinese consumers that these products are exclusive in design and limited in numbers available
- Open online stores on T-mall
- Create an online shopping website in Chinese and support Chinese local payment methods
- Open outlets in central business areas in major cities. For example, Sanlitun in Beijing
- Organize discount activities during holidays and celebrations, including the Christmas, New Year, Spring Festival and the Chinese “Single Day” (November 11th)
- Open official accounts on Weibo and WeChat, releasing text and visual information about the latest collections
- Inviting popular Chinese celebrities to endorse the brand, so as to encourage their fans to buy
Table 5.1. Marketing 4S for Topshop
Based on the analysis of the current fashion market landscape, the overall marketing environment and the consumers responses to high fashion in China, it is argued that China has a fiercely competitive but generally friendly business environment for Topshop to expand the business. From the review of the performance of Topshop, including its visions, target market, brand identity, image, equity and so on, it is summarized that this brand has competitive advantages, competences and resources that attract Chinese consumers. Therefore, it is recommended that Topshop should consider restart the brand extension in mainland China in forms of e-commerce and brick-and-motor stores, building brand equity via online and offline marketing activities.
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