PROPOSED NEW MARKETING MIX STRATEGY TO INCREASE SALES (CASE ARINE)
2. METHODOLOGY
2.3 INTERNAL ENVIRONMENT ANALYSIS
2.3.1 SEGMENTING, TARGETING, AND POSITIONING ANALYSIS 1. Segmenting
According to Dharmmesta and Handoko (2013), market segmentation is the process of dividing the market into market segments that will be targeted sales to be achieved with certain marketing mix. Arine will use four variables in order to segment the customer market. These four variables are geographic, demographic, behavioral and psychographic variables.
2. Targeting
According to Kotler and Armstrong (2014), market targeting is a process of evaluating each market sgement’s attractiveness and selecting one or more segments to enter. The result of Arine customer target is shown in table 1 below.
Table 1. Arine’s Target Market Geographic segmentation (Indonesia)
Region Sumatera Selatan, Jakarta, Jawa Barat, Jawa tengah, Jawa Timur, Sumatera Utara, Sumatera Barat, Riau, Aceh, Kalimatan Timur, Kalimantan Barat, Sulawesi Selatan, Bali.
Population Density Big city/capital City
Demographic Age 16-18, 19-21, 22-28
Gender Female
Income 500.000 – 1.000.000 2.500.000 – 2.500.000 2.500.000 – 3.500.000 3.500.000 – 6.000.000
Generation Generation Y (millennial), Generation Z
Psychographic Social Class Middles, middle up
Lifestyle Fashionable, vintage/retro style, outgoing, stylish, traveler, independent, adventurer, nature-lover
3. Positioning
Positioning is the way a company’s product, brand, or organization was perceived relatively compared to a product, brand, or organization competing by current customers as well as potential customers (Tjiptono and Chandra, 2012). Arine positioned itself as a fashion brand for women that provide vintage or retro essentials at a reasonable price, good services, unique, and colorful. Arine’s positioning will be shown in figure 2 below.
Figure 2. Arine’s Positioning 2.3.2 MARKETING MIX ANALYSIS
1. Product
Product is the good the combination of goods and services that the business provides to the market (Kotler and Armstrong, 2014). As previously mentioned in the company profile, Arine is a local fashion brand that focused on aesthetic and vintage-inspired essentials. Currently, Arine launch the basic of vintage fashion, such as shirt, printed t-shirt, jeans, tote bag, and necklace. All the product of Arine material is fabricated in Indonesia. In terms of packaging, Arine uses cardboard as a packaging with the logo of Arine attached to the box. The advantages of cardboard packaging are very durable, cheap, and recyclable. In the near future, Arine is planning to use packaging that is 99% non-plastic and recyclable.
2. Price
The definition of Price in terms of Marketing Mix is the total cost that customers give up to gain the benefits of having or using a product and services (Kotler and Armstrong, 2014). Arine set their price starting from Rp 49,000 – Rp 199,000.
3. Place
According to Kotler and Armstrong (2014), the definition of place in the context of Marketing mix is the all company activities that makes the products available to the targeted segments and customers. Currently, Arine does not have an offline store yet. In this technology communication era, Arine uses internet as their base of sales.
4. Promotion
Promotion mix consists of advertising, sales promotion, personal selling, public relation, and direct marketing (Kotler and Armstrong, 2014). There are some aspects of promotional used by Arine such as Instagram Ads, Discount Promotion, Bazaar, and Endorsement.
2.3.3 BUSINESS MODEL CANVAS
Business model describes the rationale of how an organization creates, delivers, and capture value (Osterwalder
& Pigneur, 2010). The business model canvas of Arine as shown in figure 2, is formulated based on the company activities, value, and product 2019-2020 period.
Table 2. Arine’s Business Model Canvas Key Partners
• Vendors
• Photographer
• Material Suppliers
Key Activities
• Production
• Advertising
• Selling
• Product Photo- shoot
Value Proportions
• Aesthetic fashion essentials
Customers Relationship
• Instagram’s Stories
• Daily Posts
C u s t o m e r Segments
• 18-24 y.o
• Female
• Women who seek on aes- thetic fashion Key Resources
• Physical Asset
• Human Resource
Channels
• Line
• Shopee
• Tokopedia
• WhatsApp Cost Structure
• Production
• Advertising
• Vendors Services
• Materials
Revenue Stream
• Product Sales
2.4 2.4 EXTERNAL ENVIRONMENT ANALYSIS 2.4.1 2.4.1 PORTER FIVE FORCES
According to Williams and Curtis (2016), Porter five forces is a perspective for assessing and analyzing the competitive strength and position of a corporation or business organization.
The Bargaining Power of Supplier
The bargaining power of supplies of Arine is relatively small and insignificant force. In Bandung, we can find any kind of fabrics sellers at Cigondewah, Otista, Tamim street, etc. It’s easier to find many suppliers that can provide any fabrics that we need (Nola as the owner of Lolica, 2020). Arine source their products from some suppliers in Bandung with good quality of materials. Suppliers have little control over the fashion industry as, unfortunately, they are dispensable and can always be swapped out. As a result, input prices are relatively low.
2. The Bargaining Power of Buyer
Arine, as a new small player in fashion industry, has less bargaining power than potential customer. Customers can choose another brand which they already know because the customer awareness about Arine is still low.
According to Nuna as the owner Nuna Nanu (2020), some of Nuna Nanu’s customers feel bored with existing design. So, the bargaining power of buyers is high.
3. Threat of New Entrants
Based on the data conducted earlier, the fashion industry is one of many industries that have a high threat of new entrants. The possibility of additional businesses entering the retail women’s apparel market affects the current profit and competition levels experienced by businesses in the industry. Existing businesses may choose to limit their profits to discourage new entrants. New businesses would bring with them the potential to pressure prices, costs, and investment rates of returns as well as taking market share from established businesses (Porter, 2008).
Currently, Arine is trying to find unique ways to popularize their own products and as such build a strong brand because the threat of new entrants is high.
4. Threat of Substitutes
There are so many local brands in Indonesia that create so many choices for customers to choose from. According to Njambi et al (2016), substituted products are products that can meet the same needs as other products even though the resulting product is different. There are few substitutes for clothing but all the ‘substitutions’ in the industry are about competition. Based on Nuna (2020), sweatshirt and t-shirt products in e-commerce have tens of thousands of choices. So, you have to look for other values besides the product and the price of the product itself. Therefore, the threat of substitute players is quite high.
5. Rivalry Among Competitors
According to Ehmke (2014), rivalry among competitors is often the strongest of the five competitive forces, but can vary widely among industries. Porter’s intensity of rivalry in an industry affects the competitive environment and influences the ability of existing firms to achieve. Arine has low score in rivalry among competition (such as Nuna Nanu and Lolica). This means, Arine must find out the right strategy for having more power to compete with competitors.
2.4.2 BENCHMARK ANALYSIS
According to Kotler and Armstrong (2012), benchmark is the process of comparing the company’s products and processes to those of competitors or leading firms in other industries to identify “best practices” and find ways to improve quality and performance.
There are three brands in the same industry with Arine that have similar products and value.
1. Lolica
Lolica is one of local brands in Indonesia. According to their website, the company found in 2018 and inspired by Korean culture. The idea behind Lolika is making people happy every time they wear Lolica’s outfit (www.
lolicalolica.com, 2018). They have Instagram account named @lolica.id. The products are very similar with Arine such as sweatshirt, pants, t-shirt, tote bag and necklace. The price starts from Rp 150.000 to Rp 450.000. Most of the Lolica’s products are colorful and cheerful.
2. Nuna Nanu
Nuna Nanu is a local brand in Surabaya, Indonesia. They have Instagram account named @nunaastore. They sell sweatshirt, t-shirt, pants, and tote bag. Most of the Nuna Nanu products have pastel colour and the range price is from Rp 135.000 to Rp 225.000.
3. H&M
H&M is a Swedish multinational clothing-retail company known for its fast-fashion clothing. As of November 2019, H&M operates in 74 countries with over 5,000 stores under the various company brands, with 126,000 full- time equivalent positions. It is the second-largest global clothing retailer, just behind Spain-based Inditex. The company has a significant online presence, with online shopping available in 33 countries. They utilize website as their channel for selling the product to potential customer, the look of their website is shown on figure 2.10 below. H&M has considerably affordable prices for middle class in Indonesia which starts from Rp 149.000.
Table 3. Benchmark Analysis
Brand Est. Product Price Distribution channel Promotion
Arine 2019 Women
wear Rp 135,000 – Rp
199,000 @arine.id (15,500 followers) Instagram Ads Endorsement
Lolica 2018 Women
wear inspired by Korean Culture
Rp 150,000 –
450,000 @lolica.id (150,000 followers) www.lolica.lolica.com Official store
Instagram Ads Endorsement Brand ambassador
Nuna Nanu 2016 Women
wear Rp 135,000 – Rp
225,000 @nunaastore (572,000
followers) Instagram Ads
Endorsement
H&M
Indonesia 2013 Women
wear Rp 149,000 – Rp
1,000,000 www.id.hm.com • Free return
• Product Warranty
• Discount
Based on the table above, Arine product prices are the cheapest compared to other competitors. For a brand just starting out in 2019, Arine’s followers are already good at the 15,500 followers point. With the promotion used, Arine can add a website as a distribution channel.