Pacific Brands' response to global competition and market diversification challenges

¶ … Pacific Brands -- 'Pacific Brands responds environmental forces (takes a hammering)', page 55-7 text book. (Management: Foundations applications, 1st Asia-Pacific Edition.) REPORT OBJECTIVES you expected address objectives report

Pacific Brands: Competition and multicultural marketing in the apparel industry

Pacific Brands is an Australia-based apparel company located in an increasingly competitive industry: apparel. Rival companies operating on a lower cost model are biting at the Australian manufacturer's proverbial heels. "With the elimination of quotas in January 2005, the international textile and apparel industry is facing many challenges. Among them are the increasing number of skilled producing nations, an overcapacity of goods, and a deflation of world market prices. Currently the country with the greatest capacity for capturing the largest share of the world market is China" (Parrish, Cassill & Oxenham 2006). For many years Pacific Brands combined a niche marketing strategy related to its lines of clothing specifically targeted at workers with a more general marketing strategy for its apparel lines such as its underwear and shoe brands.

However, the specific 'niche' of all sectors of the Australian market is no longer a reliable source of revenue for Pacific Brands, forcing the company to abandon its current focus upon that national market base and to pursue a more global marketing strategy. It has long been "believed that the country of origin has an impact on consumers' product evaluations and purchasing intentions to a brand" but the popularity of a company rooted in a 'buy Australia' ethos is no longer translating into widespread sales (Peng & Zou 2007). Unless Pacific Brands can offer a more international perspective and diversify its market base, its long-term profitability is threatened. Once a proud Australian institution, because of external pressures Pacific Brands must change.

Critical discussion

Up until now, Pacific Brands has largely pursued an Australia-focused strategy and will need to reformulate this to be responsive to market needs in the areas of the international market it wishes to capture. Although a more multicultural strategy for its brand profile may initially be challenging for Pacific Brands, given that Australia itself is a multicultural society, encompassing a large immigrant population, this actually allows the apparel company to build upon rather than to ignore its history. "The term 'multicultural marketing' is used here to refer to the ways firms use and respond to opportunities and challenges that arise from a multicultural society in serving domestic and international customers. Such marketing increasingly is becoming part of mainstream marketing campaigns and business strategy in Australia because of the multicultural makeup of Australian society and because, as business becomes more internationalized, it is called on to meet the demands of the multicultural world" (Wilkinson & Cheng 1999). While the 'Australia first' image may no longer be enough to sustain the company either in Australia or abroad, certain aspects of its branding, including its low price point, humor, and stress upon ethical marketing (including its commitment to offer a fair wage to its workers) can be used to endear the brand to consumers outside of its immediate market base.

Pacific Brands can still strive to adhere to a low-cost model while changing its image enough to appeal to international markets. It is attempting to cut costs on shipping, for example through consolidation to ensure that costs can be effectively contained while still offering consumers the lowest possible prices. "The rapid growth of online shopping, in particular, means we now have to pick and pack an increasing number of orders for single line items. Larger customers are also ordering smaller quantities of goods, more frequently" (Flexibility, 2013, Demantic). Its most profitable line is its Bonds underwear which combines a fun image that is not specifically Australian with a relatively low price point. Pacific Brands' CEO wishes to encourage such enthusiasm for the company's other brands but a multicultural marketing strategy is needed to do so. "Businesses operating exclusively in a domestic environment are distinguishable from businesses operating in both an international and a domestic context" -- successful multinationals are characterized by their ability to be flexible to market needs in a variety of contexts while still holding true to their brand identity (Roth & Morrison 1992).

Recommendations

Pacific Brands must embrace a more expansive multicultural image while still retaining the aspects of its operations that made it an Australian institution. "There is a need for multicultural marketing expertise within organizations as more companies establish specialist departments and tailor their activities to meet the needs of this market" (Burton 2005). The company can no longer rely upon its nation of origin to support the majority of its revenue. Although its low-cost model is popular, given its need to outsource many jobs to save money combined with the variability of Australian retail demand (particularly for its work-related clothing) requires that the company focus on other aspects of its brand portfolio. Through reduced labor costs and reducing costs in the supply chain, it can still offer consumers attractive quality combined with value, a combination which is likely to translate well abroad, as evidenced by the popularity of its Bonds underwear.

Adopting a multicultural marketing strategy may require repackaging its brands to suit the needs of consumers in different nations: this may span everything from different sizes and colors to a completely different 'look' for its various lines when sold abroad. A multicultural strategy, however, also requires the company to retain its core brand image: just as Starbucks, while it changes its menu, hours, and layout to suit the needs of local palates is quintessentially Starbucks no matter where a consumer may encounter one, Pacific Brands must still honor its mission to provide low-cost, high-value clothing to its customers in an ethical manner.