Industry Analysis

I. Cover Page II. Executive Summary III. Industry Analysis A. Environmental Analysis The competition between businesses within the textile and clothing industry has always been steep. The change in lifestyle combined with the fast changing trends has left entrepreneurs with the challenge of keeping pace with the demand of the consumers. With KRaze-Zip’s fresh, unique, and high in quality yet economical products, it is in the best position to answer such growing needs. The Clothing Accessories Industry Today Since KRaze-Zip will be selling clothing accessories, it will be penetrating the clothing and textile industry.

The clothing and textile industry has been a declining industry in the Philippines since 2005. This decline is due to the MFA (Multi-fiber Agreement) phase out and lowered of trade quotas which greatly affected the Philippines due to its inability to compete with countries with lower wage costs. Aside from this, the global crisis in 2008 has also led to the decline of the industry not only in the Philippines, but also worldwide. However, the textile and clothing industry remains to be Philippines’ second largest industry based on the number of establishments according to the survey released by the National Statistics (August 29, 2012).

Out of 4, 643 manufacturing firms employing 20, 7. 5% or a total number of 347 establishments came from the wearing apparel industry. Meanwhile, the industry generated 85, 805 jobs in 2010 (latest data) or 9. 8% of the 55. 7% of total employment provided by manufacturing companies employing 20 placing it in rank 2 after the electronic component. Despite the decline in the clothing and textile industry, clothing accessories was seen with a better spending pattern. According to an article released by reportlinker. com, more consumers opted to buy accessories because of its relatively cheaper price compared to other clothing items.

Also, the growth of the clothing accessories market is perceived to increase in the coming years and is expected to reach $9 billion by 2015 for the handbag sector alone (Global Industry Analyst). The clothing and textile industry is expected to resume its growth by the end of 2012 and will grow even more in 2015 due to global recovery from the recession period. This is also evident with the Philippines GDP continuously rising in a steady rate, it is now considered as one of the leading economies in the South East Asia region.

More foreign investors are also investing their money here because of the country’s growing economy and political stability. With these, more businesses will yield higher profit and more jobs will be generated. All these will give the people higher standard of living and higher purchasing power which will soon lead to an increase in the industry growth. The industry also depends on technology for its improved production. It plays an important role in the purchasing and manufacturing of raw materials, the transportation, production process, and advertisements.

As for the political and legal environment, KRaze-Zip might be faced with issues relating to patent. This shall be discussed in the SWOT analysis portion of the paper. B. Industry Analysis i. Demand Since bags are used on a day to day basis, there is always a demand for it in the market. Bags are not only used as a fashion statement but mainly because of its functionality as well. It is used by men and women, kids and adults. It serves different purposes and occasions like going to school, to work, to parties and formal events, and for travelling.

The demand for it as a means for carrying luggage and as clothing accessories even increase a bit more during special seasons like Christmas and Birthdays since they serve as perfect gifts, and reaches its peak during back-to-school season. The determination of demand are measured through market tools and research, use of break even analysis and various forecasting techniques such as exponential smoothing and seasonal variations. ii. Future Outlook and Trends The growing economy of the Philippines and the regaining of stability of the global economy portray positive news for clothing accessories manufacturers.

The rise in the economy also denotes the rise of the standard of living of the people in a country. The Philippines, in particular, with its increasing GDP growth rate, will give the consumers a greater purchasing power and higher disposable income. All these could lead to the revival of the clothing and textile industry which is timely for the market penetration of KRaze-Zip. This way, it will keep pace with the growth and peak of the industry. C. SWOT ANALYSIS STRENGTHS: Unique and customizable bag designs Economical High quality WEAKNESSES: Lack market awareness Limited operating history.

OPPORTUNITIES: Unique product concept No store offers exactly the same product. THREATS: Style piracy and other intellectual property issues Products not achieving popularity The first strength that business has identified is its unique and customizable designs. KRaze-Zip will break away from the usual handbags that are made out of leather and cloth. Aside from using zipper as main material, it will offer multi-purpose bags and will definitely give its customers a sense of satisfaction by giving them the privilege to customize their own design that will fit the mood and personality they have.

This would also help answer the demands of different tastes. KRaze-Zip also finds its product’s high quality as an advantage. It will be partnering with YKK, a trusted brand of zippers, to supply the business with its main material. Another strength that it has identified is the products being economical in nature. Since the industry has only begun to recover, more consumers will opt to buy the product because of its multipurpose feature (five uses in one bag) that is sold at an affordable price of P400-P500. The first weakness that KRaze-Zip has identified is the lack of market awareness about the products.

However, this solved by using various marketing techniques and advertisements. Another weakness identified is the business’ lack of operating history. To strengthen such weakness, KRaze-Zip will be leveraging the experiences of external advisors for various management decisions and also its day to day operations. One of the opportunities identified was the unique product concept and that there is no store that offers exactly the same product. This was also one of the reasons why the owners of the business decided to offer such in the market. This way, KRaze-Zip will not be following trends but rather it will be the one to set them.

The major threat to be faced is style piracy and other intellectual property issues. Product concept plays a vital role in the success of a business that is why concepts and designs are often stolen. And since KRaze-Zip’s concept will be something new to the market, it might be subject to it as well. Smaller firms and budget houses might opt to copy the concept and sell the products at a cheaper price. To reduce such risk of being copied, the business will ensure that all its trademark, methodologies and tools are copy right protected and patented.

The high quality will also be a solution to patent issues because consumers will buy things they know they can use for a long time which can actually help them reduce cost. Another threat involved is the inability of the business to make its own mark and raise product popularity. If not addressed properly, this could lead to decrease in sales, or worse, demise of the business. Branding recognition will be KRaze-Zip’s key to success. By strengthening, improving, and creating products specifically tailored to the needs of the consumers, KRaze-Zip will effectively position itself in the market.

In conclusion, KRaze-Zip will be able to mitigate risks and threats, overcome weaknesses, and position itself in the market through advertisements and strong and effective marketing plan, branding, and attracting and maintaining customers. D. Analysis of Competitors (BENCHMARKING) FACTORS WELL KNOWN BRANDS BUDGET HOUSES/ TIANGE KRAZE-ZIP Quality High Low to Mediocre High Products offered Offers different kinds of bag of one function only (i. e. for formal occasions, school, beach) Offers different kinds of bags including expandable bags.

Offers bags of functionalities, multipurpose bags, and customizable bags. Design Designs are ready made. Uses leather and other fabric for its main material. Designs are ready made. Uses leather and other fabric for its main material. Customizable/ pre-order Uses zipper as a main material Price Bags: P600-P1500 Accessories: 150-500 Bags: P150-P400 Accessories: 40-250 Bags: 400-800 Accessories: (50-250) Although the clothing and texting industry have gone through a state of decline, the competition between firms within the industry remains to be steep and dynamic.

KRaze-Zip’s nearest direct competitors for the clothing accessories will be those manufacturing companies who have established their name in the market, and the tiangges or budget houses. The factors considered for the bench marking were quality, products offered, the prices, and design. Well known brands have gained their popularity through its high in quality products. However, its high quality and good designs come in a high price as well. This is why more budget conscious consumers choose to purchase their bags and accessories in tiangges and budget houses.

But instead of saving money, they spend more because they are actually spending money for buying low quality products. KRaze-Zip balances such factors by offering the market hip, stylish, and trendy designs that comes in an affordable price, without sacrificing the quality. It offers expandable bags and multipurpose bags which can be transformed and used in different ways. So, instead of buying a P600-P1500 for one bag, KRaze-Zip offers its consumers with a 5-in-1 bag in a budget friendly price, stylish and economical at the same time.

Meanwhile, the KRaze-Zip not only focuses its attention to its direct competitors, it also keeps an eye on its indirect competitors as well. KRaze-Zip’s indirect competitors will be those small time bag manufacturers have been dominating the online community, and clothing and footwear companies like Bench, Penshoppe, Folded n’ Hung, and Primadona who have included bags in their product line. The manufacturers of eco bags are also one of the perceived competitors of the business because of the growing demand of the people for environment friendly products.