II. Environmental Analysis To fully assess the feasibility of the business idea of a custom-made jeans service shop, EALA Inc. has made two key environmental analyses: macro- and microenvironment analysis. The macro-environment analysis takes into the account the political situation under the Philippine government; the economic environment, which mentioned pertinent economic indicators that are relevant to the analysis of the market and described the current economic situation in the country; the cultural environment, which took note of important socio-cultural demographics to better understand the target market; and the technological environment, which listed capabilities that the local garments industry has as of the moment. On the other hand, the micro- environmental analysis focused on the garments industry in which the group wishes to enter. The analysis discussed the developments and issues in the local garments industry. In addition, as part of the micro-environmental analysis, the group considered the retail trade in the Philippines as well as possible competitors within the industry. A. Macroenvironment Analysis Political Environment The country is currently facing political instability, as there is a desire to change our current political system to a parliament type, thus creating a pessimistic hype for some potential long-term investors because of possible negative political issues that loom ahead, which can cause economic tribulations. Not to mention the unending corruption issues of our politicians, the alleged election 1
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II. Environmental Analysis
To fully assess the feasibility of the business idea of a custom-made jeans service
shop, EALA Inc. has made two key environmental analyses: macro- and
microenvironment analysis. The macro-environment analysis takes into the account
the political situation under the Philippine government; the economic environment,
which mentioned pertinent economic indicators that are relevant to the analysis of
the market and described the current economic situation in the country; the cultural
environment, which took note of important socio-cultural demographics to better
understand the target market; and the technological environment, which listed
capabilities that the local garments industry has as of the moment. On the other
hand, the micro-environmental analysis focused on the garments industry in which
the group wishes to enter. The analysis discussed the developments and issues in
the local garments industry. In addition, as part of the micro-environmental
analysis, the group considered the retail trade in the Philippines as well as possible
competitors within the industry.
A. Macroenvironment Analysis
Political Environment
The country is currently facing political instability, as there is a desire to change
our current political system to a parliament type, thus creating a pessimistic
hype for some potential long-term investors because of possible negative
political issues that loom ahead, which can cause economic tribulations. Not to
mention the unending corruption issues of our politicians, the alleged election
fraud and corruption charges against the president and her family, the dawn of
value-added tax resulting to higher prices, and the time-to-time resignation of
the president’s economic team. Such political crises negatively affect the
profitability of the country’s businesses due to rating outlook downgrades and
higher interest rates. If debt levels continue to decrease and higher foreign
reserves were maintained, there would be no major negative effect on business
profitability.1
1 “Philippine Political Crisis Could Hurt Business Profitability.” [Online] Available. http://en.ce.cn/World/biz/200507/14/t20050714_4189155.shtml, July 14, 2005.
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In the meantime, the country’s political crisis has brought international credit
rating companies to downgrade the country’s debt payment credit ratings and
also affected Asian Development Bank to threaten the country with suspension
of loans if fiscal and other reforms remain stagnant if the political crisis would
not be resolved.
The political crisis may not just negatively affect the country’s economic
performance, but may also damage the confidence of the consumers and
investors as well as hinder the developments in the financial markets.
Ultimately, the political crisis only serves to aggravate the country’s external
variability to global trends such as growth moderation, rising interest rates and
oil prices.2
Economic Environment
The country is currently suffering from a weaker economic base as a direct result
of the political instability, which has resulted in higher interest rates, low credit
ratings, and other performance risks as the value of peso continues to grow
weaker. These further on result in a steady increase in the unemployment rate
of Filipinos. The lack of local job opportunities has also increased the trend of
“brain drain” as more and more Filipinos seek jobs abroad.
However, a robust growth in the economy is being anticipated though it would
be moving at a slower pace than that achieved in the previous year. A positive
outlook is also being projected from the growth in the performance of major
industry players last 2004. The service sector, particularly that of
telecommunications and trade continues to lead in providing potential industry
growth and development. (Cayetano: 2005)
Gross National Product. As of the third quarter of last year, the Gross National
Product, at Current Prices, amounted to 4,150,771 million pesos. There has been
2 “Rating Firms’ Outlook on RP Turns Negative.” [Online] Available. http://www.bworld.com.ph/BW071205/topstory.php, August 2005.
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a 0.7 percent decrease in GNP, making the 2004 13.5 percent rate down to the
current 12.8 percent.3
Gross Domestic Product. By the end of last year’s third quarter, Gross
Domestic Product at current prices amounted to 3,836,727 million Pesos. As
compared to the 14.1 percent GDP growth rate from 2004, there has been a big
3.7 percent decrease leaving 2005’s GDP down to 10.4 percent. However, it is
expected to grow approximately by 5.5 percent this year. The expected growth
in GDP in 2006 can be attributed to the growth in personal consumption, the
recovery in government spending, and also the strong demand for export
products.4
Personal Consumption Expenditure. Personal consumption expenditure is
currently 72.9 percent of GNP, a decrease from last year’s 73 percent,
experiencing an annual change of 5.8 percent.
Wage Rate. Currently, the minimum wage rate in Metro Manila is currently
pegged at Php 288 to Php 325 a day (eight working hours per day), the highest
among the regions. However, there is an ongoing legislation in Congress to
increase the minimum wages to cushion the impact of the expanded value-
added tax on workers.5
Inflation. As of the year ended 2005, Inflation rate rocketed to 7.6 percent
from the previous year’s 6.0 percent - a 1.6 percent difference. The Bangko
Sentral ng Pilipinas is targeting the inflation rate to average between four to five
percent in 2006. The inflation forecast for the year, however, is placed at 7.5 to
8.2 percent.6 According to the BSP, there is little sign of any inflationary
3 “National Accounts Third Quarter 2005” [Online] Available. http://census.gov.ph, January 11, 2006
4 “Selected Economic and Financial Indicators.” [Online] Available http://www.bsp.gov.ph/statistics/sefi/sefip1_files/filelist.xml, August 2005
5 “Selected Economic and Financial Indicators.” [Online] Availablehttp://www.bsp.gov.ph/statistics/sefi/sefip1_files/filelist.xml, August 2005. 6 Gil C. Cabaccungan, Jerome Aning, “Palace: It’s Time Congress Enacted Wage Increase”[Online] Available http://news.inq7.net/nation/index.php?index=1&story_id=55347, November 3, 2005
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pressures building in the Philippine economy. The BSP Deputy Governor Diwa
Guinigundo also said that the planned rise in the sales tax to 12 percent from 10
in February could cause an upward blip in inflation levels, but that would be
short-lived. 7 However, high oil prices will remain as the main threat to inflation
this year, which have already taken some of the buoyancy out of consumer
spending last year. But amidst the threats, the strong peso and easing food
prices help balance inflationary risks.
Foreign Exchange Rate. As the year opened, the Peso closed at its highest for
the past eight months at roughly Php 52.00 a Dollar. If the political situation
slowly stabilizes, the country can experience a continuous lift in the peso.
Factors that can strengthen the peso include political stability, income
remittances from OFWs, inflows from portfolio investments, and proceeds from
government bond sale.8
The 2006 Fiscal program assumed that the average exchange rate would settle
at Php56.00 to a US Dollar, and that the benchmark 91-day Treasury bill rate
would hit eight percent. 9
Value-added Tax. The month of February has been welcomed with the
imposition of, the new 12 percent value added tax. Moves by the government to
raise the level of value added tax (VAT) from 10 percent to 12 percent would hit
hardest the country's poor and its small businesses, the American Chamber of
Commerce of the Philippines said. They also asserted that any increase in VAT
would pose a serious burden on the country's poor and small to medium size
enterprises and would also lead to greater tax avoidance. With the current
minimum wage rates, it is highly doubtful if the Filipino wage earner could
absorb price hikes to be triggered by the increase in VAT as well as other taxes.
7 “Economic Statistics.” [Online] Availablehttp://www.philippinebusiness.com.ph/economic_stats/economy.htm, August 2005.
8 “Inflation Seen to Remain Stable”, B5 Business Section, The Philippine Daily Inquirer, January 25, 2006
9 “Government Expects Billions in Savings” The Philippine Daily Inquirer. January 23, 2006
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Employers likewise may not be prepared to incur additional expenditures
particularly at this time of economic crises, concluded by the business group.10
Socio-Cultural Environment
Population. Population in the Philippines is increasing at a 1.84% growth rate
and is now currently pegged at 87.9 million Filipinos. The highest concentration
of people is found in the NCR, Southern Tagalog, Central Luzon, and Western
Visayas.
The age structure of the population is divided into three brackets. The first one is
from 0-14 years old, which include 35.4% of the population. The second bracket
of ages 15 to 64 comprises of 60.6% of the population. The third age bracket,
which is composed of Filipinos 65 years old and above, covers only 4%. The
median age for males is 21.77 years whereas for females, it is only 22.8 years.
Based on the 2000 Census of Population and Housing taken by NSO, it was found
that there were more men composing the population with 50.4% than women
with 49.6%. From 1995 to 2000, the sex ratio was pegged at 101.4
Labor Force. The total number of individuals within working age (15 years old
and over) is equivalent to 54,194,000, of which 64.8% participates in the labor
force. The employment rate in the country is currently 91.7%, an increase from
last year, whereas the average unemployment rate is currently 8.3%, increasing
at a 0.3% rate. Almost half (49%) of the total unemployed individuals in the
Philippines are aged 15-24 years old. The underemployment rate is currently
26.1%.
According to the NSO’s Labor Force Survey, men and women comprise 61 and
39% of the 2002 labor force, respectively. In addition, it was found that women
had a 51.7% labor participation rate while men participated in the labor force at
a rate of 80.8%. The Survey also showed that, in 2002, the 89.9% of the total
labor force were employed. Employment rate for women was 89.9% whereas
10 “Increase in VAT will hurt poor, small businesses”. [Online] Available http://www.inq7.net, January 27, 2006
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men’s employment rate was at 89.9%. In terms of major occupation groups,
majority of professionals, clerks and officials and special-interest organizations,
corporate executives, managers, managing proprietors and supervisors were
women. On the other hand, majority of plant and machine operators and
assemblers, farmers, foresters and fishers, and tradespersons were men. In
terms of major industry groups, more women belonged in the education, health
and social work, and wholesale and retail trade industries while more men were
found to be dominant in the construction, transportation, storage and
communication, and fishing industries.
Consumption and Expenditure. According to NSO, average income and
expenditure has shown an increasing trend as of 2003. The target market of the
business, which is NCR, was one of the top three regions in terms of average
income. The other two were CALABARZON and Central Luzon. These top three
regions posted estimates of income that were higher than the average income of
148,757 pesos in 2003.
The annual average saving as of 2003 showed a downward trend. However, on
the average, Filipino families in all regions earned more than they spent, as
stated in NSO’s 2003 Family Income and Expenditure Survey results. In 2003,
families located in NCR showed the biggest annual saving of 46,923 pesos.
In 2004, personal consumption grew at a rate of 5.8% due to double-digit growth
of income remittances. In the first quarter of 2005, there appeared a decrease in
personal consumption expenditure, which can be attributed to higher prices of
goods and services. There was a slowdown in growth for food, beverages,
clothing and footwear, household furnishings, household operations, and
miscellaneous expenditures as well as fuel, light and water due to low electricity
consumption. On the other hand, expenditures on transportation and
communication increased due to rise in road and railway ridership and mobile
phone usage.
Technological Environment
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Industrialization. The manufacturing, along with the closely associated
activities in the clothing and garment production, continues to be one of the
driving forces of industrialization the world over. The clothing industries have
fought to maintain their share of the total value that is created throughout the
series of apparel design, manufacturing and distribution.
Automation. At present, technology in the garment industry here in the
Philippines consists mainly of automation of the processes. These include the
automated designing of the patterns as well as that of fabric laying and cutting.
Electronically controlled mechanisms are also used for stitch formation and
fabric feeding for the basic sewing machines. 11The last of the processes include
automated machines and devices for pressing the clothes. In addition, current
developments in machineries include designs which enable fast adjustments of
equipment from one style to another thus eliminating the non-productive
handling of fabrics and garments. In the process, quality is thus being improved. 12
Other developments. The Garments and Textile Board of the Philippines has
recently installed an Electronic Data Interchange (EDI) system to reduce
processing time to help improve production and delivery lead-time. It allows
garment manufacturers-exporters (GMEs) to transact with GTEB electronically.
The costs associated with implementation of EDI include the costs for acquiring
the software and the hardware themselves, training and ongoing costs such as
Value-Added Network (VAN) charges, maintenance and support costs.13 In
addition, the leading companies in the industry have started to acquire CAD/CAM
techniques, Quick Response and Just in Time philosophies to allow flexible
manufacturing.
11 Byrne, Chris. “The Impact of New Technology in the Clothing Industry: Outlook to 2000” [Paper]
13 “Electronic Data Interchange – A Management Overview.” [Online] Availablehttp://66.102.7.104/search?q=cache:JAUTozWtU_4J:www.unece.org/trade/untdid/download/r1222.pdf+GTEBNet+EDI+costs+OR+fee&hl=en&client=firefox-a. August 2005
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B. Microenvironment Analysis
The Garments Industry
The Philippine local garment industry started as a cottage industry in the late
1940’s. The pioneers are engaged in dressmaking, tailoring as well as
subcontracting activities for the Americans. The golden years of the garment
industry was in the 1970’s, during which the Philippines was considered to be a
nice and attractive place to buy or manufacture apparels. This continued on for
about ten more years, which then catapulted many garment manufacturers as
leaders in the export business.
During the 1980’s, the government implemented the structural adjustments
program (SAP) as trade policies shifted from trade protectionism to trade
liberalization. The program opened doors for foreign companies to increase their
investments as well as encouraged the local manufacturers to tap into the
potential of the industry. What made the local garment industry a viable
investment for foreign companies was the high quality of the Filipino labor force
– highly trainable, industrious, and highly literate.
The local garment industry is currently involved in the production of men’s,
women’s, children’s, and infant’s wear, gloves, undergarments, stockings and
socks, neckwear and other apparel. Subcontracting activities include performing
embroidery and sewing services (i.e. printing, dyeing, knitting, laundry, finishing,
pattern-making and design-making). In addition, it is the country’s leading
employer of the manufacturing sector, with industrial relations no longer an
issue, and with minimal labor problems. Through the help of Garments/Textile
Industry Tripartite Council Board, industrial relations are continuously being
improved upon. The government also has provided different means to adapt to
the changing HR needs of workers in the garments industry. Such actions that
would help make the industry more competitive, and thus, improve the HR
scenario, include productivity enhancements like skills upgrading, productivity-
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based wages, trade facilitation, market/product development and financing
assistance. 14
As of the 18th of July this year (2005), accounting for 6% of total export receipts
were the articles of apparel and clothing accessories. This was the country’s
second top earner which garnered almost $192.9 million in revenues or a 7.4%
increase from last year’s $179.6 million.
The industry for articles of apparel and clothing accessories is the country’s
second biggest dollar earner albeit it experienced a decline of 4.0% in terms of
value of production index. However, it experienced a gain of 27.5% in volume
net sales from last year. The improvement in the performance of garments
exports can be attributed to the shift towards higher value-added items due to
the improvement also in the high-end premium categories.
According to Garments and Textile Exports Board (GTEB) Executive Director
Serafin Juliano, the growth of the local garments industry stems from the
country’s advantages and its improving competencies in moving up the value
chain. Improved performance is also a result of cost-effective manufacturing and
logistics systems as well as increased store sales locally made premium
products. The current implementation of the quota-free scheme resulted in the
shift of brand market and product mix combinations of garments exports as well
as enabling the garments manufacturers to align its sourcing strategies with
local capabilities, product design specifications, and consumer preferences.
Despite the stiffer competition resulting from the abolition of the quota system,
the local garments industry will benefit from the freedom to source with the
most efficient suppliers at the lowest costs and with the shortest cycle times.
Other Issues
Threats to the local garments industry include high power and labor costs and
smuggling of imported clothes that were undervalued and can be sold at very
14 I-Transporte, Aletha. “IR/HR Implications in the Garments Industry.” [Online] Availablewww.fu-berlin.de/iira2003/papers/track_3/Workshop_3_2_Trasporte.pdf. August 2005.
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cheap prices. Cheap imported second-hand clothes define ukay-ukay and its
proliferation serves to damage the local garments industry that cannot compete
with such low prices, and also incurs losses for the government. As of 2002,
demand for ukay-ukay clothes was 4%. For 2003, we could only conclude that
the demand must have risen due to higher prices of clothing. In addition, 4% of
the demand also attributed to preference for foreign brands over local ones. It
was said that the root of this was the inability of local manufacturers to compete
with foreign brands in terms of quality. One reason for such a trend includes the
inclination of local producers to set aside quality products for export while
bringing poorer ones to the local market. Garment manufacturers in the country
would want to take hold of the relatively higher payments foreign markets offer,
as a result, more focus is thus being employed in the quality of the apparels they
produce for exports. In the long run, this particular action increases the
tendency for local consumers to patronize foreign brands due to the lack of
quality for local brands.
Another reason for the local consumers’ preference for imported used clothes is
the lower price. Legally imported second-hand clothes have lower prices than
local brands because of the lower labor cost and the modernized facilities that
other textile and clothing manufacturing countries have. 15
Relevant Industry Indicators
Customer Price Index. The consumer price index (which is a measurement of
the changes in the price level of goods and services that most people buy for
their day-to-day consumption) increased from last year to 129.4 overall, gaining
9.1 points. In the National Capital Region, the consumer price index also
increased to 131.4, a gain of 10.2 points, whereas for areas outside NCR, the
customer price index is128.6, a gain of 8.8 points. Monthly, the consumer price
index for the clothing commodity group shows an upward trend.16
15 Bacalla, Tess B. “Gov’t Fails to Stem Flow of Smuggled Goods.” [Online] Availablehttp://www.manilatimes.net/others/special/2004/oct/25/20041025spe1.html, October 25, 2004.
Clothing Inflation Rate. The clothing inflation rate for this year is 3.6 while it
was 2.7 as of last year. The clothing inflation rate experiences a year-on-year
change of 0.9%.
Philippine's Top Exports (2001-2003)
Coconut Products1%
Electronics68%
Other Products17% Garment and
Textile7%
Machinery/Transport
4%
Food3%
Major Product Classifications. The major products produced in the local
garments industries include garments, non-garments and textile products. As of
March 2004, garments accounted for 88% of the product share in total exports.
Non-garments, which include luggage, home textile furnishings, tents, nets,
industrial clothing, has 7% of the total share. The remaining 5% share of total
export sales is composed of textile products such as fabrics, yarns and fibers.17
Political Developments in the Garments and Textile Industry
The government is working with the private sectors of the garments and textile
industry in launching investment missions that would establish strategic
alliances with foreign partners and attract investments in apparel, textile and
production of accessories. Through the introduction of ASEAN Free Trade
Agreement and the World Trade Organization (WTO), opportunities for
investments are presented as a result of tariff reduction and the phasing out of
17 “The Philippine Garments and Textile Industry Profile (as of March 2004).” [.pdf file sent by Garments and Textile Export Board c/o Jennelyn Gatuz] August 2005
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Figure 1 | Philippines Top Exports (2001-2003)
quotas with low demand as well as the growth for remaining quotas of products
that are import-sensitive. Such developments would reduce the industry’s
production costs and also minimize smuggling, which is one threat to the
industry.
To enhance investments in the industry, the government offers incentives such
as income tax holidays, additional deduction for incremental labor expenses
during the first five years from registration of the company, tax and duty
exemption from taxes and duties on selected imported spare parts, unrestricted
use of consigned equipment, employment of foreign nationals, simplified
customs procedures, access to bonded manufacturing warehouses, tax credit for
taxes and duties paid on raw materials used for the exported products.
To improve the industrial relations in the industry, the Garments and Textile
Industry Tripartite Council Board was revived to serve as a venue for resolving
issues and any conflicts. Unwarranted industrial action or harassment is put off
through this forum. According to Philippine Exporters Confederation, Inc.
problems regarding industrial relations are very minimal within the industry
through the help of the Council Board.18
Clothing and Footwear Retailing in the Philippines
Consumer expenditure on both clothing and footwear amounts to 73.3 billion
pesos in 2002. A 12.9% increase is estimated for 2003 which will result in
spending of P82.8 billion in this sector. Spending on these items increased by
40.3% over the review period.
Filipinos in general has strict fashion sense and invests much of their money on
clothing and footwear. The Filipino upper and middle-income classes are known
to be more fashion-conscious as compared to other Asian countries. The average
purchasing power is low but the income gaps across socio-economic classes are
wide which then allows the middle and upper income classes to be fashionable.
18 “Dressing Up For Success.” [Online] Available http://www.philexport.ph/garments.html. August 2005.
12
Men’s wear increased by 32.8% in expenditure while the women’s and children’s
wear increased by 47.2%. Men’s and boy’s wear expenditure amounted to about
28.3 billion pesos in 2002 and nearly 33.0 billion soon after, estimating around
37.6 billion pesos in the succeeding years. On the other hand, expenditure on
women’s, girl’s and children’s wear amounted to 32.6 billion pesos in 2002 and
increased to 36.8 billion pesos the following year.
Table 1 | Consumer Expenditure on Clothing and Footwear | 1999 - 2003 (in billion pesos)
1999 2000 2001 2002 2003
Clothing 53.3 57.1 61.2 65.6 74.4
Men's and Boy's Wear
28.3 30.7 31.6 33 37.6
Women's, Girl's and Children's Wear
25 26.4 29.6 32.6 36.8
Footwear 5.8 5.9 6.8 7.7 8.4
TOTAL 59 63 68 73.3 82.8
A total of 77 billion pesos was the total turnover of clothing and footwear
retailers in 2002, which estimated a total of 86 billion pesos in 2003, an 11.7%
increase. Sales in 2003 increased by 36.5% from the 1999 sales of 63 billion
pesos.
Clothing and footwear specialists are able to hold their ground against mixed
retailers. Majority of this is ready-to-wear which is the major merchandise carried
by department stores and variety stores. Since there is this perception that
these merchandises, especially house brands, are mass-produced, Filipinos
would usually buy from specialty shops for more choices and exclusive styles.
This is because there is a clothing shop that caters to every Filipino’s taste in
fashion, style and age group.
Clothing and footwear specialists also abound in shopping malls and tiangges.
Many of these specialists have concessions in department stores as well for
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these are proven venues that still attract the most people. They maintain these
concessions even with their existing own separate outlets. Local shops such as
Bench, Penshoppe, and Bayo are able to complete well with foreign brands such
as Giordano, Gap and Guess. Flea markets also abound clothing specialists who
has their own retail outlets at the same time. The Greenhills bargain center,
which started the “tiangge” fad, has stall owners who still operate their
permanent outlets at the same area. Many of them also have their branches in
other shopping malls and strip malls. “Tiangges” allow them to reach to more
clientele who would still prefer to shop in areas near them rather than going to
their outlets.
Specialists considered multiples or private retail companies operating in 10 or
more branches are benefiting from the expansion of shopping malls in Metro
Manila and other key areas nationwide. Sales of multiples have increased by
46.4% over the period, from 7.6 billion pesos in 1999 to 11.2 billion pesos in
2003. Multiples still remain as a minority which constitutes only 13% of the total
retail sales of specialists in this sector. Many multiples enjoy success at present
which all started out as independents.
Small independent shops are expanding their operations through franchising or
forming an informal buying group. These are areas especially those outside the
Metro Manila which contributes to the increase of sales by the affiliated retailers
and franchised retailers. There are still non-affiliated independents that cater to
the Class CDE market and are present in areas which named stores are not able
to reach. Sales of independents have increased by 35% in about five years from
55.4 billion pesos in 1999 to 74.8 billion pesos in 2003.
Table 2 | Retail Sales by Type of Outlet | % Growth (1999-2003)
1999/2003 2002/2003Clothing and Footwear Specialists Multiples 47.4 12 Independents 35 11.6 TOTAL 82.4 23.6
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Retail Distribution
Department stores and variety stores (Mixed retailers) dominate the sales of
men’s and boy’s wear and children’s wear. This is because there are much fewer
clothing and apparel specialists who cater to their market as compared to the
female wear. In this sense, women have more choices especially when it comes
to apparel specialty shops. About 56.6% of the total sales of women’s and girls’
wear were sold through specialists while around 40.4% were sold through mixed
retailers.19
Still, there are few clothing and footwear specialists that can be considered as
multiples. They contribute to only about 10% of the total sales for this sector.
This means that there is still room for a major chain to enter this retail sector
which could carry the men, women and children’s merchandises.
Table 3 | Retail Distribution of Clothing/Footwear Retailer's Core Product 2003(percentage of value)
The business idea started three years ago, when Victorino Caluza, an aficionado
of designer jeans, prompted in putting up a store that offers customized jeans in
his own unit in Mega Plaza in Ortigas.
“Fashion, in a way, is individualism. You want to be different. You can be trendy
wearing different brands, but you know ‘marami’ kayo may-ari nun. Viktor is
about good fitting jeans that makes you look and feel good. Viktor is about
exclusivity,” the jeans maker points out.
Men and, most especially, women have difficulty finding a pair that fits all over.
An expensive pair does not guarantee the jeans will fit perfectly. Every single
body is unique so it’s almost impossible to buy jeans that have the perfect
combination. This is where Viktor comes in.
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Figure 2 | Competitor Map
Product and Market Strategy
Ino Caluza initially started with 4 collections of designs when he recently opened
his store in the 4th level of Podium in Ortigas. He works on his designs
periodically and offers them at the customer’s request mix of fit, cut, fabric, and
all the way to other jeans elements like zipper, stitches and thread. Viktor
promises to give its customers the perfect pair of jeans, as in his tagline – A good
pair of Viktor can get you laid back.
Customers are primarily members of the high social class society as a greater
proportion of Viktor’s customers are celebrities and young professionals who are
into the trendy and sophisticated themes carried by most of Viktor pants.
To keep its customer go back to his shop, he offers them free alteration for
fitting updates. He also keeps a database of his customers and sends them
letters/notices whenever new designs are available.
By yearend, the company plans to launch brand ‘Vik,’ targeting a younger
market with a budget. A new store at SM’s Mall of Asia will house the new brand.
Customers will have fewer choices though compared to the original Viktor series,
but pay between P2,000 to P3,000 only for a pair.
Toppers Haute Couture
The store was established in the 70’s first promoting service to the working
class. The quality of the end products made serve to be the lasting source of the
business as it kept its operations through the years. Toppers showcases haute
couture servicing for both men and women, ranging for ages 30 and up.
Product and Market Strategy
The shop offers a wide range of tailor servicing from polo, pants to suits. As what
any tailor shop does, it offers their services along with a splash of fabrics and
different cuts as requested by the customer.
22
While the shop is primarily for anybody who wants his clothing custom-made,
but because of its store appearance, customers tend to perceive that the shop is
focusing on the older market, the adult and the professionals.
Current Price Profile of Key Competitors
Viktor charges its customers a range of P3,950 to P5,700 for a single pair of
pants. For rush jobs, customers are charged an additional P300. The amount
increases as more details are added on the design and as the fabric becomes
harder to be supplied. He also specializes in offering a one-of-a-kind jean design
ranging from Php7000 and up. On the other hand, the tailor shop located along
Katipunan offers their custom-made pants service at the cost of Php600 a pair.
Table 5 | Competitor Strengths and Weaknesses
COMPETITORS STRENGTHS WEAKNESSES
VIKTOR
has developed a strong brand equity among the aficionados of designer jeans, first to offer the kind of idea in the Philippine clothing industry, offers a wide range of trendy designs to choose from, a guarantee on fit alterations
the price is way up high from the affordability of the target market, it takes seven to 10 days for a pair to be made.
23
Figure 3 | Toppers Haute Couture
Toppers Haute Couture
affordable range of price range to students who want their pants tailor-made
has limited design offers as the owner is traditionally oriented in tailor making, cuts and fit are enclosed to a limited number only, perception that the store is focused only in the adult and professional market.