Introduction There is no doubt that family retail industry is one of the most developed in the United States. That is why there are many competitors that are performing on the US market (IBIS World Industry Report, 2017). They are trying to attract the customers will various tools, although the most effective way to attract the customers is acquiring competitive advantages. There are two main positioning strategies that can be used in order to acquire competitive advantages, namely differentiation strategy and cost leadership strategy. Thus, the paper is aiming the analysis of positioning strategies usage in the family retail industry of the United States.
Cost Leadership Strategy
Apparently, the consuming habits of the customer are changing all the time. It has become very actual when era of information technologies and internet took place. The number of customers that are buying clothes in the internet is constantly increasing. They have an opportunity to compare the prices in different internet stores and choose the most appropriate one. In addition, when target audience of the retail industry is coming to stores, they are comparing the prices with those that are posted in the internet (MacKenzie, Meyer & Noble, 2013). That is why, it is important for eh US retain industry to run cost leadership strategy in order to be competitive with e-commerce that usually offers lower prices.
One more important fact that should be into account deals with the fact that 6% of the US citizens live in deep poverty and 33% of population live close to poverty rate (The State of Poverty, n. d.). All of them are target audience of the retail industry. Following cost leadership strategy, this large group of people would become one of the target audience segments.
In order to develop cost leadership positioning strategy, the participants of the family retail industry need to reduce expenses on manufacturing, logistics and marketing in order to provide low prices for the product. The profit margin should be rather low. Companies’ will have an opportunity to earn high profitability by increasing the amount of items sold. Such cost leadership strategy will be rather beneficial for retail companies to follow.
On the contrary, it is important to lay the stress that the cost leadership is rather complicated to implement effectively due to comparatively low prices for apparel industry products that are imported from Asian markets. Such countries as China have an opportunity to produce clothes for cheaper prices due to low human resource expenditures. That is why it is beneficial for US companies to run differentiation strategy.
Rapid development of high technologies gives an opportunity to invest and implement innovative cloth materials and decoration that can be used for production apparels with unique characteristics (Business beyond Borders, n. d.). In addition, the United States has high reach and development level that will give an opportunity to maintain differentiation strategy by apparel industry companies. As for the target audience, people with upper middle and level of income will be targeted. The premium pricing can be used in terms of differentiation strategy that will give an opportunity for companies to earn high level of profitability and succeed with differentiation positioning strategy.
Thus, taking everything into account the conclusion can be done that both cost leadership and differentiation positioning strategies can be used by family retain industry participants in order to acquire competitive advantages. However, different management and marketing tools have to be used in order to maintain different positioning strategies. In addition, different targeting should be applied. However, both strategies are effective for companies of family retain industry on the US market.
- Business Beyond Borders. (August 23, 2017).Top 5 latest innovations in Textiles and Fashion. Retrieved from http://www.businessbeyondborders.info/top-5-latest-innovations-in-textiles-and-fashion/
- IBIS World Industry Report. (June, 2017). Family Clothing Stores in the US.
- MacKenzie, I., Meyer, C., and Noble, S. (October 2013). How retailers can keep up with consumers. McKinsey. Retrieved from https://www.mckinsey.com/industries/retail/our-insights/how-retailers-can-keep-up-with-consumers
- The State of Poverty. (n. d.). Poverty Facts. Retrieved from http://www.povertyusa.org/the-state-of-poverty/poverty-facts/