CB REPORT 1 final Essay examples

Submitted By Loredana-Casamassima
Words: 3351
Pages: 14

In The Apparel Industry

Date: 28th November, 2011.
Word count: 2489.

1. Background Information 3-5

2. Key Influences On Buyer Behaviour 5-11
2.1. Culture 6
2.2. Group Influences 6-8
2.3. Attitudes 8
2.4. Personality and Self-Concept 8-9

3. Conclusion On The Future Of The Sector 10-11

4. Bibliography 12-14

5. Appendices 15-17

1. Background Information

The following report will analyse the apparel industry from a consumer behaviour perspective, specifically the sector of fashionable apparel at a reasonable price.

The apparel industry corresponds to the market that is principally concerned with the sale, design and/or manufacture of womenswear, menswear and childrenswear, in other words clothing (Bitpipe ca.2011).

In 2000, consumers spent about $ 1 trillion on clothing worldwide. Approximately 1/3 of sales were in North America, 1/3 in Western Europe and 1/4 in Asia (Allwood et al. 2006).

Research has shown that the market share of manufacturers and exporters of fashionable apparel at a reasonable price is mainly dominated by the Asia-Pacific due to the economical labour. This region includes countries like China (leader manufacturer), Hong Kong, Philippines, Malaysia, Indonesia, Bangladesh, Sri Lanka, Pakistan, Thailand and India. The other major manufacturing nations were USA, Italy, Germany and Mexico (Fashion Products ca.2011) (See appendix 1).

Recently, this market sector has been globally dominated by companies such as (See appendix 2): Gap, Inc.- an American company geographically spread throughout America, Europe, Asia and the Middle East. It operates through 5 business divisions: Gap, Old Navy, Banana Republic and Piperlime. This company had a revenue of $14,526 million in 2009.
H & M Hannes & Mauritz AB – a Nordic organisation that operates in the Nordic region, Eurozone excluding Findland, and the rest of the world. In 2009, a revenue of $16,464.1 million was recorded.
Inditex S.A. – a Spanish company that operates in 71 different countries and markets its products through different stores such as: Zara and Bershka. In 2009, Inditex achieved a revenue of $13,786.3 million.
Wal-Mart Stores, Inc. – being the largest retail company in the world, operating in North America, Central America, South America, Britain, and Asia. This American company recorded an impressive revenue of $401,204 million in 2009.
(Datamonitor 2011).

The macro-environment is a relevant issue that industries cannot control (Kotler et al. 2005). This means that it constantly influences the apparel sector as well, in particular those organisations offering fashionable apparel at a reasonable price.

In the political environment, laws, government agencies and pressure groups are those that affect and could limit the development of the industry (Kotler et al. 2005). This particular sector is ruled by international trade agreements, quotas, subsidies, tariffs and policies that are imposed by the government, taking into consideration how apparel is produced, the environment and labour. (Allwood et al. 2006).

International trade agreements apply when manufacturers move across national borders looking for cheap labour, with the purpose of facilitating profits (Ng 2007). The World Trade Organisation (WTO) plays an important role in this industry as it sets preferential quotas to be applied and import tariffs for the member countries, but disadvantages non-members by for instance charging high import rates (Allwood et al. 2006).

When seeking cheap labour there are important laws and standards set by the government that manufacturers have to follow, such as employees’ rights. Things akin to minimum wage, over-time pay, benefits and health and safety regulations are constantly changing, causing significant effect on the apparel industry due to the sector’s labour-intensiveness (Ng 2007).

Economic influences also affect the fashionable apparel market