Research Of The Key Marketing Concepts And Strategies Of UGG Company
The following report will address how UGG has captured the market with their high-quality, affordable and stylish boots which capture the attention of men, women and children. The report will also address how UGG has shifted their image and marketing campaigns in order to become a household name. This report will outline the key marketing concepts and principles which UGG has implemented into their marketing efforts, as well as how UGG has implemented marketing mix considerations into the advertising of their products. The report will also focus on the socially responsible business practices as well as ethical issues which are present in the operations of a global business, and the Information Communication Technologies which UGG has used to effectively communicate with employees and consumers. Finally, the report will address an in-depth marketing plan which includes the development, resources and steps required to create a successful marketing plan.
Introduction
‘Deckers Outdoor Corporation' is a distributor, designer, and supplier of footwear. Headquartered in Goleta, California, United States, Deckers design and distribute one of the world's most popular footwear brands, UGG. The famous UGG boot was originally founded in 1978 by an Australian entrepreneur on the coast of California. By the end of the 90's, individuals in the fashion world and celebrities had begun to notice the UGG boot. Since then, UGG has become a global brand renowned for its iconic, classic and comfortable footwear. Nowadays, UGG distributes and designs retail footwear with an attitude towards craftsmanship and quality, generating over $1 billion in annual sales during the year 2017. UGG as a brand places a huge emphasis on animal welfare, in order to ensure the ethical treatment of animals during the manufacturing process, only sourcing sheepskin from sheep that were raised for food. UGG is a member of the Leather Working Group (LWG), an organization specifically designed to develop and maintain a rating system as well as a certification program to monitor environmental performance in tanneries. A huge 98% of leather used in Deckers products are sourced from an LWG certified tannery. The total Global net sales of Deckers Outdoor Corporation. UGG generated US$1. 51 billion in net sales during fiscal 2017, demonstrating the feasibility of the brands products.
Key marketing concepts and principles
UGG's success and customer loyalty may be attributed to their ability to adapt to the changing consumer market. By paying close attention to the proper segment, the positioning of the product and target market, UGG had managed to create a brand for women who enjoy a sporty, relaxed and comfortable lifestyle. UGG identified a crucial issue in their marketing campaigns: a lot more women were interested in there soft and furry boots then men. In order to solve this issue and gain higher market share, UGG had repositioned the footwear by purchasing ad placements in strategic and new areas. Although the opportunity was recognized, UGG had only a few available financial resources at the time. UGG was extremely confident in this opportunity and pursued the risk. UGG took to ‘Vogue' magazine, which sparked great media attention towards the shoe and brand. After noticing a gap in the market for manly boots, UGG had enlisted celebrities including American Quarterback Tom Brady, Jeff Bridges, and Julian Edelman as leading brand ambassadors, this gave UGG a tremendous opportunity to leverage their products with men.
UGG had launched a marketing campaign the positioning of the UGG boot in the market had not only increased market share, but also raised revenue by over $1. 51 billion. Furthermore, UGG had experienced trouble due to copycat brands and therefore sought to gain traction with the brands' target market. UGG had implemented above the line advertising to gain market share whilst educating consumers on the ethnicity of their brand. UGG's objective was to educate the consumer and emphasise the quality, design and brand status of the boots. However, UGG had experienced trouble with above the line advertising due to the extremely high level of copycat brands, operating in a highly competitive and saturated market and a large amount of competition to reach influencers in the fashion sector. In order to overcome the threats facing the company, UGG had implemented a strategically targeted Public Relations campaigns to engage key influencers and drive consumer action.
The shift from above the line advertising to a PR strategy had meant that UGG seeded the product in order of appealing to influencing media, content producers, social media advertisers, and celebrities. The company had worked with fashion editors and designers, showcasing the numerous product styles and conducting one to one meetings with influential media to showcase the brands' products. This strategy had resulted in securing offline and online coverage for UGG whilst increasing brand awareness, customer retention and engagement, in-store sales, online sales and raising revenue. Subsequently, UGG's marketing campaigns in international markets cause rising issues for the company. The inability to adapt to a number of cultures meant that UGG faced a variety of difficulties associated with marketing and promoting products in unfamiliar cultures. As each country generally has certain specialty customers, UGG must place an emphasis on improving the place branding of the company in order to appeal to consumers with significantly different cultures and diverse backgrounds.
Constant changes with consumer demand may cause a huge problem for UGG if effective marketing is not implemented. These changes include: seasonality, evolving lifestyle and fashion trends, changes to general economic as well as market conditions and publicity including social media and marketing campaigns. However, UGG's Australian campaign is lacking and requires improvement in recognizing a changing marketplace which differentiates the varying needs and wants of consumers in a number of countries. With rapid changes to consumer tastes and preferences, UGG must improve their overall marketing efforts in the Australian marketplace in order to create a diverse and cultural campaign which provides differentiation in a range of countries. Nonetheless, UGG has perfected the repositioning of their brand which ultimately captured wide market share, improved brand loyalty, raised sales and increased revenue. UGG's new focus on the rugged, yet sophisticated men has caught the attention of men across America, making UGG one of the world's most successful shoe brands around the globe.
Marketing Mix Consideration
UGG utilizes a range of marketing techniques and processes in order to influence the consumer's choice in purchasing the brands' products.
Product
UGG places a large emphasis on the design and development (D&D) function of all their products. The D&D of all their products are performed by a combination of development staff and outside freelance designers. UGG continually evaluates the cost and accessibility to raw materials in order of ensuring consistency, quality and efficiency in the manufacturing process. D&D staff regularly work closely with brand management in order to develop new styles of footwear which appeal to consumers in the changing marketplace. Additionally, UGG implements various quality control and assurance techniques in order to exceed the quality expectations of consumers. Including pre-production, in-line, and post-production inspections.
As well as the company's quality assurance program, which includes on-site inspectors who oversee the production process whilst performing quality assurance inspections. These methods include routinely inspecting boots upon arrival at the distribution center. UGG is able to build a niche brand into a lifestyle market leader. The success of premium UGG boots stems from loyal consumers and expanded product offerings. UGG will continue to diversify their footwear by developing a wider range of year-round products including spring and summer footwear.
Place
UGG has adopted a Direct-to-Consumer placement strategy. The DTC business is mainly comprised of retail stores as well as E-Commerce websites. Due to UGG's evolving and Omni-Channel strategy, the brands' retail stores and website are largely intertwined and extremely dependent on one another. UGG consumers interact with both the company's brick and mortar stores as well as websites before making a purchase decision. UGG has implemented a number of methods that combine sales channels and improve inventory productivity. These channels include; "UGG Rewards" a loyalty program which combines points and awards of recent purchases. "Infinite UGG", an online shopping access point available on E-Commerce websites. "Ship from Store" Inventory which is not available online may be shipped from a store which has access to this inventory. A physical retail store allows UGG to expose a consumer to a wider range of products, directly impacting the consumer experience and sell the products at retail prices.
Price
Due to the high-quality and authenticity of UGG Boots, the company must price their goods at a level which meets consumer expectations whilst maintaining a high level of quality.
UGG has implemented a marketing-skimming pricing strategy for new arrivals. UGG sets a high price for new arrivals, averaging between $130-$290 Aus. This strategy will allow UGG to attract their target market at these prices. Additionally, when a boot increases in demand UGG implemented a market-penetration price in the order of attracting a larger market range that will buy the product at the set price. Due to the quality and durability of the shoe, UGG implements value-based pricing. Furthermore, UGG has introduced Psychological-pricing of their products into the market, the target market including loyal customers will become aware that the product is worth it, classing it as higher-end footwear.
Promotion
Consumers trust bloggers and social media influencers more than they trust brands. Therefore, UGG has used the credibility of bloggers as well as social media influencers to expand the company's social media footprint and raise awareness of the brand. The company has implemented an "UGG Creative Council", a group of 8 bloggers who attract attention not solely on the footwear but on music, style, art, fashion and food. The posts on each bloggers sites vary according to age, gender and lifestyle. During 2014, UGG launched their first global brand campaign, designed to connect with consumers on an emotional level. "This is UGG" took the form of a multimedia campaign, a cross-channel campaign presented primarily in black and white. The introduction of the campaign had gained masses of customers, resonating with the average person. Capturing real moments with real people, the campaign celebrates the impact of small moments that mean the most.
Social Responsibility and Ethical Issues
As a global company, UGG believes in socially responsible business which helps the community, environment and inspires the younger generation. UGG has enforced a strict Corporate Social Responsibility program which looks deeper into the broader impact of the company's activities on customers, communities, employees and the environment. During 2016, UGG manufacturer and supplier ‘Deckers' joined the United Nations Global Compact (UNGC), a voluntary corporate citizenship initiative. The support of the UNGC has led Decker's to become socially aware of universal principles surrounding labor standards, human rights, responsible environmental practices and anti-corruption. Most of UGG's independent manufacturers are outsourced from countries outside of the United States where slave labor and child labor are widespread, this poses an ethical issue for the company. Therefore, tracking and monitoring business practices are paramount to the success of the company.
UGG takes immediate and effective measures to eradicate modern slavery, forced labor, human trafficking and securing the elimination of child labor in the supply chain. UGG pride themselves on protecting labor rights and promoting a safe and secure working environment for all company employees in the supply chain including T1 suppliers and factories. In order to preserve the environment where raw materials are harvested and used for production, UGG must focus on environmental initiatives to reduce adverse impacts. UGG aims to achieve environmentally sounds management of chemicals including all wastes throughout their life cycle in accordance with the international frameworks. This initiative includes significantly reducing their release to air, soil and water therefore minimizing adverse impacts on the environment as well as human health. Additionally, the company ensures the operations, key tanneries, factory partners and T2 suppliers are efficient are environmentally friendly, using industry exceptional practice for the effluent treatment and consumption of water.
Information Communication Technology
Information Communication Technology (ICT), refers to a product that manipulates, stores, retrieves and transmits information electronically in a digital form. The successful implementation of ICT systems will aid in reducing costs, improve decision-making, increase efficiency and competitiveness in the marketplace. UGG relies on a number of Information Communication Technologies to prepare sales forecasts, track operating and financial reports and operate a successful business. Quality customer service is an important factor in differentiating a business.
UGG has introduced ICT to access databases which provide comprehensive information on customers, product preferences and purchase history through the UGG Loyalty Rewards Program. It is through this information that UGG is able to improve the ‘product' aspect of the marketing mix.
Accessing customer information and purchase history will allow the marketing department to offer products which will benefit consumers. Additionally, the implementation of databases across all UGG stores will benefit the ‘Promotion' aspect of the marketing mix, consumers advertisements and discounts that will satisfy consumer wants and needs. Furthermore, the implementation of Information Communication Technology such as product analytics allows UGG to process, store, analyze and share large amounts of data. The use of product analytics enables the company to analyze the customers wants and needs whilst improving customer experience. The information gathered, enables senior management to make quick and accurate decisions in order to manage operations effectively and efficiently with quick response times. Additionally, a range of ICTs has allowed UGG to introduce multi-channel marketing campaigns. The large range of advertising campaigns and media platforms allows UGG to reach a wider range of their target audience, directly relating to the product and promotion consideration of the marketing mix. UGG is using the credibility of bloggers to expand social media footprint through a number of online posts and advertisements, promoting pop culture, style and interior design.
Marketing Plan
Based on research, numbers and past sale results is seems like UGG has an opportunity to expand their high-quality ship-skin product ranges. UGG has captured wide market share with their comfortable footwear range which will allow the company to expand, manufacturing and producing clothing, bath-robes and accessories. The expansion of their product range will differentiate the company from the market, boost sales and ultimately generate a higher revenue.
Target Customers
UGG understands not only the needs and wants of their consumers but also the changing desires, styles and trends which occur often within the fashion industry. In order to implement a new range of products, the company must undertake a study of the Macro environment through a PESTEL analysis as well as the microenvironment through a ‘SWOT' analysis. This will allow UGG to understand in depth the target audience, desired products, competitive threats, future opportunities as well as identifying any gaps in the market for high-quality woolen products.
Pricing and Positioning Strategy
Due to the implementation of a new range of products including clothing, bath-robes and accessories UGG should retain their marketing-skimming pricing strategy for new arrivals. UGG must maintain the image of a high-quality and authentic supplier of woolen products and therefore should price goods at a level that will satisfy customer expectations. Due to the company's high pricing strategy, the positioning of UGG's products remains to stay the same, appealing to a comfortable, stylish, classy and stress-free lifestyle.
Distribution Plan
UGG consumers currently interact with the company's brick and mortar stores as well as the UGG website to purchase products. The company has currently placed their range of stores in a well-known and convenient location such as shopping centers, creating a stress-free and simple way to purchase products. As this strategy is benefiting both the company and the consumers, UGG should retain the current distribution plan.
Promotional Strategy
Currently, UGG takes advantage of a multi-channel marketing strategy reaching its consumers through the influence of online bloggers, celebrities and social media influencers. The current promotional strategy with UGG has implemented is successful in both gaining a wider market range whilst broadening market visibility. Through the expansion of the product line, UGG should retain the current promotional strategy as this will allow the company to introduce a "Pull" strategy into any future marketing. Through the high visibility of the brand as well as mass media advertising, UGG consumers will actively seek out the products.
Marketing Evaluation
Tracking and evaluating marketing metrics is of paramount importance when a company has implemented a marketing plan. UGG’s marketing plan heavily relies on social and multimedia channels including market share, retention rate, ad awareness, click through rates and willingness to recommend.
