Creating value - brand

management
A C&A case study
Page 1: Introduction
The environment in which an organisation competes will
provide both opportunities and threats that influence its
long-term strategic development. Organisations, therefore,
have to analyse their strategic capability to ensure their
capabilities fit the changing environment in which they are
operating. This involves developing these abilities in new
directions.

This case study focuses upon the repositioning of a major

retailer C&A and how it has changed customer focus on cost and price to become a value-
driven retailer.

Founded in 1841 in Sneek, Holland, C&A has developed to become a large retailer, with 579
stores and 40,000 employees in 13 countries. C&A is 100% family-owned, but is nowadays
managed by family and non-family directors. The culture of the business is based on the
values of the Brenninkmeyer family, who have a long-term view on issues and relationships
and maintain high standards of ethics and social responsibility.

Until 1997, C&A consisted of independent national organisations sharing family and brand
values. Since 1997, it has developed as a fully integrated European retailer, with the
Executive Board for C&A Europe in Brussels. As the best known clothing store in Europe,
C&A is one of the leaders in key markets within Germany, the Netherlands, Belgium,
Luxembourg and Austria and also has a strong position in France, Switzerland and Great
Britain.

A key element in making management decisions was to evaluate the position of C&A. A
specialist market research company provided external information such as socio-demographic
data on country, age, social class and household size as well as market share.

A SWOT analysis was also undertaken. SWOT analysis helps to identify the Strengths,
Weaknesses, Opportunities and Threats of any business decision. This helps evaluate whether
a business strategy is capable of responding to changes in the business environment.

The challenge for the brand

C&As strengths lay in its high brand awareness, family orientation, reputation for low prices
and extensive choice. However, its perceived weaknesses included a lack of targeted
communication with customers, the reluctance to adapt to meet local fashion needs and, more
importantly, the lack of a quality fashion image.
Research also demonstrated growing confidence in retailer brands. Recently consumers have
become much more individualistic. They like clothes that reflect their lifestyles and
personality. Fashions and brands have become much more important for a wider range of
individuals from different socio-economic groups. This has led to the growth of focused
competitors providing branded products reflecting their values.

Consumers view the brand as an important part of their purchase. Whereas a product is simply
something manufactured in a factory, a brand is made in consumers minds and part of the
relationship they develop with their purchase is represented by values or attributes they
perceive as being included within their purchase. A brand, therefore, is a name, term, sign,
symbol or design that identifies the products of a seller and makes them different to those of
their competitors. Brands comprise the product, the service and customer perceptions. As
brands develop, consumers become aware of them and select them in preference to others.
The value of a brand is the extent to which it has high levels of loyalty, quality and other
associations.

Changing brand values

C&A has in the past focused upon cost and price. As one of the largest buyers within the
clothing industry in Europe, it has been product orientated. As consumers became more aware
of brands, C&A witnessed a decrease in customer loyalty and a shrinking market value. The
challenge for C&A was to alter the way in which customers viewed its products by turning
the consumer focus on cost and price into brand awareness and preference. This would
involve improving the value of activities, in and around the organisation including
transforming the store base and changing the fashion and quality image of the company from
low price perceptions to high value propositions.

To do so required exposure of the brand personality which represents:

warm and friendly - user/customer friendly, human, with feminine characteristics

(pro-) active - active, open-minded and approachable, modern
efficient - reliable, beneficial, up-to-date, value for money
being responsible - caring, concerned with others, involved in society, trustworthy
innovative - creative, vital, future-orientated.

Strategic direction
The mission statement of an organisation is a
generalised statement of its purpose. C&As
mission statement is designed to declare the
direction and long-term objectives of the
organisation. It is the reason why it exists -
'to ensure a lifetime of quality fashions at
greatest value, sold through attractive, easy
to shop stores'.

The mission helps to emphasise the rationale

behind all the changes taking place within the
business, including its long term objectives which is how it intends to develop in the coming
years. Business strategies are how C&A achieved its mission and this involved changing
orientation and repositioning the business.

Repositioning the brand

Positioning is the marketing process by which brands or products are established in the minds
of customers. It aims to satisfy their needs and expectations and helps to establish an
advantage for C&A over its competitors. Positioning also makes sure that the external world
perceives C&A in a particular way. Repositioning for C&A involved changing:

from market to customer

from being to doing
from mass to focus
from product to service
from country to lifestyle
from awareness to preference
from price to value for money
from commodity to brand.

C&As positioning statement is reflect this change.

'C&A is your store because C&A is dedicated to offer you a carefully selected extensive
range of up-to-date clothing styles which is:
manufactured with care
clearly and attractively presented in a friendly and fashionable atmosphere
for the whole household
sold at the best prices.'

The key tool for the repositioning process is that of brand management. C&A looked at the
whole of its business through brand management. For C&A, brand management has been the
cross-functional management of activities and processes that create a long-term relationship
with customers to meet agreed customer requirements at the maximum profitability to the
company. For example, this currently involves developing the whole business to move:

C&A | Creating value - brand management

The role of brand management

 Brand management enabled C&A to build relationships with
different customer target groups according to their specific needs
and requirements.

The starting point for the process of brand management was to

redefine C&As brand portfolio with a re-focusing of brand
labels within the parent or umbrella brand of C&A. When a
brand belongs to an umbrella brand such as C&A, it is called a
sub-brand and contributes in its own way to the image of the
umbrella brand.

One problem was that the C&A portfolio of sub-brands was too
large, comprising 23 labels. These were reduced from 23 to 13
and placed within five groups in different market segments.
Market segments provide a detailed breakdown of a market and
include groups of actual or potential customers who may respond in a similar way to a given
offer. C&A's are:

Young
Contemporary
Updated traditional (fashion basics)
Traditional.

Each of the sub-brands was then provided with a brand definition. Brand definition covers all
of the aspects of a brand. Brand definitions therefore act as a theoretical basis for each sub-
brand and determine how and where they are positioned.

Clockhouse sub-brand

One example of a C&A sub-brand, Clockhouse, positions itself between teens and young
families, bridging the gap between the two consumer groups. Products within the Clockhouse
range emphasise fashion characteristics which are derived from sources of information
provided by fashion scouts.

Pricing focus is on P2/3 but will vary according to market opportunities. C&A stores are to
have a dedicated Clockhouse Store Concept, with chill-out areas - a store within a store.
Promotion will be provided through visual merchandising and floor campaigns while outside
advertising will be through the fashion press and key events.

C&As marketing mix

The marketing mix comprises the four Ps - product, price, place and promotion. It is the
series of variables that work together to provide an overall offer for the C&A customer. The
marketing mix was a critical tool in repositioning C&A away from a traditional and less
fashion aware position within the clothing market, towards more individualistic, mainstream
and designer fashion.

1. Product
C&As products consisted of a carefully selected range of up-to-date clothing styles,
manufactured with care for the whole household. Collection Definition meetings helped to
provide various offers for each sub-brand. Strategic alliances have been forged with suppliers
to provide more value for customers. The core range of C&As assortment has been
repositioned to deliver a style message which is perceived as fashionable and up-to-date.

2. Price

Price structures differ within every market. Prices within C&A

are evaluated within five price points. P1 is a low price
discount proposition with P5 as the highest price. Though C&A
was and is well-known for its low prices, the repositioning
process involved transforming perceptions of price into an
image of value, with products priced in the P2-P4 range.
Consequently, key reasons for shopping at C&A in the future
will be to meet customer fashion and quality requirements in
the mid-market ranges.

3. Place

Consumer research indicated C&As selling environment did not provide an easy-to-shop
attractive ambience, this degraded the merchandise. The environment did not communicate
clear fashion statements. The Store Concept had to be in tune with key elements of C&As
repositioning strategy so that products would be clearly and attractively presented in a
friendly and up-to-date atmosphere across each of the five segments.

4. Promotion

The aim of advertising and other promotional methods is to communicate C&As new
positioning strategy, with particular emphasis upon fashion publicity.

Conclusion
As one of the leading clothing retailers in Europe and a fully integrated organisation, C&A is
rapidly moving forward in an industry where focusing on value has provided a direction for
redefining the business.

Supported by other innovative retailing initiatives, such as the development of Internet

shopping and database marketing using loyalty cards, C&A is an organisation equipped for
the future, which is visually expressed through its new corporate identity.

This case study has shown how C&A today is building the C&A of tomorrow, building on its
core competencies and experiences within the retailing industry to provide higher value
propositions for customers.