Apparel Manufacturing Company

I: Your client is an Apparel Manufacturing seeing a decline in profits. Identify the reasons and give recommendations. 

C: Can you give me some details about the client? What are the products that our client manufactures and where does it lie in the value chain? Does it only manufacture apparel or is also involved in the selling and distribution? Additionally, where is the apparel manufactured and sold?

I: The company manufactures Men’s premium wear including ethnic wear and party wear. In addition to manufacturing, they also have their own stores, but most sales come from 3rd party stores. There are 2 manufacturing plants: One in Gujarat and one in Delhi NCR. The apparel is mostly sold in Tier 1 cities.

C: Since when are we seeing a decline and what is the quantum of the decline? Are other companies in the same industry seeing a decline in profits as well?

I: Our client is seeing a 10% decline in profits since the last 2-3 years.

C: Alright. So, to tackle this case, I would like to divide profits as function of Revenue and Costs. Are either of them being impacted in the given period?

I: You can only look at the Revenue side. 

C: Alright, within revenue, we can segregate Demand side and Supply side. Do we have a Demand side problem wherein the demand for our products is falling or is it a supply side problem wherein we are not able to meet the demand?

I: The demand for our products is falling.

C: Okay. So, to understand what the issue is, I would like to breakdown the consumer journey into pre-purchase, during purchase and post-purchase. Do you want me to focus on any specific step of the consumer journey?

I: Yes, there is a problem in the during purchase stage. Can you figure out what could it be?

C: Sure, so during purchase, there are several factors at play. Once a consumer enters a store, he/she looks around the store for the variety of apparel available, then he/she goes to a salesperson for any further assistance required in browsing the store or for displaying the various options available, then the customer looks at the various available options and compares them basis their prices and quality and finally makes the payment. Is there a problem with any specific step here?

I: Yes, there is a problem with both the variety of our products as well as the relative pricing. Our competitors are offering discounts on their products which we are not doing currently. But there is one more issue that is causing a decline in sales

C: Sure, to understand that I would like to next explore any possible issues with the product. This will include any quality issues, lack of awareness of our products in the market. There might also be a problem with accessing our products, which could include problem in accessing the stores or problem in accessing the product in the store. It will also include the acceptability of our products. Are the consumers liking the products?

I: There is an issue with the product awareness. The marketing budget has been cut down over the past 2-3 years to maintain profits as there are declining sales. Now can you explore the recommendations?

C: Sure, coming onto recommendations, I would like to look at both the short term as well as long term recommendations. 

C: In the short run, we can start by giving discounts on our products to make our products more price competitive. This would lead to a fall in revenue generated per item sold but would increase the volume of products sold, which could increase the overall revenue. Additionally, we can also look at increasing social media marketing. We can shift from traditional means of marketing to social media marketing including influencer marketing to appeal to the tier1 consumers. 

C: For long term recommendations, we can look at expanding our products portfolio by bringing in more design options within existing portfolio. We can also explore the option of expanding to a new line of products like men's accessories etc. 

I: This looks good. We can close the case now.