This dissertation is about competitive strategy and how the author believes that the organisation ‘Clarks’ have used competitive analysis techniques to address the downfall in their profits, turn around sales and return to profitability. The dissertation will also look at attitudes towards Clarks during the last 4 or 5 years and whether recent increased marketing activity, during 2004 and 2005, has changed public perception of the brand.
1.1 What is competitive strategy?
“Competitive strategy is the search for a favourable competitiveposition in an industry……to establish a profitable and sustainableposition against the forces that determine industry competition.
Two central questions underlie the choice of competitivestrategy…….attractiveness of industries……and ….the determinants ofrelative competitive position within an industry.” (Porter).
Within this dissertation the author will try to determine thecompetitive strategy used by Clarks and whether it has been asuccess.
1.1.1 Why undertake a competitive analysis
By undertaking a competitive analysis, an organisation can determinewhere it fits within an industry and what the driving forces within theindustry are. If a competitor analysis is also undertaken, then theorganisation can observe the tactics of the competition and make acounter or first move. It is not the author’s intention to undertake adetailed analysis of the industry, rather to reflect on such trends andhow the effects thereof have impacted on the case study organisation,Clarks, and forced it to take measures to refocus and improve uponprofitability.
1.1.2 Proposition
A general proposition emerges from these observations to provide focus for this study
>>That there is a link between the undertaking of a competitiveanalysis and the change in the operating profits of Clarks.
This will be explored during the discussion in the literature review and by refining the aims in the following way:
1.1.3 Aims
1. To conduct an analysis of Clarks to determine the approach taken to competitive strategy
2. To determine whether the strategy determined has been a success in the eyes of the public
1.2 The Case Study – Clarks
The above named company was used as the basis for the author’s primaryresearch. The dissertation will progress to give an overview of thatcompany, showing how it has used competitive strategy to move from aproduct oriented company to one that now appears to be marketing – led.
Clarks was established in 1825 when brothers “Cyrus and James Clark setup a small sheepskin slipper business in…Street, Somerset.” (www.clarkes.com). A pioneering and innovative family, the followingdecades have seen the invention of the first shoe to follow the shapeof the foot, the Desert Boot, vulcanizing rubber soles, nature formedlasts, polyurethane soles and air comfort footwear. (www.clarkes.com). Expanding it’s product ranges in the 1990’s Clarks was named by theindustry trade publication Footwear News as it’s “Company of the Year”(www.clarkes.com) and operating profits have gone from under£1million in 1990 to £77million in 2004 (Appendix 1).
(this paragraph from customers notes as researcher cannot access Mintelor Hoover reports as they are subscription services, as is themembership organisation Britfoot…. “Clarks is the UK market leader inshoes ahead of Marks and Spencer with both Clarks and Hoover’s BusinessInformation Authority believing Clarks competitive advantage isproducing reliable, fashionable and comfortable shoes. ElizabethCornell Accessed 16/111/04”
Clarks remains a family run business and operates in many countries ofthe world, although ranges in each are not the same with some areas,like Australia, only selling children’s shoes.
1.3 Approach to the research
The aforementioned aims
1. To conduct an analysis of Clarks to determine the approach taken to competitive strategy
2. To determine whether the strategy determined has been a success in the eyes of the public
will be tested using primary research and secondary research.
1.3.1 Primary research
The primary research will take the following approach.
1. One to one interview with Lynn Benfield, Retail Employee Relationsand Human Resource Administrations Manager, C & J ClarkInternational Ltd – 26 July 2004
2. Semi–structured surveys between 19 March 2005 – 22 March 2005
3. Tangible observations on 19 March 2005
4. Intangible observations July 2004 – March 2005
1.3.2 Secondary research
The secondary approach will take the following approach.
1. Clarks annual report and accounts 10 years 1994 – 2004
2. Literature from various libraries/ internet to attempt to undertake a competitive analysis of Clarks.
1.4 Research Limitations
As with all research, there are limitations, those pertinent to this dissertation are as follows:
• The author recognises that by studying competitive advantage injust one organisation that the research implications will be limited,however would wish to point out that this study is purely exploratoryand may be used as the basis for further study.
• Clarks is a privately run business and as such there is very limited information in the public domain.
• Barriers to access research information requiring a fee.
1.5 Project Delimitations
• Study limited to the UK
• Clarks brand adult shoes will be studied in isolation from children’s shoes and sub branded.
• No comparisons with competitors will be made
1.6 Summary of Chapter One
This chapter gave an overview of the dissertation, namely that it wasabout competitive strategy and how the author believes that theorganisation ‘Clarks’ has used competitive analysis techniques toaddress the downfall in their profits, turn around sales and return toprofitability. It was also stated that attitudes towards Clarks duringthe last 4 or 5 years would be reviewed by way of a survey and that theauthor would use this and the observation technique to sense whetherrecent increased marketing activity, during 2004 and 2005 had changedpublic perception of the brand.
Finally, limitations and delimitations to the approach were offered.
2.0 Literature review
Chapter one provided the rationale for this dissertation, namely thatthere is a link between the undertaking of a competitive analysis andthe change in fortune of Clarks. It was suggested that there are manyfactors which may have an effect upon these issues and which relatespecifically to the tactics used to overcome an apparent downtown inthe company’s profits. Factors affecting these issues will bediscussed in chapter two and will incorporate literature from thefields of strategy, operations and marketing. A company, Clarks, basedin Somerset, was stated as being a case study for the author’s researchand a brief overview of that company was given.
2.1 Clarks and the shoe market in the UK
(this paragraph from customers notes as researcher cannot accessMintel reports or the customers interview with Lynn Benfield…. “ TheUK shoe market saw declining market values in the 1990’s but is nowseeing an increase in spending on shoes, with customers spending moreon individual pairs of shoes, like designer brands, than they hadpreviously increasing by 5.5% in 2001.(Mintel – Accessed 18/11/04). Atthe same time shoe prices have fallen by 8% since the 90’s due to UKshoe manufacturers moving abroad to take advantage of cheap labour. Keynote predicts that shoe sales will increase over the next fiveyears.(Mintel accessed 18/11/04)” In fact, it would appear that Clarksare also going to source their manufacturing abroad. A report on theBBC website, www.bbc.co.uk. dated 11/01/05 has the headlines “Clarksends shoemaking in Somerset” with managers in Somerset telling staffthat “the only way the company can survive is by switching productionto the Far East.”
(this paragraph from customers notes as researcher cannot access customers interview with Lynn Benfield…”Clarks are in the process ofimplementing a new competitive strategy consisting of a new innovativedesigners and an advertising campaign aimed at young adults (18-35)mainly utilising TV advertising and a refurbishment of all Clarksstores. (Lynn Bedfield) “
Clarks offer a huge range of shoes for adults from slippers to boots,casual wear to wedding shoes, and the traditional desert boot to thepractical office shoe. No longer limited in colour ranges, the fashionitems closely colour match the clothes of the season and accessoriesare available. But sustaining market share is hard in today’s market. No longer are there a handful of shoe retailers, but many retailstores, such as Next, River island and Dorothy Perkins havesuccessfully introduced shoes into their fashion ranges whilst newtrendy shoe shops such as Schuh are also becoming established withinthe shopping malls. Moreover, sports shops, such as All Sports areintroducing casual wear into their ranges, competition is definitelynow a big factor in this market. (Observation)
Trying to address this, Clarks have introduced an awareness campaignfor their wide range of adult shoes. Following on from the “my shoes”campaign of 2004, the current advertising campaign features aprofessional, well dressed woman, in her late twenties, trying topurvey the international appeal of Clarks shoes, “Nottingham is my NewYork” and “Preston is my Paris” the two current campaigns, can also beobserved on www.clarks.co.uk
How a firm addresses the competition, is determined by it’s orientation(Miles and Snow) and so it is pertinent to this dissertation to explorethe following themes:-
1. How firms may be orientated
2. How competitive analysis can help a firm refocus
3. How advertising can raise awareness of products
2.2 How firms may be oriented
Orientation refers to the relative position that an organisation takesin relation to it’s products, services and markets (Miles and Snow). There are four main orientations, production, sales, process andcustomer.
2.2.1 Production orientation
Production orientation focuses on the company driven belief thatexcellent quality is what the customer wants over and above everythingelse. Often associated with family run companies and owner managers,such companies tend not to undertake market research into externalcustomer needs resulting in them trying to satisfy the perceived needsof the general or production manager. Generally scientifically based,this orientation has been the cause of decline of many successfulcompanies such as Apple computers and Harley Davison. Danny Miller, inhis book the “Icarus Paradox” used the phrase “Craftsmen becomingTinkerers”, for whilst focusing on continually improving theirproducts, they were unaware that consumer tastes had actually changed.
The author suspects that Clarks is production oriented based on theemphasis given on their website www.clarks.com, where much emphasis inthe ‘history’ and ‘about us’ sections are given to quality andinnovation, rather than style, fashion or customer needs.
2.1.2 Sales orientation
It is not unusual for one of the side affects of a production orientedcompany to be excess stock. Often employing aggressive sales tactics,to move the goods, they spend a great deal of money on advertising totry and create a need and flood the market with their products, oftenat a discounted rate, to try and decrease the stock pile. Customersare reactive to the message the company portrays, that this onetransaction is all important, rather than try and retain regular loyalcustomers.
The author believes that there has been an element of this withClarks. Recent years have seen many sales in the stores and the Clarksvillage, opened in the early 1990’s, was a method of disposing of oldstock. However, the author does not believe that Clarks takes atransactional approach to all customers for certainly, many parents buyClarks shoes for their children because their parents bought Clarksshoes for them. But whether or not these parents now buy their ownshoes from Clarks is an issue to be discussed during the survey.
2.1.3 Process orientation
Process orientation involves the company in the continual monitoring ofsystems and procedures necessary to ensure total quality management,processes deemed necessary to undertake before delivery to the customer.
With respect to this orientation, the author believes that there is astrong element of process orientation within Clarks, for whilstinnovating with new materials for soles (airwear, www.clarks.com ) andworking on the perfecting techniques, they had probably lost site ofthe fact that fashion was becoming a key influencing decision whencustomers were purchasing shoes.
2.1.4 Customer orientation
A customer oriented business is one that puts the customer at the heartof it’s business and realigns it’s strategy, systems, structures,people and leadership around customers. Often known as marketing-led,organisations which observe this orientation take both the needs of theinternal and external customer into consideration and concentrate oncustomer retention and lifetime value, rather than a transactionalapproach. “The very core of marketing is the customer. The customeris the reason for an organisations existence, and customer satisfactionis the source of the organisation’s profits.” (Fifield and Gilligan).
Recent trends had not been seeing customers buying shoes for life,rather that they were buying shoes for current fashion needs and wereprobably not looking towards keeping such for long periods. Clarkshave tried to address this by offering a choice of fashionable rangesand trying to target customers with more disposable income.
If Competitive strategy “ is the search for a favourable competitiveposition in an industry……to establish a profitable and sustainableposition against the forces that determine industry competition”(Porter), then competitive analysis is the process by which thestrategy is analysed to ascertain whether or not the firm does have anadvantage over others in it’s industry or sector. According to Grant,there are three main target areas for the analysis of the organisation
1. Goals and values
2. Resources
3. Organisation and systems.
Grant believes that these areas need to be addressed beforeenvironmental factors are introduced, the processual approach. Whilst Johnson and Scholes would combine 2 and 3 and introduce the environmentas the third major factor into the analysis at the start, the classicalapproach.
For the purposes of this dissertation, the author will take the secondapproach (Johnson and Scholes) and discuss the factors pertinent to beanalysed within
1. The environment
2. The organisation’s resources (including competencies and capability)
3. Expectations and purposes.
2.2.1 The environment
The environment within which the organisation operates is a “complexcommercial, economic, political, technological, cultural and socialworld.” (Johnson and Scholes) No longer are firms, such as Clarks,operating in a local market, but on a global scale with globalcompetitors. Whilst this dissertation aims to look at the effect onthe Clarks branded adult shoe and sales within the United Kingdom (UK),it cannot ignore trends in global manufacturing and how this hasimpacted on trends within the UK. The research section will,therefore, look at political, economic, social and technological (PEST)factors and their impact on Clarks. It will also comment on the natureof the environment and try to ascertain an understanding of theimmediate environment in which it operates, using Porter’s “FiveForces” analysis “so as to provide an understanding of what forcesinfluence degrees of competition and opportunities for buildingcompetitive advantage” (Johnson and Scholes). The five forces are
1. Threat of entry
2. Threat of substitutes
3. Bargaining power of suppliers
4. Bargaining power of buyers
5. Competitive rivalry
A competitor analysis will not be undertaken as it does not come within the scope of this dissertation.
2.2.2 The organisation’s resources (including competencies and capabilities)
How well the organisation operates in it’s environment is dependantupon the internal and other resources available to it and theefficiencies within which they operate. In order to better understandresources and their dependencies, Porter developed the concept of thevalue chain, a diagnostic tool for determining competitive advantage bylooking at how internal factors affect the company’s competitivescope. Supported by value added activities (primary and secondary) thevalue chain should add value to the firm. It is important to analysethe value added activities and managing the linkages within the valuechain, because these are the areas which can often be improvedupon. Primary activities relate to the firms infrastructure, humanresource management, technological developments and procurement. Secondary activities support the primary ones and include logistics andtransport, operations, marketing, sales and service. Provided that theresources are sufficient, Porter argues that the firm should be capableto “perform at the level which is required for success” (Johnson andScholes) thus ensuring a “strategic fit”.
As with all organisations, there will be activities which are pertinentto it’s success, these are known as core competencies. It will beprudent to ascertain Clark’s core competency/ies because awareness ofthis aspect enables an organisation to better exploit such forcompetitive advantage and future success.
2.2.3 Expectations and purpose
An organisation has many stakeholders interested in it and thesestakeholders have a direct impact on the profitability of thecompany. Johnson and Scholes maintain that consideration should begiven to the following questions: “whom should the organisation serve,how the direction and purpose should be determined?” It is possiblethat the misunderstanding/ misinterpretation of one or the other of theposed questions that can lead to an organisation’s downfall, therefore,if an organisation is to adapt for the future then these questions needto be addressed.
It would not be unusual for a traditional company to need to adapt tocontinue profitably in the future. Established 170 years ago, at thebeginning of the industrial revolution, Clarks as an organisation musthave been a party to considerable change. The fact that it continuesto trade and is entering the global market (www.clarks.com) shows thatit must have been forced to adapt for the future, but whether this wasa gently emerging adaptation or a sudden change, would need to beexplored further. Either way, the organisation would need tocommunicate effectively with it’s existing and potential externalcustomers.
2.3 What is advertising?
“Advertising is the most visible….component of the communicationsmix…defined as the paid presentation and promotion of products orservices through mass media such as television, radio and newspapers.”(Doyle)
Advertising may be used for a number of reasons with the objective toincrease market share and thereby profits high up the agenda as well asraising brand awareness and perception of the brand. Most important isthe identification of the target audience and then successfullycommunicating to them, paramount to the success of an advertisingcampaign. It would not be uncommon for such advertising action to takeplace following a strategic review.
Dr Steinbrecher (Doyle) “offered ten commandments which successful advertising messages usually obey
1. Attract attention
2. Visual clarity
3. Concentration
4. Comprehension and credibility
5. Positive emotions
6. Unity of style
7. Match the clients world
8. Differential advantage
9. Images rather than words.”
Some of the above will be tested in the research section of the dissertation.
2.4 Summary of chapter two.
In chapter two, the author explored, by way of a literature review, therationale that there was a link between the undertaking of acompetitive analysis and the change in fortune of Clarks. An overviewof Clarks was given and the author tried to determine it’s originalbusiness orientation. Competitive analysis and turnaround techniqueswere taken from the fields of strategy and operations and the benefitsof marketing advertising discussed.
Having reviewed the literature in respect of the following research aims:
1. To conduct an analysis of Clarks to determine the approach taken to competitive strategy
2. To determine whether the strategy determined has been a success in the eyes of the public
The author suggests that for a company to become successful, havingexperienced a downturn in profits, a complete strategic review isnecessary. This, in turn may cause the company to rethink both it’sstructure and orientation and take on a more marketing-led outlook andput more focus on advertising. This reconfirms the basis of theproposition offered in chapter one
that there is a link between the undertaking of a competitive analysis and the change in the operating profits of Clarks
and will be explored in more depth in chapter three by the undertaking of primary and secondary research.
Chapter two looked at the literature used to inform the author upon thesubjects of strategy, operations and marketing in order to address theresearch aims
1. To conduct an analysis of Clarks to determine the approach taken to competitive strategy
2. To determine whether the strategy determined has been a success in the eyes of the public
and it reconfirmed the authors belief in the proposition stated in chapter one
that there is a link between the undertaking of a competitive analysis and the change in the operating profits of Clarks.
The author will progress the belief in the proposition, by undertakingprimary and secondary research which is discussed further in chapterthree.
3.1 Approach to research
Chapter three shows the approach taken to marketing research in orderto investigate the above aims. Marketing research is described as:-“the systematic design, collection, analysis and reporting of data andfindings relevant to a specific marketing situation facing thecompany.” (Kotler, 1997)
It is emphasised here that the research was based on one company only,and therefore any results obtained will be limited to that organisationand not the industry as a whole
This chapter also discusses the research methods considered and thosechosen, together with an overview of the approach. Choosing thepertinent methods for research is critical for validating findings andmethods employed will also be dependant upon the outcomes required.
3.2 Research methods
Research methods may be collected generally, in two categories, primaryresearch (self-initiated and gathered) and secondary research(information that has already been accessed). Both methods may be usedto facilitate research objectives and can be used side by side. Methods chosen may be quantitative, qualitative or a mixture of both. Quantitative data is scientific in nature and means and averagescalculated to prove or disprove a theory. Usually using a selfadministered, or researcher administered questionnaire, the findingsshould be easy to replicate. Qualitative data tries to look for thereason why things are done and is very subjective, usually undertakenin a setting conducive to research to try to work out why things happenas they do.
3.2.1 Secondary data
Aaker and Day (1990) state that the availability of secondary data isoften sufficient to answer the research question, and Webb (1995)suggests this data should be consulted before commencing primaryresearch.
As Clarks is a privately owned organisation useful sources ofinformation, such as the corporate annual report and accounts, are notin the public domain, nor is any marketing literature, internal orexternal surveys available publicly.
This type of research is useful as it can be used to redefine/reconfirm primary research findings, give an opinion from a widersample and provide key information which could not be elicited from theauthor’s primary research.
Books, journals, articles and the world wide web also contributed tothe research subjects, subjects included corporate strategy andMarketing.
3.2.2 Primary research
Primary research is generally either deductive, quantitative in nature,relying on analysis of literature or inductive, more qualitative innature, letting the data speak for itself, with research undertaken ineveryday settings and the analysis being more subjective. The authorwished to use a mix of both qualitative and quantitative data.
Questions asked during the primary research stage cantered around theresearch aims, and were mainly addressed by way of a semi-structuredinterview with the Manager of Clarks (26 July 2004) and a furthersemi-structured interview with 20 adults known to the author in thelocal area.
3.3.1 Telephone survey
This method is often used in the business to consumer market as an 80%response rate is not uncommon (Rust et al 1996). The author dismissedthis approach as it is less personal than a one to one approach and itis hard to build up a relationship with the interviewee, this wasrequired to break down barriers and elicit off the cuff remarks.
3.3.2 Observation
Observations may be tangible or intangible. Intangible data relates tothe behavioural aspects of studies such as the work style of people,attitudes to customers and so on, with the observer taking a completelyunbiased approach. The author spent just under an hour in a Clarksstore, discretely observing customers perusing and purchasingfootwear. Tangible observations may be gathered by observation, suchas posters on walls, adverts in magazines, television commercials andso forth, this method was also employed.
However, observation only offers the easily distinguishable featuresfrom the external point of view – what the company wants you to see. Gummesson (1991) likens the company to an iceberg, showing only 10 -15%of it’s mass above water.
3.5.3 Questionnaires
Questionnaires tend to be used when a large sample of the population isrequired and a qualitative analysis preferred. The advantage of thismethod is that the researcher is not limited to one geographical area,whereas the disadvantages are that
• There is no guarantee of a response
• Response rates are often as low as 25%
• There is no proof that the addressee actually completes the questionnaire
• Costly to print and post
• You cannot relate to the person completing the questionnaire
• Time constraint
However, the author wished to use a more personal approach as attitudespertaining to buyer habits and attitudes were required. The author,therefore, dismissed this approach in favour of a semi-structuredinterview.
3.5.4 Interviews
The interview method is effective in gauging the views of theinterviewees on a particular subject. The interviewee must remaindetached from the subject, so as not to bias the respondent, whilst atthe same time trying to build a bond to enable them to feel at ease andfreely express themselves.
Interviews are structured or semi-structured. Structured interviewsare formal with standard questions being asked. Whilst administered bythe interviewer, to enable the meaning of questions to be explained ifnecessary, it does not lend itself to allow for elaboration ofinformation. This method was discounted for this reason. Semi-structured interviews are also researcher administered, but allowfor additional comments and views where necessary. Esterby – Smith etal state that this “method is used primarily in situations where theaim is to understand the beliefs and values of the interviewee inrelation to a particular situation.” The author felt that this wasparticularly appropriate for their was an underlying assumption thatthe recent heightened marketing campaign had changed peoplesperceptions with regard to the purchase of footwear.
3.5.5 Exploratory research
A one to one meeting with the Employee Relations and Human ResourceManager was established and undertaken on 26 July 2004. This meetingwas used to gauge an understanding of the company Clarks and it’sapproach to strategy and marketing. The advantage of this approach wasthat the discussion held provoked spontaneity and it became apparentthat there had been strategic issues to address and that an activemarketing campaign was a tactic to help overcome such issues.
3.5.6 Strategic analysis
The author undertook a strategic analysis, using PEST, five forces andvalue chain techniques on Clarks, taking into consideration knownfactors and assuming additional factors to try and ascertain an insightinto the competitive strategy used The disadvantages of this approachare that the author does not work for the company and did not haveaccess to more than one senior member of staff in order to ask thepertinent questions. In addition, the general public can only commenton shopping habits and their ‘brand association’ so strategicquestions, obviously could not be asked.
3.6 Structuring the survey
Following the interview with the manager at Clarks the author hadformulated sufficient insight into the company in order to undertake aFive Forces and Value Chain analysis, whilst the details are discussedin more depth in the results chapter, it is sufficient to say that theauthor had deduced that Clarks had undergone a turnaround strategy andwas starting to become more marketing-led.
Throughout 2004 there were numerous awareness campaigns, television,magazines, posters and the author wanted to ascertain whether thisincreased coverage had changed the buyers purchasing habits with regardto shoes or their perception, if one existed, of Clarks as profits havebeen continually rising over the last few years.
3.7 Questionnaire format
The questionnaire was self constructed based upon the second aim
2. To determine whether the strategy determined has been a success in the eyes of the public
Having designed the questionnaire, it was then moderated by two professional associates, not employed by Clarks, to ensure
• That questions were clearly understandable
• That open questions were inquisitive and not intrusive
• Monitor flow between themes.
3.6.4 Final Questionnaire
Questions were kept as simple as possible, thus ensuring that theywould be easy to understand. It was also helped to relax theinterviewee to aid facilitation of further comments where necessary. Aaker et al state that in sequencing a questionnaire the followingguidelines are helpful
• Initial questions posed should be non threatening, this helps theresearcher and respondent to establish a rapport and builds therespondents confidence
• The questionnaire should flow smoothly from one topic to the next without sudden breaks
• More specific questions should follow on from broader ones
• Sensitive questions should be left to the end.
The questionnaire, therefore commenced by ascertaining awareness of theClarks Brand and then enquiring into their footwear buying habits
