Strategic planning & development help on: Pumpkin Patch & its strategies

Executive Summary

Pumpkin Patch is into the apparels industry and mainly caters to the kids segment and to pre-teen segment. It also has a maternity clothing segment. The company has high design standards and a keen sense of fashion. The ultimate goal of the company is to make ultra-fashionable clothes for kids. The company has been quite successful and has tripled its share value since going public. The company focuses on sales through catalogues, online stores, retail stores and through distribution channels. The company has presence in New Zealand, Australia, USA & the UK. Pumpkin Patch has been facing challenges from bigger organisations and brand names like GAP and Next. The company needs to focus on these and needs to use its core competencies. The core competency of the organisation is its designs but these are replicated. So the company also needs to work out on pricing strategies to ensure the increase in sales. The company focuses on discount sales and this has been quite effective. The company also needs to utilise its logistics infrastructure and generate more distribution channels for better and effective visibility. Lastly the company needs to focus on the Asian market which has high potential for this segment.

Introduction

Pumpkin Patch came into existence in July 1991. The company was established to fill up the gap between fashionable children clothing. Most of the retail companies at that point of time were concentrating more on producing fashionable clothes to cater to the needs of teenagers and women, but Pumpkin Patch gained competitive advantage over others by introducing fashionable clothes for children through mail order. Pumpkin Patch initially started its operation in New Zealand, later on it expanded to different parts of world including U.K., US and other Asian markets like China. Due to success in the way the business was operated, the company was able to change its status from a privately held concern to a publicly held concern, which was an eloquent testimony to the fact of how efficiently the management of the company handled its business

1. Industry

Retail industry seems to be one of the profitable industries among all the other industries. It is profitable, since the retail industry generally tends to cater to the need of large number of people to provide daily necessities like public utilities including electricity. The supply of clothes to people to meet their basic necessity is also considered under the retail industry, a retailing business not only includes providing daily wear clothes but also fashionable clothes to people of different income level. Therefore, it is of utmost importance for any retailing industry to produce goods in such way that it caters to the need of people from all income level.Pumpkin Patch was established in July 1991 as a privately held retail company that was established primarily to bridge the gap between providing fashionable goods to children. Pumpkin Patch gained competitive advantage over its competitors in retail industry by foraying into the market which would cater to the need of providing fashionable clothes to children. Later on with the plan to diversify and expand its business, Pumpkin Patch decided to foray into the market that would cater to the need of the teenager and pregnant woman and came out with a brand name called Urban Angel. The brand helped the company to enhance its revenues to subsequent level which was quite satisfactory for the company as a whole. With the introduction of the brand that would cater to the need of the children, the company gained so much of success that the demand in the market for the clothes was more than its supply (Dobbson, 2007). Though supply deficiency in the market led to a lot of dissatisfaction within the customers, but the customers remained loyal to the brand which helped the bank to get popular into the market within very few days of its operation. Gaining brand loyalty helped the company to enjoy a substantial amount of market share and create a repetitive base of customers, one of the most important elements of any business to survive. The efficiency of the management to handle the business effectively and the decision to cater to the needs of the children was the key to success (Fedor, 2005).

2. General Environment Analysis

Pumpkin Patch initially established its business by foraying into the market to provide fashionable clothes to children, a market that was not that well developed at that point of time. The company was established to bridge the gap in providing fashionable clothes to children, and was so much successful that the demand in the market was more than the supply of the clothes. The company had so much of demand that the resources of the company were unable to provide the demanded clothes to their customers on time. But the ability of the company to have brand loyalty of the customers enabled the company to enjoy market share and competitive advantage over others. With the successful inception of the sector providing clothes to children, the company further decided to expand its business by producing clothes exclusively for women with the brand name called Studio Works. But this business failed to generate enough income for the company and therefore the management of the company decided not to operate with this brand name that would cater to the need of providing clothes exclusively to women. The company also incorporated another brand that would cater to the need of teenagers and this business became stronger with the acquisition of 14 HBK girls stores (Andrew, 2009).As the business was very successfully running in New Zealand and Australia, therefore it was decided by Pumpkin Patch to expand its operation to United Kingdom and other locations like US, and Asian markets like Japan.

The company at the time of incorporation was a privately held company, but with the successful running of its business the company came up with an Initial Public Offering which helped the company to become a public company, thereby opening doors for the company to raise funds for expansion and diversification of business through public rather than using the funds of the company itself. The share price of the company nearly tripled from $1.25 per share to $3.40 per share which was obviously of much significance to the company since it enhanced the goodwill of the company in the market. The transition of the company from privately held to publicly held company was smoothly handled by the management of the company as all the necessary reporting systems were set up by the management of the company well in advance. The IPO brought a significant improvement for the employees of the concern since the employees held 16% of the shares of the company (Henry, 2008).

The company also invested good amount of money in its research to find out what its customers expected out of the company. Therefore, the company took initiatives wherein the design team went to different shops in order to have the best design to present to the customers. The initiative of the company to add new ranges of product throughout the company enabled the company to generate repetitive base of customers, thereby enhancing the overall revenue generation of the company.

As the business of Pumpkin Patch was running successfully it decided to develop its own warehouse in US and it was the single warehouse that used to operate for the whole company in the world. The warehouse in US helped the company to operate without any overhead expense.

3. Industry Environment

According to Andrew (2009) the strategies used by companies to compete are based on Porter’s generic strategies that of Cost leadership, Product Differentiation and Segmentation. One of the most significant strategies adopted by Pumpkin Patch was establishing the company to cater to the need of the children to provide them with fashionable clothes. This sector was not that well developed in New Zealand. Establishment of the company to bridge the gap in providing fashionable clothes to children helped the company to gain competitive advantage over its competitors operating in the retail sector. After establishing the children brand the company decided to expand its business by catering to the need of teenagers and pregnant women. This section strengthened further with the acquisition of HBK girl stores. Moreover, the company being customer friendly helped the company to create a brand loyalty in the market thereby enabling the company a greater share in the market over its competitors. Moreover, Pumpkin Patch transformed itself into a publicly held from being a privately held one and it helped the organization to enter into IPO, which in turn helped the company to generate business in the southern hemisphere when compared to the northern hemisphere. The thought process of the company to stay with the kids helped the company significantly to establish its brand in the retail sector over its competitors (Harrison, 2009).

4. Competitive Environment

The success of the company lies in its capability to provide unique design to its customers and its effort to provide a continuous range of products to its customers throughout the year. The initiative of the company to provide a continuous range of fresh design to its customers helped the company to create a repetitive base of customers, thereby helping the company to establish goodwill in the market. The company has also taken extra efforts in maintaining its quality, wherein the company ensures the quality of the products supplied by the suppliers is of prime quality. The apparels industry is highly competitive with big brands like GAP, Next, Esprit etc (Rothwell, 2010).

5. External Environmental Analysis (O & T)

• Foraying into the market to bridge the gap in providing children fashionable clothes was an opportunity for the company.
• Acquisition of HBK girl clothing chain to expand its business to cater to the needs of teenagers and women was an opportunity for the company.
• The brand loyalty of the customers was also an opportunity for the company.

Threats

• The entrance of the departmental stores like Wal-Mart and Marks and Spencer in the kids section was a serious threat to the company.
• The inefficiency of the company to generate profits in UK market was a serious threat to the company as the sales were mostly from NZ and Australia.

6. Pumpkin Patches Resources

The company has a good infrastructure and different retail stores in Australia, New Zealand, US and the UK. It has a very effective design team and market research team. It is led by a strong visionary. The company has well established warehouse which is capable of serving its entire distribution and retail needs. These are its tangible resources.

The intangible resources are its brand value and its superior sense of design. It has been able to grow mainly because of the design sense.

7. Capabilities Identification

Pumpkin Patch has been a brand to reckon with in the kids segment and in the pre-teen girls segment. The company also launched the women’s apparel segment but soon withdrew from it. The company also caters to maternity dressing. The company has a keen eye on fashion and is very much dedicated to market research and design. The sole motto of the company is to make extremely fashionable clothes for kids and pre teen girls. The company has been quite successful in doing this, the market shares of the company have tripled since it launched its IPO. This speaks volumes about the growth and the potential of the company (Abbas, 2008). The company has an excellent design team which has sixty designers working in collaboration with the market research team which consists of customers, visual merchandisers etc. The company has always kept its stock fresh. The company operates in different modes, online sales, catalogue sales, in-store sales and whole selling. It always ensures that the designs are changed frequently. The company also has an excellent logistics team. It has a central warehouse in Auckland and it can supply to stores in the US and UK within a day’s time. The freight charges are high but the margins on apparel being higher makes up for the freight charges. The company also has a very good distribution channel and a strong supply channel. It buys its products from all around the globe and has strict quality protocols. It also ensures standardisation and is against child labour. The company has invested in Information technology which enables them to track the products from the design stages right to the sales stages.

8. Core Competency Analysis

 The Product design and the brand quality of Pumpkin Patch has been extremely good. The company has a keen sense of fashion and has always come up with excellent clothes for kids and for pre-teen girls. The company invests heavily on design and collects designs from all over the world. It also has a sense of placing the right products in the right places. But, however as it has always been a problem with the fashion industry, Pumpkin Patch faces problems of design imitation (Andrew, 2009). In New Zealand it has faced problems where its suppliers have become independent retailers and have copied their design. As patenting is almost impossible for clothes design this remains a vulnerable area. Pumpkin Patch has an excellent distribution channel and has entered the US market through its distributors. The intense market competition and presence of big brands like GAP can affect the loyalty of the distribution channel.  The presence of the organisation in multiple locations is beneficial for the company but most of the bigger brands are also located in the same places.  The logistics of the company definitely has an edge, having a centralised warehouse it can keep track of the entire logistics from a single point (Arnoldo, 1997).

9. Value Chain Analysis

Fig: Depicts the Value Chain for Pumpkin Patch. Adapted from Fedor, (2005).

The value chain of Pumpkin Patch is defined by its products. The products are segment oriented and clearly have an edge over the other products in the segment. Catering to fashion for kids this company has been able to build its brand. The marketing and the sales are through catalogues, online catalogues, in-store sales, wholesale model. The company has been quite effective in entering new markets with the wholesale model (Dobbson, 2007). The logistics of the company are simply efficient and enhance the productivity of the organisation. Though the costs of airlifting are higher, this is absorbed by the high margins in the apparel section. The procurement ensures that quality is assured in the fabrics. The company does not bargain too much with its suppliers. This establishes a good relation with the suppliers. Information technology has been effective in ensuring the growth of the company. The company has an application which tracks goods right from design to sales. The Human resource Team has been effective in the organisation. The organisation does not have strict job roles and the employees are motivated to ‘Cross the Line’. The infrastructure of the firm is quite effective; it has not changed much from being a privately held company to a public limited company (Harrison, 2009).

10. Weakness

The major weakness of the company is the lack of distribution channel in USA. Pumpkin Patch has currently company has recently stepped into the US market and has opened two stores in the country and plans to set up more stores in the country. The company went into the US market through the distribution channel of Nordstorms and continued supplying for eighteen months. After that it has ventured into the market by itself. The presence of big shots like Wal-Mart and GAP has affected the business. The company needs to focus on partnering with retailers which will ensure the spread of awareness. Also promotional activities need to be carried out which will position the brand in a better way (Henry, 2008).

11. SWOT analysis of Pumpkin Patch

The above table discusses the strengths and weaknesses of the organisation. It has also discussed the opportunities and threats for Pumpkin patch. The strengths of the company are its brand value and its strong focus on the design. Having a strong brand value the company can negotiate much better with the suppliers but it chooses not to do so. This can be seen as a potential strength because this will ensure the loyalty of the suppliers. Women’s Apparel one of the growing segments has been neglected by the organisation due to a previous failure. With a strong foothold in the market the company needs to focus on this segment. With a superior logistic system the company needs to find more distribution channels as it has the capacity of fulfilling bulk orders within a day’s time. The company has been focussing on the ASIAN market but has not decided upon it, it needs to enter the market as this is a growing market and has huge potential. This will provide the company both vertical and horizontal growth (Hussey, 2010).

12. Current Strategies

The company has been growing steadily over the years. The company prefers to grow at a slow pace. According to the CEO the company does not like to ‘Place Heavy Bets’. The company is also dynamic, it changes its objectives and strategies frequently, it does not have a fixed business plan and the plans change quite frequently. The company makes it sales through catalogues, online sales, in-store sales and distribution channels. At present the company is more focussed into increasing the retail stores. It has the capacity of laying 30 stores every year. The company also focuses on a single warehouse system where the products for any retail store or distribution channel is route through the ware house in Auckland.

13. Future Strategies

Corporate Strategy: The organisation has experienced good growth since going public. The share prices have increased three times. But it is essential to understand that this growth will not be linear. Thus the organisation needs to focus on the shareholders and their expectations from the organisation (Luffman, 2009).

Business Strategy: The organisation has been focussing on retail stores in the recent years. It needs to focus on distribution channels and ensure that it has effective distribution channels all around the globe. This would give the company a good visibility and also increase the brand value (Joyce, 2008).

International Strategy: The Company needs to focus on the Asian Continent. The markets of China and India have proven to be successful for major organisations. These markets have huge potential for Apparels Segment. The UK based Mother Care has launched its products in India through distribution channels and has been quite successful (Rothwell, 2010).

If you want Strategic planning & management Assignment Help study samples to help you write professional custom essay’s and essay writing help.

Receive assured help from our talented and expert writers! Did you buy assignment and assignment writing services from our experts in a very affordable price.

To get more information, please contact us or visit www.myassignmenthelp.Com