Urban Wear Limited has been making high quality Caribbean leisure and casual wears for over thirty years, in a rented premises located in the heart of the Port-of-Spain, Trinidad and Tobago. The company has a flexible labour force of about twenty employees and three directors, only one of whom, namely Mr. Mottley, the managing director, is fully active in the business. The company specializes in casual, leisure and swim wear garments. Their current range consists of tee shirts, shorts, skirts and bath suits in rich vibrant Caribbean colours and styles for men, women and children. The company capacity is 400-500 garments per week, depending on style and continuity of the production run, but additional floor space and machines could be brought in quickly to raise production levels to a maximum of 1000 garments weekly if required. The company operates as a wholesaler to store agents in a hyper-competitive mature market. It has limited involvement in the marketing of its products and only uses personal selling by sales persons in its marketing mix.Urban Wear’s sales were traditionally distributed through an assortment of clothing store agents, who tended to change frequently throughout the years. However, in the period 2015 to 2019, Urban Wear’s production was increasingly taken up by Eva Fashions, a successful regional clothing boutique chain store with outlets located throughout the Caribbean. In the 2019 financial year, Eva Fashions accounted for over 80 per cent of gross sales of Uban Wear. By, then, Urban Wear had terminated most of their other distributor agreements leaving only the one it had with Eva Fashions. In 2020, owing to market restrictions due the global pandemic, Eva Fashions drastically reduced their contract quantity to 25 per cent of the previous year and Urban Wear was forced into two-days-a-week production. Mr. Mottley believes the current level of profit is too low to sustain the company. He even wonders if trying to sell through a brick and mortar establishment, makes sense in these times. Since 2015 Uban Wear had traded around breakeven levels and is working within a bank overdraft of US$50,000 along with reduced credit levels from suppliers. UbanWear’s bankers have recently asked for a meeting with Mr. Mottley to discuss both the overdraft and the future prospects of the company. The lease on Urba Wear’s premises is due for renewal at the end of this year. Mr. Frank, in some desperation, has called in the services of a marketing consultancy for advice. Question: One suggestion to Uban Wear Limited during this time, is the establishment of an online store and social media presence. In providing this advice discuss two (2) advantages and two (2)challenges in the use of this strategy.
Urban Wear Limited
Urban Wear Limited has been making high quality Caribbean leisure and casual wears for over thirty years, in a rented premises located in the heart of the Port-of-Spain, Trinidad and Tobago. The company has a flexible labour force of about twenty employees and three directors, only one of whom, namely Mr. Mottley, the managing director, is fully active in the business. The company specializes in casual, leisure and swim wear garments. Their current range consists of tee shirts, shorts, skirts and bath suits in rich vibrant Caribbean colours and styles for men, women and children. The company capacity is 400-500 garments per week, depending on style and continuity of the production run, but additional floor space and machines could be brought in quickly to raise production levels to a maximum of 1000 garments weekly if required. The company operates as a wholesaler to store agents in a hyper-competitive mature market. It has limited involvement in the marketing of its products and only uses personal selling by sales persons in its marketing mix.Urban Wear’s sales were traditionally distributed through an assortment of clothing store agents, who tended to change frequently throughout the years. However, in the period 2015 to 2019, Urban Wear’s production was increasingly taken up by Eva Fashions, a successful regional clothing boutique chain store with outlets located throughout the Caribbean. In the 2019 financial year, Eva Fashions accounted for over 80 per cent of gross sales of Uban Wear. By, then, Urban Wear had terminated most of their other distributor agreements leaving only the one it had with Eva Fashions.
In 2020, owing to market restrictions due the global pandemic, Eva Fashions drastically reduced their contract quantity to 25 per cent of the previous year and Urban Wear was forced into two-days-a-week production. Mr. Mottley believes the current level of profit is too low to sustain the company. He even wonders if trying to sell through a brick and mortar establishment, makes sense in these times. Since 2015 Uban Wear had traded around breakeven levels and is working within a bank overdraft of US$50,000 along with reduced credit levels from suppliers. UbanWear’s bankers have recently asked for a meeting with Mr. Mottley to discuss both the overdraft and the future prospects of the company. The lease on Urba Wear’s premises is due for renewal at the end of this year. Mr. Frank, in some desperation, has called in the services of a marketing consultancy for advice.
Question:
One suggestion to Uban Wear Limited during this time, is the establishment of an online store and social media presence. In providing this advice discuss two (2) advantages and two (2)challenges in the use of this strategy.
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