Billabong Market Research

 

 

 

 

 

Billabong Market Research

 

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Introduction

Billabong International is a multinational clothing company that also manufactures other accessories and sportswear such as skateboards. The company was founded in Australia in1973 after which it initiated its growth strategy by conducting numerous acquisitions and retail brands. Some of the earlier acquisitions include Von Zipper and Element. Between the years 2000 and 2011, Billabong International carried out numerous successive acquisitions of eyewear brands, wetsuit and water sport accessories and custom shoe brands (Auerbach, 2013).  These acquisitions provided a stable revenue base as well as increased market share within Europe and the United States. However, in 2012, Billabong International announced a major restructuring that resulted in massive layouts and retail store shutdowns because of major debts. In June 2013, the company was placed in a takeover bid presented by two American entities (Auerbach, 2013). All these flawed acquisitions and major debts had a 70% negative effect on their profitability that slashed their profit margin to Australian$ 16million (Auerbach, 2013).

Scope of the Study

The study is limited to Billabong International that is located in Gold Coast, Australia. However, since Billabong had several subsidiaries and acquisitions that shared their market strategy, funding and policies, all its affiliate organizations will also be included in the study. An exception to this rule is the introduction of Trilantic Capital Partners who purchased a significant percentage of Billabong’s assets during the collapse. All the surveys, data collection and relevant resources used in the paper will be retrieved from these sources.

 

 

 

Objectives of the Study

The main objectives of the study include:

• Analysing the key financial and management factors responsible for the collapse of Billabong International as a major clothing line
• Examining the contribution of executives towards restoring the financial slump experienced by the company in the year 2012
• Recommending several fiscal and management solutions to guide the restoration of assets and reputation within Billabong International
• Investigating the psychological processes behind customer loyalty to particular surf wear brands

Problem Definition

Billabong International is a company that suffered a massive profit wipeout in 2012 making cash reserves a major problem for the company in the long term. However, in the short term, the company has the problem of discovering the drivers of loyalty for surfware brands as well as creating significant consumer segments. Concerning loyalty drivers, Billabong International has a problem of instilling loyalty among its customers due to the high competition in the market (Auerbach, 2013). Therefore, most of their surfing products are not always purchased in most retail stores. Concerning consumer segmentation, Billabong has had trouble in creating meaningful segments that has resulted in the production of general surf wear. Currently, the company cannot attract customers with specialized products for children, women, and men.

 

 

 

Literature Summary

Brand Loyalty

Brand loyalty refers to a phenomenon where a customer prefers to purchase certain products from the same producer instead of opting for other suppliers. While the definition may seem basic, brand loyalty, consist of much more than simply repurchasing (Auerbach, 2013). Clientele may prefer purchasing a certain brand every time due to situational restraints for instance, vendor lock-in, retail store location, or even convenience. This type of loyalty can be categorized as spurious loyalty. Li-Wei Wu in his article “Inertia: Spurious Loyalty or Action Loyalty” analyzed this kind of loyalty and concluded that customer inertia was dependent on the length of relationship with the supplier as well as the alternative attractiveness (Li-Wei 2011; Harden & Heyman 2009). Authentic brand loyalty occurs when clientele possess a high relative approach toward the brand that is then displayed through increased repurchase. This form of loyalty presents a great asset to the organization: patrons are enthusiastic to part with more cash and can introduce new customers to the company (Harden & Heyman 2009; Lipstein 2010).

One of the constructive results of creating a strong brand image is that brand loyalty is usually guaranteed. Even though brand agents have significantly lower value when compared to brand-loyal customers, they play a significant role in advocating a particular brand as well as product (Harden & Heyman 2009). This happens mainly because they have faith in the brand themselves and eventually, encouraging new business. Customer referral is one of the effective forms of marketing for businesses, and with a high level of customer loyalty, an organization will enjoy perpetually high sales margins (Heaney & Holmen 2011; Auerbach, 2013). In conclusion, Billabong should intensify their campaign towards increasing brand loyalty using promotions and increased product quality.

Customer Segmentation

Customer or market segmentation is a strategy that involves separating a wide target market into subsections of consumers, who have similar demands and priorities, and then designing and executing strategies that target these subgroups. Market segmentation approaches have been used to classify target customers, and offer complimentary data for positioning purposes to realize a marketing plan goal (Michman, Mazze, & Greco 2013). Before market segmentation can be implemented, the proposed target group should meet a larger part of the following criteria. The target group should be profitable, measurable and exhibit stability. The group should also respond in an expected manner to market stimuli and they should be accessible for promotions and distribution (Auerbach, 2013). Segmentation can be done on several platforms and in several ways. Geographical segmentation is the most common and involves separating customers in a market according to their geographical location. These may be postal codes, countries, or even estates (McDonald & Dunbar, 2013). Billabong successfully attempted to segregate their target markets according to their geographical locations that resulted in increased acquisitions in companies related to beachwear, tourism and surfing (Michman et al. 2013; Wedel, Michel, & Kamakura 2013). Lifestyle segmentation, also called psychographics, is done by evaluating the interests, activities and opinions of clientele and consequently, making marketing decisions based on the collected information. Emerging trends in segmentation have introduced segmentation based on the occasions such as Christmas and Easter (Michman et al. 2013; Cahill 2006).

 

 

 

Methodology

Research Design

A descriptive design was adopted for the purpose of this study for the following reasons. One, it was important for the environment where the study took place to be left intact. Manipulation would be tantamount to interfering with the data integrity. Furthermore, no experiments would be carried out concerning brand loyalty and segmentation of consumers. The study involved repeated interactions with a section of Billabong employees from the mother company in Australia. The cross sectional study intended to collect recurrent data from the top executives. Several interviews were conducted with the purpose of receiving specific information that would be useful in shaping the analysis of Billabong’s brand loyalty.

Research Context and Sampling Plan

The study was based on a cultural context since the Billabong problem originated from a wrong management culture of over acquisition at the expense of servicing company debt and ensuring cash flow. Billabong management engaged in aggressive acquisition as a growth and competition strategy. The main concern supporting the study into the managerial styles adopted by the organization was the need to adopt effective ways of dealing with brand loyalty and consumer segmentation. The research serves to respond to the gaps that exist in previous studies. These earlier studies concentrated mostly on how to exploit brand loyalty and consumer segmentation rather than understanding its place within the organization. As a result, most managers have ended up being reactive rather than proactive to management flaws. Constant focus on exploiting brand loyalty rather that instilling its framework within an organization has programmed managers to be poor in assessing such situations.

The sampling plan for the study followed the following steps. The parameters of the study, the expected solution, and the range of likely values were identified. A sampling scheme was formulated and used to allocate two days per week as the duration for collecting samples from respondents. In selecting sample sizes, the total population of the Billabong staff including executives was used in the calculation. The data collected would be stored in Microsoft Excel and Word formats for calculations and reports respectively. These official documents would be stored in the company hard disks until they would be transferred to the cloud storage. IN terms or role allocation, the research team was subdivided into data collectors, analysts, facilitators, and translators. The sampling plan was successfully verified and implemented by the supervisor.

Measurement

Within the study, the major variables included customer attitude, length of relationship with the supplier and the alternative attractiveness. The customer attitude will be measured in terms of responses from surveys that will be categorized according to the extent of dislike. Length of relationship with the supplier will be measured using the firm’s records displaying duration of association while alternative attractiveness will be measured using the rivals as well as the complementary products.

Analysis Plan

Information To be Uncovered by Survey	Survey Question	Using Survey Question to Answer Research Question
What promotes brand loyalty in rival companies?	Which company’s products are you most interested in?	Analyze the percentage of respondents who answered the question. Categorize them from top to bottom according to the performance.
Are there any surfware that appeal to your demographic circle?	Does Billabong produce surfware that appeals to specific demographic groups?	The frequency with which check a certain option will indicate the need for customer segmentation

 

Ethics Statement

When conducting official research, it is imperative to be cautious in handling the ethical dilemmas that emerge in the process. The issue of intellectual property materialized at the beginning of the study and had to be addressed clearly. The problem revolved around awarding credit for the sources of information throughout the research. Researchers are required to make the decision as to whether it is ethical or unethical to engage in inquiries (Auerbach, 2013). The issue of protecting the human participants in the research is a valid issue. The identity of all the participants will be kept confidential to ensure that none of them is threatened over their opinions. The research team will also ensure they have received consent from the relevant authorities before commencing the research. The issue of consent covers direct consent from the person involved in the research while substitute consent is offered by a third party such as a university chancellor.

The capacity of the participants to understand and process knowledge is another ethical area that was considered in the research. All the participants were examined for their competence since the information they furnished the team would be used to make decisions that influenced the lives of many individuals throughout the world. Naturally, children were barred from taking part in the study since they were unable to gain consent. Closely related to this was the issue of voluntariness. While consent may be given, the issue of voluntarily taking part in the research was carefully considered. The researchers should also be careful to avoid harming the participants physically, mentally, or otherwise. The research team solved this problem by inspecting the content used in the interviews and questionnaires before releasing it for use.

Summary and Conclusion

The above research was concerned with finding out the key reasons behind the poor brand loyalty experienced at Billabong. The company has experienced a long stretch of poor performance in attempting to maintain customer loyalty prompting an in-depth research. The research was also concerned with understanding the cause of dismal market segmentation within the same company. These two problems formed the crux of the paper. The results of the research revealed that poor management was to blame for the strategic errors that caused the downfall of the company. From the paper, it was recommended that the management should develop a strategy for segmenting Billabong’s customers according to their age, purchasing power, and demographics.

 

 

 

 

 

 

 

 

 

 

 

References

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Auerbach, A. J. 2013. Corporate Takeovers. University of Chicago Press. http://www.myilibrary.com?id=112528

Cahill, D. J. 2006. Lifestyle market segmentation. New York, Haworth Press.

Harden, L., & Heyman, B. 2009. Digital engagement internet marketing that captures customers and builds intense brand loyalty. New York, AMACON. http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=251064

Heaney, R, & Holmen, M. 2011. The cost of corporate control: The case of Billabong International. RMIT University, Department of Economics, and Finance (Australia). http://researchbank.rmit.edu.au/view/rmit:4780

Lipstein, B. 2010. The dynamics of brand-loyalty and brand switching. Analytical Viewpoints in Marketing Management / [a Cura Di] Keith K. Cox.

Li-Wei Wu. 2011. “Inertia: Spurious Loyalty or Action Loyalty?” Taiwan Academic Online: 31-50.

McDonald, M., & Dunbar, I. 2013. Market segmentation: how to do it and how to profit from it. Chichester, John Wiley, & Sons.

Michman, R. D., Mazze, E. M., & Greco, A. J. 2003. Lifestyle marketing: reaching the new American consumer. Westport, Conn, Praeger.

Wedel, Michel, & Kamakura, Wagner A. 2013. Market Segmentation Conceptual and Methodological Foundations. Springer Verlag.

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