Analysis: French Connection United Kingdom (FCUK)

Executive Summary

The French Connection market analysis demonstrates the strategies that the firm has utilized to ensure it has a sustainable competitive advantage over its rivals in the market. Firstly, it is spread over many countries, over 50 countries, which ensures it has a large customer base and thus it is not threatened by consumer and supplier power. It boasts of cooperation with MIQ in a 5-year inbound logistics contract which allows MIQ to provide end-to-end supply chain to all FCUK outlets and manage FCUK inventories. It has in the recent past engaged competent human capital with the entry of two directors, replacing two former directors who have been blamed by investors for the decline of the firm in the past 17 years. Brand name and identity, coupled with a broad market reach, enables the company to have opportunities for maintaining its market position through lowering product prices without engaging in product differentiation. The firm relies on strong brand building through advertisement and creative marketing mix composed of contemporary media, billboards, and fashion magazines. Its product differentiation is in the fashion-forward clothing with features of quirky spin designs, affordable prices and high-quality products suited for its target age group of 18-25 years. Innovation has sustained its market share through the introduction of high quality and affordable brands such as sunglasses, shoes, and watches. The underlying strength of FCUK is its reliance on unique and innovative strategies to deliver design-led products which provides it with a sustainable competitive advantage in the market.

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Introduction

Overview of the French Connection United Kingdom (FCUK), 

The French Connection United Kingdom (FCUK) was founded by Stephen Marks in 1972, and in the consequent years, it expanded to menswear and labels. Marketing in the UK began in 1997 (French Connection, 2017). The company boasts of an asset base of $84 million, with over $3 million in tangible assets (French Connection Group PLC, 2017). Brand recognition, due to the extensive marketing campaigns that FCUK has conducted, constitutes some of its intangible assets. Human capital assets include awards such as the 2016 Social Enterprise of the Year Award and creative collaborations with Trevor in 1997, with Harley Weir in 2016 and Rankin in 2013. Recently, the firm has replaced its long-standing directors Dean Murray and Claire Kent with Robin Piggott and Sarah Curren (Butler, 2017). The replaced directors had been accused of overseeing a decline in the company over the last two decades at the helm of the company. The company has expanded at an astronomical level, backed up by a huge product diversification from menswear to fashionable clothing range and even alcoholic drinks. FCUK has also relied on brand licensing, accumulating a considerable amount of revenue than solely depending on fashion retail. The alcoholic drink product line is consistent with its brand image that deals with lucrative products and targets consumer between the ages of 18-24 years (French Connection, 2017). Its competitors in the alcoholic brand include established brands such as Bacardi Breezer and Smirnoff Ice. 

Brand recognition provides FCUK competitive advantage by granting its product categories brand value and association (Pigors & Rockenbach, 2008; Kotler & Keller, 2009). FCUK undertakes brand stretching due to the immense brand popularity it has gained over the years. The idea of brand identity at FCUK, which is unique and thus offer a competitive advantage, is vague. Brand identity in respect of FCUK is dependent on its brand exposure and popularity. Brand identity is characterized by a stylish and sexy attitude that seeks to target the 18-24 years age group which is the target market for FCUK products. FCUK has grown in brand recognition such that it personifies the casualwear. Premised on the recognition of its acronym “FCUK,” the French connection logo has grown through simple advertising to the controversial “fcuk” fashion advertising. The advertisement was perceived as both bold, intelligent and witty. This has enabled the business to grow due to the distinctiveness of the brand and the personality of the brand derived from its acronym “fcuk,” which is interchangeable with brand name and identity at French Connection.

VRIO Analysis

In order to determine the FCUK resources and assess its competitiveness in the market, a VRIO analysis was performed. The market analysis tool assesses the competitive advantage of a firm by identifying the firm’s resources under their value, rarity, imitable and non-substitutable attributes (Knott, 2015). The resources are a source of sustained competitive advantage for the business (Barney & Hesterly, 2010). The company value is based on a distinct brand made of a wide range of licensed products with operations in over 50 different countries. MIQ Logistics has supported it with a $40 million contract that has gone along to streamline its operation through the closure of unprofitable stores and opening new ones in strategic locations (Marle, 2016). 

SWOT Analysis of FCUK

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SWOT analysis will investigate the strengths, weaknesses, opportunities and the threats that FCUK faces in the market. This will help in the exploitation of potential opportunities which can enhance the company’s operations and performance (Kormaris, 2009). Product diversification and brand identity are major strengths of FCUK that gives the company competitive advantage over its competitors, coupled to the short lead times due to its collaboration with MIQ logistics that helped it to streamline its operations (Marle, 2016). The 5-year inbound logistics contract allows MIQ to provide end-to-end supply chain to all FCUK outlets and manage FCUK inventories in the 50 countries across Asia, Europe, and North America. 

The multinational profile of the company grants it a diverse and a huge market to market for its products. Customers are key to the sustainability of the business, and bad reviews weaken a business profile as demonstrated by bad reviews due to its customer service (Sundar, Rajan, Bharadwaj, Varadarajan & Fahy, 1993; Eloranta & Turunen, 2015). However, there is huge potential for the business due to the opportunities presented by the closure of unprofitable stores, enabling FCUK to focus on profitable stores. Scaling down its head office down makes its fashion more affordable, and enabling it to expand its target population in the areas of operation. 

FCUK targets the young customer segment that has an appetite to spend on lucrative, stylish and sexy products including beauty products and alcoholic drinks. It has potential to boost its sales through the available international wholesale market and pricing strategy, where it engages in price differentiation and lowering product prices. Its cooperation with celebrity through joint-design is an opportunity for the business since celebrities have following among the 18-24 age groups which the business targets in its marketing. There is the potential threat of high competition in the product it specializes on, due to the threat of market saturation (Aday & Phelan, 2015). Competitors in the market include Ted Baker, Cos, and Karen Millen. 

Porter’s Five Forces model Analysis of FCUK

FCUK was analyzed based on the Michael Porter’s five force model (Porter, 2008; Katherine, 2015). Competitive rivalry shows that FCUK faces intensive competition from multiple equal rivals who have quality products and customer service relative to their price. For example, H & M has a better understanding of the customer needs in comparison to FCUK. Product differentiation is not extensive when compared to the competitors since competition is usually based on price. The company is also faced with low growth rate as demonstrated by the exit of two of its long-serving directors, Dean Murray and Claire Kent, with the allegation of overseeing the decline in the company value for the past two decades (Butler, 2017). The overall market also faces low growth rate which intensifies the level of competition. 

The second dimension under Porter’s five forces of competition is the threat of entry which can be said to be medium to high. Even though the market is apparently saturated, there is the risk of entry of new brands through brand innovation. The growing e-commerce poses a significant threat to the sustainable operation of FCUK in the long-time. E-commerce is experiencing annual growth of 17.2%. Although FCUK has embraced e-commerce, e-commerce has lowered the entry for firms that can venture into the similar business, posing an existential threat to FCUK. The threats of substitutes are moderate since the company offers basic, high-quality products to a loyal and stable customer base in over 50 countries across the world. Currently, a quarter of its earnings, 23%, comes from e-commerce (Rigby, 2013). 

The underlying strength of FCUK is its reliance on unique and innovative strategies to deliver design-led products, which provides it with a sustainable competitive advantage in the market (Goksoy, Vayvay & Ergeneli, 2013). The inclusion of designers lowers the risk of imitation of its products such that threat of substitution of FCUK in the market is low. Since buyers are unconcentrated, their buyers are moderate, and the switching costs are low (Bhattacharya,2013; Brush, Dangol & O’Brien, 2012). FCUK has a multinational presence, implying the existence of many suppliers in different countries such as India and China. No supplier has a monopoly over FCUK business demonstrating the low power of suppliers. Thus, the switching costs to other suppliers is low since the products are undifferentiated implying that no single supplier is uniquely specialized to produce goods for FCUK. Since FCUK targets high-end customers, it has faced less risk of buyers’ price sensitivity. 

The company can lower product prices while maintaining the quality of the product, thereby satisfying the customer. The resources, which are the basis for the competitive advantage of the company, are not rare such that they can grant FCUK sustained competitive advantage since they are based on popularity, and brand recognition which can be eroded over time. Brand identity may be indirectly imitated by rivals seeking to substitute the business. This lowers the competitive parity of FCUK in the market. Brand identity can only be sustainable if FCUK can utilize the resource potentials through its processes, management systems, and policies that seek to ensure resources are valuable, rare and difficult to imitate. The French Connection vision has focused on the lucrative market, expanding the market to include sunglasses, spectacles and alcoholic drinks. It has extended its FCUK brand to the radio through FCUK FM to communicate its brand name and identity to its target customers. 

Conclusion

In conclusion, FCUK market analysis demonstrates the marketing the firm has utilized since its brand awareness efforts in 1997. With an asset base of over $80 million, it boasts of tangible assets in human assets and brand name as well as brand identity. It has experienced a decline in its value as competition becomes intense in the past two decades. It faces intense competition, but as observed in the SWOT analysis, its strength lies in its global presence. It has opportunities for lowering price to increase its market share, riding on its brand recognition in the market. Human capital assets include awards such as the 2016 Social Enterprise of the Year Award. To stand out from the crowd, both the advertising, creative and media choices are increasingly important. The firm relies on strong brand building through advertisement and a creative marketing mix constituted of contemporary media, billboards and fashion magazines. Its product differentiation is in fashion-forward clothing with features of quirky spin designs, affordable prices and high-quality products suited for its target age group of 18-25 years. Innovation strategies have sustained its market share through the introduction of high quality and affordable brands such as sunglasses, shoes, and watches.