Introduction
The demand for knitwear products in the UK increases due to the annual winter seasons requiring people to keep warm. The Winter season kicks off during December, January, and February. The UK experiences the coldest and freezing temperatures and sometimes icy and snow conditions. Therefore, warm knitwear such as woollen sweaters is on-demand during the coldest season. The ready market presents a business opportunity for Shetland Wool Company, a “shaggy dog” sweater maker (McGhee, 2021). The UK’s large population, favorable business laws, high average income, and existing fashion trends promote the sweater business. The youths are the most preferred target market due to their insatiable desires for fashion trends and high income. Therefore, Shetland Wool Company venturing in the UK is profitable because of the ready market and the large youth population obsessed with fashion.
Market Opportunities and Trends in the UK
The United Kingdom is one developed country with the fastest internet connection. According to the Office for National Statics, 92% of UK adults use the internet in 2020 from 91% in 2019 (ONS, 2021). Many internet users present a vast internet marketing opportunity for the company. Furthermore, the highly advanced technological development promotes the use of artificial intelligence that Shetland can use in marketing its products. Therefore, Shetland could develop an e-commerce website to advertise its knitwear attracting large internet users in the UK.
The UK’s fashion industry is fast-growing and holds the British culture depicted as sustainable. Clothing is one of the biggest businesses in the UK, accounting for about £26 billion in the country’s economy (Ruiz-Fernández et al., 2021). Furthermore, a growing Britons’ desire to promote their clothing culture presents a marketing opportunity for the company (Creative Industries Council, 2021). Sustainability and circular economy are the drivers of the purchasing decision among the UK population (Gazzola et al., 2020). The British clothing culture and the country’s desire for sustainable products and a circular economy present a lucrative marketing opportunity for Shetland.
Shetlands Wool SWOT Analsysis
Strengths. The company produces high-quality garments that satisfy consumers in the long run. Furthermore, Shetlands Woollen is one of the oldest knitwear companies in Scotland with a broad consumer base. The company has financial and suppliers’ advantage over foreign companies selling similar products in the UK. Therefore, the company’s products are easy to sell due to the product quality, brand’s reputation, wide-consumer base, and sufficient financial resources.
Weaknesses. The company faces stiff competition from local companies such as the Edinburgh Woollen Mills, competing for the same wool source in Shetlands. Furthermore, Brexit presents marketing disadvantages across the European countries since the strict exportation rules. Global companies such as Fendi present stiff competition in producing high-quality knitwear as prompted by the company. Therefore, the Shetlands Wool should strategize on delivering quality products and conducting product promotion.
Opportunities. The UK presents an opportune market for Shetlands products since the country has a large population with purchasing capabilities. Furthermore, the UK government has enacted favourable laws and regulations enabling easy business operations. As the college population and new fashion trends set in, the company could introduce a new product category to satisfy the various consumer segments in the UK.
Threats. Although the textile industry is controlled by traditional companies such as Shetlands Wools and Edinburgh Woollen Mills, new entrants are possible. Foreign companies such as Nike and Fendi are overtaking the market by producing garments serving a similar purpose as woollen garments. Furthermore, the unstable relationship between the UK and other European countries after Brexit threatens product exportation.
Macro-Environmental Factors in the UK (PEST Analysis)
Political and legal forces. The fashion market develops according to the various political and legal forces affecting the business. The UK Common law is set in employment, fraud, health and safety, and import/export laws. For instance, the UK government has prioritized textile waste in addressing the Resources and Waste Strategy (UK Parliament, 2020). Furthermore, the new post-Brexit trade agreement with the European Union encumbers business operations due to the travel restrictions (Adam, 2020). The Brexit affected the fashion industry, which depends on importing and exporting raw materials and products. The long-term effect of Brexit is the loss of the consumer base among the UK fashion industries, including Shetland. While the robust UK legal system supports the fashion industry, the existing political differences, including Brexit, negatively affect the industry.
Economic Factors. The UK’s well-structured and developed economy positively influences the fashion industry’s growth. The country’s economy is the third-largest economy in Europe after Germany and France and the sixth-largest globally (Van Kerckhoven, 2021). The UK economy was affected by the Covid-19 pandemic and the exit from the European Union. However, recent studies show that the economy will recover and reach the pre-crisis levels at the beginning of 2022 (OECD, 2020). The country’s output was estimated to rise by 6.9% in 2021, moderate growth to 4.7% in 2022, and 2.1% in 2023 (OECD, 2020).
Furthermore, the government’s move to impose a Global Tariff on imported goods from countries without a trade deal with the UK greatly affected the textile and fashion industries, including Shetland. High Global tariffs, unstable foreign exchange rates, and the global economic crisis associated with Covid-19 present long-term effects on the fashion and textile industries (Casadei & Iammarino, 2021). Therefore, the UK economy is o recovery mode, significantly affecting textile and fashion businesses.
Social-cultural factors. Social factors that would affect Shetland’s business operations in the UK include employment rate, education level, and household composition. The United Kingdom is composed of a literate population. The literacy level among most UK persons has led to a high employment rate of about 75.3% (ONS, 2021). The UK population comprises immigrants from developed countries such as the United States and the United Arab Emirates (Goldstone, 2021). Most immigrants desire luxury and form a lucrative marketing opportunity for original knitwear (Zhang et al., 2021). Furthermore, the Shetland communities have a sheep-raring culture providing sufficient wool to the company (Haughton et al., 2021). The high literacy and employment rates, diverse population, and sheep-raring culture among UK residents affect the performance of the textile and fashion industries.
Technological Forces. Technology is the backbone of every industry since it accelerates business operations. The UK is one of the most advanced countries with highly developed technology. About 96% of the UK premises are connected to superfast broadband networks, and 60% can access ultrafast networks (Gerli et al., 2020). The fast internet speed facilitates business communication within a company and clients. The fast internet speed enhances the development of e-commerce websites and internet marketing. The fast internet speed enables companies to effectively communicate, launch e-commerce services, and conduct internet marketing.
Highly advanced technology allows smooth manufacturing processes and high-quality production. Many textile and fashion industries have acquired highly advanced manufacturing equipment. Furthermore, the integration of artificial intelligence has led to effective quality control among the textile and fashion industries (Ghoreishi & Happonen, 2021). The short-term consequence of advanced technology is high installation costs. The long-term effects include reduced labor costs and improved product quality. Technology integration among the textile industry is expensive but lowers labor costs and improves product quality, attracting a broad client base.
Micro-Environmental Factors in the UK
Competitors. The textile and fashion industry in the UK is lucrative and highly competitive. Although recent studies show that the textile and fashion industries are to grow between 2020 and 2025, there is expected increased competition among companies (Casadei & Iammarino, 2021). The critical competitor within the sector is the Edinburgh Woollen Mill, among others, as shown in Figure 2, a retailer specializing in clothing, homewares, and tourists’ products (Bowden & Higgins, 2021). The stiff competition among UK companies is associated with technological advancements and a stable economic system. The consequences of stiff competition include the business decline, reduced suppliers, and reduced marketing opportunities.
Suppliers. The suppliers are significant to the functionality of a business since they determine the product quality and production volume. Many textile industries in the UK depend on the wool supply from the Shetlands islands (Hermann, 2018). The islands’ climatic conditions favor the growth and development of sheep with high-quality fibre (Shetland Woollen Co., n. d.). Companies such as Shetland Woolbrokers Limited account for over 80% of the island’s wool clip (‘Jamieson & Smith’, n. d.). Local and global companies seek wool from the islands, increasing the supplier power. The high supplier power leads to increased wool cost and subsequent yarn products’ price increases.
Customers. The Shetland Wool company sells its products to consumers locally and across the UK borders. The increased UK population with a high employment rate provides a ready market for the company’s sweaters. Furthermore, the winter seasons encourage the purchase of warm clothing by the large population affected. While most of the population purchase sweaters and other warm clothing to keep warm, some purchase Shetland’s sweaters due to its class. The sweaters are associated with celebrities and politicians in the UK and countries like the United States of America. The UK population is literate and understands the essence of fashion purchasing fashionable garments.
Marketing Intermediaries. The marketing intermediaries exist when the company does not sell products directly to the consumers. The marketing intermediaries make the products easily accessible and streamline manufacturers’ processes. Advanced technology has eased the intermediaries’ functionalities through digitized inventory control and e-commerce. Furthermore, well-established and reputable intermediaries increase the company’s sales. The intermediaries also participate in the company’s advertising activities, leading to excellent brand building if effective (Gielens & Steenkamp, 2019). Although most fashion and textile industries opt to sell their products directly to the consumers, the intermediaries play a crucial role in marketing.
The Public. The public plays a crucial role in defining the company’s reputation and brand. Many UK residents support companies that enhance sustainability and circular economy (Upadhyay et al., 2021). The public is also scornful about greenwashing, leading to negative comments about the companies’ products. The Shetlands Wool company utilizes natural wool with quality fibre attracting positive public opinion. Moreover, the company takes part in corporate social responsibility attracting public support. Positive public opinion leads to excellent brand image, but negative thought causes poor brand image.
Workers and their Unions. The Shetland Wool company employs workers within the Shetland Islands. The workers understand the significance of knitwear and have sufficient experience in the knitting industry. Consequently, the company’s end products are durably attracting a broad consumer base. Given the limited UK’s working population, workers in the textile industries draw lucrative salaries (Rainsford & Wambach, 2021). The sufficient compensation among the workers leads to a calm working environment with reduced strikes among the workers. Furthermore, the workers’ Unions, such as Wool Textile Workers and Trade Union Organization, National Association of Unions in the Textile Trade, and others, have met their demands. The warm relationship among the companies, labor Unions, and workers leads to a suitable working environment.
Potential Target Customers
The textile industries attract various customers with different preferences and other behavioral characteristics. The potential Shetland’s customers could be segmented into multiple demographic, psychographic, behavioral, and geographic factors. Segmentation according to demographic may include children, 0 to 15 years, and adults, 15 years and above. The adults comprise the working population with purchasing power and the more significant part of the UK population. The psychographic segmentation breaks down the customers based on beliefs, lifestyle, social status, and activities (Utama, 2021). The behavioral segmentation includes loyal customers, occasion-based customers, and customers seeking benefits. The geographic segmentation consists of those customers living in urban areas and those in rural areas. The various marketing segmentation is potential Shetland’s customers persuaded through advertising activities.
Most Preferred Segment
The demographic segmentation is the most suitable marketing group for the Shetlands products. Between the children and the adults, the adults are the most preferred potential customers. The group has a high purchasing power, makes purchasing decisions, and forms the working class’s most significant part. Since the UK economy is expected to grow exponentially in the next five years, adults expect increased income (OECD, 2020). A viability analysis would help determine the adult segment needs and how Shetland products would fill them.
Viability Analysis
Market size. The UK adults form the most significant part of the population, with an estimated annual growth rate of about 0.4% (Figure 1, Appendix). The adults’ population growth rate is low, but the existing above 50 million is large enough to accommodate new sellers. Furthermore, there is room for growth since UK’s mortality rate is down due to advanced medical care and a healthy lifestyle. The growing population and the fashion trends make the industry attractive and potentially lucrative for the next five years.
Target audience. The target audience is the UK adults who form a large part of the working class. The working class earns an average annual income of £25,971, with an average yearly increase of about 3.3% (ONS, 2021). The adult population consists of college students attracted to fashion. Furthermore, the adults in the UK make the purchase decisions and easily be persuaded to purchase Shetland’s products. The expected salary growth makes the market sustainable for the next five years.
Competition. The fashion and textile industries are highly competitive due to technological advancements and existing cordial rules and regulations. The existing competitors in the market include local and global companies. Global brands such as Fendi and Nike have established consumer brand equity, presenting stiff competition. However, unlike the local companies, the foreign companies ignore the British clothing culture that attracts the UK market. The growing British clothing culture desire makes the market attractive in the future.
Product Life Cycle
The product life cycle involves the amount of time Shetlands products are introduced in the UK market until they take off the shelves. The knitwear will go through four stages as soon as it is presented in the UK market. Firstly, at the introduction stage, the company will be required to invest in product promotion. Shetlands will have to conduct a marketing campaign to make people aware of its wool products. Secondly, if the product wins the hearts of UK consumers, it will move to a growth stage that involves an increasing demand. The company should ensure enough product supply. The company will benefit at the third stage, the maturity stage, when the marketing and production costs decline. The last stage is the decline when the company increases competition and may decrease. Shetlands should remain afloat during the various product life cycle stages.
Three Dimension of Product Model
Managerial dimension. The product should cover specifications and related services, Shetlands Wool brand, package, product life cycle, and product planning development. Product planning development help assure an expected return on investment rate. Furthermore, enterprise growth is guaranteed, and the company records profits over a long period.
Consumer dimension. Consumers are attracted to products and services because of many reasons. Therefore, the Shetlands knitwear should represent both utility and non-utility aspects. For instance, the company’s sweater helps keep warm and represents British culture. Furthermore, the company should ensure a positive customer experience to encourage frequent future purchases.
Societal dimension. Companies have social responsibilities that they must fulfil during product delivery. The product should help conserve the environment and promote consumers’ health. The Shetland’s Wool products are natural and help preserve the environment. Furthermore, the products satisfy the consumers due to high-quality fibres in the long run. Therefore, the Shetlands woollen products help conserve the environment and consumers’ health and benefit consumers in the long run.
Recommendations and Strategic Implementation Loop
The company should apply different strategies to allow smooth penetration into the UK market. The 4Ps approach: place, product, price, and promotion should be emphasized in the course of the business. The company should develop various strategies to ensure that it remains competitive in the wool market. Therefore, the four Ps should be improved to help sustain business operations in the UK.
Product and brand strategies. The Shetland Wool company is an unfamiliar brand at the global level. The company could develop unique designs that attract various cultures globally. Furthermore, the company could establish various product categories suitable for different social classes and lifestyles. The luxury product categories would attract celebrities and people with the highest annual wages. Coming up with unique product categories would help the company attract all kinds of adults and build the company’s brand image.
Pricing strategies. The company could adopt a competitive pricing strategy to counter stiff competition. The price should be incongruent with other companies such as Nike and Levi’s. Since Shetland’s products are made from wool with high-quality fibres, value-based pricing would help the company maximize profits. Furthermore, the company could adopt a penetration pricing strategy to enter new markets. The company could set lower prices of products in new markets to attract new consumers. The company could also provide discounts and incentives for the new customers.
Promotional mix and distribution strategies. Digital marketing and e-commerce are trending promotional tools. Shetland should adopt a digital marketing strategy by launching official accounts on all social media platforms: Twitter, Facebook, Instagram, WhatsApp bot, Telegram bot, Pinterest, and LinkedIn. Social media presence would help the company gain a local and global audience. Shetland could also carry out advertising activities through promotional tools available on social media. Furthermore, the company should use other promotional elements: public relations, direct marketing, sales promotion, personal selling, and direct marketing.
Conclusion
The Shetland Wool company makes knitwear suitable for cold winter seasons and the hard times during the day. The company sources its wool from Shetland, the largest wool producer in the United Kingdom. Shetland’s products are of high quality with durable and natural fibers. Since the UK has promising technological advancements and many potential customers, venturing into the UK is lucrative. However, the country is still recuperating from the Covid-19 pandemic and Brexit. The most suitable market segmentation is the adults who form the more significant part of the working population’s purchasing decisions. Therefore, Shetland could establish many outlets within the most influential UK cities. Furthermore, the company could establish an e-commerce platform to attract international clients and remote UK areas. Although the textile and fashion industries are competitive in the UK, Shetland could take advantage of the available business opportunities to expand its operations.
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