Executive Summary

The purpose of this report is to launch a new product to the Australian market. The new product
is COS (Collection of Style) Australia and its been compared and distinguished to its competitor
Zara. This report critically analyzes key areas of how COS Australia will penetrate and capture a
big share of the Australian market. This include marketing strategies, marketing objectives,
situation analysis and competitive strategies of the company. The Australian market has many
competitors as indicated in the report. The situation analysis which includes the internal and
external environment is carried out to identify past, present and anticipated strengths,
weaknesses, opportunities and threats and comparing them to its competitors. The report also
analyzes the market strategies using the 4ps of the marketing mix (product, price, promotion, and
place/distribution) to identify the strategic position of its products and service. The report
outlines the marketing objectives which include economic and sustainable goals that will be used
for promoting COS Australias products and services to the Australian market. COS Australia
emphasizes on sustainable practices and the report illustrates this from the manufacturing process
in foreign countries to their operations in the Melbourne store. The report finds out that this is
one of the reasons why the prices of products are high because they use sustainable raw material.
From the report, recommendations include broadening the target market by lowering prices,
broadcast advertising and using local companies as opposed to foreign companies in
manufacturing to boost Australians economy. The report helps managers at COS Australia to
understand the customers needs that result to customer satisfaction by producing products that
meet their expectations through innovation and sustainable practices.

Table of Contents

Executive Summary......................................................................................................... i
Introduction.................................................................................................................. 1
Mission Statement.......................................................................................................... 1
Situation Analysis........................................................................................................... 2
Internal Environment.................................................................................................. 2
External Environment.................................................................................................. 4
Marketing Objectives...................................................................................................... 8
Marketing Strategies....................................................................................................... 9
Financial Information................................................................................................... 11
Monitoring and Control................................................................................................. 11
References.................................................................................................................. 12
Appendix 1: Porters Five Competitive Forces...................................................................13
Appendix 2: COS Australia SWOT Analysis......................................................................14
Appendix 3: Zara Australia SWOT Analysis......................................................................15
Appendix 4: Product Life Cycle....................................................................................... 16

Introduction
COS which stands for Collection of Style is a clothing and shoe label company that sells high
fashion design for men, women and children. Its parent company H&M (Hennes & Mauritz)
based Stockholm Sweden, was started in 1947 and many years later launched COS in 2007 at
Regent Street in London (H&M Website, 2015). COS operates independently from H&M but
benefits from the companys financial health and experience of the clothing business. COS now
has currently has 116 stores across Europe and Asia. In November 2014, COS opened its
Melbourne store and is set to open more stores in Brazil, India and Philippines later this year.
Because it sells luxurious designs, COS operates in a market that is positioned at a high price. It
is associated as the more up market, more sophisticated sibling of H&M offering customers
who want fashionable, modern, stylish, reinvented classics and latest trends. The brand targets
older, mature customers who appreciate fashion, quality and style without looking at the price
tag (COS Website, 2015). The report is going to achieve COS Australias new marketing
objectives and strategies and will also look at its competitors and its position in the market using
tools such as the SWOT analysis and marketing mix.

Mission Statement
In summary, the mission statement of COS Australia is emphasized in the companys key values
which are modern, functional, timeless and tactilely. This makes the companys brand profile
vibrant and robust in order to differentiate from other brands (COS Website, 2015).

Situation Analysis
Situational analysis is the collection and systematic evaluation of present economic, social,
political and technological data that is aimed at identifying both internal and external forces of an
organization and assessing the organizations future and current strengths, opportunities and
weaknesses (Business Dictionary, 2015).

Internal Environment
Marketing Goals and Objectives
Marketing goals are guidelines that explain what the marketing department wants to achieve in a
specified time frame whereas marketing objectives are strategies to attain the marketing goals.
COS Australias marketing goals is to reach a more upscale market by growing with design,
quality and exclusivity. The companys objective, through the parent company H&M, is planning
to expand COS Australia to Sydney and Brisbane later this year.
Marketing Strategy and Performance
Varadarajan (2010) defines marketing strategy as an organizations integrated pattern of decisions
that specify crucial choices concerning products, markets, marketing activities and marketing
resources. COS Australia has numerous marketing strategies such as segmentation strategy,
target strategy and penetration strategy (STP). Market segmentation is defined as the process
the dividing the market into several groups and or segments based on factors such as
demographic, geographic, psychological and behaviourial factors (Gunter & Furnham,1992).
COS uses demographic and psychographic segmentation by targeting any religion, culture and
lifestyle with preference to different locations. Kotler (1997) defines positioning as the act of

designing the companys offering and identity so that they occupy a meaningful and distinct
competitive position in the target customers mind. COS Australia provides consumers with
fashionable, quality clothing at high prices. Their clothing line, shoes and accessories range from
different categories from casual to formal and are economically, social and sustainable. This
makes COS Australia performance high because more and more customers are looking for
quality clothing without being price conscious (COS Website, 2015).
Current and Anticipated Organizational Resources
Organizational resources are the companys assets used in the production process and they
include capital, human, raw materials and monetary. COS Australias capital are the machines
used during process of the clothes and shoes. This include IT Software for graphic design and
printers for logos. Their human resources currently consists of a small team consisting of a
manager, accountants, IT staff, customer service, communications and marketing. COS Australia
uses conscious materials such as organic and recycled cotton as their raw material for a more
sustainable future. The money used for COS Australia to pay for their expenses such as salaries
comes from the sales it makes and also from the parent company H&M if they need financial
support. Anticipated organizational resources would be better technology and machinery for
efficiency and because they are expanding to Sydney and Brisbane later in the year, the human
capital is expected to increase and as a result more monetary resources will be propelled into the
company.
Current and Anticipated Cultural and Structural Issues
Matsumoto and Juang (1996) defines culture as a set of attitudes, values, beliefs and behaviours
shared by a group of people, but different for each individuals, communicated from one

generation to the next. The culture in Australia is about creativity, innovation and change. COS
Australia is fairly new to the Australian market therefore its not currently experiencing any
cultural encounters but in future it anticipates their fashion will be a cycle of boredom. They may
anticipate structural issues such as change of command, job structures, organizational hierarchy
and administration processes depending on the changes in the markets or decisions made by the
parent company H&M that affect COS Australia policies and procedures.
Customer Environment
This is when a business is focused around the needs of customers such as quality, good customer
service and ease of accessing goods and services. COS Australia focuses on the customers by
producing clothing lines, shoes and accessories that are of value and have positioned their store
at the Strand Melbourne which is a prime location in the city, convenient for customers. Also
they have put in place a clothing-rack rail system that creates room for customers to move to
different sections (COS Website, 2015).

External Environment
Markets
A market is defined as a set of all actual and potential buyers of a product or service (Kotler et
al., 2009). COS Australia is not priotising on any markets but is continuing to tap into different
markets such as the United States of America and countries in Asia where market growth will be
much faster.
Competitive Environment

Hirschey (2008) defines competitive environment as the dynamic business in which businesses
compete. Also known as market structure, the competitive environment can be classified into
two categories; Direct competitors who offer similar products and services and indirect
competitors who offer dissimilar products and services. COS Australias direct competitors
include, Zara Guess, Diesel, Levis and Misssixty and their indirect competitors include
Woolworths and gap.
The Porter five forces is a tool used to determine the competitive environment and attractiveness
of a market (Appendix 1).
i)

Threat of new entrants for COS Australia is high because it requires less capital to

ii)

start a clothing company and the manufacturers of the raw materials are countless.
Bargaining power of buyers is high because COS Australia has several competitors

iii)

therefore it is easy for buyers to switch from one brand to another.

Bargaining power of suppliers is low for COS Australia because there are numerous
manufacturers all over the world that it can choose from such as China and India.

iv)

This is possible due to increased globalization resulting to international trade.

Threat of substitutes for COS Australia is low because it has a unique, high end
clothing line which few retailers can imitate but there are substitutes in the market

v)

that customers can choose from.

Intensity of competitive rivalry is high because there are quite a number of retailers in
the Australian market. Also with the high cost of living in Australia, consumers might
not afford to buy clothing at COS Australia so they opt to switch to their competitors.

Economic Environment
Consumers in Australia are very cautious in spending because of the decline in the global
economy. Production is much cheaper because it is outsourced from foreign countries but the

cost of raw cotton is rising due to increased demand. As a result, COS Australia now uses
recycled and organic cotton for their production and also to ensure sustainable standards are met.
The clothing business is a highly competitive sector in the Australian market offering cheaper,
same quality substitutes.
Demographic Environment
COS Australia targets many faiths, cultures and lifestyle therefore their clothing line, shoes and
accessories have to meet the principles and values of that country they operate in.
i)

Segment by age: COS Australia is targeting women who are mature with high buying

ii)

power
Segment by class: COS Australia is for the high income earners who appreciate

iii)

quality over price.

Segment by position: Most customers in COS Australia are women who at the selfactualization stage in Maslows hierarchy.

Social and Cultural Environment

The fast moving fashion trend is a term used by fashion designers when designs from the catwalk
will go straight into mass production to capture market trends. COS Australia has the current
clothing line in order to keep up with the trends in Australia. COS Australias manufacturing is
outsourced from foreign countries which have cheap labour and affordable raw materials. COS
Australia appreciates that Australia has different cultures with different ethical values and in so
doing applying sustainable strategies such as recycling cotton for a better future.

Political and Legal Environment

COS Australia does not own any factories but has suppliers all over the world including Asia and
Europe. The trade is affected by:
i)

Foreign exchange rates that fluctuate leading to high cost or low cost of

ii)
iii)

manufacturing
Taxes in Australia which are relatively high leading to less profits
Strict regulations on exportation and importation of manufactured products from the
manufacturing countries to Australia. This can affect the supply of clothing line,
shoes and accessories to COS Australia.

Technological Environment
COS Australia has embraced technological advancement in its branding, fast fashion trend and
customer experience such as ordering online. As a result, it increases sales and customers are
satisfied. COS Australia has also introduced sustainable development technology in the
production line such as the shoes using water soluble glues as opposed to the normal glue. The
parent company H&M are currently working towards development of new recyclable fibers for
the future (COS Website, 2015).
SWOT Analysis
SWOT analysis is a method for identifying a companys position as well as the competitors
through its strengths, weaknesses, opportunities and threats. To identify COS Australias
competitive advantage, we shall compare it to one of its competitors Zara (See Appendix 2 & 3).
The comparison of Zara and COS Australia is that they are both big brands, they dont use
advertisement to increase sales and follow the fast fashion trend to meet the current market
trends. The contrast is that Zara does not outsource its manufacturing to foreign countries like
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COS Australia. It does the fabric cutting work in-house and then sends to local sewing
companies. Zara also has unique supply chain systems that allows it to change styles in a short
duration of time (Zara Website, 2015).

Marketing Objectives
Economic Objectives
COS Australias economic objectives include;
i)

Profit making: All businesses are in existence because of profit which means the extra
money that is left after paying all expenses of a business. It helps in the growth and
also brand image of a business to stakeholders such as consumers, shareholders and

ii)

employees.
Market share: Capturing a bigger share of the Australian market is a priority for COS

iii)

Australia which will be done by producing and selling unique apparel.

Innovation: COS Australia is currently adopting new technology in production of its
apparel by using recyclable, organic cotton as a competitive strategy. It is still looking

iv)

for other sustainable ways by researching on the latest technology.

Utilization of resources: COS Australias objective is to maximize its resources (Man,
Machine, Money and Material) the best possible way. This can be done by using
efficient workers, full use of machine, and reducing on wastage of material.

Sustainability
COS Australias future depends on sustainable processes for a better fashion future. Townsend
(2006) defines sustainability or sustinere in Latin as support or to uphold. COS Australia is
sacrificing profits in making fashion sustainable by using organic and recycled cotton. The
parent company H&M launched the Fair Living Wage to promote better wages, living
8

standards and workplace safety for employees working in the foreign manufacturing companies
(H&M Website, 2015). This strengthens the community through education and basic human
rights. COS Australias pricing is high because of using sustainable resources and their customers
understand that its about the best value not the best price.

Marketing Strategies
Target Markets
Because of their high end fashion of quality clothing, COS Australia typically targets the high
class society especially older, mature people who appreciate fashion. Their style doesnt really
appeal to the youth. COS Australia also uses the target strategy and is defined as the selection of
potential customers that the business wishes to sell products and services to. COS Australias
target customers are men, women and children. Women are there main target consumers because
they shop a lot of clothing not just for themselves but also for their children and spouses.
Therefore as a strategy they should target youth and men and children rather than women only
Product Strategies
COS Australias focus is to sell the latest fashionable goods and products. Offering fast fashion
apparel, COS Australia has the current trends of different categories ranging from casual,
business and footwear including accessories. This forces customers to purchase more than they
intended. Using the product life cycle (Appendix 4), a product has 4 stages which include
introduction, growth, maturity and decline. With this in mind, clothing lines, shoes and
accessories have a short life span because trends and taste change often therefore it should
continue being innovative and develop new fashion trends.

Pricing Strategies
Based on their customers, the apparel at COS Australia are costly and have been described at
starting where H&M prices end. They range from $125 dresses to $500 leather apparel (COS
Website, 2015). This is because of the high cost of manufacturing and high cost of sustainable
raw materials they use for their apparel such as organic cotton. This is good for brand image as
more and more people are becoming conscious of the environment thus allowing the company to
gain market share over its competitors.
Promotion Strategies
Although COS Australia seldom advertises, they promote their apparel through their website and
social media. They have already identified the target audience which are mature men and women
who are conscious about sustainability. To increase market share, COS Australia needs to invest
more and focus in the promotion mix such as advertising, public relations and sales promotion in
order to increase market share.
Distribution Strategies
The logistics for COS Australia are defined as transparent, reliable and simple. The designs are
made by parent company H&M and are outsourced for production. The high end apparel are
made in Turkey while the rest are made in India. They dont own factories only store outlets
where they sell the final product. Their distribution strategy is direct that is from producer to
consumer and is less costly and efficient for service delivery. They refresh their stock almost
every day. Also by selling the clothing line, shoes and accessories in one store makes it more
convenient for customers who walk in or order online.

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Financial Information
The H&M group which consists of COS, Monki, Weekday and Cheap Monday resulted in good
sales and an increased market share from 1 st December 2014 to 31st August 2015. This resulted to
an increase in sales up by 22% to SEK 132,167 million. The groups profit after tax increased to
SEK 15,372 million, an increase of 12%. This is a reflection of COS Australia that so far this
year sales have been good except in the months when the weather changed drastically. Profits
have also increased during the period but were affected due to increase of purchasing cost from
the strong US dollar. The company ensures that it delivers to its customers with quality and
sustainable fashion regardless of any financial problems (H&M Website, 2015).

Monitoring and Control

COS Australia regularly monitors its suppliers using the full audit programme (FAP) to comply
with their code of conduct. FAP audit process involves inspection of factory site, management
investigations and worker interviews (COS Australia Website, 2015). It helps suppliers
understand the value of making improvements and as a result long term relationship between
suppliers and COS Australia are made. The company goes beyond monitoring by assisting
suppliers to build good management systems that can prevent non-compliances from happening
in future. A large of number of employees take part in monitoring the compliance with the code
of conduct and also do workshops and training with suppliers. Choosing the right partners who
meet minimum requirements is done by the audit team so that they can fully assess whether the
partner has the potential to meet expectations of COS Australia.

References

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BusinessDictionary.com - Online Business Dictionary. 2015.BusinessDictionary.com - Online Business Dictionary.

[ONLINE] Available at: http://businessdictionary.com. [Accessed 16 October 2015].
COS | cosstores.com . 2015. COS | cosstores.com . [ONLINE] Available at:http://www.cosstores.com/gb/. [Accessed
16 October 2015].
Gunter, B & Furnham, A 1992, Consumer profiles: An introduction to psychographics, Routledge, London.
H&M offers fashion and quality at the best price | H&M AU. 2015. H&M offers fashion and quality at the best price
| H&M AU. [ONLINE] Available at: http://www.hm.com/au/. [Accessed 16 October 2015].
Hirschey, M 2008, Fundamentals of managerial economics. 12th edn, Cengage Learning, US
Kotler, P 1997, Marketing management: Analysis, planning, implementation and control, Prentice Hall, UK.
Kotler, P, Keller, LK, Brady, M, Goodman M, Hansen T, 2009, Principles of marketing: A global perspective, Upper
saddle river, Prentice Hall, UK.
Levitt, T 1965, Exploit the product life cycle, Harvard Business Review, vol. 43 pp. 81-94.
Matsumoto, D & Juang, L 1996, Culture and Psychology, 5th edn, Pacific Grove, USA.
Porter, ME 1979, How Competitive Forces Shape Strategy, Harvard Business Review, vol.57, no.2, pp.137-145
Townsend, AK, 2006, Green business: A five-part model for creating an environmentally responsible company,
Schiffer, US.
Varadarajan, R 2010, Strategic marketing and marketing strategy: domain, definition, fundamental issues and
foundational premises, Journal of the Academy of Marketing Science, vol. 38, pp. 119140.
ZARA Official Website . 2015. ZARA Official Website . [ONLINE] Available at: http://www.zara.com. [Accessed
16 October 2015].

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Appendix 1: Porters Five Competitive Forces

Source: Porter (1979): The five competitive forces that shape strategy, Harvard Business Review

13

Appendix 2: COS Australia SWOT Analysis

Strengths

Weaknesses

Opportunities

Threats

1.
2.
3.
4.
5.
6.
7.
1.
2.
3.
4.
5.
1.

Prime location in city, Melbourne

Reputation for trendy and quality clothing
High brand image with financial resources
Distinct look of garments
Wide range of apparel for men, women and children.
Fast fashion trend
Online services e.g. e-retailing
Low brand loyalty of customers
Retaining customers
Mass production with no guarantee of sales
Due to variety of manufacturers, quality of apparel is different
No advertisements
Online market and social media is becoming more and more

2.
3.
4.
1.
2.
3.

popular
Growing market of high end apparel
To tap into the organic clothing market
Continue with current sustainable practices
Several competitors in the Australian Market
The fashion trends change quickly
High cost of living leading to discretionary spending

Appendix 3: Zara Australia SWOT Analysis

Strengths

Weaknesses
Opportunities
Threats

1.
2.
3.
4.
5.
6.
1.
2.
1.
2.
1.
2.
3.

Have 13 stores across Australia

Well established brand name
Supply chain, operations and manufacturing are low cost
Follow a just in time system for value chain management
Innovative and fashionable designs.
Fast fashion trend
No advertisements
Low brand loyalty
Tap into more global markets
Concentrating on e-retailing
Intense competition
High end retailers such as COS Australia can be a threat
Decline in economy

14

Appendix 4: Product Life Cycle

Source: Theodore Levitt 1965 Exploit the product life cycle: Harvard business review

15