The target customer for TVtoWear is a fashion-forward American woman interested in purchasing high-end fashion and accessory pieces as worn by their favorite characters on television with the simple click of a button to attain the exact entire ensemble. No need to match different pieces or go to different stores/websites, the outfit is the exact one as seen on TV. Some characteristics to consider when determining demand for the use of such a website include the following:
Taste in Clothing: We are aiming for high-end consumers since we are offering the connection to purchase the identical exclusive, fashion-forward clothing/accessories worn by actresses on the latest TV shows/TV movies
Budget: How much is the consumer they willing to spend on their online clothing purchases?
Online Shopper: Is our target customer willing and able to purchase the items they love from their favorite TV star online?
In trying to determine the addressable market for consumers being considered for TVtoWear, we can look at the overall global market for the apparel industry. The industry grew in 2011 to reach a value of $1,175.353.1 million. It is expected that the global apparel retail industry is forecasted to have a value of $1,348,098.8 million in 2016 which would be a 14.7% increase since 2011. The largest segment of the global apparel industry is Womanswear and accounts for 51.1% of the industry’s total value. The Americas account for 36% of the global apparel retail industry value (http://www.prnewswire.com/news-releases/apparel-retail-global-industry-almanac-marketline-149800025.html).
Other relevant data includes online sale of clothes and shoes from 2003-2008. The market size here is the total value of clothing and shoes sold electronically in 2003-3008. There was a great increase in growth over these 5 years especially when considering the difficulty to sell this type of merchandise online since customers could not “try-on” before purchasing. Sales were $5.13 and $17.06 billion respectively, representing a 233% (http://www.marketsize.com/blog/index.php/category/apparel/).
The total addressable market (TAM) can be estimated in two different methods, either a top-down approach or the bottom-up approach. In general, the bottom-up approach is more robust because the broadmarket figure used as the starting point in the top-down type of analysis often includes a bunch of different market segments. More often than not, it easy to forget to remove some of these segments from the estimate. With a bottom-up approach the estimate is less likely to include non-addressable revenue (http://mpd.me/addressable-m-1/). In our TVtoWear business model, the TAM will be important in order to convince venture capitalists that a website that makes this type of convenient online purchase is relevant and needed in our target consumer group. Having this data will also help to convince our advertisers to use our site as well, as this will be the main source of revenue for the business model for TVtoWear as we have designed it thus far. A quick calculation using the bottom-up method using the 2001 global data is as follows:
Global market value= $1,175,353.1 billion
Americas (assume includes North and South America)= 36%, therefore $443,127.12 billion
Womanswear= 51% of market value, therefore $211,563.56 billion
In order to really narrow down the TAM even further, it would be beneficial to take the $211,563.56 billion and determine what percentage is purchased online.
The analysis involved in assessing realistic opportunities versus what the competition offers relies on determining whether or not our website will fit the needs of the niche market we are aiming to attract. Our competitors include ANY websites that offers women’s clothing be it a retail store’s online shop, department store website etc. The hope is that by addressing the specific fashion needs of our target customer, and combining that with the convenience of purchasing an entire outfit on one website will distinguish us from our competition. The success of our website versus the competition will rely heavily on the partnerships that can be developed between management/fashion staff at the represented TV shows as well as the relationships between our colleagues and the management/IT departments at the retail stores for the products that will be sold. TVtoWear’s value relies heavily on attracting our target consumer and the ability to provide them with an entire high-end fashion forward outfit specifically chosen by them in a seamless online transaction.
Because it is very unlikely that TVtoWear cannot obviously reach the entire addressable market, it is important for the group to work on targeting an exclusive selection of the winnable market opportunities. Two keys to doing so includes; hearing directly from the voice of the consumer, which we will do via an online survey and competitive intelligence which will take some in-depth research on our part in refernce to the online shopping habits of our targeted consumer
Great analysis on the total addressable market. The figures you've been able to uncover certainly helps determine the current opportunity as well as a projection of what to expect over the next few years. In doing a similar exercise, I started wondering about other factors that would influence the purchasing potential of this niche market. A few examples included changing technology and economic conditions.
ReplyDeleteExpanding technology could provide more flexibility and increase purchasing online. We have already seen a tremendous increase in online purchasing, but additional mechanisms such as televisions with online access could expedite the usage. On the other side, a poor economy could negatively influence the amount of clothing purchases. For this project, the hope is that this target customer would not decrease purchasing as much as other income levels in the case of down economy.
Carmin,
ReplyDeleteGreat analysis on everything. I like how you calculate the market size, very smart and clear.
I agree with you about targeting high-end fashion market. People who are into the high-end market seemed have higher possibilities to purchase a whole package of the outfit. So my question will be what customer behaviors of your target customers like. Will women in the high-end market like to purchase their clothes online?
My second thought after reading your blog is the marketing budget. TVtoWear relies heavily on the traffics since you conduct an ad-supported business model. So how to make the name as broader as it can will count on the marketing strategy. I guess a lot of money will be spent here to get people to know the website. Inbound marketing is great since women love to talk about where they get their clothes and accessories. But I believe that outbound marketing is just faster and more efficient to attract traffic. I can see big money spent on outbound marketing.
Carmin, you've presented some detailed marketing data for the clothing industry. I have no idea that the market is this big (over 1 trillion?). I believe you might have used billion instead of million in some places. But overall, this is a huge market. If 5% of the market is online, it is still a more than $10 billion market in U.S. alone! As you mentioned, you might have to drill deeper into the particular fashion market you're in to identify obtainable market for your company.
ReplyDeleteI am sure there are lots of companies competing for this large market. It would be interesting to know what kind of average margin the online retailers are getting. I totally agree with you that TVtoWear should find their niche market and target a small section of the total market first. If the initial strategy works, future expansion into other markets should be made at a later stage.