Skinclad Ltd is a business-to-business manufacturer of high quality leather, suede and sheepskin men’s full-length coats and jackets. The company has been established in the UK leatherwear market for twenty-five years, which in 2000 was valued at approximately ï¿½2.5m but has since dwindled due to economic changes.Skinclad sell their garments through Modal Fashions, a fashion retail chain, who have outlets throughout Europe. Since 2001 Modal have reduced their contract quantity to 25% and negotiations have become more difficult, with Skinclad only getting a profit return per garment as low as ï¿½1 on certain styles and being forced into two days a week production.Skinclad failed to secure a contract in 2001 to export through an overseas warehouse selling garments to the Scandinavian market. Skinclad are now working at breakeven levels in production and working within a ï¿½80,000 bank overdraft. Skinclads lease of premises is also due for renewal at the end of the year.This report aims to aid Skinclad in becoming more marketing orientated and in doing so will:* Review the micro and macro-environmental likely to impact upon Skinclad’s in the long term* Identify internal factor’s of the company where there maybe problems* Indicate marketing relevant courses of actionIn becoming market orientated the firm will have to consider the following:2.0 Market Analysis – External AuditIn considering marketing analysis ‘An external and internal audit is carried out as part of the broader process of market analysis to determine the opportunities existing in the marketplace (Gilbert, 1999).’ To do this the company needs to gather information for the external audit. This information can be categorised using PEST analysis. This acronym stands for and considers the following issues that may affect the company:* Political including Economic* Environmental* Social including Cultural* TechnologicalIn addition to PEST analysis it would also be of use to review how the company’s Competitors and Customers influence the external audit.2.1 Political including EconomicPolitical and Economic factors affecting Skinclad include the ‘implications of a change in government policy, irrespective of whether or not there is a change in government. Also, at national level, political influence is significant and not just limited to legislation on trading, pricing, dividends, tax, employment or health and safety (CIM, 1993).’ Current political and economic issues could concern whether or not Britain may be joining the Euro which may or may not have adverse affects on import and export legislation as well interest and exchange rates. For example (Wanna Argument:The Euro, http://www.bized.ac.uk/stafsup/options/argument/arg2. htm, [Accessed 18/05/2004]), joining the Euro would lead to the loss of control of interest rates. If the interest rate on borrowing was to increase repayments towards loans would increase, which could force a company such as Skinclad (considering their financial position) into bankruptcy. Fluctuations in exchange rates may also affect Skinclad. For example if the Pound was to increase, Skinclad’s products would be more expensive to buy for their European customers.2.2 EnvironmentalPeople are increasingly becoming more environmentally conscious (Why Me? http://www.reducetheuse.co.uk/Page/Whyme.htm, [Accessed 18/05/2004]) and as a company Skinclad needs to be aware that consumers may be against wearing garments made from leather. This has a huge implication in Skinclad’s line of business, as consumers may want to know if cattle are being slaughtered just to make garments or is the leather produced a by-product of the meat industry. Skinclad could gain advantage in marketing garments as the latter.2.3 Social including CulturalThe fashion world is constantly changing and at times without notice Skinclad need to be aware of social issues and in its line of work fashion trends must be identified. Skinclad could do more fashion research in bringing the current range more up-to-date. Skinclad could also branch out into producing women’s garments, which would increase their customer base. In realising fashion trends Skinclad would also need to address cultural diversity, for instance, fashion in one country may not necessarily be to the taste of those in another.2.4 TechnologicalDue to the ever-rapid development of technology, investments in new machinery need to be revised, as production methods will improve. At Skinclad there are currently fifty people employed which is very costly. New production techniques can automate many processes; although a considerable initial investment is required the long-term viability of the company can be realised.2.5 Customers and CompetitorsSkinclad are business-to-business manufacturers and their customer base consists mainly of Modal Fashions and their contracts may have dried up due to the fact that Skinclad couldn’t keep up with production demands as “orders increased to an embarrassing level” as well as the fact that Modal maybe purchasing from cheaper Far Eastern suppliers. Skinclad could try and go back to previous agencies they had contracts with to increase their dwindling orders. Skinclad could capitalise on the fact that cheaper garments from the Far East are being returned due to poor quality. Skinclad needs to analyse where they are going wrong with their jackets and compare them to their competitors.3.0 Market Analysis – Internal AuditSkinclads ‘internal factors can be represented and remembered as the five M;s representing the functional areas of the business:* Men and women – Its human resources and organisation* Money – Its financial health* Materials – Supply sources and products* Machines – the production facilities, its fixed assets, capacity, etc* Markets – its reputation, position and market prospects.'(CIM,1993)3.1 Men and WomenSkinclad has an employee base of around fifty, three of which are company directors including Mr Frank who is fully active. The workforce is said to be flexible and from the text it can be assumed that they are a loyal group as they have stuck by Skinclad through difficult periods. The structure of such a company would assumed to be top- down hierarchical with the directors and management making strategic decisions at the top, then supervisors at tactical level governing the workers at operations:Strategic LevelFig 2. Skinclad’s Assumed Structure of Hierarchy3.2 MoneySkinclad are working around break even levels, a bank overdraft of ï¿½80,000 and reduced credit levels from suppliers. Their financial assets only seem to be machinery and stock, if any, which means that their options for securing loans are minimal. The need and use of the personnel needs to be revised and to cut costs redundancies may be necessary.3.3 MaterialsSkinclad’s main materials are leather, suede and sheepskin. It is not known who their suppliers are but if Skinclad needed to increase production they may find it a problem in getting supplies on credit. Skinclad are producing high quality products, which according to the price continuum (R.Wright, 2004) means they are selling at a high price. This indicates that the materials bought may also be very expensive. Skinclad need to see if they can find a cheaper supplier or if new materials are being developed such as fake leather products (lammy).3.4 MachinesIf money was available Skinclad can bring in more machines so as to increase production from 400 garments per week to a possible 1000. Firstly the current machines need to be evaluated to see if they are efficient enough. If not Skinclad need to see if new, more efficient and maybe cheaper production techniques can be implemented.3.5 MarketsSkinclad’s market seems to be highly competitive, as there were many independent retailers in the late 1990’s. However due to the market depression in 2001 smaller manufacturers could have gone out of business. The company does not seem to be very customer oriented as all contracts with smaller agencies were terminated when Modal Fashions were on the rise. The customer contact and service perceived is very little.3.6 Internal overviewAlthough Skinclad had been trying to secure new contracts to sell to Norway and Sweden which failed, the only other strategy they seem to be initiating is calling in XXX Marketing Consultants. Skinclads skills lie in its flexible workforce, which manufacture their product. The product is of high quality, which means that the garments are highly priced, and in accordance with the price continuum should generate a high profit. This indicates that Skinclad shared values lie in producing high quality products.So then why are Skinclad working at breakeven levels? The problem could lie in the products themselves. Are they too expensive? Are they out of fashion? Product packaging may also need to be reviewed. The lease of Skinclads premises is up for renewal too. Even though there is space to maybe bring in more machines for production, could Skinclad consider relocating to cheaper premises? Skinclad also need to revise distribution costs. There does not seem to be any promotion of the company itself. Skinclad needs to have a promotion strategy of some sort.4.0 SWOT AnalysisIn considering the current situation and environment of Skinclad a SWOT analysis can be devised. ‘The SWOT analysis helps managers focus their attention on the key areas in a company that need to be taken into account in producing a marketing plan. It highlights internal strengths and weaknesses as they relate to external opportunities and threats’ (Hannagan, 2002) .The SWOT analysis can then be used as a conversion strategy from turning weaknesses and threats into strengths and opportunities from which possible marketing relevant courses of action can be identified.5.0 Courses of actionFirstly Skinclad need to secure a healthier relationship with Modal Fashion, their main source of business. This is because at the moment Modal may only be using Skinclad as a backup supplier and could drop them at any time, doing so would probably see Skinclad going into liquidation. Skinclad could negotiate differing contracts that promise supplies on time and at the highest quality. Skinclad could also produce differing quality garments along the price continuum. They could make lesser quality products from their own recycled waste materials, which would be cheaper as well as making medium quality products. If Skinclad did move in to the lower quality end of the market they could maybe try and guarantee better production of garments than those in the Far East.This would broaden Skinclad’s customer base and look like a better choice of supplier of garments to its customers as they would only have to go to one supplier instead of finding other manufacturers that make lesser quality but more profitable goods. If Skinclad did make lesser quality products, they could market the higher quality range as an exclusive range. In doing this their output of higher quality products would be less, which would initially cut costs as they would not have to buy as much high quality materials. Skinclad could then also look for cheaper suppliers of raw materials for the lower quality range.Skinclad needs to analyse the effectiveness of the workforce and processes governing them and if necessary look to downsize. This may benefit in the short term to reduce costs, but when production increases again new employees will need to be trained which may be costly.Skinclad should have never terminated all their other agency contracts. Skinclad should have kept supplying other agencies maybe even one or two just as a contingency plan. Skinclad could go back to its smaller agencies and negotiate contracts with them, as they need as much work as possible. If Skinclad could accomplish in negotiating new contracts they may be able to negotiate a bigger overdraft or loans from their bank. Also as orders from smaller agencies would be smaller Skinclad’s mark-up per garment would be higher.An area where Skinclad needs to review is if its range is fashionable. In order to do this Skinclad needs to do some form of marketing research. ‘The marketing research process consists of four steps: defining the problem and research objectives; developing the research plan; implementing the research plan and interpreting and report the findings.’ (Kotler et al, 1996). To do this Skinclad could send out representatives to fashion shows or go out into retail stores and see what styles are available. Skinclad needs to know what their customers want, how they want them and where they want them.The company needs to find out what is in fashion around Europe. Skinclad’s market is generally a seasonal market as leather coats or jackets are generally bigger and more padded and used for colder weather. This means that they should try and make their products available to countries of colder climates, which they initially failed to do in selling to Sweden and Norway. The Scandinavian and Eastern European markets would be an ideal place to negotiate contracts as their climates are a lot colder throughout the year. Skinclad could also look to introduce women’s outer garments as well. This could double Skinclad’s target audience. Research into womens wear would need to be undertaken in considering designs. This at first could be costly but would broaden Skinclad’s customer base.When going through research and development, Skinclad needs to find out exactly what its customers are looking for. Skinclad at this moment in time does not seem to have any customer care values or any after sales service. These would be fundamental steps towards becoming a more market and customer orientated business. Skinclad needs to work with its customers like Modal Fashion to see if they can make the processes of manufacturing, packaging and distributing their product as easy as they can. Marketing the company as an all round service than just a producer of leather, suede and sheepskin garments will enhance the reputation of the company and create a better relationship with its customers.