Market Architecture

Market Architecture

The Challenge

The Client is a worldwide apparel company with a stable of over 30 brands.  After divesting of one of its old legacy brands, the company wanted to implement a new growth strategy via acquisition.  They approached Management Science Associates, Inc. (MSA) seeking a robust solution for identifying what types of brands and businesses would have the greatest future growth potential for the apparel industry.
 

The Solution

MSA’s Market Architecture™ solution was the perfect approach to clarify the current state of the apparel industry, as well as provide a glimpse as to where the best growth opportunities are within the category moving forward.
Instead of looking at repeat purchases as a way to compute brand loyalty, Market Architecture looks at brand purchases along key consumer dimensions to estimate what this solution calls ‘choice elasticity’.

The four-part framework for this Market Architecture solution is:
1)    Market Structure – How do consumers choose products within a category?
2)    Brand Choice Drivers – What factors influence consumers to buy certain brands?
3)    Brand-to-Brand Competition – What is the nature of competition between brands?  Why do consumers buy competitors?
4)    Profitability – How to leverage brand strengths to grow sales and profits?

While consumer survey data is usually the main data input for Market Architecture, in this case, MSA worked with ‘purchase occasion’ data from a syndicated consumer panel for the apparel industry to which the Client subscribes.

The study looked at all of the Client’s current retail customers, as well as other broader retailer classifications and channels.  The study also covered almost all major retail apparel lines.

The Results

The output from the study provided the Client with a clear and consistent ‘three-tier choice hierarchy’ for women and men, with just a few exceptions.  In addition, MSA was able to illustrate a ‘strength of appeal’ table for the Client showing which retailers, apparel categories and brand types had the greatest appeal to the least appeal.  This table was crucial to the client for assessing the profit potential of target acquisitions.

As a direct result of the study, the Client soon afterwards made two major brand acquisitions, investing nearly $1 billion.
For more information please contact Joe Reddy (jreddy@msa.com), Vice President