12.53 FDT 304 FASHION MERCHANDISING
Description:
The purpose of the course is to enable the student to acquire to the requisite the skills in
marketing. Students will work on assignments and projects that will help them fully
understand the depth and breadth of the fashion environment. In addition, the student should
understand some common marketing terms such as retailing and wholesaling.
The course should cover:
1. Concept of Fashion merchandising
2. Retailing and wholesaling
3. Production planning and development
i.
Product features
ii.
Product branding
4. Pricing:
i.
Policy objectives
ii.
Strategies
iii.
Price determination and Price setting methods
5. Promotion: Advertising
6. Marketing: Customer behaviour
i.
Cultural influence
ii.
Social group
iii.
Physical
7. Forms of Fashion Business Ownership
8. Levels of the Fashion Business
i. Primary Level, Secondary Level and Retail Level
Reading lists:
1. Marian, L. D. (1976). “Visual Design in Dress”, Prentice Hall Inc.
2. Elaine, S. (2000)” Fashion Merchandising”, Blackwell Science Ltd.
3. Mike, E. (2002) “Fashion Marketing”, Blackwell Science.
Fashion merchandising is the study of fashion trends to determine merchandising strategy for
a retail store or fashion product provider. It's an exciting field that demands both an intuition
for fashion trends and a shrewd understanding of business management. When most people
think about the fashion industry they immediately think of fashion design. In addition to
being designed, clothing items need to make it into a retail store, they need to be displayed
and marketed to customers, and they need to be properly stocked as items are sold. This is the
business side of fashion - the growing field is generally termed fashion merchandising and
management.
Fashion merchandising is the strategic analysis, marketing, management, and distribution of
fashion products in order to maximize profits. Fashion merchandisers stay acutely aware of
past and present fashion trends to project what consumers will want in the future. Fashion
merchandising is a dynamic and exciting field. Merchandisers are not fashion designers, but
they stay close to the fashion world and use their fashion sense and analytical minds to
determine how much of each style to stock, negotiate with manufacturers, and work with
designers to determine emerging or existing trends. In a way, you could say fashion
merchandisers buy clothes for a living but the job is much more challenging and rewarding
than that would make it sound. Fashion merchandising is the promotion of apparel sales and
involves all of the tasks necessary to deliver the clothing requests and meet the needs of
potential customers and designers. Fashion merchandising involves developing campaigns,
displays and advertisements, directing manufacturing and marketing as well as creating sales
strategies for the fashion industry or the retail environment.
Merchandising also refers to the necessary preparation that must be completed in order to
ensure that the merchandise is accessible and appealing to the customers. You have to attract
the customer to the product. The key to being a great merchandiser is to promote and obtain
the goods that are going to be sold to customers. This can involve going to international
fashion events, buying fashion goods at market and negotiating with merchants,
manufacturers, retailers and designers. Fashion merchandising is a broad industry that
requires a strong sense of style and trends in addition to business training. A successful career
in fashion merchandising begins with formal training at a fashion merchandising school.
Obtaining a fashion merchandising degree can open the door to many opportunities in this
diverse field. Students can learn about industry trends, marketing, and event planning and
product development. Most fashion merchandising students choose careers in a management
role or working with major apparel manufacturers and designers. Others may choose to own
and operate a boutique of their own. Some of the skills needed to be successful are an
understanding of consumers’ wants and needs and knowledge of current fashion trends as
well as the ability to forecast future trends. Excellent communication skills and great
analytical skills are key to success, too. It's also wise to have an understanding of colours,
patterns in fabrics and the psychology and behaviour of consumers. Fashion merchandising is
a blend of fashion sense and business expertise. Staying ahead of the fashion curve is a feat
involving both art and commerce. Strategy and marketing experience are an integral part of
fashion merchandising. So if you have these skills, along with the essential love of fashion,
the fashion merchandising field may be just the place for you. Fashion merchandising is a
broad term. Typically, a fashion merchandiser will have several potential areas of focus and
is used to juggling different responsibilities. As the name implies, the role of a fashion
merchandiser combines fashion and merchandising, and requires a strong sense of style and
fashion in addition to business acumen. What does a fashion merchandiser do on a day-to-day
basis? Here are a few key responsibilities of a fashion merchandiser.

Fashion Trend Analysis and Forecasting
To successfully manage the profitability of a retail store you have to be in tune with fashion
trends to know what will sell. To do this fashion merchandisers keep up with the latest
fashion news, attend fashion shows, and communicate regularly with fashion designers.
Fashion merchandisers are able to blend fashion sense with quantitative analysis to look at
how products have performed in the past and forecast consumer demand for coming seasons.

Fashion Buying and Merchandise Price Management
This is primarily where fashion and merchandising aspects come together. Knowledge of
fashion and trend analysis is used to decide how to stock retail stores. This includes which
new styles to order, which items to reorder, quantity of items, and the colours and sizes to
stock. The fashion merchandiser works within a budget and has to make sure stores can be
properly stocked within that budget. Part of this process is buying and negotiating with
manufacturers and designers to make sure items can be priced in a way that will sell and
make a profit. If responsible for multiple retail stores, fashion merchandisers also need to
determine how each store should be stocked since different stores likely have a different
surrounding clientele with different tastes.
How Marketing Influences Design
A fashion marketing manager wears many hats. What might a fashion marketer do on a dayto-day basis? Market research and media planning, as well as branding, product display,
creative, and photography all fall within the purview of fashion marketing. Fashion marketers
may also be involved in public relations. Read on for a few key responsibilities of a fashion
marketer. Although a fashion marketer is not a fashion designer, fashion marketers still
influence the products and designs of a fashion brand. The fashion marketer understands
fashion trends and their business impact. What styles are selling best? Which aren’t? Fashion
marketing isn’t only about promoting the work of fashion designers, it can also influence
design based on business performance and market trends.

Market Research & Analysis
Knowing who you’re selling is a vital first step in any kind of marketing. Fashion marketers
must be able to perform qualitative and quantitative research into fashion trends and the
lives and behaviours of the people who may purchase fashion products. Market research is
presented and used to make important decisions about fashion design and business
activities.

Brand Design & Development
Fashion marketers are charged with creating the story behind the brand so that customers
can relate personally and see themselves wearing the designs. Logos, copy, and imagery
all need to stay in line with the image and lifestyle that a fashion brand represents and
create a personal connection with target customers.

Develop & Manage Advertising Campaigns
Fashion marketers use their creativity alongside market research to create compelling
advertisements that resonate with their target audiences. They also manage media planning
to determine the scheduled distribution of advertisements. This may include
advertisements in newspapers and magazines, on television, and in digital formats such as
social media.

Pricing & Distribution
Pricing and distribution decisions are also part of fashion marketing. This involves
research and analysis of how products are selling in retail or online distribution channels
and determining where and at what price fashion products should be sold, with the
overarching goal of maximizing profits.

Marketing and Promotion
In many cases fashion merchandisers are also responsible for drawing in customers via
promotion of products. That requires marketing skills and a keen understanding of local
customer demographics. To get their products out to the world and draw in consumers,
fashion merchandisers may develop marketing campaigns, design store displays, and create
sales strategies. Here are some commonly held job titles for graduates from fashion
merchandising colleges and programs:
Merchandising Manager
Merchandising managers generally oversee all the retail functions for clothing or shoe
departments within a store. Duties include creating merchandising displays, coordinating the
workflow and activities of retail employees, and ensuring an attractive appearance for the
retail store.
Marketing Representative
Marketing representatives promote a company's products to the identified target markets.
Rather than managing the display and workflow of employees and products, marketing
representatives conduct presentation and sales activities to market a brand or series of brands
to potential customers/clients.
Fashion Buyer
Fashion buyers are responsible for selecting products and negotiating with product vendors
on behalf of retail companies. Fashion buyers understand the trends in the fashion industry
and identify products that will drive sales, reinforce brand attributes and increase the
competitive edge of companies.
Merchandising Consultant
Merchandising consultants oversee the sales and marketing efforts of companies. They
execute business plans according to established revenue goals. They research and establish
consumer
Production planner
It the processes of coming up with a business idea for a manufactured garments, preparing the
garment for production and then introducing it to the market. Product planning involves
managing the product's manufacture and development by selecting marketing and distribution
approaches, making modifications, setting and changing prices, and offering promotions.
Product-developer
The creation of product with new or different a characteristic that offer new or additional
benefits to the customer. Product development may involve modification of an existing
product or its presentation, or formulation of an entirely new product that satisfies a newly
defined customer want or market niche.
Products- designer
The detailed specification of a manufactured item's parts and their relationship to the whole.
A product design needs to take into account how the item will perform its intended
functionality in an efficient, safe and reliable manner. The product also needs to be capable of
being made economically and to be attractive to targeted consumers.
Product-feature
A function of an item which is capable of gratifying a particular consumer need and is hence
seen as a benefit of owning the item. In business, a product feature is one of the
distinguishing characteristics of a product or service that helps boost its appeal to potential
buyers, and might be used to formulate a product marketing strategy that highlights the
usefulness of the product to targeted potential consumers.
DISTRIBUTION CHANNEL
It the path through which goods and services travel from the vendor to the consumer or
payments for those products travel from the consumer to the vendor. A distribution channel
can be as short as a direct transaction from the vendor to the consumer, or may include
several interconnecting and intermediaries along the way such as wholesalers, distributors,
agents and retailers. Each intermediary receives the item at one pricing point and movies it to
the next higher pricing point until it reaches the final buyer. Fiber does not reach the
consumer before first going through a channel involving the farmer, spinner, weaver,
distributor/designer, and retailer (consumers).
WHOLESALING, DISTRIBUTOR, MIDDLEMAN, DEALERS
Wholesaling is the sale and distribution of goods to specific customer types such as those
most commonly referred to as resellers. Resellers are traditionally retailers, other wholesalers
or merchants who will resell the good to an end user. Certain industrial, commercial and
institutional customers also qualify, as the goods are often a component of a different end
product.
Distributors
Distributors frequently have a business relationship with manufactures that they represent.
Many distributors maintain exclusive buying agreements that limit the number of participants
or enables distributors to cover a certain territory. The distributor becomes the manufacture’s
direct point of contact for prospective buyers of certain products. However, distributors rarely
sell a manufacture’s goods directly to consumers. Wholesale representatives and retailers
generally find distributors to buy products for resale.
Wholesalers
Wholesalers generally buy a large quantity of products directly from distributors. Highvolume purchase orders typically improve a wholesaler’s buying power. Many distributors
provide discounts for a certain number of items purchased or the total amount spent on
merchandise. Wholesalers acquire merchandise, such as telephones, computers, bicycles,
clothing, televisions and furniture. The goods are frequently destined for retailers.
Retailers
Retailers consist of small and large for-profit businesses that sell products directly to
consumers. To realize a profit, retailers search for products that coincide with their business
objectives and find suppliers with the most competitive pricing. Generally, a retailer can buy
small quantities of an item from a distributor or a wholesaler. For instance, a retail merchant
who wanted to purchase a dozen lamps could contact lighting distributors to inquire about
pricing.
PRODUCT PLANNING (7)
Product planning, design & development – Product life cycle –Market Segmentation &
Targeting and positioning, developing marketing mix, pricing decisions – channel design and
management – Retailing and wholesaling – promotion methods. Product
Classification
PRODUCTION PLANNING AND DEVELOPMENT
1. Product features
2. Product branding
Product planning is the process of creating a product idea and following through on it until
the product is introduced to the market. It is also the ongoing process of identifying and
articulating market requirements. Every product or service has a purpose. For example, the
purpose of an oven is to bake raw food, but not all ovens have the same features and benefits.
The distinction between the terms benefits and features is an important concept in developing
and marketing a product or service. Features are characteristics that your product or service
does or has. For example, some ovens include features such as self-cleaning, smooth
stovetops, warming bins, or convection capabilities
The uniqueness of a product or service can set it apart from the competition. Features can
communicate the capability of a product or service. But features are only valuable if
customers see those particular features as valuable. You want products or services with
features which customers perceive as valuable benefits. By highlighting benefits in marketing
and sales efforts, you’ll increase your sales and profits.
It’s important to remember that customers buy products and services because they want to
solve a problem or meet a need. Consciously or unconsciously, your customers will always
be asking the question, “What’s in it for me?” Your product and service offerings have to
deliver solutions and satisfy needs, or they won’t be successful.
Given that benefits are ultimately more important to your customers than features, it is
imperative that you understand the benefits your products and services provide, emphasize
these benefits in your sales efforts, and update your products and services when new or
additional benefits are desired by your customers.
Think about how automotive manufacturers advertise. To sell minivans, they don’t
emphasize the layout of the vehicle or its carrying capacity. They show images of happy
families loading their kids, sports equipment, and toys into the vehicle. They emphasize the
benefits above and beyond the features.
Once ideas emerge and are analyzed through the opportunity analysis plan, they will need
further development and refinement. This refining processes (the product planning and
development process)—is divided into five major stages: idea stage, concept stage, product
development stage, test marketing stage, and commercialization. These stages result in the
start of the product life cycle.
PRICING
It is the amount of money expected, required, or given in payment for something. Price is a
vital component of a marketing mix, also known as the "four Ps" of marketing. The other
components are product, place and promotion, all of which constitute costs. Price, on the
other hand, generates a return as it supports the other marketing-mix elements. The four Ps
are the four essential factors involved in marketing a good or service to the public. These are
the four Ps: the product (the good or service); the price (what the consumer pays); the place
(the location where a product is marketed); and promotion (the advertising)

Product – The first of the Four Ps of marketing is product. A product can be either a
tangible good or an intangible service that fulfils a need or want of consumers.
Whether you sell custom pallets and wood products or provide luxury
accommodations, it’s imperative that you have a clear grasp of exactly what your
product is and what makes it unique before you can successfully market it.

Price – Once a concrete understanding of the product offering is established we can
start making some pricing decisions. Price determinations will impact profit margins,
supply, demand and marketing strategy. Similar (in concept) products and brands may
need to be positioned differently based on varying price points, while price elasticity
considerations may influence our next two Ps.

Promotion – We’ve got a product and a price now it’s time to promote it. Promotion
looks at the many ways marketing agencies disseminate relevant product information
to consumers and differentiate a particular product or service. Promotion includes
elements like: advertising, public relations, social media marketing, email marketing,
search engine marketing, video marketing and more. Each touch point must be
supported by a well positioned brand to truly maximize return on investment.

Place – Often you will hear marketers saying that marketing is about putting the right
product, at the right price, at the right place, at the right time. It’s critical then, to
evaluate what the ideal locations are to convert potential clients into actual clients.
Today, even in situations where the actual transaction doesn’t happen on the web, the
initial place potential clients are engaged and converted is online.
Fashion marketing is the management of advertising campaigns and promotions to sell
fashion brands and products. The effort required to present fashion products in a way that
appeals to potential customers is called fashion marketing. It's a vital part of the business side
of fashion. Fashion marketers have to be creative and in tune with their target customers
while also being focused on the business side of fashion with the goal of driving sales and
profits. If done well, fashion marketing balances the creative side of fashion with the needs
and desires of customers and the need to make a profit. Fashion marketing is the management
of advertising campaigns and promotions to sell fashion brands and products. Although when
most people think about the fashion industry they immediately think of fashion design,
but there’s actually so much more that needs to happen in order for the latest designs to get to
the customers who will wear them. Designers need to get their creations in front of the right
customers in a way that makes those people want to buy them. The effort required to present
fashion products in a way that appeals to potential customers is called fashion marketing. It’s
a vital part of the business side of fashion.
Exactly what is fashion marketing and what is involved? Fashion marketing and fashion
marketing management are the practice of advertising brands and fashion products to
potential customers. Like any other kind of marketing, you have to research the preferences
of different audiences and find creative ways to present products in a way that resonates
enough to inspire customers to buy.
Fashion marketing and management is unique because of the fast pace of the fashion
industry. While you might be able to run the same or similar marketing campaigns for
multiple years in other industries, the fashion industry moves in very short cycles, so fashion
marketers need to keep up with the latest trends and continually devise creative ways to
advertise their newest products. Fashion marketers have to be creative and in tune with their
target customers while also being focused on the business side of fashion with the goal of
driving sales and profits. If done well, fashion marketing balances the creative side of fashion
with the needs and desires of customers and the need to make a profit.
ADVERTISING AND PUBLICITY
Advertising and Publicity are the two most important communication strategies which can
positively or negatively impact the business and reputation of the organization. Both the
advertising and publicity is the mass communication tool which concentrates on reaching the
larger audience
Advertising is marketing as well as a as advertising promotional tool in the hands of the
company which conveys a message about the company or a product to the viewers, listeners
or readers. Publicity is another promotional tool, which serves as personal and Non-Personal,
but it is not same as advertising. Every business organization’s main aim is to generate sales
for their products or services, for this reason, organizations use various types of promotional
techniques to reach their target audience and persuade them to buy the products or services
which the organization is offering.
There are various types of promotional techniques and out of them most used is advertising,
publicity, public relations, sales promotions, etc. This article focuses on communicating the
difference between Advertising and Publicity.
ADVERTISING
Advertisement can be easily defined as a powerful communication tool which helps the
organizations to sell goods, ideas or services to the targeted or potential customers. It also be
defined as, “Advertising is any paid form of non-personal communication and promotion of
ideas, goods, and services by an identified sponsor”.
The advertisement is done through various channels of media like electronic media, print
media, social media, etc. Every organization takes utmost care in creating and
communicating the advertisement to their target market. The advertisements are a precise,
short and simple communication to reach the customers by targeting and segmenting the
customers into different groups.
Publicity is a non-personal communication by an organization to reach their customers about
their product, service or idea. Publicity can be treated as an almost free or involves a very
little amount of money but the money is not directly paid nor run under a identified
sponsorship. Many organizations rely on publicity as an important communication medium
because of its credibility. The publicity is usually in the form a news article or an editorial in
the famous newspapers about an organization or person or a movie. Publicity is like a mass
communication, it is more of like viral news. Publicity is not under the control of an
organization and sometime the publicity becomes negative and can damage the reputation of
the organization or sub-brand of the company.
COMPARISON TABLE
ADVERTISING
Advertising is purely a paid form of
communication used by an organization.
Driven by
Advertising is a communication which is
company driven.
Time frame
Advertising is a long-term strategy used by
the organization to increase the brand
reputation of the company.
Nature
An advertisement is purely a non-personal
form of communication.
PUBLICITY
Publicity is an almost free form of
communication, but sometimes money is also
involved.
Publicity is a communication which is a public
driven.
Publicity is a short-term strategy for achieving
the very short or immediate goals.
Publicity comes under both personal and NonPersonal also.
ADVERTISING
Impact
Advertisement given about the product or
services may increase sales or lowers the
sales.
Purpose
PUBLICITY
The publicity given may reflect the person or
organization in the positive or negative sense
sometimes.
Organizations as well as movie producers,
Mostly business organizations use advertising
cinema stars involve in publicity to attract the
for communicating about the products or
people to buy their product or watch their
services for increasing their brand awareness.
show, etc.
Expenses
Every business organization uses advertising Not every business organization use publicity
strategies and set aside some money for
as their communication strategy and don't put
advertising expenses.
aside any money for publicity.
Sponsor
Advertisement campaigns run under a
Publicity campaigns don't have any sponsorers
identified sponsorship of either company or a
for spreading the information.
person.
Measurement
The results or benefits obtained from the
The results or benefits obtained from publicity
advertisement campaign can be calculated
cannot be easily calculated.
and measured easily.
Examples
1. Broadcast AdvertisingA mass-market form of communication including television and radio, broadcast advertising
has, until recently, been the most dominant way to reach a large number of consumers
2. Print Advertising
Periodical Advertising
If it's in a magazine, a newspaper, or anything else that comes out at regular intervals,

Brochures, Leaflets, Flyers, Handouts, and Point-of-Sale Advertising

Direct Mail Advertising
3. Outdoor Advertising
Also known as out-of-home (OOH) advertising, this is a broad term that describes any type of
advertising that reaches consumers when they are away from home. Think of billboards, bus
shelter posters, fly posters, and even those big digital boards in Times Square.
4. Public Service Advertising
Unlike traditional commercials, Public Service Advertisements (PSA) is primarily designed
to inform and educate rather than sell a product or service. PSAs traditionally appear on TV
and radio but are also heavily promoted online.
5. Product Placement Advertising
Product placement is the promotion of branded goods and services within the context of a
show or movie, rather than as an explicit advertisement. It's a way that these films and shows
get funding, and is a great way for advertisers to reach a targeted demographic. Most of the
times there is no mention of the product although the audience sees the product. Movies are
the major places where product placement is done.
6. Theatres
The advertisements in movie theatres before all the movies start or during the intimation are
called movie ads. These are one of the costliest forms of advertising since people cannot skip
it change the channel or move away.
7. Outdoor Blank Space Advertising
It is a newer form of advertising which ensures a large reach of audience. Occupying the
empty spaces for advertisements is known as space advertising. Examples include the spaces
of metros, buses, cabs, flight seats & movie theatre seats (where advertising is done on the
removable seat covers)
Direct Mail and Personal Sales
Direct mail, or the art of sending a compelling sales letter by snail mail to your target
audience, can offer a healthy return on investment for small businesses
Email Marketing
A kind of advertisement that is focused on your existing customers, email marketing involves
them signing up for promotional sales or newsletters focused on your brand
Social Media Ads
Pinterest, Instagram, Facebook and pretty much all social media sites offer relatively
inexpensive advertising.
The fashion industry is unique from other fields of manufacturing in that it is ruled largely by
the same intention as its end product: change. What defines the fashion industry is largely
based on the functions of the individuals who comprise it—designers, stores, factory workers,
seamstresses, tailors, technically skilled embroiderers, the press, publicists, salespersons (or
"garmentos"), fit models, runway models, couture models, textile manufacturers, pattern
makers, and sketch artists. In simplest terms, the fashion industry could be described as the
business of making clothes, but that would omit the important distinction between fashion
and apparel. Apparel is functional clothing, one of humanity's basic needs, but fashion
incorporates its own prejudices of style, individual taste, and cultural evolutions.
Types of Ownership
Each type of ownership functions differently and places you in a slightly different role within
the company. There are different advantages to each business type and also specific
requirements that you have to meet in some cases.
1. Sole Proprietorship
A business owned and operated by a single individual.
The advantages with a sole proprietorship include ease and cost of formation. Simply
announcing you are in business and requesting any licenses and permits you may need; use of
profits. Since all profits from the business belong exclusively to you, the owner; flexibility
and control -- you make all the decisions and direct the entire business operations; very little
government regulations; secrecy; and ease of ending the business. There are disadvantages,
however, including unlimited liability -- all business debts are personal debts, meaning you
could lose everything you own if the business fails or loses a major lawsuit; limited sources
of financing -- based on your creditworthiness; limited skills -- the sole proprietor really must
be a "jack-of-all-trades," part manager, marketer, accountant, etc.; and limited lifespan -- the
business ends when the owner dies.
2. Partnership
This is type of business that is owned and operated by two or more people.
There are two basics forms of partnerships, general and limited. In a general partnership, all
partners have unlimited liability, while in a limited partnership, at least one partner has
liability limited only to his or her investment while at least one other partner has full liability.
Most states require a legal document called the "Articles of Partnership" that delineates
details about each partner's investment and role in the new company.
The advantages of a partnership include ease of organization -- simply creating the articles of
partnership; combined knowledge and skills -- using the strengths of each partner for better
business decision-making; greater availability of financing; and very little government
regulations.
There are disadvantages, however, including unlimited liability -- all business debts are
personal debts; reconciling partner disagreements and action -- each partner is responsible for
the actions of all the others; sharing of profits -- all money earned has to be shared and
distributed to the partners per the articles of partnership; and limited lifespan -- the
partnership ends when a partner dies or withdraws.
3. Corporation
A large company or group of companies authorized to act as a single entity and recognized as such in
law
Private Corporation
A business that is a legal entity created by the state whose assets and liabilities are separate
from its owners.
while there are also public corporations -- which stock (and ownership) are traded on a public
stock exchange -- most small businesses are (or at least start as) private corporations. A
Private Corporation is owned by a small group of people who are typically involved in
managing the business. Forming a corporation requires developing a legal document called
the "Articles of Incorporation" and submitting them to the state in which the corporation
wishes to reside.
The advantages of a corporation include limited liability -- an owner (stockholder) can only
lose up to the amount s/he invested; unlimited lifespan -- a corporation is charted to last
forever unless its articles of incorporation state otherwise; great sources of funding; and ease
of transfer of ownership.
Disadvantages include double taxation -- the corporation, as a legal entity, must pay taxes,
and then shareholders also pay taxes on any dividends received.
Two other types of ownership include:
S Corporation
A form of business ownership that the best of both partnerships and corporations. Owners
have limited liability, greater credibility (for obtaining financing), and no double taxation as
all profits pass directly to the owners and the corporation pays no taxes. There are, however,
restrictions on the number and type of shareholders.
Limited Liability Company (LLC)
A form of ownership that is growing in popularity in the United States.
LLCs provides limited liability and are taxed as a partnership or sole proprietorship
(depending on the number of members). This type of business formation -- formed by
submitting articles of organization to the state in which the company resides -- is growing
rapidly because it is flexible, simple to run, and does not require all the paperwork of
corporations.
The 4 Levels of the Fashion Business
The Primary Level consists of growers and producers of raw materials such as of man-made
and/or synthetic fibers, but we don't think about the fact that they actually need to be made.
This is where that the production of these raw materials like fibers, fabrics, leathers, and fur
producers begins. Colour and texture planning take place in this stage. It's also the level that
has the most amount of lead time, up to two years, before a product will be available to the
consumer.
The Secondary Level is made up of industries. Manufacturers or contractors that produce the
semi-finished or finished product from material made in the primary level. This is where the
Designers, manufacturers, contractors, and vendors work at. These companies work on a lead
time of about six months to one and a half years ahead of products available to the consumer.
The Retail Level is just what it sounds like. This is ultimately the distribution level. The
retail level is where all the different types of retailers purchase their goods from the
secondary level.
The Auxiliary Level is the only level that functions with all other levels simultaneously. This
level basically offers support services to the primary producers, secondary manufacturers and
retailers to the consumer, us, aware of all the merchandise that's being produced. This is
where all media -print, audio, and visual- lay.
In fashion, one of the key issues is how ownership, control and use of the brand can be spread
between different businesses. A fashion franchise this arrangement is a contract that gives an
individual or group of people the right to own a business while benefiting from the expertise
and reputation of an established firm. In return, the individual, known as the franchisor, set
sun to purchase the franchisor and royalties on goods or services sold. An authorization
granted by a government or company to an individual or group enabling them to carry out
specified commercial activities, for example acting as an agent for a company's product
Franchising and Licensing
When deciding to open a business using an already established brand, you may have heard
people talk about franchising and licensing. There is a difference between these two business
models, but what exactly is that difference?
On the most basic level, the difference between a franchise and a license is the amount of
support you can expect to receive. A franchised system will provide you with support in site
selection, training, marketing and much more, whereas a licensing agreement provides you
with little to none of that.
Franchising
Businesses usually start franchising once their business models have been perfected and
proven to make money and their brands have at least some regional recognition. So, not only
do you get to leverage the brand’s name, but you also get access to all its support systems in
exchange for a fee.
In franchising, you run your business the way you’re instructed to run it because the
franchisor doesn’t just retain control over the intellectual property (the brand), it also retains
control over how the franchise business is operated. You put up the capital to start the
business, but the franchisor supplies you with the know-how to run the operation according to
their business model.
Licensing
At the other end of the spectrum is the licensing model, where you pay for the use of the
intellectual property, but you is free to run your business however you like. The brand that
gives you the license may specify the purpose their intellectual property is to be used, but
they won’t provide you with any support like site selection, training, marketing or any of the
other support systems you enjoy when you are part of a franchise system.
Often, a licensing agreement is entered into between a brand and someone who has an
existing business who just wants to expand their product line, so this lack of support might
not be a big deal to people with an established business.
Which one is best for you?
While licensing agreements can be drawn up and put in place quickly and for little cost to a
brand, franchising agreements take a lot more work.
Which one works best for you will depend on how much control over the running of your
business you want to retain and how much assistance you want. When you license a brand,
you do get the benefit of whatever brand recognition it has garnered, but you are pretty much
on your own for running the business. Again, this may not matter if you already have an
established business.
When you franchise, you get the benefit of brand recognition, but also a lot of support in the
running of the business within a set system. If you have your own business already and
decide to join a franchise, this will mean giving up control of how you currently run your
business.
Another consideration is cost. A licensing agreement will be cheaper than entering into a
franchising agreement. However, since you get little to no support when running a business
with a licensing agreement, you will be responsible for all other costs associated with the
business, which would normally be included in a franchising fee.
For example, with a licensing agreement, you would have to lease or own the building
yourself, do all your own marketing and training. In a franchise, the franchising fee would
cover the lease and build out, it would likely get you some national marketing from the brand
and the franchise would likely have training for you and your staff.
This may make running a business with a licensing agreement and running a franchise
comparable cost wise.
And, lastly, there is also the matter of legal protection. There are specific franchising laws in
place in six provinces in Canada to protect franchisees. Licensing agreements are not covered
by these laws, although sometimes a licensing agreement can actually end up being viewed
legally as a franchising agreement.
Here at Fran Net, we firmly believe franchising is the way to go. The amount of support a
franchise offers you are invaluable. Fran Net can help you find the perfect franchising
opportunity. If you believe you’re ready to take that first step toward business ownership,
sign up for a free Fran Net franchise search and consultation today.