BUSINESS STRATEGY: Michael P. Three Generic Strategies and The Five Forces Model

Strategy

                                                                                                                

  

   According to Michael Porter’s three generic strategies, Victoria Secret is pursuing a focused strategy with its different models available at several price points. Victoria’s Secret’s differentiation is its quality of conformance, and it prices its various products (higher than many other lingerie companies) to reach a large, stratified audience.

      All their products meet all the specifications of their designs. Manufactures make the products according to the specifications and limitations that are given to them from the Operation managers. Victoria’s Secret has patented and copyrighted many of their collections and product technologies because of their quality and innovation. Most of their targeted customers are teenagers and women between the ages of 18-40. Most of their customers know that all Victoria's Secret designs are very innovated, new and unique in design and very sexy.

    Most of their targeted customers are teenagers and women between the ages of 18-40. Most of their customers know that all Victoria's Secret designs are very innovated, new and unique in design and very sexy.

     Victoria's Secret is the leading specialty retailer of lingerie and beauty products, dominating its world with modern, fragrances and cosmetics. Victoria's Secret stores, the catalogue and their website allow customers to shop anywhere, anytime, from any place. Victoria’s Secret has the top quality products which last for years. Through their catalogue and their website (VictoriasSecret.com), Victoria's Secret Direct makes it possible for their customers to feel the sexy and sophisticated intimate lifestyle of Victoria's Secret 24 hours a day, 7 days a week.

The Five Forces Model Analysis

Buyer Power

Victoria’s Secret Buyer Power is low, because its buyers do not have an ability to directly impact the price they are willing to pay for products. Most of the customers are loyal to Victoria Secret to the high quality of their products. Victoria Secret keeps putting out new styles of clothing and new lines of their products each season. This attracts buyers to keep on coming back, knowing that Victoria Secret is always new and up to date. This is a challenge for Victoria Secret because they must always make sure they are reaching their goals to satisfy all customers.

Victoria Secrets quality systems are their "quality in their design". All of the designs are new, different and unique. The quality of all these designs is excellent and very appealing to their customers. The products are put out according to the different seasons of the year. This allows the customer's to easily go through a variety of clothing for a particular season. Victoria Secrets abilities and quality of conformance are always coming out with new clothing, lingerie and beauty products. Their products have the best new sexy colors, sizes, materials and designs for all occasions. Victoria's Secret lingerie and beauty stores, their catalogue and their web site www.VictoriasSecret.com allow customers to shop for their wonderful designs at anytime, anywhere. Victoria Secret wants you to experience the sexy, comfortable and sophisticated lifestyle you can have wearing this designed brand. The store has more than 390 million customers a year come to visit and their web site has now grown.

Thus by making customer satisfaction, along with offering high quality products, its primary concerns, Victoria’s Secret keeps the buyer power low and keep the prices on the desired level. They always take very seriously any issues their customers may have with their products. If you ever have a concern with one of their products, they always ask you to let them know.

Victoria’s Secret has millions of customers all over the world. As the world's leading lingerie brand, millions of women trust it for its safe, high-performing products that offer world-leading comfort, fit and quality. To ensure this safety, every step of the manufacturing process—from yarn to finished goods—is audited against strict quality guidelines. Victoria’s Secret carefully selects the types of raw materials used in its products. They adhere to apparel industry guidelines that avoid problematic ingredients. Specific individual reactions to some ingredients cannot always be predicted. Victoria’s Secret uses only top-quality raw material suppliers – a majority of which are voluntarily certified by Oeko Tex (one of the most stringent textile guidelines in the world). Several of their manufacturing partners are also Oeko Tex certified. Oeko Tex restricts the use of specific ingredients in textiles.

· In Victoria's Secret design process, they conduct internal and external wash and wear tests as part of our process. This testing includes literally hundreds of customers and associates, who wear Victoria’s Secret products, wash them and then provide feedback in regard to fit, quality, comfort and durability before a new product is introduced.

Most of the customers are loyal to Victoria’s Secret due to the high quality of its products. Switching to another brand would be difficult for Victoria’s Secret customers. Although the prices at Vitoria’s Secret are high, the company makes sure to offer extremely high quality and, however, yet optimal prices, in order to keep buyer power low and to reduce it even more.

Another tool that Victoria’s Secret uses to reduce buyer power and to keep it low is loyalty programs. Victoria’s Secret rewards its customers for every certain amount of money they spend either on-line or inside the store. Also, the company offers free shipping and discounts after customers spend certain amount of money. In addition, Victoria’s Secret offers a reward credit card program. Clients are constantly being rewarded based on how much money they spend.

Supplier Power

Victoria’s Secret uses mainly silk, cotton, and acryl. Even though there are many companies around the world who can provide Victoria’s Secret manufactures with all need supplies, it chooses to work exclusively with those companies which produce extremely high quality products, a majority of which are certified by Oeko Tex.

Oeko Tex 100 is an independent organization that tests textiles for any harmful substances or residue of chemicals. The Oeko-Tex Standard 100 is the world's leading eco label for textiles. Products carrying this label have been tested and certificated by internationally renowned textile insitutes in one of 15 countries around the world. Textiles products bearing this label will provide reassurance in your pursuit of a healthy lifestyle.

Victoria’s Secret supplier power is low because the company, itself, chooses the suppliers it prefers to work with, and control prices.

Supply Chain

Victoria Secrets supply chain starts off with raw materials chosen by their designer's which then gets shipped from China for a cheaper price. This helps the company with price especially because the quality is high quality material. This high quality is satisfying to all their customers and that is Victoria Secrets top concerns. Once the raw materials get processed through specific factories with specific machines Victoria Secrets products are on its way to becoming a product. After the raw material gets processed and becomes a product, the product is made in batches in different colors, sizes, designs, and cuts depending on the product design. Once these products are finalized they are shipped out to all Victoria Secret stores.

Their performance is determined depending on delivery, quality, time and cost of their products. Victoria Secret does not ship all products to all countries because of specific restrictions. However, if Victoria Secret cannot ship a certain item before you check out, you will receive a notice right away stating that you must remove that specific item and why. It may be because of an address change or a possible change in another shipping method. Shipping and handling charges are determined by the merchandise dollar amount of your order before any deductions. Charges will be calculated before taxes. If products are on backorder your total will not be charged until the product is shipped out. The price and the quality of Victoria Secrets products are all reasonable prices and very high in quality. The delivery time is usually 4-7 business days and could be quicker for additional prices depending on the delivering company.

Limited Brands, an upscale branded consumer packaged goods company, sells women's intimate apparel, personal care products and women's and men's apparel under various trade names through its catalog, e-commerce and network of more than 3800 stores. Limited Brands is currently implementing Manugistics' web-based demand and supply chain management solutions including collaborative logistics management for both inbound and outbound planning, optimization and execution.

On holidays like Black-Friday when the most of their consumers begin their Christmas shopping, the corporate head-office has to deal with huge volumes of hourly phone calls from individual stores for updates on sales.

Limited Logistics Services has set up some functions to manage the company's supply chain processes. Also, it wants to concentrate on maximizing distribution and logistics efficiency, fulfilling with international trade and customs laws, ensuring regulatory compliance and facilitating product allocation and flow planning. All departments also have to make sure there are no weak links in the supply chain management. One of the important facts is that Limited Logistics Services investing in its employees.

Victoria’s Secret’s supply chain management is well managed. They could start supplying their stores with clothes which are offered through Internet and catalogues. Since manufactory is in Sri Lanka, it would be good if all stores could place an order and the products would be sent directly to the store from the manufactory. Victoria's Secret should keep using the same manufacturing process which is being used in present.

Threat of Substitute Products or Services

The threat of substitute products or services is low but Victoria’s Secret should be aware of the fact that there are many alternatives to its products and, mostly, to the services they offer. It is obvious that there are many lingerie companies on the market. But none of them offer quality, variety, 24/7 availability, and acceptable prices at the same time. In addition, Victoria’s Secret products are widely promoted and popularized by the Hollywood stars.

Threat of New Entrants

The treat of new entrants is low because it is not easy for new competitors to enter a market because of significant entry barriers. A new lingerie store must offer its customers at least the same quality as Victoria’s Secret offers. A new entrant must create excellent customer service as well.
It would be extremely hard for a new entrant to compete with Victoria’s Secret because this company developed a unique relationship with its customers, which is based on trust. For example, their website VictoriasSecret.com takes many types of security measures like, uses of technologies and policies such as limited access data-centers, firewall technology, secure socket layer certificate authentication and limitations of administrative access to their systems. In addition, their policy is NOT to send the credit card number via e-mail. They designed their page to accept orders only from Web browsers that permit communication through Secure Socket Layer (SSL) technology.
VictoriasSecret.com will ask you to provide personal information when you establish or update an account with them, ask to sign up for Victoria's Secret E-mail, when you shop online they also may ask for your personal information, check the status of an order, request a catalogue, purchase an e-gift card or send a wish list or gift reminder or if you sign up to receive information about their products, promotions and events through text messaging for all that actions Victoria's Secret might ask for your personal information just because they want to provide an excellent service.
Categories of information collected include name, address, e-mail address, recipient's name and e-mail address, order information, telephone number, credit card information and messages or reminders you create.
Also they have a return policy. They know that they have a strong reputation for their quality. But, if for any reason you aren't satisfied with your purchase, they will assist you with a prompt refund or exchange. Their sales aren't final. Refunds for the items returned within ninety days of the purchase date will be credited in the same form as the original payment type. And items returned more than ninety days after the purchase date will be in the form of a merchandise credit redeemable with your next purchase. Unfortunately, customers can't return the merchandise bought through their catalogue or website at the Stores.

Rivalry Among Existing Competitors

In general, the rivalry among existing competitors in lingerie is high. Victoria’s Secret beats its competitors by offering very high quality when many other companies try to beat or match this existing competition on prices. Unfortunately, Victoria’s Secret does not offer plus-sizes when many other lingerie companies do. According to the recent research studies, an average American women size is 14. This is a weakness of Victoria’s Secret company as it is not able to compete (even by its highest quality) with other lingerie companies on availability of large and extra-large sizes.

Also, in order to reduce intensive competitive conditions and continue to be a leader on the American lingerie market, one of new ideas that they should consider, is open a new Victoria's Secret for clothes and shoes. Victoria's Secret website has a variety of clothes and shoes, that customers are not able to find it in the store. Last year, VS introduced bathing suits to the store, which it never happened before, VS just had bathing suits available online, and since they brought bathing suit to the stores, the customers were very excited about it, because some of them don't like to buy bathing suits or clothes online. By opening a Victoria's Secret just for clothes and shoes, the company would have more quality design. In addition, customers who don't like to buy clothes on-line, would be attract to the stores, and this would increase profits to the company. Also, it will be a good idea to have a Victoria's Secret overseas. In the store, VS have foreign customers, which every time they come to the United States they come to Victoria's Secret. It will be good idea to have VS in Canada, Mexico and England.