Agent Provocateur is an English, London-based company that specializes in production and sale of luxury lingerie items for women of the high income social groups. Founded in 1994 by Joseph Corré and Serena Rees, Agent Provocateur has gone through a long path of its development and managed to expand internationally. 3i Group PLC bought Agent Provocateur from its founders for £60m in 2007, and since that time the company has only increased its capacities and sale rates.
Moreover, during all 15 years of its existence, Agent Provocateur has worked on developing its unique identity in the luxury products, exclusively provoking and controversial advertisements, and the unique mission statement, according to which the company sells only those goods that are favored by their producers (Agent Provocateur, 2010).
However, even such a customer-friendly strategy of development cannot be implemented without challenges and obstacles. For Agent Provocateur, such obstacles have proved to be found in the aspects of competition, customer loyalty, and profit rate increase. In each of the three areas listed above Agent Provocateur has faced considerable problems, and now the company is looking for the ways to improve the situation.
Accordingly, the purpose of the current report is to suggest a set of options for Agent Provocateur to overcome its problems and find new ways for the sustainable development. For this purpose, the current paper will implement such effective business strategy development methods as PESTEL analysis, Ansoff Matrix, and positioning GRID (Improvement Network, 2010; Ansoff Matrix Guide, 2010).
Suggested Options for “Agent Provocateur”
For the better understanding of the situation in Agent Provocateur and its external environment, it is first of all necessary to examine the market conditions in which the company operates. PESTEL analysis is one the best tools used for the tasks of such kind (Campbell, 2002, p. 118):
Thus, the PESTEL analysis reveals that Agent Provocateur is affected by the social, economic, and technological factors most of all in its performance, and the options for further development should be based on these factors.
At the same time, the products launched by Agent Provocateur to the market, as well as the strategies used for it, are also important for the sustainable development of this English company. The Ansoff matrix is rather helpful in researching the relation of market and product relations for Agent Provocateur (Rainey, 2006, p. 94):
|Present||– Increase market share by producing more goods; |
– Reduce prices to boost sales;
|– Launch new products to existing markets; |
– Work on new product promotion in existing markets;
|New||– Further international market expansion; |
– Rebranding of existing products in new markets;
|– Carry out product line diversification; |
– Reconsider leadership and customer-friendly strategies for every new market separately.
The above Ansoff Matrix reveals that Agent Provocateur has to do much work in all aspects of market and product development, including developing new markets and launching new products to both existing and new markets locally and internationally.
Further on, to recommend the best developmental options for Agent Provocateur, it is necessary to consider the interests of its key stakeholders. Such an analysis will allow seeing how this or that change will affect a certain stakeholder group, which in its turn will demonstrate the probability of this option’s use in the current conditions for Agent Provocateur:
|Stakeholder Group||Basic Interests|
|1. Agent Provocateur founders;||Direct interest; Agent Provocateur founders benefit from the company’s development and should adopt any initiative that would boost the company’s performance;|
|2. 3i Group PLC;||Direct interest; the company acquired Agent Provocateur to enhance its market performance and any positive initiatives are welcome;|
|3. Agent Provocateur shareholders;||Direct interest; shareholders invest money into Agent Provocateur but should be careful selecting the developmental options as in case of their failure the shareholders’ dividends will decrease;|
|4. Employees;||Direct interest; employees’ salaries, medical insurance, and other benefits are directly related to Agent Provocateur’s success;|
|5. Customers;||Indirect interest; customers depend on Agent Provocateur’s quality but will not be financially affected by the company’s failure;|
|6. Suppliers;||Direct interest; suppliers retrieve their profit from Agent Provocateur that buys their raw materials.|
The stakeholder review reveals that every stakeholder group has either direct or indirect interest in Agent Provocateur’s success. So, the developmental options for the company should be considered with attention paid to stakeholders’ interests.
Option 1: Target Audience Expansion
Thus, the above presented analysis of internal and external conditions that affect the performance of Agent Provocateur allow suggesting the option of target audience expansion as the first one for this company. To support this option, it should be stated that scholars like Schmetterer (2003, p. 187) and Rainey (2006, p. 38) associated customer base expansion with increased profit for a business company. Thus, the brief list of the advantages this option brings to Agent Provocateur includes:
- Increase of customers and associated increase of sales;
- Ability of Agent Provocateur to satisfy the larger groups of customers;
- Field for product diversification;
- Acquisition of the better public image (moving from a luxury company for the rich to the generally accessible company);
Option 2: Product Diversification
The second option suggested to Agent Provocateur is the policy of product diversification. According to Campbell (2002), a diversified product line allows a business company to find its target customers in a larger number of social groups, thus facilitating the sustainable development of this company (p. 284). So, drawing from this and from the above discussed needs of Agent Provocateur, the idea of product diversification can allow the company to:
- Attract new groups of customers that were previously not interested in Agent Provocateur’s products;
- Refresh the public image of the company that might be damaged by the long-term focus on the similar production line elements;
- Facilitate the international expansion;
- Increase the annual profit;
- Facilitate the target customer expansion.
Option 3: Cheap Labor Force Acquisition
Further on, the PESTEL analysis reveals the fact that the shortage of cheap labor force and the expensive labor force available for Agent Provocateur are major issues that affect the company’s developmental potential. So, to overcome the challenge of cheap labor force shortage, Agent Provocateur can implement the policy of outsourcing its production capacities to the Asian or Eastern European countries where the labor force can be found in excess and is cheaper than in UK or other EU countries. Such an option will allow Agent Provocateur to:
- Economize its production process;
- Reduce prices at the expense of the saved funds;
- Direct increased funds to other initiatives including price reduction, customer loyalty programs, and opening branches in international markets.
Option 4: Price Reduction
As stated above, Agent Provocateur has been originally position as a luxury lingerie company. Accordingly, the prices for the luxury items have always been at the respectively high level, which made Agent Provocateur accessible to the high-income groups of customers. Therefore, faced by the need to improve its market performance, expand in size and production capacities, Agent Provocateur should implement price reduction initiatives based mainly on the above listed options of customer base expansion, product diversification, and cheap labor force acquisition. The successful implementation of this option will enable Agent Provocateur to:
- Acquire wider customer bases consisting from people of all income groups;
- Accompanied by product diversification and cheap labor force use, price reduction will allow increasing annual profit;
Option 5: Customer Loyalty Programs
Finally, the last option that Agent Provocateur can use to solve its problems and achieve the major developmental goals is the policy of customer loyalty programs and rewards. More specifically, Agent Provocateur can monitor the customer activities and buying habits and reward the most loyal customers who either stay with the company for the longest time or make purchases for the largest average sums. The proper implementation of this option will allow Agent Provocateur achieve the following:
- Increase customer base;
- Achieve better rates of customer loyalty and satisfaction;
- Develop customer-friendly policies in future;
- Increase the rates of sales;
- Improve the public image of the company among all income groups;
- Improve the overall efficiency of the company’s performance.
Positioning GRID: Best Option Selected
So, the whole discussion presented above has allowed designing the five basic options for Agent Provocateur to use in order to solve its performance problems and achieve sustainable development in future. Now that all the options are considered, it is necessary to define the best one out of five, and the so-called positioning GRID is of great use for this task (Schmetterer, 2003, p. 84):
|Market attractiveness||Competitive position|
|High||Option 1||Option 4|
|Medium||Option 3||Option 2|
Thus, the positioning GRID allows seeing that Option 1 is the best option that Agent Provocateur can implement in its strategic development. At the same time, the GRID also reveals that Options 3 and 5 are also rather favorable, as well as Options 2 and 4. This fact allows assuming that to achieve the best effect possible Agent Provocateur should combine the best practices of all the five options considered in its attempts to achieve sustainable progress in its operations.
So, based on the above presented considerations the current report has developed five options for Agent Provocateur to achieve its major goals of sustainable development, income increase, and overall performance improvement. The options have been developed on the basis of PESTEL analysis and Ansoff matrix data, while the positioning GRID revealed that only the combination of all options suggested might bring the desired results to Agent Provocateur.
Agent Provocateur. Official Corporate Web Site. Agent Provocateur. Web.
Ansoff Matrix Guide. Ansoff Matrix Peculiarities. AMG, 2010. Web.
Campbell, David. Business strategy: an introduction. Butterworth-Heinemann, 2002. Print.
Improvement Network. PESTEL Analysis. ING, 2010. Web.
Rainey, David. Sustainable business development: inventing the future through strategy, innovation, and leadership. Cambridge University Press, 2006. Print.
Schmetterer, Bob. Leap: a revolution in creative business strategy. John Wiley and Sons, 2003. Print.