East Coast Lifestyle (ECL) is an apparel brand started by Alex MacLean as a project for his business plan course. The case illustrates the challenges of brands that offer limited edition collections to inspire regional pride. By 2017, ECL had more than half a million successful customer transactions and collaborated with retailers in Canada and the U.S., thus having its products at 91 retailer stores (Pancer et al., 2017). ECL had its products worn by celebrities and implemented diverse marketing strategies, ranging from an ambassador program with fifty social media influencers to cross-promotion initiatives. ECL did not realize its expansion potential due to difficulty setting priorities, the failure to alter marketing strategies to appeal to clients in the U.S. and Canada’s West Coast region, and overemphasized scarcity marketing.
Key Issues
WCL and the Limited Edition Strategy
It is possible to single out two areas of concern that can interfere with ECL’s expansion aspirations. Extrapolating its business formula to sibling brands in other locations, such as West Coast Lifestyle (WCL), is challenging. After gaining control over WCL and re-launching WCL products with new logos, MacLean realized that ECL’s model and aesthetic could not “unlock the potential” of Canada’s West Coast region (Pancer et al., 2017, p. 6). Attempts to apply ECL’s model in another region with citizens that did not feel much connection with the coast aesthetics could only produce tremendously slow sales. Also, as current research suggests, ubiquitous scarcity appeals increase brand switching intentions in those not getting the limited edition product (Biraglia et al., 2021). Thus, ECL’s reliance on the limited edition positioning could also be problematic in light of the brand’s expansion plans.
Divided Attention and Inability to Resonate with Foreign Consumers
Another issue surrounding ECL’s growth plans is the brand’s inability to concentrate on one specific expansion option and appeal to customers in the U.S. market. As per MacLean’s speech, ECL’s attempts to consider several strategies at a time, including international expansion, innovative product lines, and developing WCL, could not facilitate the use of its growth potential (Pancer et al., 2017). Collaboration with small retailers in Florida and Rhode Island was not very successful since all three U.S. retailers classified ECL’s products as slow-moving items (Pancer et al., 2017). Therefore, the inability to capture foreign customers’ attention is evident, although its deep causes are uncertain and possibly involve the inability to stand out in the saturated lifestyle apparel market in the U.S.
Alternative Courses of Action
As per the case, ECL has at least three options to keep its growth rates high and should select one strategy to focus on to address the issue of divided attention. The first course of action involves continuing to develop WCL as a separate brand and creating a unique model for this business (Pancer et al., 2017). The second opportunity is to concentrate on expanding to the U.S. Eastern Seaboard by developing partnerships with U.S.-based large retail chains (Pancer et al., 2017). Thirdly, ECL can emphasize domestic growth by opening new single-brand stores/kiosks.
Solutions – Evaluation of Each Course of Action
WCL Brand Development
WCL is a separate brand with products that should be targeted at an audience than differs from that of ECL. Investment in WCL could serve as ECL’s practice field in terms of mastering the art of transforming the customer profile into apparel design solutions that would appeal to diverse target populations. However, efforts to increase WCL’s sales could result in brand cannibalization or reductions in ECL’s sales as a result of WCL’s success in the market (Ganesha et al., 2020). Because of these financial risks, this strategy should be rejected.
International Expansion
Considering the theoretical models of expansion, there are reasons to believe that entering Los Angeles or Miami would not bring significant profits. A three-stage international expansion theory proposed by Contractor and colleagues suggests that a company’s performance after foreign expansion typically follows an inverted U-shape pattern when it comes to performance (Dimitrova et al., 2019). ECL’s profitability at locations outside of Canada would probably remain low for an undefined amount of time right after expansion. McKinsey and Company report that city-based strategies started to trump country-based ones with regards to the power to accelerate the evolution of fashion (Pancer et al., 2017). Thus, Canada-inspired products would likely meet little demand from U.S. customers who would seek inspiration from their native cities.
Keeping the popularity of city-based strategies in mind, ECL would have to develop strategies/product lines for each U.S. area, which would involve resource-consuming efforts with hard-to-predict outcomes. As per the consumer ethnocentrism theory, upper-class consumers are more heavily affected by ethnocentric motivations in purchasing decisions compared to lower-class peers (Aljukhadar et al., 2021). Despite recent declines in nationalism rates, U.S. citizens still outperform other nations in terms of ethnocentrism (McCarthy, 2019). Taking ECL’s premium positioning into account, it is likely that Canada-inspired products would remain underestimated in the U.S., which is why the strategy needs to be rejected or at least postponed.
Domestic Growth
Increasing ECL’s retailer presence in Canada by opening new brand-specific stores seems a prominent strategy aligned with ECL’s central value – uniqueness. As per Keller’s brand resonance model, brand resonance is achieved by establishing optimal pricing policies, controlling product quality/customer service, making customers identify themselves with the brand, and other elements (Anselmsson et al., 2017).
The establishment of new stores will increase ECL’s control over all of these activities. ECL can use unique store designs to ensure that all clothing items are presented with reference to its philosophy and unique aesthetic instead of being lost to view among other prominent brands. With this strategy, ECL will reduce the threats of mainstreaming and emphasize its original positioning as a unique lifestyle brand. However, as an example of a non-traditional investment, the option might involve both financial and strategic risks, such as unpredictable effects on ECL’s established relationships with large retailers.
Best Recommendation
Pursuing domestic growth by means of investing in new stores is a preferable solution. The reasons for this choice refer to ECL’s ability to gain more independence from Canada’s retail chains and focus on the geographic areas with the most loyal consumer groups. Also, this approach to expansion addresses cannibalization risks and brand blurring due to being mixed with other manufacturers’ clothes at Pseudio’s and Below the Belt’s stores. The ultimate argument is that this decision would maximize ECL’s control over various predictors of brand resonance proposed by Keller (Anselmsson et al., 2017). By using this strategy, ECL would maximize its stronger brand’s potential instead of investing in WCL. Also, it would not have to abandon its limited edition strategy – there will be more locations to maximize the most loyal customers’ access to unique clothing.
Regarding strategies, ECL is recommended to focus on location analysis prior to making any decisions. It should involve the analysis of demand in different parts of Nova Scotia, Ontario, and Alberta to identify the most promising places for stores. Thorough planning will be required to estimate expenses and develop store design solutions that would incorporate the brand’s aesthetics and symbols to maximize customers’ positive spatial experiences. Further actions should include correcting the basic store development plan above and adding extensive details, including weighing the proposal against ECL’s current financial resources.
References
Aljukhadar, M., Boeuf, B., & Senecal, S. (2021). Does consumer ethnocentrism impact international shopping? A theory of social class divide. Psychology & Marketing, 38(5), 735-744. Web.
Anselmsson, J., Burt, S., & Tunca, B. (2017). An integrated retailer image and brand equity framework: Re-examining, extending, and restructuring retailer brand equity. Journal of Retailing and Consumer Services, 38, 194-203. Web.
Biraglia, A., Ulqinaku, A., & Usrey, B. (2021). The downside of scarcity: Scarcity appeals can trigger consumer anger and brand switching. Psychology and Marketing, 1-9. Web.
Dimitrova, B. V., Kim, S., & Smith, B. (2019). Performance of international retailers: Empirical evidence of an S-curve relationship. Journal of Global Marketing, 32(3), 154-176. Web.
Ganesha, H. R., Aithal, P. S., & Kirubadevi, P. (2020). Experimental investigation of cannibalisation by introducing a global brand abreast existing Indian store brand. International Journal of Applied Engineering and Management Letters, 4(1), 10-19. Web.
McCarthy, T. (2019). US still outdoes all other countries for national pride. The Guardian. Web.
Pancer, E., Ferguson, A., & Poole, M. (2017). East Coast Lifestyle: Expanding a regional apparel brand. Richard Ivey School of Business Foundation.