Exploring Possible Growth Strategies

Moving forward, Hang Ten needs to focus on strategies for future growth and sustainability. We first consider sources of growth for Hang Ten in either current or new markets and/or products before showing our recommendations.

1) Capitalizing on the Hang Ten parent brand for future brand extensions

Brand extension occurs when a firm uses an established brand name to introduce a new product, including line and category extension.

Line extension applies the parent brand, Hang Ten, to a new product that targets a new market segment within a product category the parent brand currently serves

• Casual surfwear for teenage market
• Apparel for kids
• Smart casual and formal for the trendy, working crowd

Category extension applies the parent brand, Hang Ten, to enter a different product category from the one it currently serves

• Intimate wear for men and women
• Shoes, bags & accessories for young, trendy fashionistas

The advantages of brand extensions

Brand extensions are crucial for Hang Ten’s future. It facilitates new product introduction and acceptance from consumers. For example, if Hang Ten were to enter the intimate wear market under the established parent brand name, customers are more likely to accept it and perceived risk is reduced. It also increases efficiency and reduces costs of marketing programmes since consumers are already familiar with the brand name.

In addition, brand extensions can also provide positive feedback to the parent brand by broadening brand meaning and salience. For example, if Hang Ten ventured into the shoes, bags and accessories market, the brand meaning could widen from “casual, comfortable apparel” to “for all casual occasion needs”. This in turn attracts new customers and increases market coverage. If executed effectively, brand extensions can also revitalize and renew interest the parent brand.

2) Expanding the Group through strategic acquisitions

Acquiring new businesses entails the purchase of shares or assets of a corporation by Hang Ten Group.

Hang Ten could acquire either related businesses in the apparel industry or a completely unrelated business for greater business diversification. For example, the Group could acquire close competitor Bossini to drive down competition, achieve synergies in their operations or tap on developed distribution channels to increase market share. Alternatively, the Group could acquire successful restaurant chain, Thai Express, to snap a stake of the highly lucrative F&B industry.

The advantages of acquisitions

Strategic acquisition significantly reduces costs of entering the market and provides fast access to existing resources and expertise. However, before this is done, besides analyzing whether the acquisition is in line with the Group’s strategic direction, the financing options, asset valuation and effects on management and culture must also be considered to outweigh the costs and benefits.

Acquisitions is not recommended

Given the Group’s strategic imperative in establishing itself in the apparel industry, it is unlikely that management will perform dissimilar acquisitions as this deviates from its long-term vision. Acquiring current competitors might prove to be too costly and cumbersome as Hang Ten’s competitors are relatively large.

3) Riding on Hang Ten’s current regionalization to reap the benefits of internationalization

Hang Ten Singapore is under the direction of the Group headquartered in Hong Kong, making it a regional brand with strong presence in South Korea and Taiwan. Due to Hang Ten’s unique licensing structure, the Group manages Hang Ten in South East Asia, while Hang Ten USA is a separate entity.

Internationalization strategy is not recommended

Although it is not within our team’s capacity to recommend an internationalization strategy for Hang Ten Singapore or the Group, we recognize the advantages of developing global marketing programmes that contribute to economies of scale in production and distribution, reduced marketing costs and building a consistent, reliable and recognizable international brand image that reconciles all levels of the CBBE to achieve strong brand resonance. Thus, we will inject the concept of a global marketing programme to our growth recommendations so that Hang Ten can capture the benefits of a unified, regional branding.

Now that we have rejected options 2 and 3, the next entry examines different types of brand extension strategies we can adopt.E