THE SEGMENTATION OF THE ROMANIAN CLOTHING MARKET

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1 Bota Marius THE SEGMENTATION OF THE ROMANIAN CLOTHING MARKET Faculty of Business, Babe -Bolyai University, Horea Street No. 7, Cluj-Napoca, Romania, Phone: , Boriceanu Monica Faculty of Mathematics and Computer Science, Babe -Bolyai University, Kogalniceanu Street No. 1, Cluj-Napoca, Romania, Cosma Smaranda Faculty of Business, Babe -Bolyai University, Horea Street No. 7, Cluj-Napoca, Romania, Phone: , Abstract: The Romanian clothing market is a crowded one with a lot of powerful competitors, especially Asian firms with their cheep products. In order to survive on this market the Romanian clothing companies should adept their products offer to well defined segments of customers. In this paper we split the Romanian clothing market into segments. We used the chi-square test to find if there is a relation between income, age, sex and education of the Romanian people and the monthly amount spent on clothes. Key words: Romanian clothing market, segmentation, chi-square test I. Introduction The textile and clothing industry is one of the oldest in the world. The oldest known textiles, which date back to about 5000 B.C., are scraps of linen cloth found in Egyptian caves. The industry was primarily a family and domestic one until the early part of the 1500s when the first factory system was established. It wasn t until the Industrial Revolution in England, in the 18th century, that power machines for spinning and weaving were invented. According to a GfK study made for Wall Street Journal Europe 161, four out of five Europeans and Americans buy clothes because they need them. So we can notice that the clothing industry is a very old and important industrial sector all over the world. The clothing industry is a very global industry, with constantly increasing trade flows all over the world. The Romanian clothing industry has a long tradition and experience from the 19 th century, as well as a good fame around the world as its products are present in many countries of the world. Since 1 January 2005, The WTO Agreement on Textile and Clothing no longer exist. There was implemented a measure stipulated for some time, that is the total abolishment of the quota system for the imports of textiles and clothing. Before the Agreement took effect, a large portion of textiles and clothing exports from developing countries to the industrial countries was subject to quotas under a special regime outside normal GATT rules. The total liberalization of the world trade with textiles and clothing opened the way to the imports from Asia as well as to the interest of the big companies for the cheap workforce in these areas. The Asian firms (Chinese, Indian) and the companies from Turkey became powerful competitors on both domestic and foreign markets. China is the biggest player on the UE-25 market with a share of 31,5% in the European market. China is the most competitive production base for the time being due to an immense oversupply of labor in the rural provinces and young educated workers who make possible the keeping of the wages at very low levels We buy clothes because we need them,

2 The clothing market is a vast one. The products become, in most of the cases, after the processing, a part of the clothes. Generally, the clothes can be considered products of strict necessity for the clients and the demand for those products appears as soon as the income appears. II. Material and Method We used for our investigations exploratory, descriptive and causal research. We obtain primary and secondary data through one personal (face to face) interview based on short questionnaire. The main goal of the conducted study was to identify the attitude of the Romanian people regarding the acquisition of clothes. The questionnaire is structured in two parts: the first one contains eight questions which give us basic information and the second one includes questions for the classification of the respondents. The information we got was neither sensitive, nor threatening; we used clear, unambiguous, structured and unstructured questions. In order to identify the representative sample we used STATGRAPHICS soft. For a standard error of ±0.03 the sample was 1068 Romanian people. First we tried to find which of the classification variables (age, sex, income, education) worth to be used in the segmentation of the Romanian clothing market. We want to find which of these variables have a significant influence in the activity of clothes shopping. So it is important to know if age, sex, income or education influence the amount spent on clothes. We used the chi-square test from the STATGRAPHICS soft to identify the relation between: age and amount spent on clothes, sex and amount spent on clothes, income and amount spent on clothes, education and amount spent on clothes. For the relation we found we will identify its intensity. Taking into account these intensity values we will establish the orderr of the variables we will use in segmentation. III. Results and Discussions The starting point of our investigation was the situation of the Romanian companies involved in the clothing sector after the total liberalization of the world trade with textiles and clothing. The domestic market seems lost for the Romanian companies in the face of the Asian imports especially after the total liberalization of the world trade with textiles and clothing. There is no market in Romanian at this moment for the domestic products. Too many products are manufactured that the domestic market cannot absorb. The specialists maintain that, unless one has a network of shops, one cannot adapt the price of the products according to the market conditions, cannot withdraw a product that does not sell; all in all, one does not have many chances. Through the market segmentation we will identify different segments of costumers, with specific needs and wishes. The Romanian companies could adapt their product offer, taking into account these costumers segments. From the analysis of responses at the question regarding the monthly amount spent on clothes (Figure 1.) it can be seen that most of the Romanians (36%) spend between RON. About 35% of the people spend less than 50 RON. The percentage of those who spend between 100 and 150 RON is almost equal with the percentage of the customers who spend over 150 RON. We can also observe that over 70% of the Romanian costumers spend less that 100 RON on clothes per month, which is a small amount RON 15% Over 150 RON 14% Under 50 RON 35% RON 36% Figure 1. Monthly amount spent on clothes 765

3 Regarding the income of the interviewed persons we found out that the biggest segment of the population (40%) earn between 400 and 1000 RON per month. A significant percentage (31%) is of those who made less than 400 RON. For an income between 1000 and 1600 RON we have a percentage of 17% and for over 1600 RON we have only 12% RON 17% Over 1600 RON 12% Under 400 RON 31% RON 40% Figure 2. Population monthly income Concerning the age of the interviewed persons we have: under 20 years (11%), between 20 and 30 (29%), between 30 and 40 (16%), between 40 and 50 (26%), between 50 and 60 (13%) and over 60 (5%) % Over 60 6% Under 20 11% % % % Figure 3. Population age The number of the men and women who answered the questions was almost equal, in percentage 46 % men and 55 % women. Male 45% Female 55% Figure 4. Population sex As we can see in the Figure, the majority of the interviewed persons (45 %) have attended a high school and the smallest segment (4 %) has a master or a PhD degree. The other segments are represented in as follows: elementary (17 %), college (12 %) and university (22%). 766

4 university 22% vocational studies 12% master, PhD. 4% elementary 17% high-school 45% Figure. 5 Population education 3. In order to identify if the age influence the monthly amount spent on clothes we used the chi-square test from the STATGRAPHICS soft. We first obtained the frequency table for age and amount (Table 1..) Age (years) Under 50 Under Over Table 1. Frequency table for Age and Amount From the frequency table we can notice that the persons over 60 years old have spent under 100 RON per month for clothes. Probably the low income and the mentality were the causes. For the age categories under 50 years it can be notice that the majority of the people has spent between 50 and 100 RON per month for clothes. We start with the hypothesis that there is no relation between the age and the amount spent. The chi-square test performs a hypothesis test to determine whether or not we can reject that hypothesis. With 99 % confidence level we can reject the hypothesis that there is no relation between age and amount, so we can say that the age of respondents has a significant influence on the monthly amount spent on clothes. In Table 2 we have the two dimensional distribution of frequencies for income and amount. We can notice that: the majority of the respondents with low income spend less than 50 RON per month for clothes; the majority of the people between 50 and 100 RON Monthly amount spent (RON) Over with medium incomes (between 400 and 1600 RON) spend the majority of the costumers with big income spent over 150 RON per month to buying clothes. 767

5 Monthly amount spent (RON) Monthly Income (RON) Under Over 150 Under Over Table 2. Frequency table for Income and Amount To find out if there is a relation between monthly income and the monthly amount spent on clothes we performed the chi-square test. We obtained that with 99 % confidence level the income has a significant influence on the monthly amount spent on clothes. It can be notice from Table 3. that the persons with higher education spend more many on clothes than the persons with lower education. Monthly amount spent (RON) Under Over 150 Elementary Education High-school Vocational studies University Master, PhD Table 3. Frequency table for Education and Amount Performing the chi-square test on the education and the monthly amount spent on clothes we obtained that with 99 % confidence level the education has a significant influence on the monthly amount spent on clothes. In Table 4 it can be notice that the men and the women spend on clothes between 50 and 100 RON per month. The number of the persons who spend under 50 RON and between 50 and 100 RON is almost equal and has no relation to the sex of the interviews people. Monthly amount spent (RON) Sex Under Over 150 Female Male Table 4. Frequency table for Sex and Amount Using the same hypothesis test with 99 % confidence level we cannot reject the hypothesis that there is no relation between sex and monthly amount spent on clothes. We decrease the confidence to 95 %, then to 90% and even for 80% we could not reject the hypothesis. So we cannot say that the sex of interviewed people has a significant influence on the monthly amount spent on clothes. Using the previous results obtained, we decided to use for the customers segmentation only the criteria with significant influence on the amount, which are: age, income and education. To establish the order of these variables we analyzed the intensity of the relation between the three variables and the amount spent on clothes. 768

6 The intensity of the relation between the variables can be measured by dividing the calculated value of the chi-square to the value found in the distribution table of the chi-square, for the same Df. Taking into account the income, age and education we have obtained the following results: = 7.13 for income; = 3.47 for age; = 2.99 for education In conclusion we can say that income is the first variable for segmentation, followed by age and education. IV. Conclusions By splitting the populations after the monthly income it can be create for segment. The characteristic of these segments are: A half of the population (50%) with low income (under 400 RON) spend under 50 RON per month for clothes; The biggest percentage (43%) of the people with an income between 400 and 1000 RON spent buy clothes spending per month between 50 and 100 RON; The people with an income between 1000 and 1600 RON, in majority (37%) they are spending between 50 and 100 RON for clothes; The majority of the people with big incomes (38%) up to 1600 RON spend more then 150 RON per month for buying clothes. It can be notice that the Romanians with biggest incomes spend more many on clothes than the others. But the percentage of the Romanians with big incomes is a small one only 12% of the population. In conclusion we can say that the biggest part of the Romanians spend less than 100 RON per month for clothes. It means that they spend between 20% and 25% of the minimal wage in Romania. Taking into account the age of the persons we found some interesting facts: The biggest percentage (38%) of the youngest people (under 20 years old) spends between 50 and 100 RON for clothes. Significant parts of the youngest people (31%) spend less then 50 RON. In conclusion we can say that the 69% of the youngest people spend less that 100 RON per month for clothes; The people with the age between 20 and 30 years spend in majority (68%) less than 100 RON per month; Concerning the people between 30 and 40 years old we can notice that 35% spend between 50 and 100 RON. An interesting thing is that a big percent of people from this age category spend more than 150 RON; The majority (73%) of the people between 40 and 50 years old spend less than 100 RON for clothes; 86 % of the people with the age between 50 and 60 years spend less than 100 RON for clothes; Almost 75% of the old persons spend less than 50 RON. So it can be notice that the majority of the Romanians from all the age categories spend less than 100 RON per month for buying clothes. Regarding the education of the respondents we can split the population into five segments with specific characteristics: Almost a half (48 %) of the population with elementary studies spends less than 50 RON per month on clothes; 769

7 Three quarters (38 %+36 %) of the people who attended a high school spend less than 100 RON in a month on clothes; The majority (73 %) of the persons who has vocational studies spends less than 100 RON; In the segment of the people with university studies the biggest percentage (37 %) spend between RON per month; 35 % of the people with the highest education (master and PhD) spend more than 150 RON. We have noticed that the majority of the people from each educational category spend less 100 RON per month for buying clothes, excepting the people with high education, who spend more money for clothes. Resuming all the analysis it can be noticed that the majority of the Romanians spend less than a quarter of the minimal wage per economy (100 RON) monthly for clothes. References: 1. Bota, M., The impact of the accession to the UE on the Romanian textile industry, Studia Universitas, Seria Negotia, nr. 1/2005, Cluj Napoca, pg Bota, M., Cosma, S., The perspectives of the romanian clothing industry in the European Union, Analele universitatii din Oradea - Seria Stiinte economice, Editura Universitatii din Oradea, Volumul I/2007, Oradea, pg Bota, M., Cosma, S., Negrusa, A., The European clothing industry post the agreement on textile and clothing, Studia Universitas, Seria Negotia, nr. 2/2007, Cluj Napoca, pg Cosma, S., Bota, M., Bazele Marketingului, Ed. Alma Mater, Cluj Napoca, Kotler, Ph., Managementul marketingului, Ed. Teora, Bucure ti,

PARTICULARITIES OF CONSUMER BEHAVIOR IN THE COSMETICS MARKET

Studies and Scientific Researches. Economics Edition, No 20, 2014 http://sceco.ub.ro PARTICULARITIES OF CONSUMER BEHAVIOR IN THE COSMETICS MARKET Eugenia Harja Vasile Alecsandri University of Bacau eugenia.harja@ub.ro