The importance of marketing cost control in PPG's failure

December 29 Afternoon News, the December 2009 batch of auspicious apparel (Shanghai) Co., Ltd. closed the door, the analysis of the advisory release of the report that the marketing costs as a necessary expenditure in the operation of enterprises, too little, not to promote sales, brand-building effect; too much, it directly leads to the tight capital chain, Increase business risk in the short run. The following is part of the full text: Event background: December 2009, the batch of auspicious apparel (Shanghai) Co., Ltd. (ie ppg) completely closed, assets used to repay the outstanding advertising fees. It is reported that PPG was founded in 2005, through the business website and call center sales men's shirts, early sales growth.　　At the beginning of 2008, PPG was exposed to a worrying situation, with advertisers, suppliers of debt disputes frequently in the newspapers.　　Iris Reviews: As the forerunner of Chinese apparel industry, PPG's development process has implications for the future operation of the market and the development of Chinese apparel industry.　　The growth of PPG, which provides a model for the later entry. The early growth of PPG is closely related to the improvement of the whole external environment and the product orientation of the enterprise itself. 1. The improvement of the external environment makes it possible on the one hand, the Chinese online shopping environment is improving, the network popularity rate and the penetration rate of the network shopping are increasing; On the other hand, China's garment manufacturing industry is becoming more and more standardized and mature. China's apparel manufacturing enterprises after a long time for foreign OEM experience, skills continue to improve the situation of foreign trade increasingly serious situation, many enterprises began to demand opportunities at home.　　These make online clothing sales possible. 2. Product entry point is good, easy to open the market early PPG Select men's shirts as a starting point for online sales.　　Eric analysis that men's shirts standardized high, coupled with men's low demand for shirts, demand, and men easy to accept the form of online shopping, so that PPG early to quickly open the market. PPG early rapid growth, led the Chinese men's E-commerce market development. After that, the market appeared vancl, BONO, wheat nets and other apparel enterprises. Eric Research data show that 2009 China's business Apparel online shopping market volume will reach 2.4 billion yuan.　　Among them VANCL sales after Taobao mall, the third quarter of 2009 sales have been billion, product line has been expanded to women's, home, jewelry and other categories. Second, the failure of PPG, to provide a lesson to the later Eric analysis that PPG eventually went downhill, with the entire team's management operations closely related. Among them, the advertisement cost control LAX is the biggest mistake of PPG operation.　　The marketing cost control is disadvantageous, causes the enterprise capital flow to be tense, the product quality crisis outbreak, has intensified the enterprise capital pressure, after the discount website's introduction, has not been able to return the fund effectively, has intensified the enterprise's public opinion crisis, the information communication channel flaw, has facilitated the crisis the reality. 1. Advertising costs to control LAX,Lead to the tension of the capital chain Eric observed that PPG mainly choose TV, newspapers, outdoor print media for advertising, internet advertising less, resulting in the company's advertising costs are too high, in addition to the Enterprise brand construction behind the enterprise sales highly dependent on high advertising.　　It is reported that November 2007, PPG's advertising expenses have reached 400 million yuan. Eric analysis that the marketing costs as a necessary expenditure in the operation of enterprises, too little, can not promote sales, establish the effect of the brand, too much, it will directly lead to the capital chain of tension, increase the enterprise short-term operational risk.　　Eric suggested that in the course of business operations, advertising and other marketing costs should be controlled within a reasonable range. 2. Product quality control is not strict, exposing the hidden danger of quality inspection links in May 2007, PPG's batch of goods appeared quality problems, triggering a large number of returns.　　Eric Observation found that PPG's product quality inspection concentrated in the garment processing stage, the quality of the procurement of fabric control is not strict, resulting in product defects. Eric analysis that the product quality is the lifeblood of sales enterprises. For clothing, the problem of product quality is particularly important.　　Eric suggested that online apparel sales enterprises, set up a supply chain quality concept, strengthen including fabric procurement, garment processing, clothing distribution and other aspects of garment quality inspection.　　3. Self-push discount website, aggravate the public opinion crisis at the end of 2007 PPG launched a discount website www.ppsale.cn, sale backlog products, withdrawal of funds.　　Eric analysis that the introduction of discounted Web sites, on the one hand, hurt the original consumer's feelings, triggering a large number of consumers lost, on the other hand, exacerbated the public opinion on the operation of PPG, inhibit the injection of subsequent venture capital. 4. Information communication channels have not been established, contributing to the reality of the crisis. Eric observed that with VANCL open the user evaluation function, PPG operation in several years, has not established a direct communication with consumers of information channels.　　The lack of information channels makes it difficult for PPG to get feedback from users in time, adjust the operation of the company, and finally contribute to the outbreak of the crisis. Eric analysis that, with television, newspapers, advertising and other media, the Internet media to achieve the rapid spread of information and two-way flow. Eric suggested that Internet enterprises learn to use the Internet to establish a clear channel of information between consumers, timely understanding of customer needs and dissatisfaction, improve product and service quality, resolve the enterprise crisis.