Company- Elaborate the evidence in systematic research.
- Evaluate general analysis with critical engagement with information and functions.
INTRODUCTION
International marketing is the simplest application that is used in marketing principles for more than one country; therefore, it has its importance in marketing. The report's main aim is to provide deep knowledge related to marketing strategies that are used to expand their current business. The chosen company for this report is Zalando, which is a medium-sized firm that wants to expand its current business step by step. The company deals in the retail sector and offers clothing and footwear for men, women, and children. Now the company wants to expand its current business at a further level of success. The report determines the most prospective market to enter through market opportunity assessment. The report also describes the investment opportunities, effects of government, interventionist policies, impact of regional integration initiatives, and threats of each market. The report also recommended which county the firm should enter first with proper justification. The report also describes the market strategy and which is the most suitable among them to expand their current business with proper recommendations.
Identify The Most Prospective Market To Enter
Zalando is one of the most rapidly growing companies, and it deals with footwear and clothing for men, women, and children. Now the company wants to expand its business in further countries in order to generate more revenue and profit. For this reason, the company uses market opportunity assessment. In today's world, brands are under pressure to stay connected in an increasingly competitive marketplace (Reid, 2018). In order to be successful in the current market, there is a need to connect new products and services that should be offered to the customers. By understanding the market as well as maintaining a consistent awareness of challenges as well as barriers to entry and growth. To determine these things, there is a need to do a market opportunity assessment, which is as follows:
Market Sizing And Growth Plan:
It is the first assessment that helps Zalando determine the actual size. The quoted company is a medium-sized firm, and among all markets, it has been analysed that the UAE is one of the most suitable options to expand its current business because the country has good political stability, and therefore, choosing the UAE is the suitable option for the company. For this, estimating the number of target customers is another option that supports and determines the actual scenario. Therefore, Zalando chooses the UAE because the country has a maximum availability of products and resources and there is a demand for new products and services of clothing or footwear, which help to generate more revenue and also increase the sales of a company (Kumar, 2018). After that, the penetration rate of the offered products should be low so that it will help to establish competitive advantages. If the offered product is of high rating, then the category of products is mission-critical and mandates the regulations. Through proper monitoring and awareness related to the market, the company can easily determine the market size and the proper generation of profit for the firm.
Industry and segment attractiveness:
This is another market opportunity assessment that helps to determine which market should be chosen. Therefore, Zalando has to determine the target segments' benefits as well as attractiveness and then which products are actually beneficial for the product, and the demand of UAE people is quite different from the other countries. Therefore, Zalando decided to expand its current business in the UAE, and it can be done through qualitative data. By taking surveys from the people, the quoted company will easily determine the exact and also fully meet their customer's needs. By analysing the needs of their customers, it will be helpful for them in order to provide the exact service to their customers (Vedula, York, and Corbett, 2018). In addition to this, if Zalando has a unique selling proposition, then it will help them to create the best sales for their product by targeting the exact market, which will be helpful for them in order to gain high competition in the market.
Porter Five Force Model for Turkey:
|
Basis |
Turkey |
Egypt |
UAE |
|
Threat of substitute |
For Zalando, the threat of substitutes is high because to introduce a new product, the company needs to invest a lot of money, which is quite cost-effective. |
In Egypt, the quoted company also has a high power of substitute; therefore, the company can also be affected by the rival company's business strategy. |
In UAE, the company has a low threat of substitutes because in UAE there are not many stores that offer the best quality of products, which are offered by Zalando. |
|
Bargaining power of suppliers |
The supplier range in Turkey is low, and if there are some, then they also have some power to control the prices. |
The supplier range of the country is low, and many of the customers also switch to other companies because they offer low prices (Salinas, 2018). |
The bargaining power of suppliers is high; the company also has good supply power in the UAE, so it can expand its business there. |
|
Bargaining power of customers |
The bargaining power of customers is also low and for this reason, the company cannot expand the business in it |
The buyers are not so powerful because their social lifestyle is quite different from other people and therefore, the company faces low bargaining power of buyers |
In the UAE, people demand different clothes, and this can be fulfilled by Zalando if they fulfill their demands if the business is expanding their new unit in the UAE. |
|
The threat of new competitors |
If the company has its brand image in the market, then it will not be affected by other rivals, and in Turkey there is a wide range of companies that offer their products at a low price. Therefore, to expand Zalando in Turkey is not helpful to generate revenue. |
In Egypt, the company is not so developed and there is such a small number of new entry companies; therefore, it will not be helpful for Zalando to expand its business in a quoted country. |
UAE is a more developed country, and the threat for Zalando to expand their business in UAE is helpful, such that a new entrant faces problems because of new rules and regulations, and this can be helpful to generate more revenue (Sheng, 2015). |
|
Intensity of rivalry |
There are few competitors in Turkey, and it will not be possible for Zalando to expand the business in it. |
In Egypt, the competitive rivalry is quite low because the competition is low from other countries. |
In the UAE, the intensity of rivalry is also high because, in a market, if the competition is high, then it will also help to generate more revenue and expand its business. |
Market Requirements And Barriers To Entry:
The requirements of the market are different in different countries, and it is quite necessary for the company to determine the exact needs of the market. For this reason, the company needs to do market opportunity assessments, which help to identify which market is beneficial, and at the same time, the company needs to identify different barriers that create hindrances in order to enter a new market. In Turkey, the market requirements are quite different and the suppliers are also low; on the other side, in Egypt, the demand of their customers is also not over, which is a force for Zalando in order to expand their business in Egypt. Therefore, the company also meets the basic requirements of their company (Market, 2017). On the other side, in the UAE, the company is in demand because many of the customers are also in demand of their favorite clothes, and this can be overcome if the company is in the UAE.
On the other side, whenever a new country enters into a new market, it is quite necessary for the company to follow all the new rules and regulations, which helps to establish its new unit in a market. Therefore, if the company also wants to enter a new market, then it will be helpful for them to follow all the new rules and regulations. Similarly, in the case of the UAE, the rules are not so difficult to follow, and they can be easy to follow.
Go-To-Market Strategy:
It is a plan that is actually used in order to specify how the company will reach its target customers and then achieve competitive advantages. Through this market strategy, Zalando will easily come to know which products will need to be launched in which city, and this assessment criteria will be helpful to determine the exact needs of their customer demand, and through the go-market plan, the company will also realize the exact needs of their customers.
Explaining The Market Assessment Opportunities
Investment Environment:
It refers to the exchange of money, wealth, or the international economy or domestic economy that directly affects the prices of the values that actually effect the products. In addition to this, the prices of financial assets in the financial market further affect the risk of financial markets (Helfat and Martin, 2015). As the GDP of the country affects the company's overall structure, when the investment environment affects the actual performance, then it directly affects the company's overall working performance.
In addition to this, if the investment environment comprises all types of investment opportunities and the market structure that helps facilitate the buying and selling of investments,. Therefore, different types of securities and institutional setups also affect the actual working performance of the company. In the context of Zalando, if the company is actually affected by these intermediaries, then, as a result, it also comes to affect the actual environment of the company, and it will directly or indirectly affect the buying power of their customers.
Effects Of Government Interventionist Policies:
It is an economic policy that differs for every country, and this also favors government intervention in a market process in order to correct the market failure and promote the welfare of the people. The main aim of this is to promote economic growth, increase employment, and raise the prices of the company so that it will further help to manage the money supply and interest rates (Van Hoa, 2017). These interventions are generally made to improve the performance of the country's actual economy. A common example of this is subsidies, information, or private benefits.
The effect of government intervention policies is helpful to many companies because it provides employment opportunities as well as reduces the prices of their offered products so that it will be helpful for their customers so that they will enjoy their shopping from Zalando (Schembera, 2018). Many countries face high relative poverty and in order to overcome this, the country's economic system has to be managed, which further helps many lower-income people who suffer from social exclusion, negative externalities, etc. In the context of Zalando, before entering a new market, the company has to monitor all policies of government because it may create obstacles in the way of progress.
Market Potential:
It is the entire size of the market for a particular product at a specific time. This can be easily evaluated through the sales generated for a particular period. To determine the exact market of the product is the best and most successful way to analyse the current environmental condition, which may effect the market potential (Market Potential, 2018). As Zalando wants to enter a new market, for this reason, the company has to determine the customer base of their existing firm and for the new market by conducting primary data, which is helpful for identifying the exact needs of their customers. After this, taking the review of the competition is another strategy which is helpful for the company to launch which product on exact date. Good customer service will help Zalando to keep interacting the activities. Therefore, this market potential also depends upon profitability, and forecasting profitability is important to understand the market potential.
Another important key aspect for market potential is to determine which customer type is actually liked by the customers. For Zalando, as it deals with clothing, this will be helpful for the company to sell the same kind of product in other country also because it will help to keep sustaining its brand image in market.
Regional Integration:
It is the simplest process that is used when the neighbouring states enter into an agreement in order to upgrade the cooperation with some institution or rules. The main objective of this process also varies from political to economic factors or through political economy also (Platonova et al., 2018). Through this process, it is also possible to achieve the broader socio-political and security objectives that are defined through their country's government. Therefore, it also creates some impact upon the company through intra regional trade that helps to focus on the level of trade and commodity exchange rate between themselves that further reduces the inflation and tariff barriers which are associated with the foreign markets that help to grow the prosperity.
This also creates the impact upon the company's actual performance; therefore, if the company wants to enter a new market, it can be overcome through the regional integration, which is quite successful but also presents challenges for the pre-existing global order.
|
Basis of comparison |
Turkey |
Egypt |
UAE |
|
Investment environment |
Turkey's economic condition is quite stable and that is why the investment environment of the company is quite affected regarding investment environment. |
The economic condition of Egypt is moderate, and therefore, the investment environment has affected the GDP of the country. |
UAE is considered one of the most developed countries, and therefore, Zalando wants to invest in UAE so that it will help them to generate more revenue and maximize the profit. |
|
Effects of government interventionist policies |
The government has their own rules and regulations, which need to be followed by every company in order to expand their business in a new country (Abu ELSamen and Akroush, 2018). Turkey's government policies are quite fluctuating, and therefore, investing in this country is not affordable. |
The effect of government policies is quite effected on the company's overall performance, and therefore, for Egypt, it takes too long to invest in such a market, and therefore the company did not. |
UAE government policies are simple and adjustable. Therefore, Zalando can operate their business and take this country as a market entry mode to maximize the profit. |
|
Market potential |
The market potential for Turkey is so strong, but the size of the market is also good, but the customer base is not so strong to force a company to enter into this market. |
For Egypt, the market potential is also so strong but the customer did not demand for the clothing and footwear which company actually offered. That is why Zalando did not enter |
UAE is one of the developed countries, and there is a demand of people to invest in such a market, and therefore, the company needs to invest in such. |
|
Regional integration |
The regional integration of Turkey is quite strong, and therefore, the company will definitely be affected through the political as well as economic system, and that is why there are no chances to invest in this country. |
In Egypt, the regional integration is also affected, and the political and social condition of the country is fluctuating; therefore, there are no chances for Zalando to invest in such. |
In UAE, the company's actual working performance is such that it will also be affected, but this will be helpful (Schellenberg, Harker, and Jafari, 2018). |
Recommending Which Country The Firm Should Enter First
Among Turkey, Egypt and UAE, Zalando chooses UAE for first entrance. The country has political stability, and therefore, the quoted company chooses this. As per the above analysis, it has been analysed that the country's market size is quite big as compared to other countries. Therefore, choosing the UAE is a better option for Zalando in order to expand their current business. The economic system of the country is also stable, and this is the one reason that the quoted firm chose this, and through the Porter five force model, the country also did not have the threat of substitution as well as new entry because there is no actual branded firm in the UAE, and to choose this, it will be beneficial for the company to expand their current business (Mathews et al., 2016).
In addition to this, the country also grows as time passes, and therefore, Zalando also takes initiative in order to expand their current business. In the UAE, people demand new and fashionable clothing, which is fulfilled by Zalando, and therefore, to fulfil the demands of their customers, the company wants to expand its unit in the UAE so that it will be helpful for maximizing the profit and minimizing the risk. The investment environment of the country also affects the actual performance of the company, and even the market potential of the UAE is also better as compared to other countries. Therefore, to choose the best option, it has been recommended to Zalando to choose the UAE because it is well developed and has enough resources, which are helpful to create chances to maximize the profit as well as sales.
Presenting The Best Market Entry Strategy For Zalando
Market strategy is a mode that is helpful for a company to enter a new mode. Hence no one market strategy is right for all international markets, and for most of the company, direct importing is considered one of the most simple and effective strategies, which is helpful in order to establish their unit in a new country. Some of the methods are as follows:
- Direct Exporting: It is one of the simplest methods, which is actually selling directly into a market if the company has enough resources. Many of the companies have established new and different sales programs in order to popularize their own products and brands (Ragland, Brouthers, and Widmier, 2015). Through this method, connections are directly established, and agents or distributors are also helpful in order to represent their company in another country so that it will be helpful for them to increase their actual sales.
- Licensing: The next entry method is licensing, which is a sophisticated arrangement of the firm in order to transfer the rights to use the products as well as services to some other firm. It is useful for those countries that have a good market share in the market and who want to grab a new and long market share in another firm.
- Franchising: The most simple and rapid market expansion strategy that is actually useful for those companies who have a good market share. Franchising work for those who have the repeatable business model and who can be transferred into other markets (Marchi et al., 2014). While using this model, the company should have a good brand image in the market so that it will be helpful to merge with another and utilize others resources, and next is to create future competition through this franchising.
- Partnering: This method is actually successful for those market who want to invest into foreign market. Partnership means to share the ratio of profit as well as loss in an equal ratio so that the risk occurring chances will be minimized. Moreover, this market entry strategy method is useful in those markets where the culture and society are different from the local market, so investing in such a market will be helpful in order to gain market knowledge and increase contacts.
- Joint Venture: It is another form of partnering and also involves the creation of a third independently managed company. These all work together in order to create a good market brand image so that it will be helpful in order to gain high competition in the market, and therefore, risk as well as profit are also shared in equal amounts.
- Merger and acquisition is the most common strategy, which is actually helpful for many companies that lose almost share in the market. Under this strategy, the company has a good market share, and due to government regulations, many companies choose only this market entry mode for the expansion of their current business (Reid, 2018). This entry immediately provided the best results, such that if the company acquires or merges with another company that has a brand image in the market. Then it was immediately helpful to create a strong customer base and also treated by the local government in the form of a local firm.
Among all market strategies, it is to be recommended to Zalando to choose franchising as a market entry mode. Because the company also have a repeatable business model and have a unique brand positioning in order to expand their current business. So that choosing franchising among all is quite beneficial for the company in order to create future competition for the franchisee. If Zalando buys a franchise of the company in the UAE, it will be beneficial in many ways, and some of them are as follows:
- The risk of business failure decreases by using franchising as an entry mode. Choosing that company that has a good brand image in the market will also help to establish a good market share, and at that time there is no need to test the market share. Therefore, choosing franchising as an entry mode is beneficial (Salinas, 2018).
- No prior experience is needed, such as training, because taking a franchise means that a franchisor should also ensure that they also have good enough skills, which are actually required in order to operate the business.
- Using franchisee as an entry mode will also help Zalando to establish better relationship with suppliers so that it will be helpful for the company to uses and produce the best variety of products as well as services as per the needs of the customers of UAE.
Also Read: International Business Competition
CONCLUSION
By summing up the above report, it has been concluded that Zalando is a medium-scale business and it wants to establish its new unit in the UAE, which is the most developed country and has a stable political as well as economic status, which helps a company to expand their current business. report also concluded that through market opportunity assessment, there are many factors that also affected the company's overall performance, and the government intervention policies are also sometimes creating problems. As a result, the company got affected. Further reports also concluded that UAE is the most appropriate marker, which should Zalando enter first so that the profit margin of the company also maximizes. In order to enter a new market, Zalando may use franchising as a market entry mode because it will help to let the company realize what the market is in the UAE and it will also help to establish long-term relationships with their suppliers. Are you worried about assignment help ? Connect with our experts online.
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