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Interplanning …we fix your problems! Marketing strategies for fashion and textile industry Alessandro Barulli Training Program for ICE - Italian Trade Commission & Sistema Moda Italia Sozhu, China March 15-16, 2010 Interplanning …we fix your problems! The following slides support front lessons and are part of a wider teaching program. Without teacher explanation, arguments can be partial and drive to incorrect conclusions. For any further needs or clarifications, please send and email to: [email protected] [email protected] -2- Notes Interplanning …we fix your problems! • In the following slides the terms client and consumer are considered synonymous, even if the first refers to a B-2-B (Business to Business) relationship and the second to a B-2-C (Business to Consumer) one. • Either terms like product and service can be considered synonymous. [email protected] -3- Notes Interplanning …we fix your problems! • Acronyms: Foreign Direct Investments: FDI Human resources: HR Joint venture: JV Marketing: mktg Market: mkt Multi National Companies: MNCs Research and development: R&D Small Medium Enterprises: SMEs Wholly Foreign Owned Enterprises: WFOE [email protected] -4- Index Interplanning …we fix your problems! 1. Marketing principles and planning. From the basics to marketing plan. 2. The product: from conception to launch in the market. 3. How to calculate the price, considering the typical elements of fashion and textile industry. 4. Building distribution channels. Differences between fashion and textile markets. 5. Brand and promotion: the importance of communication. 6. International strategies and the companies’ expansion to foreign markets. 7. Case history: Ermenegildo Zegna [email protected] -5- Interplanning …we fix your problems! Marketing strategies for fashion and textile industry 1. Marketing principles and planning. From the basics to marketing plan. Marketing and strategy Interplanning …we fix your problems! What is your company’s marketing strategy? Do you have a strategy for pricing and distribution? Do you plan to reach customers in a foreign country? Are you scheduling an advertising campaign for a soon-to-be-released new product? These are important questions because every business needs a marketing strategy [email protected] -7- Marketing Interplanning …we fix your problems! Clients Markets Products Marketing Place (distribution) Prices Promotion (& advertising) Processes Human Resources [email protected] -8- Marketing: definition (American Marketing Association) Interplanning …we fix your problems! Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives [email protected] -9- Marketing Interplanning …we fix your problems! Company Type of Company Product Oriented Sales Oriented Market Oriented Mission Manufacture Products Sell Products Address products to the Markets Type of MKTG Passive MKTG Organizational MKTG Strategic MKTG Function of MKTG MKTG exists to sell what has been manufactured MKTG is used to build and manage efficiently sales force MKTG is used to build and maintain the presence in the market Historical period Post II World War Sixties Seventies [email protected] - 10 - Marketing Interplanning …we fix your problems! Strategic MKTG: Analysis and forecast of market needs Operative MKTG: Ensemble of sale instruments Needs analysis Market segmentation and segment choice Attractiveness Analysis Competitiveness Analysis New products strategy New markets access strategy MKTG plans MKTG budget Plans application & control Sales tools (catalogs, price lists) Web site Advertising Promotion Trade shows [email protected] - 11 - Company marketing oriented (P. Drucker) Interplanning …we fix your problems! Main questions What is our business? Who is our client? What is valuable for our client? How should be our business? How will be our business in the future? Who are our competitors? [email protected] - 12 - Market structure Interplanning …we fix your problems! Knowledge path Access path Distributors Competitors CLIENTS Company Social and Economical Environment [email protected] - 13 - Marketing Information System Interplanning …we fix your problems! Clients Company internal environment - Expectations - Purchase intentions - Purchase behaviors - Behaviors after purchase - Marketing activity - Marketing vs. other activities - Revenues / mark ups - Market share Competitors Information (M.I.S.) - Positioning - Strengths /weaknesses - Mktg strategies & politics Market external context - Social elements - Technological elements - Cultural aspects Demand - sector/market - type of client [email protected] - 14 - Mktg Information System: sources Interplanning …we fix your problems! • Internal: sales data, accounting data, experiences, internal resources • External: – Clients – Other manufacturers, either competitors – Distributors – “Professional” sources (e.g. consulting companies) • Marketing research: targeted information [email protected] - 15 - Marketing research: why? Interplanning …we fix your problems! • • • • • • • Define the characteristics of a market Measure the attractiveness of a market Analyze sector developments Analyze competitors products/brands Study the acceptance of new products Study the price the market wish to pay Analyze clients/consumers behavior [email protected] - 16 - Marketing research: types Interplanning …we fix your problems! define the problem problem finding research find alternatives evaluate alternative actions problem solving research decide actions control actions performance research [email protected] - 17 - Customer satisfaction: the road map Interplanning …we fix your problems! Satisfy the clients when they have a need, not before (when they don’t feel it), nor after (when the need has been satisfied by a competitor). Timely Customer satisfaction Continuously Competitively Knowledge of the Market Customer satisfaction is a never ending attitude: Is much better and profitable maintain a client than get a new one Satisfy the clients better and more than the competitors [email protected] - 18 - Competitive advantage (G. Gandellini) Interplanning …we fix your problems! Capability of the company to satisfy its customers choice better and more than competitors The competitive advantage derives from the best perception of Value and Price made by the customers [email protected] - 19 - Competitive advantage (M. Porter) Interplanning …we fix your problems! Value that a company is able to generate for its clients, bringing higher results than the expenses sustained to create it [email protected] - 20 - The market Total market 100% Potential Mkt 10% Available Mkt 30% Potential Mkt 100% Interplanning …we fix your problems! Target Mkt 10% Served Mkt 5% [email protected] - 21 - The market: definitions Interplanning …we fix your problems! • Total Mkt: composed of all people in a given geographical area (county, region, country, etc.) • Potential Mkt: composed of people among the total population who have some interest in buying products of the company • Available Mkt: people who are interested in, can afford and have access to company’s products • Target Mkt: portion of Available Mkt the company address to • Served Mkt: members of Target Mkt that have purchased company’s products (or services) [email protected] - 22 - Market segmentation: bases Interplanning …we fix your problems! • Geographic criteria – City, county, region, state • Demographic criteria – Age, sex, family size, income, occupation, nationality • Psychographic criteria – Social class, values, personality, lifestile • Behaviorist criteria – Occasional, regular, loyal [email protected] - 23 - Market segmentation: an example Interplanning …we fix your problems! Variable Possible segments Products Age Child, adult, senior Toys, car, medical insurance Sex Occupation Male, female Managers, clerical, students, retired, unemployed American, British, Japanese Sport equipment, cosmetics Work shoes, personal computer Nationality Ethnic food, movies [email protected] - 24 - Identifying and defining Mkt segments Interplanning …we fix your problems! 1. 2. 3. 4. 5. Select product Select market Qualify prospective markets Determine worthwhile target markets Profile and prioritize segments [email protected] - 25 - Market segmentation and variables Interplanning …we fix your problems! Product: Variables of functions and/or characteristics of the product Market: Demographic variables (sex, age, expenditure, occupation, etc.) and/or clients needs Technology: Company’s technical variables to manufacture the product [email protected] - 26 - Market segmentation: transports Interplanning …we fix your problems! Air On wheels Sea By rail Land International Goods < National [email protected] Local > People - 27 - Segmentation & Mktg strategies (P. Kotler) Interplanning …we fix your problems! Undifferentiated Differentiated MKTG Mix Market MKTG Mix A Segment A MKTG Mix B Segment B Segment C Concentrated MKTG Mix C Segment A MKTG Mix Segment B Segment C [email protected] - 28 - Positioning Interplanning …we fix your problems! States as the product is positioned in consumers’ mind, with reference to all the different choices they feel available to satisfy a need. The company has to offer a product: – Matching the expectations of the target(s) – Different from that of competitors – With a well known and unforgettable brand [email protected] - 29 - Positioning: benefits to offer Interplanning …we fix your problems! Target(s) characteristics Better benefits than competitors Benefits expected Benefits to offer Different benefits Benefits offered by competitors [email protected] - 30 - Marketing plan Interplanning …we fix your problems! • Is the document containing the company’s marketing strategy. It is based on a clear company mission, objectives and goals other than effective controls. • The marketing plan has to be coherent with segmentation, positioning and marketing mix politics. [email protected] - 31 - Marketing plan: basic structure Interplanning …we fix your problems! Company’s Mission Internal environment Analysis External environment Analysis Goals Strategy Programs & Schedule Improvements Controls [email protected] - 32 - Marketing plan: concepts Interplanning …we fix your problems! Mission States guidelines for strategic planning and markets expansion. It lays out the corporate philosophy, which provides direction and specifies the nature of the company’s business. [email protected] - 33 - Marketing plan: concepts Interplanning …we fix your problems! Environmental analysis (1/3) The “external” environmental analysis covers a wide range of macro and micro data, such as competitive initiatives, growth rate for selected markets, suppliers availability, distribution problems, social, economical and political elements that can affect the company’s expansion plan [email protected] - 34 - Marketing plan: concepts Interplanning …we fix your problems! Environmental analysis (2/3) The “internal” analysis is related to company’s elements that can be positive or negative to its development plans. Includes: marketing mix policy, salesforce competence, financial strength, manufacturing expertise and organization. [email protected] - 35 - Marketing plan: concepts Interplanning …we fix your problems! Environmental analysis (3/3) SWOT analysis S Internal (the company) W Strengths O Weaknesses T Opportunities [email protected] Threats External (the market) - 36 - Marketing plan: concepts Interplanning …we fix your problems! Goals Targets can be various and different; the most popular are those referring to the market; they can be as follows: Penetration strategy • Focused on more aggressive mktg of existing products Market development strategy • Focused on attracting members from other segments Product development strategy • Focused on developing new products for members of the segments actually served [email protected] - 37 - Marketing plan: concepts Interplanning …we fix your problems! Strategy Determines the ways by which targets can be reached; for instance establishing or improving an efficient export strategy, signing assembling or franchising contracts or deciding to enter in a foreign market opening a branch. [email protected] - 38 - Marketing plan: concepts Interplanning …we fix your problems! Programs & schedule Lists the actions required by strategy to reach the goals and sets the calendar planning for each action. This allows all the actions to be determined and scheduled before the marketing plan starts. [email protected] - 39 - Marketing plan: concepts Interplanning …we fix your problems! Improvements All the plans have to be improved because of many unforecasted events (economic changes, distributions changes, market changes, consumers changes, etc.). Best of all, every marketing plan should have an alternative plan, if the former cannot be reached. [email protected] - 40 - Marketing plan: concepts Interplanning …we fix your problems! Controls To be efficient - and reach the goals every plan has to be carefully kept under control constantly, to verify if the coming results are those foreseen. On time control allows small real time changes; no control makes only damages. [email protected] - 41 - Mktg plan: strategic control matrix Interplanning …we fix your problems! Strategy Yes Strategy needs changes? No Plans Yes Standards of Performance for Plans require changes? No Review Standards Mktg Production R&D Finance H.R. Results Results match standards? [email protected] No - 42 - Interplanning …we fix your problems! Marketing strategies for fashion and textile industry 2. The product: from conception to launch in the market. Product life cycles (PLC) Interplanning …we fix your problems! Sales & Profits Introduction Growth Maturity Decline Sales Profits Product development Time [email protected] - 44 - Threats, opportunities & mktg in PLC Interplanning …we fix your problems! Introduction Growth Maturity Decline Maintain competitive advantage (a) Cut back (b) Revive (c) Terminate Mktg objective Attract innovators Expand and opinion distribution and leaders to a new product line product Sales Increasing Rapidly increasing Stable Decreasing Competitors None or small Some Many Few Profits Negative Increasing Decreasing Decreasing Mark ups Low High Decreasing Decreasing Clients Innovators Affluent mass mkt Mass market Laggards Product mix One basic model Expanding line Full product line Best sellers Distribution Depends on product Expanding number of outlets Expanding number of outlets Decreasing number of outlets Price Depends on product Greater range of price Full line of prices Selected prices Promotion Informative Persuasive Competitive Informative [email protected] - 45 - Product: penetration strategies Interplanning …we fix your problems! Pull (attraction) Using promotion and advertising campaign Push (pressure) Using sales force and sales people [email protected] - 46 - Product: mktg mix comparison Interplanning …we fix your problems! Fashion clothes Product Selling Textile fabrics Distribution Promotion [email protected] Advertising - 47 - Product: adoption process model Interplanning …we fix your problems! The consumers learn of the new product, but lack information about it Awareness They consider whether The consumers decide benefits of the new to use the new product product justify trial regularly Interest Potential buyers are stimulated to seek information about the new product Evaluation Trial Adoption They make trial purchases to improve their original estimate of the new product’s value [email protected] - 48 - New product: development & process Interplanning …we fix your problems! A. In-company analysis F. Performance measurement - Motivation - Culture - Risk Sales Market share Profitability - B. Market focus E. Launch plan - Customer needs/value - Competitive offerings - Environment analysis Test Announcement Launch - C. Product strategy development D. Design of marketing plan - Identify target customers - Create value proposition Product Price Promotion Distribution Service - [email protected] - 49 - New product: main failure causes Interplanning …we fix your problems! 1. Market/marketing failure 4. Small size of the potential market No clear product differentiation Poor positioning 5. Misunderstanding of customer needs Lack of channel support 6. Competitive response Technical failure Product did not work Bad design Organizational failure Poor fit with the organizational culture Lack of organizational support Environmental failure Government regulations Macro economic factors 2. Financial failure Low return on investment 3. Timing failure Late in the market “Too” early - market not yet developed [email protected] - 50 - Product to export: strategies Interplanning …we fix your problems! Domestic Market Foreign Market #1Mercato Mercato Straniero 2 Straniero 3 Same Product Domestic Product Adapted Product Customized Product Global Product [email protected] - 51 - Interplanning …we fix your problems! Marketing strategies for fashion and textile industry 3. How to calculate the price, considering the typical elements of fashion and textile industry. Pricing: objectives Interplanning …we fix your problems! Return on sales (ROS) Return on investments (ROI) Increase the market share Maintain the leadership towards other manufacturers Sell other products of the range Survive to possible cash flow crisis [email protected] - 53 - Pricing: issues Interplanning …we fix your problems! • To price effectively consider the following issues: – Price should reflect • Strategic objectives • Customer target • Product positioning – Price should take costs into account, noting that variable cost is the floor and customer value the ceiling – Price should take channel considerations into account – Price should understand the product life [email protected] cycle - 54 - Pricing: strategies Skimming strategy Interplanning …we fix your problems! • The product is launched in the mkt at the highest price, targeting only those consumers attracted by the quality and uniqueness of the offer. • Then - after sales to this first segment - the price will be lowered to attract other clients. • Skimming strategy is appropriate if the product isn’t attracting excessive competition, if the high price is support by a superb quality, if the target market is large enough to get positive short term returns. [email protected] - 55 - Pricing: strategies Penetration strategy Interplanning …we fix your problems! • This strategy would suggest a low introductory price to stimulate the growth by grabbing market share from existing competitors. • The market share achieved in this way usually produces long term benefits that will easily compensate for short term profit losses. • Penetration strategy requires a large, expandable, price sensitive target market and the possibility of economies of scale; other than this the low [email protected] price should effectively - 56 discourage competition and not violate Export pricing: major elements Interplanning …we fix your problems! Internal to the company: - Mktg targets - Mktg strategies - Costs (fixed, variable, manufacturing, packaging, sale, promotion, etc.) - Company organization and structure Price Decisions External to the company: - Market characteristics (number of clients, purchasing capacity, infrastructures, etc.) - Demand - Competitors - Environmental aspects (custom barriers and duties, exchange rates, economic conditions, restrictive rules and laws, etc.) [email protected] - 57 - Pricing - Fashion typical costs Interplanning …we fix your problems! • Advertising – Newspapers, magazines, billboards • • • • • • Brand awareness Channel structure (long) Promotion (fashion weeks) Public relations Product placement Collections obsolescence [email protected] - 58 - Pricing - Textile typical costs Interplanning …we fix your problems! • • • • Samples Salesforce Product research and innovation Production costs (large quantities required) [email protected] - 59 - Export price and distribution channels (example - figures refer to an Italian company) Interplanning …we fix your problems! Direct Product industrial cost Importer Wholesaler Retailer 50,00 50,00 50,00 50,00 7,50 7,50 7,50 7,50 57,50 57,50 57,50 57,50 40’ container CIF Dubai 1,60 1,60 1,60 1,60 Duties (5%) 2,88 2,88 2,88 2,88 Transport 0,20 0,20 0,20 0,20 Price @ Importer - 62,18 62,18 62,18 Importer Mkup (50%) - 31,09 31,09 31,09 Transport - 0,20 0,20 0,20 Price @ Wholesaler - - 93,47 93,47 Wholesaler Mkup (20%) - - 18,69 18,69 Transport - - 0,20 0,20 Price @ Retailer - - - 112,36 Retailer Mkup (20%) - - - 22,47 62,18 93,47 112,36 134,83 Mkup (15%) EXW price Price @ End User [email protected] - 60 - Selling price: Nike Air Pegasus (D. Cohen) Interplanning …we fix your problems! Selling price: 70,00 $ • Worker salary: 2,75 $ • Raw materials (leather, rubber), machines purchasing, export costs: 13,75 $ • Promotion and advertising: 4 $ • Accounting, R.O.I., stock cost, shareholders: 17,75 $ • Clerks payrolls, store rent, warehousing costs: 31,75 $ [email protected] - 61 - Interplanning …we fix your problems! Marketing strategies for fashion and textile industry 4. Building distribution channels. Differences between fashion and textile industry. Distribution: types Interplanning …we fix your problems! Intensive: Products are distributed through the highest number of sale points Selective: Products are distributed through selected sale points (for brand, other products, position etc.) [email protected] Exclusive: Products are distributed only in selected and qualified sale points - 63 - Distribution channels Interplanning …we fix your problems! • Indirect – Big buyers (supermarkets, chain stores, other manufacturers). Importers. Wholesalers. Trading companies (national & foreign). Commissioned agents (brokers). Cooperatives. • Direct – Salesmen. Sales Reps. Branch. Subsidiary. Affiliated. • Integrated – Franchising. Contractual JVs. Piggyback (when a company allows another one, which has its own export distribution, to sell its [email protected] products abroad). - 64 - Direct distribution channels Advantages: Direct market control Own people more efficient Immediate changes on mktg mix More info from the market Sale actions more efficient and lasting Presence on markets without intermediaries Brand diffusion Intermediaries mark ups retention Interplanning …we fix your problems! Disadvantages: Very expensive initial investment and high yearly costs Need of highly skilled H.R. Need of a large market share to absorb investments and yearly costs [email protected] - 65 - Indirect distribution channels Interplanning …we fix your problems! Advantages: No costs and risks entering the market No need to know market characteristics No need to know customers requirements and behaviors Disadvantages: No control on the market Lack of direct info from the market No contact with the endusers Risk of substitution from intermediaries [email protected] - 66 - Distribution channels: types Interplanning …we fix your problems! Consumer goods Manufacturer Import Wholesaler Retailer End user Long Manufacturer Wholesaler Retailer End user Medium End user Short Manufacturer Industrial goods [email protected] - 67 - Interplanning …we fix your problems! Marketing strategies for fashion and textile industry 5. Brand and promotion: the importance of communication. Brand & Branding: Definitions Interplanning …we fix your problems! Brand: Name of a product or category of products that can be identified referring to the first product introduced in the market Branding: Ensemble of activities related to the brand conception, development and management [email protected] - 69 - Brand strategies: Objectives Interplanning …we fix your problems! Convince consumers to buy or use products and/or services offered by the brand Push consumers to buy the emotions related to the brand Create anticipations – meaning explicit or implicit promises – for the consumers Give a meaning to products and their characteristics Convince consumers to prefer the brand products to those of competitors [email protected] - 70 - Brand strategies: valuable factors Interplanning …we fix your problems! Type of consumer (person that use the brand) Type of use (occasion the brand is used in) Type of personality the brand reflects (exciting, emotional, sexy, etc.) Type of feeling “brand-client” Type of relationship the brand build up with its consumers (casual, occasional, everlasting, etc.) [email protected] - 71 - Brand strategies: measuring criteria Interplanning …we fix your problems! Attribution Have the target consumers perceived the brand as source for the benefits they desire? Convincement Do they know the benefit(s) are really reachable? Desire Is the purchase of the brand products originating from the perception of the benefit(s)? Difference Is the brand considered as the only source for - 72 [email protected] the benefit(s) by the consumers? Birth of a brand Interplanning …we fix your problems! Is made through: Launch of an innovative brand/product Promotion of the new category of products [email protected] - 73 - Birth of a brand Interplanning …we fix your problems! Some examples of brands related to products and services that originated new categories: Band Aid: the first medical strip Kleenex: the first paper tissue Jacuzzi: the first whirlpool bath Intel: the first microprocessor CNN: the first news tv [email protected] - 74 - Birth of a brand Interplanning …we fix your problems! The birth of a brand is made through promotion The best way to promote is being the first brand of a new category of products. The Body Shop has been the first line of natural beauty products, manufactured to respect the environment and not tested on animals [email protected] - 75 - Motivational factors: leadership Interplanning …we fix your problems! The leadership permits to build up in consumer minds the convincement the products of the brand leader are the best in the market The leadership is defended by the advertising that allows to maintain the positioning reached and prevent other competitors from attacking the brand leader market share [email protected] - 76 - Motivational factors: credentials Interplanning …we fix your problems! • The crucial ingredient in the success of any brand is its claim to authenticity. • When Coca-Cola launched “The Real Thing” campaign, customers immediately responded “yes, it is; everything else is an imitation The Real Thing [email protected] - 77 - Motivational factors: quality Interplanning …we fix your problems! • Quality, or the perception of quality, resides in the mind of the buyer; a powerful brand is built by a powerful perception of the quality in the minds. • Building a quality brand usually means to price products higher than competitors The Art of Writing [email protected] - 78 - Identify a brand: how to do Interplanning …we fix your problems! Possibly responding in the same way to the following questions: What’s the brand name? What’s the name of the product in the packaging? Pepsi is The brand name The product name The company name [email protected] - 79 - Launch of a second brand Interplanning …we fix your problems! The launch in the market of a second brand - or a third, fourth and so on - is possible only if every brand has its proper identity, even if it belongs to the same family of products. In the example all magazines belong to Time family, but they aren’t called Time for Fortune, Time for Sport, Time for Money and so on; the different brands have an identity completely separated the one from the others. [email protected] - 80 - Launch of a second brand: strategy Interplanning …we fix your problems! Concentrate in a common product area Select only one element to segment (price, age, target, etc.) Set and maintain a rigid distinction between brands Use different names, not similar Launch the new brand to create a new category, not to fill any lack or compete with a competitor Keep a rigid control on the brand family [email protected] - 81 - Brand affirmation: strategies Interplanning …we fix your problems! Brand Domain Domain of a brand in terms of product, distribution, promotion Brand Reputation Brand characteristics that support its uniqueness, credibility and reliability towards competitors [email protected] - 82 - Brand affirmation: strategies Interplanning …we fix your problems! Brand Affinity Based on the relational relationship of the affinities within brand and consumers Brand Recognition Higher perception of the brand towards the competitors, typical of brands positioned in market niches [email protected] - 83 - Decline of a brand: new life or death? Destiny of a brand is decided by: • Its awareness within consumers • What it stands for the consumers Interplanning …we fix your problems! A well known brand that don’t have a meaning for consumers can disappear. The brand that has a meaning, even if not much known, has a value and is worth to be revitalized [email protected] - 84 - Brunello Cucinelli Interplanning …we fix your problems! [email protected] - 85 - Pinko Interplanning …we fix your problems! [email protected] - 86 - Mario Mazzoni Interplanning …we fix your problems! [email protected] - 87 - Rubelli Interplanning …we fix your problems! [email protected] - 88 - Larioseta Interplanning …we fix your problems! [email protected] - 89 - Marina Mansanta Interplanning …we fix your problems! [email protected] - 90 - Interplanning …we fix your problems! Marketing strategies for fashion and textile industry 6. International strategies and the companies’ expansion to foreign markets. Pay attention!!!! Interplanning …we fix your problems! [email protected] - 92 - Internationalization: boosting factors (internal) Interplanning …we fix your problems! • • • • • • • Economic growth Management skills on international trade Technological and mktg know-how Risk diversification Economy of scale Domestic market contraction Change agent subjects [email protected] - 93 - Internationalization: boosting factors (external) Interplanning …we fix your problems! • Foreign countries economic development • Opportunities and benefits offered to foreign investors • Economic integration (Nafta, EU, Mercosur, ASEAN, etc.) • Homogeneity of social models • Supply chain management (cheaper sources) [email protected] - 94 - Internationalization: SMEs development Interplanning …we fix your problems! • Preparing the company to international trade seeking people speaking foreign languages and possibly experienced of export sales • Learning transport and logistic techniques in relation with distance, infrastructures and product to ship • Acquiring info on payment terms used to settle exchanges and guarantees used to protect export sales • Preparing sales dox (e.g. proforma and/or commercial invoice, packing list, certificate of origin, export license) and defining sales and distribution contracts [email protected] - 95 - Internationalization: SMEs development Interplanning …we fix your problems! • Studying the export strategy and analyzing the most attractive markets • Studying the product to export, eventually adapting it to markets needs • Preparing sales tools (catalogues & price lists) in foreign language(s) and measurements • Training sales reps and seeking locally the intermediaries according to the company strategic plan [email protected] - 96 - Internationalization: SMEs development Interplanning …we fix your problems! • Monitoring the market constantly for a real time control of happenings that could affect the commercial expansion • Evaluating partnerships/alliances with local partners or the opening of a corporate branch for production and distribution [email protected] - 97 - Internationalization: success keys (some examples) Interplanning …we fix your problems! Management oriented towards foreign markets Adequate company structure (H.R., financial resources, productive capability) Overall costs under control Product innovation (R&D) Flexibility to adapt products to foreign market requirements Pricing problems solving Control and management of distribution channels [email protected] - 98 - Internationalization: success keys (some examples) Interplanning …we fix your problems! Selection of commercial and distributive partners Brand development and awareness International contract problems solving Evolution from light to deep internationalization Use of ICT instruments Strategic alliances culture Tendency to Foreign Direct Investments (FDI) [email protected] - 99 - The International Manager: useful skills • Sensibility towards foreign cultures • Ready to adapt to changes • Open mind • Strategic vision • Capability to manage complex situations • Be a frequent traveler • Knowledge of foreign languages • Ability in communication and negotiation Interplanning …we fix your problems! • Leadership & teamworking • Target & result oriented • Conscious of his skills and capabilities • International MKTG aware • Use of ICT • Patient, modest, tough • Serious and correct when approaching the foreign markets [email protected] - 100 - Internationalization: role of ICT (in pills…) Interplanning …we fix your problems! • Website: your company displayed to the world • Web positioning: let your prospects find you easily through your website displayed among the first sources in search engines • E-mail: send dox saving money (cheaper than fax); a useful tool either for incoming papers. • VOIP (Voice Over Internet Protocol): cut phone calls costs. • Intranet: let your company’s departments communicate together in real time [email protected] - 101 - Internationalization: role of ICT (in pills…) Interplanning …we fix your problems! • Extranet: let your company communicate with those who are outside of it, including clients for placing orders • E-business: sell products directly to clients bypassing distribution intermediaries • Videoconference system: see each other during long distance business negotiations • CRM (Customer Relationship Management): keep the relationship with your clients constantly updated and under control • SAP (Systems, Applications & Products in Data Processing): the “engine” of the company [email protected] - 102 - International trade: risks of business relationships • Manufacturing • Changes in components – Type – Price • Client mistake posting the order • Transport • Goods uncollected – From customs – From manufacturer warehouse Interplanning …we fix your problems! • Claim on goods shipped – Different type – Different size/color – Damage • Payment – Delayed – Not cashable – Not executed • Country • Exchange rate [email protected] - 103 - International trade: distance still matters…. Interplanning …we fix your problems! USA • NYC–LAX 3.961 km. • Miami–Chicago 1.909 km. Europe • Lisbon–Moscow 3.913 km. • Milan–Helsinki 1.985 km. [email protected] - 104 - Intl marketing: entry strategies Interplanning …we fix your problems! [email protected] - 105 - Internationalization: activities Interplanning …we fix your problems! [email protected] - 106 - Becoming MNCs: strategies Interplanning …we fix your problems! NO Incorporating a new firm? YES With foreign Partner? Company JV YES NO With majority of shares? Contractual JV With shares at 50% or less? Foreign Direct Investments Branch Subsidiary [email protected] Affiliated - 107 - Becoming MNCs: strategies Interplanning …we fix your problems! • FDI: flows of capital aimed to get control over a certain percentage of shares in a foreign business and participating in the management of the company • Branch: the shares are wholly owned by the mother company • Subsidiary: the mother company controls more than 50% of shares, but one or more shareholders are present • Affiliated: the mother company controls up to 50% of shares; in this case the company is managed by the foreign partner [email protected] - 108 - Intl marketing: country entry strategy Interplanning …we fix your problems! Company Strategy Market characteristics Company Size &dimensions Competitors Strategies Market selection decisions: Simultaneously or One-by-One Concentrate or Diversify Competitors markets selection [email protected] Market 1 Market 2 Market 3 Market 4 Market n - 109 - International marketing: Country Analysis (some factors) Interplanning …we fix your problems! GDP HDI Unemployment Inflation Economic growth Economic and political stability Financial rating Families and singles expenditure Custom duties Government regulations Infrastructure and transports Financial benefits for foreign investors Being part of political and/or monetary unions [email protected] - 110 - International marketing: Country Analysis (some factors) Interplanning …we fix your problems! Market size Market growth Number of potential customers (prospects) Level of development market/sector Import volume market/sector Tendence to import market/sector Number of competitors Competitors market share Mark ups Structure of distribution channels [email protected] - 111 - Country analysis Interplanning …we fix your problems! • GDP Gross Domestic Product. Made of private expenditure [PE], government investments [I], government expenditure [G] and balance within export and import [Exp - Imp] GDP = PE + I + G + (Exp - Imp) • HDI Human Development Index. Composite index that measures three basic aspects of human development: longevity, knowledge and life standard. [email protected] - 112 - Country analysis: selection methods • Former experiences Interplanning …we fix your problems! The selection of market(s) to enter is made referring to the previous introduction of products different from those the company intends to introduce presently or considering previous business experiences made by the management. • Competitors imitation The selection is based on competitors’ strategies and choices. [email protected] - 113 - Country analysis: selection methods • Method of “Development level” Interplanning …we fix your problems! Groups countries according to their level of development, considering their GDP per capita as unique factor. • Method of “Key factors” Selection is made considering multiple factors, both quantitative and qualitative (this is the best method for an accurate country analysis). [email protected] - 114 - Strategic alliances: motivations (some examples) Interplanning …we fix your problems! • Specific weaknesses (e.g. human resources) solvable from external contribution • Small company dimensions for international expansions • New competitive threats • Possible synergies with specific partners • Share of risk [email protected] - 115 - Strategic alliances: success conditions • Have the same mission • Advantages for both parts • Sharable goals • Mid-long term targets • Possible synergies • Fair share of contributions and advantages Interplanning …we fix your problems! • Entrepreneurs and management “alliance - oriented” • No risks of buy back • Compatibility within partners (on company culture and management) • Compatibility within people that have to cooperate [email protected] - 116 - Strategic alliances: risk factors Interplanning …we fix your problems! • • • • • • Political instability Monetary and/or financial instability Government nationalization politics Operative limits Fiscal and/or financial limits War or terrorism [email protected] - 117 - Interplanning …we fix your problems! Marketing strategies for fashion and textile industry 7. Case history: Ermenegildo Zegna Ermenegildo Zegna Interplanning …we fix your problems! [email protected] - 119 - Ermenegildo Zegna Interplanning …we fix your problems! • • • • • • • Italian company founded in 1910 Manufacture of men luxury clothes More than 700 mln. € turnover More than 6.000 people employed worldwide 85% of business made abroad Presence in 60 markets More than 200 stores worldwide [email protected] - 120 - Ermenegildo Zegna Interplanning …we fix your problems! • Market and Business Strategies: – Since ‘90s company customer oriented – International businesses adapted to markets: • Japan since ‘70s with its own trading company • China since 1991 directly • Presence with DOS (Directly Operated Stores) and franchising – Expansion first in Emerging Markets (Mexico, Brazil, China, Russia, Turkey, Middle East, India, South Africa) where margins are higher than elsewhere [email protected] - 121 - Ermenegildo Zegna Interplanning …we fix your problems! • Market and business strategies: – Travel retail concept: stores for businessmen that move across the world and wish to find the products they like almost everywhere – Retail school: to teach salespersons on how to approach and serve the customers – CRM (Customer Relationship Management): to know everything about clients and customers – IT (Information technology): to link and manage direct stores and franchising [email protected] - 122 - Ermenegildo Zegna Interplanning …we fix your problems! • Product and brand strategies: – Segment extension: from luxury clothes to upper casual (trend started in USA mid ‘90s and expanded to Europe and Asia) – Brand/product extension (through licensing): • Perfumes • Glasses • Underwear – Products characteristics: • New fabrics, easy to clean • High tech clothes, fresh in summer warm in winter [email protected] - 123 - Interplanning …we fix your problems! interplanning s.a.s. di alessandro barulli & c. via romita, 9 - 61100 - pesaro - italy www.interplanning.it [email protected] - 124 -