Skagen Design Report
Skagen Designs Group 4 Q1.What screening criteria should Skagen Designs use in connection with its choice of new markets for its watch collection? When Skagen Design chooses the new markets and use the connection with them, at first, they have to care about price.Competitive price is not only one of the essential of their brand, but also the easiest method to enter new markets, especially in developing markets.
In watch markets, you can see which markets is developed or developing from the charts, after looking at those, you will see which strategies Skagen Design needs to enter into each market with.
Somehow, competitive price is qualified advantage in any markets, of course, it is a lot more affecting to developing markets. So, Skagen Design need to keep the low price and proper quality, of course, with their characteristic design either. Next, aside from price, they also have to separate market into developed & developing markets in watch markets as I mentioned already. By dividing them into two groups, they can decide which strategy they will adapt to, for instance, if the market is developed market, they have to upgrade their quality.
It will charge more cost, so the price should be higher, but the customer in market doesn’t need normal one, so it is necessary. Meanwhile, if the market is still developing market, the best way to attract them is to keep low price with proper quality. Also, Skagen Design has simple design, it could make easy to adapt slight change from local needs. Third, Skagen Design should check whether the market has any forces with international trade such as high tariff.
It is basic step before getting into the market, since Skagen Design has not bigger brand power comparing to competitors such as Gap, Calvin Klein, it has to be emphasized with quality and low price. With high tariff, it ain’t possible to keep lower price than local brand, and not even other international brands which has good online markets. So, if the market has high tariff or regulation from its government, Skagen Design should operate their business in small step such as online supply.
It is uncontrollable part for every watch companies to change the market situation, so it has to keep checked, since it is also possible to get first mover’s advantage if Skagen Design gets into new market with low regulation at first/ Last, no matter how the market is developed & developing or has different situation, Skagen Design has to keep their watch proper quality and design. It is essential for every business to keep them. Consumers never buy crappy product again, also the product from those brand images.
Even though Skagen Design could offer lower price than others, their brand shouldn’t be same to local anonymous brand images, so they have to keep their brand characteristic, either. Quality & characteristic design are always the most important parts in every markets, and competitive advantages for business success. Q2. Make a specific choice of new markets for Skagen Designs. Table 1 and Table 2 can be used to support your argument. The characteristics of Skagen Designs are colours, shapes, and simplicity, etc.
However, one of the most competitive characteristics is competitive price. Their high turnover has been kept for decades, and it’s originally started from competitive price, of course, its design either. To choose which markets Skagen Designs get into, they have to consider not only how much retail volume they have, but also how much they are afford to pay for watch. At least, they have advantage with their price comparing to competitors like Calvin Klein, Coach, Guess, Gucci, Swatch, Alfex and Jacob Jensen, etc, somehow it could make their product more successful in retail market.
About retail volume, we can confirm it from Table 1 and Table 2. From Table 1, retail volume in thousands of units can be estimated, for sure, USA market has been still the biggest market since the research started from 2003. Also, we can see interesting raise in India market, their retail volume has been growing rapidly the most. Now, India market has the second biggest retail volume in thousands of unit, and it is even same to USA almost. Looking at number of watches per 1,000 people, Mexico has showed highest ratio, and India’s ratio is still the lowest.
From Table 1, we can see Mexico, Netherland, South Africa, Sweden have the greatest number of watches, and opposite to it, India, China, Japan, Belgium have the lowest number of watches. Aside from Table 1, Table 2 shows value of different watches, which also shows the biggest and the lowest markets as well. From Table 2, USA, Japan, UK are the biggest one, in opposite to Belgium, Hungary which are the lowest one. One thing we can discover here is counties with biggest retail market have not so big volume value of watch market.
Also $ per capita shows similar aspect, from Table 2, we can see the separation between developed market and growing market. Already developed markets have the biggest $ per capita when it comes to market, meanwhile growing markets have the lowest one. It is same with value of watch markets. So, from those charts, we can suggest potential markets for Skagen Design would be Mexico, India or China. Skagen can offer them average quality with lower price than competitor’s, also their design is so simple and never follow established trends that it can be adapted in growing market easily.
It can be adapted to local needs slightly with marketing. Meanwhile, when Skagen Design enters into developed market, it doesn’t need to adapt local needs or adaptation. What only they have to care is more high quality with higher price, so it can’t be good market as much as first one. Q3. Which market entry mode should Skagen Design use on the chosen markets? First of all, you have to know what is a market entry mode : this is an institutional arrangement which is necessary for the entry of a company’s products into a new foreign market.
There are three different types of entry mode: – Export – Intermediate – And hierarchical mode There are few factors that influence the market entry mode choice. These factors are externs or interns, or specifics. The market entry mode is different between countries with low, medium and high standard of living. Firm’s products are manufactured in the domestic market or a third country and then transferred either directly or indirectly to the host market. Three types of exporting: 1. Indirect mode 2. Direct mode 3. Cooperative mode |Lowest US $ per capita |Medium US $ per capita |High US $ per capita | |Indirect export mode |Is the process of exporting through | | | | |domestically based export | | | | |intermediaries, but the exporter has no| | | | |control over its products and over the | | | | |marketing decisions. | | | | | | | | |Fast market access. | | | | | | | | | |No infrastructures are built. | | | | |Low sale promotion. | | | |No market researches are carried out. | | | |Direct export mode | |If the international markets are considered as a | | | | |crucial part of the company’s success the direct | | | | |exporting is the best market entry tool. | | | |Using own sales subsidiary and direct marketing | | | | |(including mail order and telemarketing). | | | | |Low infrastructures are built. | | | | |Market researches are carried out upon secondary | | | | |data. | | | | | | | | |The business can use: | | | | |Distributors | | | | |Market country agents | | |Intermediate mode | |The intermediate mode is used to transfer the | | | | |knowledge and the skills to the local | | | | |producer/seller. | | | | | | | | | |There is no full ownership by the parent firm | | | | |involved, but ownership and control can be shared | | | | |between the firm and the local partner. | | | | | | | | |Four types of intermediate entry modes: | | | | |Licensing | | | | |Franchising | | | | |Contract manufacturing | | | | |Joint ventures | | |Hierarchical mode | | |Solid infrastructure. | | | | |Sponsoring artists, athletes and | | | | |events. | | | |Market research, qualitative & | | | | |quantitative. | | | | |Aggressive marketing campaign. | | | | |Sales promotion. | | | | |Market coverage: Intensive | Each kind of countries has one appropriate mode concerning its export, and each of these modes are listed in the table above. Q4.
What should be the guidelines for including other products lines in the Skagen Designs collection? Including other products mean want to have an expansion? : you can add a new product to expand your business; just be sure to take these four steps before moving forward:? Determine the specific needs of your customers in each high-priority market segment.? Identify the product/service bundles (groups of features) that would be most attractive to them. Create a unique value proposition for the proposed line extensions and decide how you’ll position the product in the market segments you’ve identified. ? Determine the sales and distribution channels that will achieve the highest penetration of your target market segments.
In all, you’ll need to use market research and speak customers and marketing partners or distributors and evaluate competitive products. This will help you to validate the present level of demand for the product and the best channels for sales distribution, plus shape the product messaging. If you do your homework and proceed with an analytical eye, your line extension will increase sales, help you reach new markets and build market share overall for your growing business Having a guideline represents choosing the right segmenting, targeting and positioning. Segmentation [pic] Targeting [pic] Positioning The positioning is the process by which marketers try to create an image or identity in the minds of their target market.
So, the guidelines for introducing other products lines are mainly respecting the positioning. For Skagen, we can describe the brand as simple, elegant and affordable. It is indeed very elegant with technical precision and a true original design. It means that a new line of products has to be part of this universe; it means something chic, no food or others. Furthermore, it has to need a technical precision because they could have an advantage using their expertise with that kind of materials. It has to be simple. Indeed, for example, the super slim line is totally purified, simple. The watches are non-numerical, the logo is very discreet. So the new line has to be made in a very simple style.
Last but not least, it has to be an affordable product. It means that they have to find way to produce it almost low cost. And so it has to be a product which can be made almost low cost. Ideas for the future of new products – High quality & design pen as Rolex for example – Clothes as Calvin Klein for example Q5. Which criteria should Skagen Designs use for its selection of future sponsor partners? First of all, it is interesting to give a little definition of sponsorship to understand the interest for companies to make some partnership. After that it must easier to define some criteria in the selection of future sponsor partner. Sponsoring:
Supporting an event, activity or organization by providing money or other resources that is of value to the sponsored event. This is usually in return for advertising space at the event or as part of the publicity for the event.  For Skagen Designs it can be really interesting to set up a sponsoring policy. Sponsoring is one of the best ways of communication for two reasons. Firstly, it is a good tool to highlight and precise the positioning of Skagen Designs thanks to an event or a celebrity really famous and know by everyone. Secondly, this kind of partnership makes advertisements more visible. For example in the past, Skagen Designs had a partnership with the famous TV series Ally McBeal.
This sponsoring corresponded to the Skagen Designs targeting (active population, 25-45 years old with a fashion sensitivity) and to the positioning also (classy, elegant and affordable). Moreover, people who loved ally McBeal and who recognize themselves in the series must be more sensitive to the brand Skagen Designs. It was a really good promotion. Indeed, when the sponsorship is well selected, it allows identifying with a particular target market or lifestyle and so attracting customers, easier. The first reason is increasing of awareness of brand name and then, reinforcing perceptions of key brand image associations. For example, every time people watched Ally McBeal, they thought Skagen Designs.
The sponsoring makes the brand alive and present everyday in the life of customers. As any decisions, nevertheless, sponsor partnership can be risky. That’s why we speak about selection. One of the difficulties of sponsorship it is hard to measure and predict success and outcome. Another risk depends on the sponsored person’ image which can change because of an event or a situation. This can affect the brand credibility and associate the brand with this bad event or behavior and change perception of brand values. That is why it is important to establish a list of criteria in order to make a good selection amount the different sponsor partnerships available.
Firstly the partnership has to be in adequacy with Skagen Designs values and strategy: • The sponsorship has to be in line with the business and communication objectives. • It has to be a strategic fit between the events target markets and Skagen Design? s. • The sponsorship must match the targeted market and be able to reach it. Finally the sponsor partnership has to be in line with the positioning and targeting in order to touch the customer and attract him: • The sponsorship must generate sufficient awareness, possess the desired image and create the desired effects. • The consumers have to see attributions for the sponsor’s engagement
To conclude, Skagen Desings has to focus on its values and keep in mind its strategic direction for the brand. Then it must be easier to choose a partner by following the criteria. Finally by following up and evaluating the sponsorship Skagen Designs will be able to decide if it’s better to continue or stop the sponsorship. Q6. Skagen Designs is considering online sales of his watches. What problems and possibilities do you see for the company in this area? On this basis what are your conclusions? Nowadays, every brand is most of the time at least a brand “click and mortar”, if it is not a “pureplayer”. Nevertheless, the online trade cannot be adapted to every type of brand. Indeed, the brand universe has to be able to be put on the internet.
Furthermore, when competitors start to sell on the internet, if you do not want to lose market share, you have no choice: you have to fight their advantages and so start considering selling online. First, we have to remember what an online sale is. An online sale is a form of electronic commerce which allows consumers to directly buy goods or services from a seller over the Internet without intermediary services. So, we can think that a luxury brand such as Skagen, which anyway looks luxury, will lose its ability to advice consumers, one of his strengths. Furthermore, those watches are pretty technical products and so require some expertise. However, there must be some advantages. It is important to say that Skagen has already a website and is already selling on this website, so every watch can be purchased on the internet.
Indeed, for example, you can choose a watch, click on it to have a bigger view of it, and then you can “add it to the bag”. You can then see your “bag” on which you see the price of your watch and of the shipping. The last step is to do the check out by giving your personal address, and of course, paying. As a consequence, we can think that Skagen took its decision: they decided to sell by the internet also. Now, what means “problems and possibilities”. A problem is an obstacle. A possibility is more an opportunity. It means in this case how the website can be done, what possibilities they have. But also, it means what opportunities it will bring.
So, we can think that the expression “problems and possibilities” refers to the “Threats and Opportunities” in the SWOT analysis. First, it is an opportunity because customers are not the same nowadays. The new customer is always in a hurry, always wants to change his style, optimizes a lot his time in the transport by using his cellphone. So, of course, if the competitors start to sell on the internet, Skagen customers, which are young and active people, will lose their faithfulness toward Skagen finding better answers to their needs. Second, as it was said, the typical Skagen customer is the typical person who spends a lot of time buying on the internet and who is very comfortable with new technologies.
It means that it will not be a problem for him to buy at the online store, and even, it will bring new customers: this main target, the one of Skagen, is sometimes so much active that it does not have time to buy and sometimes, he is totally willing to buy in another country but cannot because there is no online store. As a consequence, it means that more than an advantage, creating an online store was necessary for Skagen’s customers. Plus, every brand does not have exactly the same target. We can guess that because, for example, Alfex is still not selling on the internet, you can just click on “where to buy” on its website. Third, but it is a detail, it quite easy to establish some advantages for faithful customers on the internet. For example, reductions, special sales. And it is easily accessible. These advantages can also be combined with partners.
Indeed, Skagen, choosing to start selling on the internet can start having good partners for complementary items such as clothes for example. However, we can observe that most of this brand does not make any promotion for other brands. We can think that it is because the world of watches is an “elegant” world; it means that websites are really modern and purified. Fourth, we can think that it could be cheaper to sell on the internet because you do not have to pay a so huge rent and you do not have to pay the sells staff. However, of course, there are some disadvantages. First, it is a quite precise and technical product: some exigent customer can feel lost, even if it is well described they might need still more details.
Details that are so numerous that it cannot be put on a website for example if you have some risks to break a bit your diamonds on the watch if you go on the shower with it. Second, Skagen will always have to watch the markets evolution and to be able to answer very quickly to demands. It means a lot of stocks and money. This is an aspect of starting selling online: selling online is a job in itself, you have a lot of technics to acquire such as how to ship your products for example. And, because it is a lot of money, you have to calculate if it is really worth it to sell on the internet and if it is, how you will do it without huge amounts of moneys. Beside, details which is important for Skagen which is a brand whose positioning is selling very pretty products at affordable prices.
Third, Skagen, as clothes, is a fashion brand, it means that people requires style from it. And, as they do with clothes, they might want to try it to see how it feels and how it fits their clothes. And, indeed, it is the main problem with online stores. But, anyway, it is less grave for watches than for clothes. However, we can notice that on their website we only see their watches alone, which means that it hard to imagine how it looks on a wrist. Some competitors such as Jacob Jensen or Guess still have this trouble, they should all of them do as Alfex, show it on the wrist of a model also. As a result, it was almost mandatory for them to go on the internet.
Indeed, they have the perfect target, it can be cheaper and they are an affordable brand because they can produce low cost, their competitors start to sell on the internet and this type of products which are objects and not clothes or food, can be quite easily sold on the internet. The disadvantages are really negligible comparing to the advantages. We can anyway to go more far think that they could do it in another way such as proposing pictures of people wearing it and even proposing some clothes style to fit with it. ———————–  http://www. tutor2u. net/business/marketing/promotion_sponsorship. asp ———————– Report 2013/02/19 INTERNATIONAL MARKETING SODERTORNS HOGSKOLA