International Market Assessment

This report analyzes the international market entry strategies for Zalando, a leading online fashion retailer. It examines potential markets, including Turkey, Egypt, and the UAE, using market opportunity assessment, Porter's Five Forces, and regional integration analysis. The report recommends the UAE as the most suitable market for Zalando's initial expansion and suggests franchising as the optimal market entry strategy.

International Market
Assessment and Market Entry
Strategies

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
Identify the most prospective market to enter........................................................................1
Explaining the market assessment opportunities ...................................................................4
Recommending which country the firm should enter first.....................................................8
Presenting the best Market entry strategy for Zalando...........................................................8
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
International marketing is the most simplest application that is used in marketing
principles for more than one country, therefore, it has its own importance in marketing. The
report main aim is to provide deep knowledge related to marketing strategies which are used in
order to expand their current business. The chosen company for this report is Zalando which is
one of the medium size firm and wants to expand its current business step by step. The company
deals in retail sector and offer clothing, footwear for men, women and children. Now the
company wants to expand their current business at further level of success. Report determine the
most prospective market to enter through market opportunity assessment. Further report also
describe the investment opportunities, effects of government, interventionist policies, impact of
regional integration initiatives and threats of each markets. The report also recommended which
county the firm should enter first with proper justification. Report also describe the market
strategy and which is the most suitable among them in order to expand their current business
with proper recommendations.
MAIN BODY
Identify the most prospective market to enter
Zalando is one of the most rapidly growing company and it deals with foot wear and
clothing of men, women and children. Now the company wants to expand its business in further
country in order to generate more revenue and profit. For this reason, the company uses market
opportunity assessment. In today's world, the brands have pressure to stay connected in an
increasingly competitive market place (Reid, 2018). In order to be successful in the current
market, there is a need to connect new products and services which should be offered to the
customers. By understanding the market as well as maintaining the consistent awareness of
challenges as well as barriers if entry and growth. To determine these things, there is a needs to
do market opportunity assessment which is as follows:
Market sizing and growth plan: It is the first assessment which help Zalando to
determine the actual size. The quoted company is a medium size firm and among all market, it
has been analysed that UAE is one of the most suitable option to expand their current business
because the country has good political stability and therefore, choosing UAE is the suitable
option for the company. For this, estimating the number of target customers is another option
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which supports and determine the actual scenario. Therefore, Zalando Chooses UAE because the
country has a availability of maximum products, resources and there is a demand of new
products and services of clothing or footwear which help to generate more revenue and also
increases 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. Because if the
offered product is of high rate then the category of products is mission critical and mandate for
the regulations. Through proper monitor and awareness related to market, the company can
easily determine the market size and the proper generation of profit for the firm.
Industry and segments attractiveness: This is another market opportunity assessment
which help to determine which market should be chosen. Therefore, Zalando has to determine
the target segments benefit as well as attractiveness and then which products is actual beneficial
for the product and the demand of UAE people is quite differ from the other countries.
Therefore, Zalando decided to expand its current business in UAE and it can be done through
qualitative data. By taking survey from the people, the quoted company will easily determine the
exact and also fully the meet of their customers needs. By analysing the needs of their customers
will helpful for them in order to provided the exact service to their customers (Vedula, York,
and Corbett, 2018). In addition to this, if Zalando has unique selling proposition then it will help
them to create best sell for their product and by targeting the exact market which will be helpful
for them in order to gain high competition in market.
Porter five force model for Turkey:
Basis Turkey Egypt UAE
Threat of
substitute
For Zalando, threat of
substitute is high because
to introduce new product,
the company needs to
invest much money and
which is quite cost
effective.
In Egypt, the quoted
company has also high
power of substitute,
therefore the company
can also affected from
the rival company's
business strategy.
In UAE, the company
has low threat of
substitute because in
UAE there is no much
stores who offered best
quality of products
which are offered by
Zalando.
Bargaining The supplier range in The supplier range of The bargaining power
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power of
suppliers
Turkey is low and if there
are some then they also
have some power to
control the prices.
the country is low and
many of the customers
also switch to others
company because they
offer in low prices
(Salinas, 2018).
of suppliers are high,
the company also have
good supply power in
UAE so it can expand
the business in it.
Bargaining
power of
customers
The bargaining power of
customers are 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 UAE, people
demands for different
clothes and this can be
fulfilled by Zalando if
they fulfilled their
demands if the business
is expanding their new
unit in UAE.
Threat of new
competitors
If the company has its
brand image in market then
it will not affect by other
rivals and in Turkey there
is a wide range of
companies which offered
their products at low range.
Therefore, to expand
Zalando in turkey is not
helpful to generate
revenue.
In Egypt, the company
is not so developed and
there is so small number
of new entry companies
therefore, it will not be
helpful for Zalando to
expand their business in
a quoted country.
UAE is more developed
country and the threat
for Zalando to expand
their business in UAE is
helpful such that a new
entrant faces problem
because of new rules
and regulation 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
able 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 UAE, the intensity of
rivalry is also high
because in a market if
the competition is high
then it will also help to
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generate more revenue
and expand its business.
Market Requirements and barriers to entry: the requirement of market is different in
different country and it is quite necessary for the company to determine the exact need of the
market. For this reason, the company needs to do market opportunities assessment which help to
identify which market is beneficial and on the same time, the company needs to identified
different barriers which creates hindrance in order to enter into new market. In Turkey, the
market requirement is quite different and the suppliers are also low and on the other side, in
Egypt the demand of their customers are also not over which creates force to the Zalando in
order to expand their business in Egypt. Therefore, the company also meet out the basic
requirements of their company (Market, 2017). On the other side, in UAE, the company is in
demand because many of the customer are also demand of their favourite clothes and this can be
overcome if the company is in UAE.
On the other side, whenever a new country is entered into new market then it is quite
necessary for the company to follow all the new rules and regulations which helps to establish its
new unit into a market. Therefore, if the company also wants to entered into new market then it
will helpful for them to follow all the new rules and regulation. Similarly, in the case of UAE,
the rules are not so difficult to follow and it 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 reaches their target customers and then achieve the competitive advantages.
Through this market strategy, Zalando will easily come to know which products will needs to
launch in which city and this assessment criteria will helpful to determine the exact needs of their
customer demand and through 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 affect the prices of the values that are actually effect
the products. In addition to this, the prices of financial assets, in the market of financial which
further affect the risk of financial markets (Helfat and Martin, 2015). As the GDP of the country
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affect the company's overall structure but when investment environment affect the actual
performance then it directly affect the company overall working performance.
In addition to this, if the investment environment comprises all types of investment
opportunities and the market structure which help to facilitates the buying and selling
investments. Therefore different types of securities and institutional set up are also affect the
actual working performance of the company. In the context of Zalando, if th e company is
actually affected by this intermediaries then at 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 economy policy which is differ
for every country and this also favouring the government intervention in a market process in
order to correct the market failure and also promote for the welfare of the people. The main aim
of this is to promote the economic growth and increases the employment, raise the reducing
prices of the company so that it will further help to manage the money supply and interest rates
(Van Hoa, 2017). This intervention are generally made to improve the performance of the
country's actual economy. The common example of this is to subsidies and information or
private benefits.
The effect of government intervention policies are helpful to many company because it
provide 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 faces high relative poverty and in order to overcome from
this, country's economic system has to be managed which further help to many lower income
who suffer from social exclusion, negative externalities etc. In the context of Zalando, before
entering into new market the company has to monitor all policies of government because it may
creates obstacles in the way of progress.
Market potential: It is the entire size of the market for a particular product in a specific
time. This can be easily evaluated through the sales generate for a particular period. To
determine the exact market of the product is a best and successful way to analyse the current
environmental condition which may effect the market potential (Market potential, 2018). As
Zalando wants to enter into new market and for this reason the company has to determine the
customer base of their existing firm and for new market, by conduction primary data which is
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helpful for identifying the exact need 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. By good customer service will help Zalando to keep interacting the activities.
Therefore, this market potentiality also depends upon the profitability and to forecasting the
profitability is important to understand the market potential.
Another important key aspect for market potential is to determine which customer type is
actually like by the customers. For Zalando, as it deals with clothing and therefore, 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 a 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 is also varies from political to economical factors or through
political economy also (Platonova and et.al., 2018). Through this process, it is also 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 growing the prosperity.
This also creates the impact upon the company's actual performance therefore, if the
company wants to enter into new market and it can be overcome through the regional integration
which is quite successful for also 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 the Egypt
is moderate and
therefore, the
investment
environment of the
affected the GDP of
the country.
UAE is consider one
of the most
developed country
and therefore, the
Zalando wants to
invest in UAE so
that it will help them
to generate more
revenue and
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maximizes the
profit.
Effects of
government
interventionist
policies
The government has their
own rules and regulation
which needs to be
followed by every
company in order to
expand their business in
new country (Abu
ELSamen and Akroush,
2018). Turkey's
government policies are
quite fluctuating and
therefore, to invest in this
country is not affordable.
The effect of
government policies
are quite quite effected
to the company's
overall performance
and therefore, for
Egypt it takes too long
time to invest on such
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
for maximizes the
profit.
Market potential The market potential for
Turkey is so strong but
the size of market is also
good but the customers
base is not so strong to
forced 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 country
and there is a
demand of people to
invest in such a
market and
therefore, the
company needs to
invest into such.
Regional integration The regional integration,
of the Turkey is quite
strong and therefore, the
company will definitely
affected through political
In Egypt, the regional
integration is also
affected and the
political and social
condition of the
In UAE, the
company actual
working
performance is such
that it will also
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as well as economic
system and that is why
there is no chances to
invest into this country.
country is fluctuating
and therefore, there is
no chances for
Zalando to invest into
such.
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 a political stability and therefore, the quoted company chooses this. As per above analysis, it
has been analysed that the country market size is quite big as compared to other country.
Therefore, to chooses UAE is 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 which the quoted
firm chooses this and through Porter five force model, the country also did not have threat of
substitute as well as new entry because there is no actual branded firm in UAE and to chooses in
this it will be beneficial for the company to expand their current business (Mathews and et.al.,
2016).
In addition to this, the country also grows as per the time passes and therefore, Zalando
also take an initiative in order to expand their current business. In UAE people demand for 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 UAE so that it will be helpful for maximizing
the profit and minimizing the risk. The investment environment of the country is also affected
the actual performance of the company and even the market potential of UAE is also better as
compared to other country. Therefore, to chooses the best option it has been recommended to
Zalando to chooses UAE because it well developed and have enough resources which are helpful
to creates a chances to maximizes 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 entry into new mode. Hence no
one market strategy is wok for all international market and for most of the company, direct
importing is consider one of the most simple and effective strategy which is helpful in order to
establish their unit in new country. Some of the methods are as follows:
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 Direct Exporting: It is one of the simplest method which is actually selling directly into
a market if the company have enough resources. Many of the company have establish
new and different sales program in order to popularised their own products and brands
(Ragland, Brouthers and Widmier, 2015). Through this method, Connection are directly
established and agents or distributors are also helpful in order to represent their company
in other country so that it will be helpful for them to increases their actual sales.
 Licensing: The next entry method is Licensing which a sophisticated arrangements 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 country who have good market share in the market and who
wants to grab new and long market share in another firm.
 Franchising: The most simple and rapid market expansion strategy that is actual 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 market (Marchi and
et.al., 2014). While using this model, the company should have a good brand image in
market so that it will be helpful to merge with another and utilize others resources and
next is to create the future competition through this franchising.
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Illustration 1: Market entry strategy
(Source: Market entry strategy, 2018)

 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 equal ratio
so that the risk occurring chances will be minimizes. Moreover, this market entry strategy
method is useful in those market where the culture and social is different from the local
market so that by investing into such a market will be helpful in order to gain market
knowledge, and increases the contacts.
 Joint Venture: It is another form of partnering and also involves the creation of a third
independently managed company. These all are work together in order to creates god
market brand image so that it will be helpful in order to gain high competition in market
and therefore, risk as well as profit are also share in equal amount.
 Merger and acquisition: The most common strategy which is actually helpful for many
companies who losses almost share in the market. Under this strategy, the company has a
good market share and due to government regulations many company chooses 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 acquire or merge with
other company which has a brand image in market. Then it immediately helpful to create
the strong customer base and also treated by the local government in the form of local
firm.
Among all market strategy, it is to be recommended to Zalando to chooses, 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 buying a franchise of the company in UAE will be beneficial in many
ways and some of them are as follows:
 The risk of business failure are decreases by using franchising as an entry mode.
Choosing that company who have a good brand image in market and this will also help to
establish good market share and at that time there is no need to testing the market share.
Therefore, choosing franchising as an entry mode is beneficial (Salinas, 2018).
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 No prior experience is needed such as training because taking a franchise means that a
franchisor should also ensure that they also have good and 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.
CONCLUSION
By summing up above report it has been concluded that Zalando is a medium scale
business and it wants to establish its new unit in UAE which is most developed country and have
a stable political as well as economical status which help 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 some times creates problems. As a result, the company got affected. Further
report also concluded that UAE is the most appropriate marker which should Zalando entered
first so that the profit margin of the company also maximizes. In order to entered into new
market, Zalando may uses Franchising as a market entry mode because it will help to let
company realize what the market is in UAE and it also help to establishes long term relationship
with their suppliers.
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