Market Entry Strategy for Michael Kors in Iran

This assignment tasks the student with developing a market entry strategy for luxury brand Michael Kors into the Iranian market. It requires an analysis of the suitability of Iran for Michael Kors expansion, a comparison of various market entry strategies (direct exports, partnerships), and a focus on adapting the marketing mix (price, product, place) to align with Iranian socio-cultural norms and consumer behavior.

Running Head: INTERNATIONAL MARKETING; MICHAEL KORS
International marketing; Michael Kors
Name
Institution

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Executive summary
Michael Kors (MK) a globally known luxury and stylish brand has been seeking expansion to its
success track record. Upon a wide range of research including the situational examination of the
brand, this study hereby proposes a strategic marketing plan that would comprise of the
following objectives:
- Increase in the annual total revenue to about 175 percent of the FY 2015 by the year 2018
- Increase in the social media following by about 5 percent every month
- Taking over the Ralph Lauren Corporation by being the top online luxury corporation
through the increase of the online market share to about 23.1 percent.
- Protection of the brand value
For the above mentioned objectives to occur, numerous strategies need to be in place. To further
enhance the brand’s global geographical presence including the exploration of the development
of the e-commerce, the number of the products offerings need to be increased (Hoffmann & In
Coste-Manière, 2013). The product differentiation and innovation also require to be frequently
highlighted in order to capture any stray online traffic that would get converted into sales. The
brand value also requires to be converted in order to maintain exclusivity. This means that the
price control and the supply demand control would significantly assist the Michael Kors in the
achievement of success.
The projected plan further aims to promote the corporation’s status, not only as a lavishness
brand, but also as an international enterprise hence the achievement of the growth sustainability
(Atwal & Bryson, 2014). Michael Kors will also require assessing the conditions and adjusting
its approaches in order to fully exploit its profitability.

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Background information
Michael Kors is a prestigious designer of luxury men and women ready to wear products such as
clothing, jewellery, accessories eyewear and fragrance products. Michael Kors has been known
to operate in all the stages of the value chain that comprise of design, marketing, distribution
including the retail of the branded products. Since its introduction in 1981, Michael Kors
Holdings Limited by a superlative executive team as-well-as the famous, award winning
designer and the director of the company, Michael Kors.
Task 1: analysis of the macro and micro factors impacting the fashion industry
There are two main categories of the external marketing environments. These comprise of the
micro and the macro factors. The macro and the micro factors are usually beyond the control of
the marketers but still influence the decisions made when creating the strategic marketing
strategies.
These factors affecting the fashion industry comprise of the following:
Economic factors
In the year 2014, the global luxury market had been valued at about 240 billion dollars. Despite
the fact that the opulence market is usually resilient to the economic fluctuations, it was noted
that most of the luxurious fashion industry players managed to lose roughly 40 percent of their
stock worth in the 2008 financial crisis. Michael Kors will have to protect themselves from such
depreciation (Kapferer & Bastien, 2012).
The global markets have been known to behave differently. Despite the fact that the BRICS
countries (Brazil, Russia, India, China and South Africa) have been known to offer some strong

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potentiality for productive businesses, the impeding Chinese economic crisis and Russia’s
monetary policies that are unfavorable to the foreign investments may affect the organization’s
market infiltration.
Social factors
The community usually views the luxurious and fashionable goods as a means of expressing
their social standings and economic accomplishment (Kapferer & Bastien, 2012). The more the
customers view a particular brand as being fit for their standards, the more accommodating as
they get towards that particular brand hence the formation of the brand loyalty. The exorbitant
prices of these fashionable products including their exceptional quality further get to build some
emotional attachments with the customers (Czinkota & Ronkainen, 1994). For instance, the
middle income earners may find the need to purchase some luxurious accessories for the
purposes of “self-indulgence” that may be aimed at hinting their achievements. This usually
leads to the construction of a ritual whereby such individuals continue procuring some luxurious
supplies which may no longer be limited to accessories which ultimately leads to them moving to
the range of “absolute luxury” (Mosca & Gallo, 2016).
Technological factors
While most of the luxury brands have not progressed towards the modern technologies, to fit in
the technological world, Kors has come up with various technological devices such as
Smartphone cases, iPad sleeves and USB key chains. Also, as the technology continues to
advance, the organizations are required to acquire the skills and knowledge needed for the
production of the technological materials. Also the modern market has moved online and so in
order to progress the company needs to engage in to the digital marketing platforms such as

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Facebook, YouTube and Pint rest. Having an online store would also come as an advantage to
the fashion industry as the customers would be able to access their products from the comfort of
their homes hence increasing the sales.
Environmental factors
The modern day consumers have been seeking ethical consumerism to define the meaningfulness
of a particular brand. When a brand faces ethical consumerism in regard to the environmental
conservation, the consumers tend to distance themselves from that particular brand (Onkvisit &
Shaw, 2009). By selling of leather products and animal testing in the fashion industry, most of
the businesses are usually faced with the consumerism problem. Use of animal fur has also
brought about problems in the luxury fashion industry as numerous organizations such as PETA-
(People for Ethical Treatment of Animals) have been campaigning against animal cruelty.
Demographic factors
The luxury and fashion industry can be impacted by the common demographic forces such as the
country, ethnic and the household lifestyle. For some regions, the ethnicity of the people may
cause them to lack the need for some luxurious items. For instance a community that wears some
particular types of clothes may lack the need to buy fashionable clothes.
Micro factors
Michael Kors Holdings may not get affected by most of the micro-factors such as the suppliers
or the resellers since they have indulged in all stages of the value chain. However, other factors
such as competition and customers can affect the operations of the business in a fashion industry.

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The type of customers may determine the success of the organization. By giving the customers a
reason and need for buying some particular product, an organization is able to make more sales.
However of the customers do not feel the need of a particular product; they might end up not
buying it (Som & Blanckaert, 2015).
Market competition: for the organization to sell their products, they need to know their
competition and the competitors’ strategies. This way, they are able to attract more customers
hence making more sales compared to their competitors.
Task 2: Internal business factors using Porter’s value chain framework.
While diverse businesses have dissimilar internal environments, it is usually easier to
view these latent features as generalized categories. The value chain framework is usually a
common chain that is used to attain this. The value chain is used in the identification of the
sustaining activities and the primary activities that can be used in the creation profits.
The external environment of a particular business tends to be more diverse and complex
compared to the internal environments. Models such as Porter’s five and SWOT analysis are
used to analyze both the external and the internal business environments. With both the internal
and the external environments in consideration, the upper administration of an organization is
able to rationally derive a set of tactical principles that internally leverages the strengths and
externally captures the chances of creating profits.
Michael porter defines value as a chain of activities for an organization that operates in a
particular industry. In order to gain some competitive advantage, going through the chain of the
directorial activities, adds more value to the goods and services than the sum of the additional
costs to the said activities. And therefore, the company tends to gain some marginal value to that

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particular product or services. If the said activities run efficiently, the organization is able to gain
some competitive advantage of the product or service. On such a case, the customer should
willingly transact the product hence providing return on value to the organization (Doole &
Lowe, 2008).
Fig. 1: Source (Doole & Lowe, 2008).
Almost all the organization including Michael Kors tends to engage in several activities in the
progression of converting their inputs to becoming outputs. These actions can be classified as
being either primary or support actions.
The primary activities usually comprise of the inbound logistics, the operations, the outbound
logistics, marketing and sales and services while the secondary activities comprise of
procurement, human resource management, technological development and infrastructure
(Sterlacci, Arbuckle & Sterlacci, 2009).
Porters’ five analysis
The bargaining power of the supplier: the Michael Kors bags are usually made by the Sitoy
Holdings Group located in china. Other competitors’ brands such as Prada and Coach are also

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manufactured by Sitoy making the bargaining powers of this supplier to be quite high. When an
organization has multiple suppliers, the bargaining power of such a supplier is usually low as the
company is able to negotiate on the price.
The bargaining power of the buyers: in the luxury market, there are always some buyers. The
customers at a luxury store usually purchase one product at a time. When a particular company is
flooded with numerous small purchasers, the consumers are usually incapable of bargaining the
prices. However, when the same business has some few large consumers, the said buyers tend to
hold more power in bargaining for some better prices. Since Michael Kors holdings is a luxury
brand, their prices are usually fixed which tend to attract small scale buyers.
The intensity of the competitors’ rivalry: Michael Kors has always faced competition from other
key players such as Ralph Lauren and coach who tend to offer similar products at almost the
same prices. The strength of any industry’s competition depends on the number of replicas, the
base costs of the products and also the exclusivity of any particular product. If the base cost of
any particular product is high the company such as MK is forced to sell at higher prices forcing
the customers to go for replicas at the competitors stores. Kors Company is required to augment
its product demarcation in order to uphold its customer loyalty.
High threat of substitution: since there are many players in the market who also sell some
valuable products, the determinant factor is usually based on the character preferences. Since
Michael Kors Holdings is usually measured as a mid-range luxury brand since their goods are
usually much cheaper compared to some other high end stores such as Chanel and Hermes. Most
of the price sensitive customers who visit MK usually tend to switch between brands of the same
price ranges. However, there have been recent rises in the imitation of goods that have been
threatening the brand image.

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Threat of new entrants: the chances of new entrants in the market are usually determined by the
barriers of entry. It is usually more difficult for the fresh companies to penetrate a particular
market if the existing ones have untested their technologies and the costs of starting up can be
seen as high. However, in the fashion industry it is usually quite difficult for any new brand to
appear and become among the top players due to the fact that fashionable and luxury brands are
required to gain some fame before becoming among the top players (Scholz, 2014).
The SWOT Analysis
Strengths:
Michael Kors Company has managed to constantly develop an idiosyncratic brand image
across the growing variation of products, price collection and geographical market over the past
several years. The advanced quality and design of the products are usually depicted through the
premium price points and quality products that tend to encourage repeat purchases among the
growing customer base. Another factor that has managed to increase the customer base of the
brand is its exposure in the entertainment industry that enables it to increase its sales through
trending celebrity outfits. The company has also maintained some strong associations with some
premier wholesale clientele such as Macy’s Harrods and Nordstrom that allows it to have contact
to a large number of specific patrons in a particular targeted approach. In addition to such
associations, the organization has been targeting a large number of key clients through their
multi-retail format that comprise of the collection stores, the outlet stores, the lifestyle stores and
me-commerce which totals to 317 stores both nationwide and globally. Over the years the
company has also acquired various noteworthy awards and achievements that have proven to
enhance its brand image. Furthermore, the broad price range of the Kor’s products that range

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from about $40 to about $10,000 that is usually revealed by their broad customer base but still
retains its presence in the luxury market.
Weaknesses
The company lacks significant operating experience internationally compared to most of its
established competitors. The company also managed to expand quite rapidly over a small
duration of time causing some strain on the existing resources including the incapability of
keeping up with the expanding operations proportionately. Michael Kor has been known to rely
on the discretionary spending that tends to decline during the recessionary periods. The
company is also dependent on the limited number of distribution facilities which basically means
that if one or more operational facilities get to be inoperable, there would be adverse effects on
the business’ financial condition.
Opportunities
Despite the fact that the company has been in operation for about 30 years, the brand is still
emerging in the affordable luxury fashion market. This means that there is a large opportunity for
expansion. Also, through the implementation of some stronger presence in the media, the
organization will be able to effectively increase the brand awareness.
Threats
Due to the limited numbers of the distribution facilities, the organization is usually
disadvantaged in responding to the ever changing fashion trends in a timely manner. Michael
Kors also operates within a highly competitive market posing a threat to its operations

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Task 3: Evaluation of potential markets
China
Despite being the largest market in the world, the Chinese economy has been slowing down and
has continues to reveal some considerable signs of weaknesses. This particular economy grew at
7.4 percent in the year 2014, the slowest it has been since 1990. Lower economic growth
amounts to the inability of absorbing workers that migrate from rural to urban areas leading to
expensive labor force.
India
India is the world’s second largest market. India’s luxury market is currently not very
competitive. However, with the increasing brand awareness among the youth and purchasing
power of the upper class the luxury market is expected to move from 14.7 billion to about $18.3
billion.
Russia
Luxury in Russia is usually reserved for small minorities of people. The Russian culture has not
fully embraced the luxury market. However, the country witnessed a 14.8 percent CAGR in the
consumer expenditure of the fashion products from the year 2002. Though 2007, the Russian
fashion market can be seen as an emerging economy that is mostly concentrated in Moscow and
St. Petersburg.
Iran
With the estimated luxury market size of about 80 million customers Iran has been gradually
emerging as a country of interest for the expansion of various international luxury brands.

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Luxury brands such as Versace and Roberto Cavalli have already opened their stores in the
country.
From the research, it is quite clear that Iran is the best country for the expansion of the Michael
Kors stores
Task 4. Market entry strategy
In order to map out the market entry strategy into the Iranian market, the tradeoff analysis among
numerous strategies needs to be deployed in order to balance the risks. These comprise of:
Direct exports: avoiding middle men would assist in setting lower prices for the more
competitive position
Partnership: partnerships with the Iranian companies can be categorized into outsourced or direct
investment.
Task 5. Areas of the marketing mix
The three key areas of the marketing mix that need to be adapted due to the socio-culture and
consumer behavior of Iran comprise of Price, Product and place.

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(Kapferer, & Bastien, 2012).
Product: Since Iran is a conservative country, the company needs to ensure that they have the
right products that do not go against their cultures
Price: since it’s a new market, the company should make use of the market penetration pricing
strategy to attract luxury customers and also maintain their luxurious style.
Place: the company must ensure that they put up their store in a strategic location that defines
their luxurious theme and attracts more customers.

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References
Atwal, G., & Bryson, D. (2014). Luxury brands in emerging markets. Houndmills, Basingstoke,
Hampshire: Palgrave Macmillan.
Czinkota, M. R., & Ronkainen, I. A. (1994). International marketing strategy: Environmental
assessment and entry strategies. Fort Worth: Dryden Press.
Doole, I., & Lowe, R. (2008). International marketing strategy: Analysis, development and
implementation. London: Cengage Learning.
Hoffmann, J., & In Coste-Manière, I. (2013). Global luxury trends: Innovative strategies for
emerging markets.
Kapferer, J.-N., & Bastien, V. (2012). The luxury strategy: Break the rules of marketing to build
luxury brands. London: Kogan Page.
Mosca, F., & Gallo, R. (2016). Global marketing strategies for the promotion of luxury goods.
Hershey, PA, USA: Business Science Reference.
Onkvisit, S., & Shaw, J. J. (2009). International marketing: Strategy and theory. London:
Routledge.
Scholz, L. (2014). Brand Management and Marketing of Luxury Goods. Hamburg: Diplomica
Verlag.
Som, A., & Blanckaert, C. (2015). The road to luxury: The evolution, markets and strategies of
luxury brand management.
Sterlacci, F., Arbuckle, J., & Sterlacci, F. (2009). The A to Z of the fashion industry. Lanham,
Md: Scarecrow Press.
West, D., Ford, J. B., & Ibrahim, E. (2015). Strategic marketing: Creating competitive
advantage. Oxford: Oxford University Press.
Kors, M. (2016). Michael Kors: Designer handbags, clothing, watches, shoes, and more.
Michael Kors. Retrieved 3 December 2016, from http://www.michaelkors.com/
Michael Kors - Overview. (2016). Investors.michaelkors.com. Retrieved 3 December 2016, from
http://investors.michaelkors.com/corporate-overview/default.aspx

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