International Marketing Strategy of Prada

This assignment delves into the international marketing strategy of the luxury brand Prada. It utilizes analytical frameworks like PESTLE analysis to examine the external macro-environmental factors, Porter's Five Forces to assess the competitive landscape, and Ansoff Matrix to evaluate Prada's growth strategies in international markets. The analysis provides a comprehensive understanding of the challenges and opportunities Prada faces in expanding its global presence within the luxury goods industry.

International Marketing
Management

Table of Contents
1. INTRODUCTION.......................................................................................................................2
2. Globalization: Advantages and Disadvantage.............................................................................2
Globalization:.........................................................................................................................2
3. Environmental Analysis...............................................................................................................3
PESTEL Analysis...................................................................................................................3
Porter's Model.........................................................................................................................5
4. Competitive Advantage...............................................................................................................6
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
Appendix .......................................................................................................................................12
1. PESTLE analysis of PRADA:..........................................................................................12
2. Porter's five forces of PRADA:........................................................................................12
3. Ansoff Matrix:..................................................................................................................13

Illustration Index
Illustration 1: PESTLE analysis for Prada.......................................................................................4
Illustration 2: Porter's five forces for Prada.....................................................................................5
Illustration 3: Ansoff Matrix............................................................................................................7
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1. INTRODUCTION
Market can be defined as a place in which exchange of goods and services takes place.
On the other hand, International marketing takes place when exchange of goods is done among
international boundaries (Papadopoulos and Heslop, 2014). The present report is about PRADA
which is an Italian organization which provides luxury shoes, perfumes, clothing, leather
handbags, etc. This firm was founded by Mario Prada in the year 1913. This report is focused on
understanding the concept of globalization, its benefits as well as limitations etc. Further, it
covers to analyse external environment of Prada with the help of PESTLE analysis and Porters
five forces. Lastly, it also includes critical analysis of competitive advantage which can be
achieved by Prada.
2. Globalization: Advantages and Disadvantage
Globalization:
According to Czinkota and Ronkainen (2012), “Globalization can be defined as a process
in which organizations focus on moving their businesses form national and domestic markets to
the international markets” (Czinkota and Ronkainen, 2012). This is done to increase the
interconnectedness among different markets. This is helpful not only in developing international
trade but it also helps in exchanging culture of one country to another.
In this context, there are mainly four parameters followed which are very helpful in the
area of globalization. Four parameters are as follows:
 Aims at reducing the trade barriers through which free flow of goods is possible among
countries (Hollensen, 2015).
 It develops environment in which flow of money is possible between countries.
 Technology flows from country to country.
 Free supply of labour is possible among countries.
As per Paliwoda and Thomas (2013), “Globalization is very helpful for both the developing
as well as developed countries” (Paliwoda and Thomas, 2013). However, following are the
advantages of globalization:
 It is very helpful in the effective allocation of resources. Through globalization, firm
focuses on delivering their goods from one country to another.
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 When firms operate their business in different markets, then they also make exchange of
technology (Turnbull and Paliwoda, 2013). Organizations in other market get to know
about the technology with the help of which they can provide improved services.
 Through globalization, expansion of business becomes faster in order to meet the demand
of customers and it also helps in developing employment opportunities. As a result, it
reduces the poverty rate of country.
Following are the disadvantages of globalization:
 One of the main disadvantage of globalization is that it increases the rate of import but it
does not make much difference in export rates (Turnbull and Valla, 2013).
 As it was discussed above, globalization helps in increasing productivity and promotes
idea of technological change but this is only effective for those countries which are
developing, but in case of developed countries, impact of globalization is not that much.
 Different countries have various organizations which provide similar goods and it
becomes difficult for the firm which expands their business in new market as they face
high competition (Akaka, Vargo and Lusch, 2013). Through globalization, expansion of
business becomes easy but due to high competition, it becomes difficult to operate
business effectively in the new market.
In accordance with the case, Prada was gaining huge profit with the products and was able to
attract customers effectively. This enabled them to expand their business in Europe and USA.
This was very helpful in developing brand image and spreading information regarding the firm
with minimum use of risk and cost (Majaro, 2013). Through expansion of their business, brand
image was developed and with the high growth, they focused on developing new range of
products. Growth and profitability gave them the confidence to become a global luxury
conglomerate.
3. Environmental Analysis
In order to analysis the environmental factors, PESTLE analysis and Porter's five forces
for Prada are as follows:
PESTEL Analysis
PESTEL Analysis can be used by PRADA in its business expansion. This tool is likely to
aid towards study of all the macro or external factors that can affect its operations.
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Political Factors: Prada is planning to target countries like USA and Europe as its
potential customers. It is important for the company to carefully study the political situation in
those countries as it has direct impact on the business (PESTLE analysis, 2014). Concerns that
company should focus are tax policies, foreign trade barriers, intervention of government,
political unrest, rules, regulations and foreign company's policies in that country. For example, In
US and Europe, government is very supportive for the foreign investment.
Economic Factors: Economic condition of a country also decides a company's future
(Berthon, Pitt and Shapiro, 2012). Economic growth, inflation, demand, Gross Domestic
Product, income, taxation, interest rates and exchange rates of both USA and Europe should be
carefully studied.
Social factors: Social factors include age, taste and preferences, attitude of people and
demand. Prada can target countries like USA and Europe where people are ready to buy luxury
fashion items (Diamantopoulos, Fritz and Hildebrandt, 2013). Both the nations are known as
shopping hubs where people have positive attitude. This ideology can be used by PRADA in its
favour.
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Illustration 1: PESTLE analysis for Prada
(Source: PESTLE analysis, 2014)

Technological factors: The growth and technological changes have their own impacts on
the business. Prada is an international brand which is growing rapidly and they are bringing in
the changes also in terms of technology. They need a market which supports its technology. Both
USA and Europe are supportive in terms of technology (Turnbull, 2013). Hence, this is likely to
favour the business expansion of PRADA in these nations.
Environmental factors: Some countries have their own concerns about the environment.
They would not support the activities that harm the environment or puts pressure on their natural
resources. Prada should evaluate these conditions before entering any new market and should
focus on sustainable growth (Eng and Ozdemir, 2014). For example, USA is very particular
about environmental laws. Hence, they should be taken care of.
Legal Factors: Laws and rules of a country should be carefully studied. Each country has
its own rules like rules for companies, advertising guidelines, consumer rights, etc. which needs
to be studied carefully.
Porter's Model
Porter's five forces model is a useful tool to evaluate the current situation of PRADA with
respect to its international expansion (Porter's five forces, 2011). The five forces that may
influence its business are:
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Illustration 2: Porter's five forces for Prada
(Source: Porter's five forces, 2011)

Bargaining power of Suppliers: the threat of suppliers in case of PRADA is low as the company
has ample of suppliers so that bargaining power lies with the company. This area is likely to
favour in its expansion.
Purchasing power of Buyers: PRADA has more buyers that means more bargaining power is
with the company (Papadopoulos and Heslop, 2014). The company is likely to grow in other
countries as well. It would not find any difficulty in grabbing new market.
Revelry among existing Competition: PRADA can face tough competition from other
international brands like Gucci, Verasace already established in the market. Yet it has Brand
loyal customers and the company can grow internationally.
Threats of substitution: PRADA needs to do something to make the customers brand loyal. If
they switch to other products, it would result in loss of profits (Czinkota and Ronkainen, 2012).
The substitution available in the market has to be studied before entering any market and its
potential to capture market needs to be evaluated to make sure customers stay with the brand.
Threat of new entry: PRADA can face difficulties with the entrance of new firms and products.
This would not only increase the competition but also the revenues of the existing brands would
decrease (Hollensen, 2015). Most of the countries does allow new firms to get established in the
country especially if it is a domestic one. PRADA should prepare itself for the competition.
4. Competitive Advantage
According to Paliwoda and Thomas, 2013 “competitive advantage can be determined as a
benefit which organization gets over its competitors and help the firm to gain huge profits when
compared with its competitors” (Paliwoda and Thomas, 2013). There are different types of
competitive advantages which companies can get which are distribution network, cost structure,
customer support, product offering, etc.
In accordance with the case, Prada has many competitors and there are many strategies
which can be adopted by this firm in order to gain competitive advantage (Turnbull and
Paliwoda, 2013). One of the main competitors of Prada is Gucci and both were founded with in
the difference of ten years. In addition to this, they both focus on providing accessories for
customers. Following are the differences among Gucci and Prada with the aim at achieving
competitive advantage:
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According to Turnbull and Valla, 2013 “Gucci focused on developing their brand by developing
a structure in which they aimed at selecting celebrity” (Turnbull and Valla, 2013). On the other
hand, Akaka, Vargo and Lusch, 2013 stated that “Prada did not adopt any kind of plans to
develop their brand image, they just focused on developing advertisement to convey information
regarding the products delivered by Prada” (Akaka, Vargo and Lusch, 2013).
With the help of this strategy of celebrity status Gucci was able to make expansion to their
businesses to important cities which included New York, London, San Francisco, etc. However,
Prada did not conduct any kind of operations so as to expand their businesses and they remain to
focus on domestic business.
Lastly, after the business expansion of Gucci, they focused on prolific brand extension strategy
with the help of licensing agreements (Majaro, 2013). On the other, Prada did not perform any of
the activities.
There are different models with the help of which organizations can easily gain competitive
advantage. This is possible through different marketing models, among which one is as follows:
Ansoff Matrix: This model is very helpful in determining the growth strategy. According to
Berthon, Pitt and Shapiro, 2012 “Ansoff determines the potential products which could be
marketed to different markets” (Berthon, Pitt and Shapiro, 2012). There are mainly four possible
combination in which firm can make use of Ansoff Matrix, which are as follows:
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Illustration 3: Ansoff Matrix
(Source: Marketing Theories, 2013)

Market Penetration: According to this growth strategy organization focus on delivering their
product at same market segment (Marketing Theories, 2013). In accordance with the case, Prada
focused on developing brand image with the same market among customers. This was very
helpful in attracting customers.
Market development: In this strategy the organization aim at selling their existing product to
new market. Gucci has adopted this strategy as they hired celebrities with the help of which they
increased their sales and this gave them the opportunity to expand their business
(Diamantopoulos, Fritz and Hildebrandt, 2013). On the other hand, as discussed above, Prada did
not conduct any kind of efforts to expand their business.
Product development: According to this strategy, organization aim at developing new product at
same market. This strategy was adopted by Prada as they first developed product with the help of
which they gained huge profit, then they focused on developing new range of product which
helped to grow their business effectively (Turnbull, 2013). In this context, they developed many
stores within the market so that they could easily make the products available to their customers.
Diversification: According to strategy, firm develops new product for new market. This a type of
risk which organizations take as it is very difficult to develop a product and in attracting
customers.
Another strategy which can be adopted by organization in order to attain competitive advantage
is with the SWOT (Eng and Ozdemir, 2014). This will be helpful in determining the areas in
which both the organizations lack or can enhance their strengths so as to attain competitive
advantage.
Table 1: SWOT for Gucci and Prada
Strengths Gussi has a strong brand equity and brand
image. On the other hand, Prada provide high
quality services and provides its customers
with unique designs.
They focus making use of all promotional tools
effectively so that they could develop a good
perception among customers (Papadopoulos
and Heslop, 2014).
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However, Gucci has a strong distribution
network with the help of which they easily
make their products available to their
customers.
Weaknesses Gucci has to conduct huge investment so that
they could maintain their brand image
(Czinkota and Ronkainen, 2012).
On the other hand, Prada do not have any
operation in order to develop their brand
image.
Opportunities One of the opportunities which prevail for
Prada is business expansion.
On the other hand, Gucci can develop luxury
market in countries like China and India
(Hollensen, 2015).
Threats For both organizations that is Gucci and Prada
has high competitors as there are many firms
which provide similar products.
CONCLUSION
From this report, it can be articulated that Prada should be able to develop strategies with the
help of which they will be able to develop brand image customers. This will be help in increasing
their sales and profitability. Customers prefer to buy product which have high brand image. Like
Gucci, they aim at developing their brand image which helped them to gain competitive
advantage. Another thing which can be done by Prada is business expansion and to developing
countries and this will be helpful for the growth of the organization. In addition to this, firm
provides unique designs on their product, this can be used as a competitive advantage. In order to
expand business it is very important for the firm to make use of promotional tools effectively so
that they can attract customers.
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REFERENCES
Books and Journals
Akaka, M.A., Vargo, S.L. and Lusch, R.F., 2013. The complexity of context: a service
ecosystems approach for international marketing. Journal of Marketing Research. 21(4).
pp.1-20.
Berthon, P.R., Pitt, L.F. and Shapiro, D., 2012. Marketing meets Web 2.0, social media, and
creative consumers: Implications for international marketing strategy. Business horizons.
55(3). pp.261-271.
Czinkota, M. and Ronkainen, I., 2012. International marketing. Cengage Learning.
Diamantopoulos, A., Fritz, W. and Hildebrandt, L. eds., 2013. Quantitative Marketing and
Marketing Management: Marketing Models and Methods in Theory and Practice. Springer
Science & Business Media.
Eng, T.Y. and Ozdemir, S., 2014. International R&D partnerships and intrafirm R&D–
marketing–production integration of manufacturing firms in emerging economies.
Industrial Marketing Management. 43(1). pp.32-44.
Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.
Majaro, S., 2013. International Marketing (RLE International Business): A Strategic Approach
to World Markets. Routledge.
Paliwoda, S. and Thomas, M., 2013. International marketing. Routledge.
Papadopoulos, N. and Heslop, L.A., 2014. Product-country images: Impact and role in
international marketing. Routledge.
Turnbull, P.W. and Paliwoda, S.J., 2013. Research in international marketing(Vol. 39).
Routledge.
Turnbull, P.W. and Valla, J.P. Eds., 2013. Strategies for international industrial marketing.
Routledge.
Turnbull, P.W., 2013. Tri-Partite Interaction: The Role of Sales Subsidi-aries in International
Marketing. Research in International Marketing (London: Croom Helm, 1986), pp.193-
212.
Online
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PESTLE analysis. 2014. [Online]. Available through:
<http://www.cipd.co.uk/hr-resources/factsheets/pestle-analysis.aspx>. [Accessed on 8th
March 2016].
Porter's five forces. 2011. [Online]. Available through:
<http://www.investopedia.com/terms/p/porter.asp>. [Accessed on 8th March 2016].
Marketing Theories. 2013. [Online]. Available through:
<http://www.quickmba.com/strategy/matrix/ansoff/>. [Accessed on 8th March 2016].
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Appendix
1. PESTLE analysis of PRADA:
Illustration 4: PESTLE analysis for Prada
(Source: PESTLE analysis, 2014)
2. Porter's five forces of PRADA:
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Illustration 5: Porter's five forces for Prada
(Source: Porter's five forces, 2011)

3. Ansoff Matrix:
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Illustration 6: Ansoff Matrix
(Source: Marketing Theories, 2013)