International Expansion of ASOS: Marketing Strategies and Challenges

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ROX: GLOBAL MARKETING

Table of Contents
TASK - 1.......................................................................................................................................................................... 3
TASK 2............................................................................................................................................................................ 6
A.................................................................................................................................................................................... 6
B.................................................................................................................................................................................... 8
C................................................................................................................................................................................. 10
REFERENCES............................................................................................................................................................ 12

TASK - 1
A
OVERVIEW OF COMPANY
ASOS is a British online clothing industry headquarter in London, the United Kingdom
founded in the year 2000. It is 18 years ASOS is running their business online successfully
in the online market of Europe. Additionally, ASOS is working in Paris, New York, Berlin
and Birmingham also the main place of operating business of ASOS is Barnsley and south
Yorkshire where near around 3000 employees are working. ASOS design their clothes for
young peoples and working with more than 800 brands all over and give 75000 clothing
range to its customers also ASOS design their clothes and maintain shipping for
approximately 190 countries. ASOS deals in a product of clothes, shoes and accessories.
Approximately more than 4000 employees are working with ASOS. For increasing sales of
company online ASOS launched a campaign for Instagram stories asked their customers to
post stories of purchased products from ASOS. One video of ASOS product got 3 million
views in the UK. Looking after the huge reaction of product online ASOS created hashtag
#AsSeenOnMe so that everyone can add pictures online this helps in increasing database of
a company. Seeing peoples preference for purchasing of product online ASOS created an
online mobile app. Approximate turnover of ASOS in a year is about 100 million pounds
(Cullinane et al., 2019).

B
EVALUATION AND MOTIVES INFLUENCING COMPANY TO MOVE IN INTERNATIONAL
MARKET
ASOS is originally operating their business in the UK and now ASOS is dealing with 190
countries like USA, France, Germany, Spain, Italy, and Australia etc. ASOS is shipping their
products all over but it is the centre of shipping and distribution is the UK only. Gradually
ASOS is expanding their business in other countries Thompson and McLarney 2017).
International Market influenced ASOS because:
 Customers around the world look and shop products of the company which
increases the brand value of products of the company.
 Selling of products in other countries allows growth for the company but one should
know the local laws, rules and regulation of operating business. Rules and
regulation of every country are different and a specialist is needed to help in
another country for proper implementing and understanding of laws, this whole
process of documentation is lengthy but it is compulsory and beneficial for the
future operation of the business.
 ASOS is good in product delivery service, designs and description of products and
returns .therefore all these facilities like by customers and this makes the path easy
for ASOS for growth and success in International Market (Thompson and McLaren,
2017).
 Other than own brands of ASOS Company source 1000 other brands, which attract
customers as they got a variety of product range.
 Speedy global delivery is another benefit for ASOS to survive in the global market
also customer service of ASOS is good.
 Challenges faced by ASOS in establishing their products in the global market is
Rules and regulations, policies of other countries, political factors and challenges of
foreign countries, it takes time to understand the diverse geography of another
country also ethical standard and norms of countries differ according to change in
environment and understanding rules of taxation is another big challenge.

TASK 2
A
The marketing strategies adopted by ASOS are illustrated with the application of linear
growth theory. As per this theory, there are two factors affects the growth of a company in
the market. These are capital-output and capital investment. Capital investment is crucial
for the growth of the business. The success of business improves the economic status of the
local population by generating employment there (ASOS, 2019).
As the data indicates the growth rate of business of ASOS is in a positive trajectory.
Factors Growth rate
Revenue 26%
Gross profit 29%
Net asset 53%
It is clear from the above-mentioned data that the company is growing and disposable
income is also growing in the markets it is working in. It is working successfully in the
market of the UK, USA and EU. The reason behind the growth of the organization is aim to
offer fashion with integrity. There are many factors responsible for the entrance of
organization in new markets and these are illustrated as follows: the data indicates the
growth rate in the UK is 23% and 19% in France (TMF, 2019).
Factors UK France
Resources The raw material is easily
available for the apparel
industry.
Creative designers to offer
fashion with integrity is only
possible with creative
designers.
Government norms The tax laws, trade laws are
flexible and support the
growth of the business
The tax laws, trade laws are
manageable and the
recovery and contracts

positively. enforcement is also easy.
Capital It is being the developed
nation capital from the
market can easily be
accessed.
Authorities in France
incentivize clothing business
due to its potential for
growth.
Labor Availability of labour is easy
due to the strong textile
industry in the UK.
It is easy to find skilled
labour in France for this
business.
The corporate tax rate in the UK is 20%. It also has a double taxation agreement with the
other countries. Thus, ASOS doesn't need to pay foreign dividends on corporation tax. It is
considered as the additional benefit for the organization. The vast pool of talented
employees and fastest labour supply are also a major reason for operating in the UK.
Overall labour cost is relatively lower in the UK. Presence of global brands provides ample
opportunity for growth. ASOS is operating its business in France due to the natural flair for
art in the local labours. Though the education level is average creativity is nurtured
effectively.
Major competitors like Zara, Primark make help in improving the competitiveness of the
business. The tax rate in France is set at 20% for the corporations and it is also easy to get
credit form the local markets. France being one of the most fashionable countries provides
immense scope for doing business there profitably. Sometimes, business units face
problems in enforcing contracts but France has adopted a modern legal system to enforce
contracts and this ranked 15th for providing ease of doing business. Resolution of
insolvency is also high and the recovery rate is 73.5%. This all factors make it a lucrative
destination to enter into a new market (Thompson, 2017).

B
The linear growth theory focuses on the growth of business along with the growth of
purchasing power of the populations. There are several modes of entry available to enter
into a new market. This mode has its advantage and disadvantage. ASOS to enter in the
market of France is going for partnership and strategic alliance. This is the agreement
among the two parties to set up their new business. They can fulfil the capital requirement
easily with the shared investment; this type of alliance also has a lower risk for the
business. Though, at times it can be costly compared to other modes of entry. The
acquisition is the fastest mode of entry in the new market and gives rights over the already
established business of the acquired organization. So, there is no need for initial investment
(Mu et al., 2015).
Exporting is the swift mode of entrance in the new market. It also has the least risk
associated with it. If any organization is planning to expand business with low investment
and risk can adopt this mode of entrance. ASOS enter in the new market as an exporter of
textile. ASOS does not need to invest in infrastructure creation and operation management.
Licensing and franchising are the other modes of entrance in that licensee can get limited
accessed to the latest tools and technologies. In the franchising infrastructure of the
organization can be used as per the stipulated provisions. ASOS can adopt this mode of
entrance for gaining access to the latest technologies and eliminate the need for the initial
set up cost (Hitesh Bhasin, 2018).
ASOS to enter in France can go for partnering and strategic alliance. This is the agreement
among the two parties to set up their new business. They can fulfil the capital requirement
easily with the shared investment; this type of alliance also has a lower risk for the
business. Though, at times it can be costly compared to other modes of entry. The
acquisition is the fastest mode of entry in the new market and gives rights over the already
established business of the acquired organization. So, there is no need for initial investment
(Cullinane, 2019).
ASOS has the other option available to enter in the market of France is green Field Venture.
This strategy has a higher risk attached to it and costly as compared to other strategies.

This also has a slow entrance due to set up time. So, after the above analysis, it can be said
that ASOS for the expansion of business can go for an alliance with the other business in
France as it will help in reducing the additional cost required initially. It will also distribute
the risk involved in the business.
Type of entry Advantage Disadvantage
Exporting Swift entrance, lower risk Low control over the
business, a lack of local
knowledge
Licensing and franchising Swift entrance, lower risk
and low cost
Low control over the
business, the licensee may
turn major competitor
Partnering and strategic
alliance
Shared investment, lower
risk
Costly compared to
exporting, licensing and
franchising
Acquisition Swift entrance established
business operations
Higher cost and merger
issues
Green Field Venture Attain knowledge of the
local market, highest control
Higher risk and cost as
compared to other
strategies, slow entrance
due to set up time (Mu et al.,
2015).

C
Marketing strategies
Product adaptation strategy can be defined as the procedure of modifying a present
product so that it can be suitable for new customers and markets. It is suitable for export-
oriented companies (Thompson, 2017).
EPRG model: this model is also called EPG model. It is a great tool for international
marketing. This method involves Polycentric, Geocentric and Globalization or Ethnocentric.
The Regiocentric is the newly added dimension.
Ethnocentric in some sense has the dominance of culture over the sales, growth and other
business factors. Centric is the centre of focus in all these terms. Similarly, in the
geocentric strategy, all foreign markets are treated as a single entity. In this strategy,
subsidiaries align their business operations.
Advantage and disadvantage
This strategy is used for the expansion of the business to fulfil the local needs or meet the
demand of diverse religious and cultural communities. It helps in Brand Creation for the
ASOS. This strategy also helps in the reduction of cost for manufacturing, operations. This
method helps in enhancing product efficiency and maintaining uniformity. It also provides
benefits to consumers. The disadvantage of this method has a complex procedure and
costly. It is tedious and time-consuming. It is also difficult to maintain uniformity in the
implementation (Cullinane, 2019).

Integrated marketing communication
This strategy is helpful for the organization to promote brand worth and create awareness
among the users about their products and services. The modes adopted by them are
advertising, PR, direct marketing and selling and use of social media.
This method helps in brand creation and adopting corporate culture for them. It also helps
in creating new business for the ASOS. IMC help in creating effective marketing and pricing
methods for the business (Andrade et al., 2019).
EPRG model: this model is also called EPG model. It is a great tool for international
marketing. This method involves Polycentric, Geocentric and Globalization or Ethnocentric.
The Regiocentric is the newly added dimension.
This strategy is used for the development of the business is the use of the IMC method for
integrated management of the business processes. It helps fulfil the indigenous
requirements or encounters the request of varied religious and cultural societies. It helps in
Brand Creation for the ASOS. This approach also helps in lessening of cost for developed,
procedures. This method helps in enhancing production competence and maintaining
consistency. It also provides benefits to consumers. The disadvantage of this method has a
complex procedure and costly. It is tedious and time intense. It is also problematic to
maintain consistency in the application (Wach, 2014).

REFERENCES
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3. Hitesh Bhasin, 2018. (Online available at https://www.marketing91.com/what-is-
product-standardization-uses-and-advantages/ last accessed on Aug 17, 2019).
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https://saylordotorg.github.io/text_international-business/s12-03-international-
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undertaken by next Plc have on themselves and their competition in the UK Clothing
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9. TMF Group, 2018. Business in France (Online available at https://www.tmf-
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