Global Marketing: Cotton On's India Market Expansion Analysis Report

This report provides a comprehensive analysis of Cotton On's global marketing strategy, specifically focusing on its potential expansion into the Indian market. It begins with an executive summary outlining the key findings of the report, followed by a detailed situational analysis using the PESTE...Read More

Running head: GLOBAL MARKETING
Global Marketing
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Executive Summary
The country and product opportunity brief of an Australian company aiming to expand their
business in an Asian country is studied to understand the concept of Global Marketing. The
largest Australian fashion retail company, Cotton On planning to expand their business in India
is used as a case study. This report aims to understand the availability and requirement of the
market and company, respectively, to execute a new business in foreign country. Situational
analysis have been conducted to study the business environment and the factors required for
carrying out the business in India. A market analysis of Australia in accordance to the company’s
function and the company’s own organizational analysis are carried out. Moreover, a SWOT
analysis has been conducted to study the strengths and weakness of the company and the
opportunities and threats of the company in the Indian market. It has been concluded that the
company has few favourable factors that can contribute towards launching its business in India.
The Indian market too has suitable conditions to provide allowance to the company to set up its
business. Although there are few regulations and changes in business plan the company need to
establish to consider extending towards a global market, all of which have been studied in detail
in the paper.

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Table of Contents
1 Introduction...................................................................................................................................4
Discussion........................................................................................................................................5
2 Situation Analysis.....................................................................................................................5
2.2 Market Analysis.....................................................................................................................9
2. 3 Competitive Analysis..........................................................................................................10
2.4 Organizational Activities.....................................................................................................11
3 SWOT Analysis..........................................................................................................................12
Conclusion.....................................................................................................................................14
Swot Summary...........................................................................................................................14

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1 Introduction
Cotton On is Australia’s largest retailer that works on a global scale. It deals with fashion
clothing and stationery brand items (Cotton On Group, 2019). They own 7 different brands and
function in 18 countries all across the globe. They have a record of more than 1,500 stores across
the countries and have successfully become a part of the global community (Footprint | Cotton
On, 2019).
India is a highly populated country and one of the fastest growing economies of the
world. India is set to provide major opportunity for Australian business than any other single
market in the forthcoming 20 years (Foreign Affairs and Trade [AU], 2019). Hence Australia is
certainly looking forward to establish a greater economic connection with India. Moreover,
India’s clothing or textile industry is one of the major contributors of its total economy.
Cotton On has recently entered the Indian market through online shopping store Myntra
and is expected to launch their offline store in the Indian market by 2020 (Singh, 2019).
This report aims to analyse the available market opportunities for the Australia to expand
in the international or Indian market through a situational analysis. It further intends to study the
potential, capability and issues of Cotton On to enter the new international market through
SWOT analysis.
Discussion
2 Situation Analysis – PESTEL
2.1 Business Environment
Various key factors that are likely to affect the business and operational activities of
Cotton On and the Indian market are analysed below:

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2.1.1 Political Factors
Over the years, it is noticed that India has invested well in the business sector. According
to the World Banks’s Global Assessment ranking, India has moved up 23 places in one year,
standing at 100 in 2019 (The World Bank, 2018). The Indian government recently implemented
the system of Goods and Services Tax that provides a concrete tax structure to eliminate all the
indirect tax levied on any kind of goods and services (services.gst.gov.in/services, 2019). The
GST system is implemented with the hope of introducing ease and simplicity of carrying out
business activities in India in the long run. It is mandatory for any foreign company functioning
in India to file an official GST registration. Although this might sound beneficial, there has been
numerous instances of Australian or similar other foreign companies facing difficulty to function
in the Indian market. Companies often enter into a cycle of endless waiting to receive the
approval for starting their business. The numerous political regulations and government
procedures to be followed to establish a business often acts as barriers. Especially the
bureaucratic way of functioning in the country and inefficiencies associated with the same,
makes it difficult for foreign companies to progress even further.
2.1.2 Economic Factors
India is a developing country with a mixed economy. It is the third-largest economy in
the world by purchasing power parity and the seventh largest by nominal GDP. According to the
First Revised Estimates of GDP, the real GDP growth of India has been consistent and estimated
at Rs 140.78 lakh crore with a growth rate of 6.81% as of 2017-2018 (GDP 2019 -
StatisticsTimes.com, 2019).

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Figure 1: Real GDP growth of India from 2014-2024
Source: Statista.com
India has a huge raw material and manufacturing base. The present market size of Indian textile
industry is approximately US$ 108 billion at present and is set to reach US$ 223 billion by the
year 2021. From 2000 to 2016, the textile industry witnessed a total Foreign Direct Investment of
US$ 1.85 billion (indiantradeportal.in, 2019). This may provide a chance for Cotton On to
capitalize in this area.
2.1.3 Social Factors
India is the most populated democracy and the second most populated country in the
world. The current population of India is 1.37 billion which is equivalent to 17.74% of the world.
Such a massive range of population leaves the scope of reception of any kind of business or
service high. Moreover, the textile sector contributes largely to India’s economy and is important
to the society as it contributes highly to human development (ibef.org/archives/detail, 2019). As
seen in Figure 2 below, nearly 27.7% of the Indian population ranges below 15 years old, the
majority of all age groups. Cotton On has a separate brand named “Cotton on Kids” that caters
specifically to kids aged 9-14 year old (Cotton On Kids, 2019). The brand also believes to stand
for diversity and look forward to empower people from all background and both the genders

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(Cotton On | Brands, 2019). This idea can certainly work in a country like India that stands for
unity in diversity.
Figure 2: India’s Age Demographics
Source: Encyclopaedia Britannica 2016
But it should also be considered that the probability of competition in the mentioned sector also
remain considerably high. In recent times, there has been a boom of products and services
business in India. A foreign company certainly requires a lot of market research, effort and
understanding to establish itself in such a setting.
2.1.4 Technological Factors
With the advent of the new digital age and numerous technological advancements, India
is certainly embracing various technological advancements. The Australian fashion industry is
also open to embracing smart technological ways (smartcompany.com.au, 2019). There is a huge
scope for amalgamating such technologies in the Indian market. Specifically, Cotton on aims to
focus largely on the digital space and establish 30% digital growth this year (cmo.com.au, 2019).
Along with an omni-channel presence, they also upgraded their ecommerce site to Salesforce

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Commerce Cloud. The company’s first instance of expansion in the Indian market has been
through the digital space.
2.1.5 Legal Factors
India as a country is bound by various legal rules and regulations (History of Indian
Patent System | About Us, 2019). India has been a member of World Trade Organization since
1995 and as per the rules; all member nations of WTO must include intellectual property
protection in their national laws. Most leading Indian corporations abide by the Intellectual
Property Rights. Australia is yet another that follows the Intellectual Property Rights. Hence,
Australian companies that look forward to expand their business in India may find certain
similarities in following the IPR regulations and enforcements.
2.1.6 Environmental Factors
India has been a home to many environmental issues over time. Degradation of forests
and agricultural lands, degradation of resources like water, minerals, soils, issues of solid wastes
and garbage, are few among the major environmental concerns of the country. These are some
factors that can cause hindrance to the workflow of Cotton On. However, the company focuses
on establishing sustainable fashion at large and that concept would be widely accepted in the
country.
2.2 Market Analysis
The analysis of available market relevant to Hospital Services Group is as stated below:
2.2.1 Definition of Product Market
Cotton on will be competing in the textile, clothing or apparel market. The textile market
is one of the oldest business markets in India. The future of the Indian clothing industry is
considered to be great especially with the growing consumerism and disposable income. The

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retail sector has always witnessed a rapid growth and has welcomed export demand as well as
domestic utilization.
2.2.2 Market Size and Outlook
The Indian textile industry is expected to grow at a CAGR of more than 13% in the
forthcoming years. The total rate of apparel export is set to reach US$ 82 billion by 2021 and the
gross cloth production is expected to reach 112 billion square metres by FY17. India’s double
digit growth will provide a great opportunity for apparel products. The brand plans to compete to
other international apparel firms like H&M and Forever 21.
2.2.3 Market Characteristics
The market size of India’s textile industry is something. The total revenue of the fashion market
in 2019 is recorded to US$ 12, 546 million. By 2023, the annual growth rate is expected to
surmount to a CAGR of 20.8% and the expected market volume is US$ 26, 723 million
(statista.com). Out of the fashion market, the apparel sector holds the largest volume with US$ 9,
931 million.
Such market characteristics leave a great chance for Cotton On to expand its business in the
respective areas of the Indian market.
2.2.4 Target Market Behaviour
In accordance of delivery, Cotton On’s target market ranges from kids, women and men
of all ethnicity. The increasing trends in the fashion industry and the aim of attaining sustainable
fashion provides a great scope for the company to expand in the Indian market. However, a
proper market segmentation plan and research is required before stepping into the international
market.
2.2.4 Customer Segmentation

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Analysis of probable customers based on demographics to identify target market. In order to
establish offline stores in India, it is essential for Cotton On to have an understanding of the
customer that they should mainly put under their target. Therefore, a probable classification of
customers according to demographics, they can cater to has been provided below:
Figure 3: Customer Segmentation Demographics
Source: Creator
2. 3 Competitive Analysis
The majority of fashion brands in the Indian market is American and European. Therefore,
Cotton On can have an advantage for being one of most prominent Australian brands to venture
into the Indian market. India has a great demand for new fashion and Cotton On for the same.
Though categorically, the biggest competition will arrive in the form of brands like Forever 21
and H&M, as these brands have already established their stronghold in the Indian market.

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There are also numerous Indian companies operating in these three sectors, therefore,
increasing the competition even further.
2.4 Analysis of Organizational Activities
2.4.1 Previous and Current Experience
Cotton On was established back in 1991 and has been functioning since the last 28 years. They
expanded to another state in 1994 (History | Cotton On, 2019). The kids brand was established in
2004 and started international expansion with New Zealand 2006. The Better Cotton initiative
was launched in 2016 and the Cotton On foundation was established in 2017.
2.4.2 Technical Capabilities
The company definitely holds great technical capabilities that help them design their
clothes and accessories. The Sustainable fashion initiative also requires technicalities that the
brand is capable of. It also focuses a great deal on digital growth and e-commerce expansion.
2.4.3 Technological Skills and Knowledge
The group has high technological knowledge that enables them to constantly introduce
new fashion products.
2.4.4 Relationships with Market
Cotton On is the largest fashion retailer in the market with a great brand value and image.
2.4.5 Company Profile and Financial Capability
Cotton On‘s company profile is decent with a vision to “make a positive difference to
people’s lives” (Values | Cotton On, 2019). They aim to touch the lives of people through their
clothes in domestic as well as global market. As of 2015-2016, the company’s total revenue was
$1.8 billion (ragtrader.com.au, 2019).
2.4.6 Business Philosophy and Culture

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Cotton On’s main philosophy is to believe in the concept of getting better. They solely believe
their tomorrow can be better than today.
3 SWOT Analysis
A SWOT Analysis of Cotton On is conducted to study the internal strength and weakness
of the company. It will also help to gain an idea about the opportunities and threats of the
external Indian market.
Figure 5: SWOT Analysis of Cotton On
Source: Created by the Author
3.1 Strengths and Weakness Analysis
3.1.1 Strengths:
The key strength of Cotton On is the large Global presence. It also has a great brand
value as the biggest Australian fashion retailer. The company comes with a large range of
products for all genders and kids with 8 different brands of its own. It is also affordable as
compared to its competitors and it work towards attaining sustainable fashion (Sustainability |

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Cotton On, 2019). The company has also made a huge impact through its non-profit foundation
(Cotton On Foundation, 2019).
3.1.2 Weakness:
The biggest weakness of Cotton On has been the product quality. Grievances regarding the low
quality production and fault in materials have often been reported. The company also has e
limited colour palette with a lack of colour variations.
3.2 Opportunities and Threats Analysis
3.2.1 Opportunities:
India and Australia is looking forward to expand economic ties hence providing opportunity for
brands to establish themselves in the Indian market. At a time when the world is looking forward
to achieving sustainable goals, the company aims at introducing sustainable fashion. Therefore, it
has a huge opportunity in the same sector. The company also has great opportunity is expanding
over the digital space.
3.2.2 Threats:
The Indian market has numerous fashion brands that hold top positions in the business.
There is also a constant influx of emerging companies in this sector within the country.
Environmental conditions and pollution might be a threat to any foreign company. Customer
expectations from such companies are usually high and customer satisfaction is hard to achieve.
Conclusion
It can be concluded from the above report that Global Marketing is an important
phenomenon in expanding business across nations. The case study, Cotton On is the largest
fashion retail company in Australia. India has been used as the example of an Asian country
where the Australian country can expand its business. Situational analysis of factors influencing

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the business environment in India has been studied. The market analysis and organisational
analysis of the company in Australia has been carried out. It can be established through Cotton
On’s strength and opportunities that the Australian company can expand its market in India
especially because textile business has great scope and opportunity. Australia is also looking
forward to strengthen its economic ties with India, which provides further chance of the
company’s business expansion. However, there remains an extreme strong competition in the
Indian market, both from state-owned as well as foreign companies. Therefore, Cotton On
strongly requires overcoming their weakness and threats. They also need to carry out a proper
market research and establish a strong segmentation plan in their business. They should also take
into consideration betterment of the product alongside the service. As a whole, the conditions for
introducing their company or product service in India seem favourable.

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ABOUT US: Cotton On Group. (2019). Retrieved 19 August 2019, from
https://cottonongroup.com.au/about-us/ ("ABOUT US: Cotton On Group", 2019)
CMO Article, 2019 Retrieved 19 August 2019, from
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growth-2019/
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footprint/
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lang=1&id=0,30,50,163
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enters-india-through-myntra-plans-offline-stores-119060101264_1.html
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Sustainability | Cotton On, 2019 Retrieved 19 August 2019, from
https://cottonongroup.com.au/sustainability/

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we-are/