Lotto Sport Italia: International Market Entry Plan for Sri Lanka

This report presents Lotto Sport Italia's international market entry plan for Sri Lanka, focusing on the expansion of its sportswear and footwear business. The report begins with an appraisal of the Sri Lankan target market, examining its size, growth prospects, competitor landscape, and consumer buying behavior. It then evaluates various market entry methods, recommending a partnership with DSI Group, a local brand, to leverage its established market presence and distribution network. The core of the report outlines a comprehensive marketing strategy, incorporating Ansoff's growth matrix, competitive strategies like low cost and differentiation, and a unique selling proposition. Finally, it provides detailed marketing mix recommendations, including product offerings, pricing strategies, promotional techniques, and distribution channels tailored for the Sri Lankan market. The report emphasizes the importance of brand image, price sensitivity, and the potential for Lotto to succeed by offering quality products at competitive prices, leveraging DSI Group's established consumer trust and distribution network.

Entering in Sri Lankan
market Lotto

Table of Contents
INTRODUCTION...........................................................................................................................1
INTERNATIONAL MARKET ENTRY PLAN.............................................................................1
1. Sri Lanka Target Market Appraisal.........................................................................................1
2. Methods of Entering into Sri Lankan market .........................................................................2
3. Market Strategy.......................................................................................................................4
4. Marketing mix recommendation.............................................................................................6
5. Evaluation and measurement of plan whether it is successful or not.....................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Breaking into the foreign markets can be refereed to as very critical task.
Expanding the business to the overseas market is considered as one of the greatest
task for any company and critical evaluation has to be done so as to become the leader
in that market. Understanding the target market is one of the key thing in order to have
the successful and positive outcome while going global. Market entry strategy includes
the methods of planning, delivering of services or goods to a new market and
distribution of the product in the same target market. While entering into the new market
the company should analyse the external environmental factors that are responsible for
its growth. This report is based on one of the famous brand that is planing to enter into
the new market that is Sri Lanka to expand its business. The company deals in
Sneakers, casual wears and footwear categories. This report will help in analysing the
Sri Lankan market factors such as Size, growth prospects, competitors profile and
buying behaviour of the consumer over their. The entry methods will be discussed and
the means of partnering with the local sub heads to start their business will be analysed.
INTERNATIONAL MARKET ENTRY PLAN
1. Sri Lanka Target Market Appraisal
Size: SL sports industry is one of the reputed industry in the world for its quality.
As the country is having the population of around 21.44 million and the GDP is around
87.59bn us dollars it is one of the best growing market. The SL market is capable of
producing 15mn shoes annually hence it is the recommended country to expand the
business for any Sneakers & casual wears brand (Doing business. 2018). The large
number of UK retailers watches their cost and lead-time savings grow exponentially -
and it all began when they set up their regional Supply Chain Logistic Hubs in Sri
Lanka.
Growth: As the market of Sri Lanka has been observed as one of the best
market for growth and expansion prospectus. Over few years this industry has shown
the trends to become the best market. For the Companies like Lotto it provides the best
opportunity for growth as the market has not yet become saturate. The increasing
population can be seen as the aspect that will help the company to grow. The current
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market condition of Sri Lanka is suitable for the company to grow their branches and the
increase their productivity.
Competitor profile: As the country is one of the best producers of the sports
wear which is widely recognised. It has been the hub for most of the brand to produce
and sell their products there. The competition that will be face by Lotto Italia while
expanding their business in Sri Lanka would be from the rivals brands already having
their operations there (DO BUSINESS WITH SRI LANKA, 2018. ). These companies
are Nike, Adidas, Fila, Reebok, Puma etc. They have the good customer base and
offers heavy discount to the customers to attract them. The market availability of their
products is very high. So the company has to do some research work to tackle the
competition.
External Trends: The external trends in Sri Lanka plays a vital role in deciding
whether to expand the business in that country or not. As this factor includes the social,
legal and technological factors that affects the operation of the business. As 20bn euro
sports market is the key for making the decision for entering the market. The total
income in this sector for the country in 2011 has been accounted for 4.2bn dollar. So
this trend helps the company in deciding whether to enter the market or not.
Buying behaviour: In Sri Lanka brand consciousness is very high amongst both
males and females. Store loyalty is probably higher than product/brand loyalty. Sri
Lankans are very price conscious, but will not accept any quality for a lower price.
Further, the level of price sensitivity increases when income decreases (Cavusgil and
et. al., 2014). In general most Sri Lankans look for 'value-for-money.' So the brands
such as Lotto who have the motive of providing the quality product at a reasonable price
can become successful here. The people of Sri Lanka are moving their preference
towards the brand. So it will make the company to sell the product more efficiently. As it
is a hub of Sneakers & casual wears market, the prices of shoes generally range from
low to medium price.
2. Methods of Entering into Sri Lankan market
Foreign market entry strategy is the most important strategy that the company
should consider while planning to enter into any country. As Lotto Italia has considered
the continent Sri Lanka for expanding its business. They have to consider different ways
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to capture the market and hold its presence their (Footwear&Leather product, 2018).
The choice of entering into foreign market is to made very cautiously as if done wrong
then whole market plan will become infectious and the strategy to expand the business
will lead to huge loss. As the company has planned to sell sneakers & casual wear in
Sri Lankan market they have to decide the ways of entry accordingly. Analysis has been
done that Sri Lankan footwear industry has the significant potential and has contributed
to the Sri Lanka's economy in a positive way. The industry employs about 20k people
and includes 10 large export companies. The strategies that Lotto can choose to enter
into the Sri Lanka's market are:
Direct exporting: This strategy implies that the company can directly sell the
product in the market using their own resource. Once the company has discovered the
potential market then it has to appoint the distributor and the agents to sell the products
to the customers (Holtbrügge and Baron, 2013). In the case of Lotto Italia this type of
entering in the market would not help the company to enhance its goal as it involves
the huge amount of financial investment which company cannot afford at the initial
stage. Also exporting the product to Sri Lankan market involves high cost as this will
involve high tax and shipping cost which will finally make the product costly and will
discourage the customer to buy it.
Partnering: This is the way where big brands partners with the other
organisation so as to sell their product to the targeted customers. These partners are
basically the local brands that already have their hold and command in the market. As
in the case of Sri Lankan market DSI group which is the local brand already have their
roots dug deep inside the market and holds good command over other local merchants.
For entering into the market Lotto Italia should partner with this brand for helping them
in manufacturing selling their product. As this local partner already have 200
showrooms and around 5000 dealers inside the continent will provide the company to
reach mass number of population at once. As this merchant is having the experience of
about 52 years they knows the price and taste of the customers.
Joint ventures: This is the type of partnership in which two companies having
the same objectives dilutes themselves so as to complete that task. This would not help
Lotto Italia as the company is having its brand image and if they jointly does the
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business with the other company then it will hamper the quality control and can effect
the already build image in the global world. The company has to use huge amount of
fund while targeting the continent for entering. And will also has to open different
outlets which in unpredictable, will lead to success or not.
Lotto Italia has to keep in mind future business dynamics while planning to
partner with DSI group. The company should go step by step so while launching their
products. As they entering the market with sneakers & casual wear the plan should be
to capture this market first. Once the brand image is established then the strategy to
enter into sportswear would be taken into process.
If Lotto Italia chose to partner with DSI group then they will have the advantage
of selling the product at relatively lower price as compared to the other groups. This will
also not require huge amount of fund while launching their product. As DSI group uses
the local resource’s which are cheap and have the highest quality will encourage them
to sell the product at the entry level point (DSI overview, 2018). The company would
have the advantage to launch the product at effective price. Lotto Italia has chosen the
market of Sneakers & casual wear which has to be showcased to the customer from the
outlets that should be attractive. As the brand image has to be formed in the initial stage
the company should use different pricing and promotion techniques. DSI group has the
brand image in the local market that involves the consumers thinking that they provide
the best quality of the product will help the company to build the brand image. With
having number of outlets and showrooms in the continent the launch of Lotto Italia
brand would become easy.
3. Market Strategy
Launching of new product in the market can lead the company to a relationship
of increasing the opportunity to achieve its objectives of becoming world leader. The
strategies has to be made by company Lotto Italia so that they are able to achieve rapid
growth and penetration in the market. Many companies uses these techniques so that
they are able to guarantee quick insight in the market (Kim and Mauborgne, 2014).
Lotto Italia should use different strategies that are given by the company so that they
are able to make a marketing plan that will enable them to achieve the market place in
Sri Lanka. These strategies are:
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Growth Strategy of Lotto Italia: For any company to grow and expand its
market they should create a strategy that will make them expand their business and
would enable them to capture new market that they are entering in. Ansoff market
strategy has provided a alternative for growth strategies. It says that Lotto Italia should
follow well known approach that has been given by Ansoff. The company should focus
on its present and potential products and the markets (Laufs and Schwens, 2014). They
should also consider a way that will help them grow via existing products and new
products and in existing markets and new markets. Company should focus on the
matrix that consider new market with existing product that it offers. This combination
should include product development strategy given by Ansoff which will enable them to
grow by introducing products into the new market segment. A product development
strategy is appropriate for Lotto Italia as there aim is to concentrate on the market
which has its specific customers. The company aims at providing new product in the
market to targeted customers. The market that is chosen to enter into Sri Lanka is
Sneakers & Casual Wears and they should be developed with taking care the
preference of the customers taste and requirement.
Competitive Strategy: Firms relative position in a industry determines whether
the organisation is profitable or not. If the Lotto Italia wants to increase its profitability
firstly they have to sustain a competitive advantage over above. Lotto Italia can
approach two types of competitive advantage that are, either Low cost or Differentiation.
As Lotto wants to enter into new market they should formulate a strategy that will
provide their customers a cost benefit over other products and a differentiation from the
products that are available in the market.
Lotto Italia should set establish a import house from its Indian market to Sri
Lankan market that will help them to provide its product at relatively low cost from its
competitors. By this they will be able to become low cost producers in the market.
Company should include the pursuit off economies of scale so that will make them
achieve the objective of low cost product selling without hampering the quality of
product.
Lotto can also apply the approach of Blue ocean strategy that will enable them to
pursuit differentiation and the advantage of low cost to open a new market segment and
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to formulate a new demand in the economy. Lotto should create a market place that will
offer different product from that which is provided by their competitors by making the
market competition irrelevant. The competition can be overcome d by creating the
market rather than overcoming or fighting it. As this theory applies that it is always a
new market so Lotto by making their range of sneakers & casual wears will provide
them market competition hold.
Segmentation, Targeting and positioning strategy will help the company to
portion the target market, target the customer that are desired and Positioning the
offerings to the target market ( Lee, Abosag and Kwak, 2012). As Lotto is entering into
Sri Lankan market they have analysed the demographic, geographic, psycho graphic
and behavioural approaches. Lotto develops the product keeping in the mind the
customers and the market trends that is prevailing in the country. After this approach
they will position there offering in the market and the customers will be targeted to
purchase the product.
The market strategy would also include a plan that will make a unique selling
proposition. This will help the company to develop a style that will enable them to sell
their product in a unique way of style by differentiating from those of their competitors.
Their focus be on appealing the customers to take steps that will make them buy the
product from their stores. The company should form a outlet that will sell only a
exclusive products which are of Lotto Italia. They should provide their customers a
unique discount on first purchase to enable to expand the market image of their brand.
4. Marketing mix recommendation
Marketing mix is a plan that provides the company to put right product at a right place
and at a right price. This is the one of the difficult task for the company as they have to analyse
the demographic area and the behaviour of customers their. The marketing mix is associated with
the four types of factors that will make them enable to capture the targeted market if fulfilled.
These factors are:
 Product: The company is targeting to sell products that are Sneakers & casual wears. As
this is the product that is rarely available in the market and is preferred by Sri Lankan
customers so the quality should be maintained. The product that is offered should meet
the criteria of the as specified by the customers
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 Price: The company should target the price that is not too high. They should formulate a
pricing method that is considered to be best and provides the suitable price to the
customer's. As Sri Lankan economy is middle class economy so the target price should be
around the range of LKR 1500 to 5000 (Luthans and Doh, 2012). they can achieve
this by making the prodcut available through Indian production factories which will
provide the product at relatively lower cost. Company should formulate a pricing policy
that will make them become market leader in country. While setting up the product price
they should chose the market penetration pricing method and market skimming method.
 Place: Placement and distribution is one of the important part of making the product
available to consumers. The place of distribution should be considered as the vital part
while selling the product to the targeted customer's. Lotto should choose the place that is
crowded and where most of the customer comes for shopping. There target place should
be malls and the complexes which are most visited like they should chose Laksela trade
centre, Arcade independent Square, Colombo city centre etc. for placing their products.
 Promotions: This is the activity that is done by company to promote its product in the
market. This enables Lotto to promote its brand image and sales. There promotion
technique should include Public relations, Adverting techniques and sales promotion.
They should use the techniques that includes displaying the product to early followers of
the brand, the illustration of the product should be given to customers. Lotto should
create a website which relates to Sri Lanka and should use this to promote their
availability in the market. Online tools such as social media is used to promote product in
a better way and it expands the vast criteria so that product can be known to users easily.
 Physical evidence: This is the area where Lotto has to create a physical evidence in the
market against their competitors. The company aim is to create a brand name that is
would be well known to consumers. This is the area where customer interacts with the
brand and this should be created in a best manner. All the outlets should be labelled and
branded in the name of Lotto Italia and according to the guidelines that are provided by
their managers. The staff available their should also wear a proper uniform which should
be also Lotto Branded.
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5. Evaluation and measurement of plan whether it is successful or not
The plan that is made by the managers of the company is proper and will help Lotto Italia
to win the market segmentation in Sri Lankan market (Sui, and Baum, 2014). As their plan
includes different steps that has been applied by different other companies also so that are
prevailing in the market and has huge success, so this will also help them to achieve the success
in entering this country. The part of plan that contains producing the product with the help of
local manufacturer is best suited as this is also adopted by rivals in this industry.
It is the plan that has given the positive output to all the companies and the success ratio
is around 80%. So the company would be able to enter the market and would become one of the
leader in continent with this plan and strategy.
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REFERENCES
Books and authors
Cavusgil, S.T.. and et. al., 2014. International business. Pearson Australia.
Holtbrügge, D. and Baron, A., 2013. Market entry strategies in emerging markets: An
institutional study in the BRIC countries. Thunderbird International Business
Review. 55(3). pp.237-252.
Kim, W.C. and Mauborgne, R.A., 2014. Blue ocean strategy, expanded edition: How to
create uncontested market space and make the competition irrelevant. Harvard
business review Press.
Laufs, K. and Schwens, C., 2014. Foreign market entry mode choice of small and
medium-sized enterprises: A systematic review and future research agenda.
International Business Review. 23(6). pp.1109-1126.
Lee, J.W., Abosag, I. and Kwak, J., 2012. The role of networking and commitment in
foreign market entry process: Multinational corporations in the Chinese
automobile industry. International Business Review. 21(1). pp.27-39.
Luthans, F. and Doh, J.P., 2012. International management: Culture, strategy, and
behavior. New York: McGraw-Hill.
Sui, S. and Baum, M., 2014. Internationalization strategy, firm resources and the
survival of SMEs in the export market. Journal of International Business
Studies. 45(7). pp.821-841.
Tayar, M. and Jack, R., 2013. Prestige-oriented market entry strategy: the case of
Australian universities. Journal of Higher Education Policy and Management.
35(2). pp.153-166.
Wang, K.J. and Lestari, Y.D., 2013. Firm competencies on market entry success:
Evidence from a high-tech industry in an emerging market. Journal of Business
Research. 66(12). pp.2444-2450.
Online
Doing business. 2018.[Online] Available through
<http://www.doingbusiness.org/content/dam/doingBusiness/country/s/sri-
lanka/LKA.pdf>
Footwear&Leather product .2018.[Online] Available through
<http://www.srilankabusiness.com/footwear-and-leather/>
DSI overview. 2018. [Online] Available through<http://www.dsi.lk/en/about>.
DO BUSINESS WITH SRI LANKA. 2018. [Online] Available through
<https://en.portal.santandertrade.com/country-profile/171,sri-lanka>
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