International Marketing Strategy for Zara in Tuvalu

Desklib provides solved assignments and past papers to help students succeed.

International Marketing Strategy
1

Executive Summary
The exact report includes a brief discussion regarding the exact market entry method that
will be suitable for the organisation Zara while entering into the retail market sector of
Tuvalu. Different marketing as well as cultural related issue that might narrow down the
market expansion procedure of Zara has also been identified at the study. Moreover,
adequate marketing mix has been applied at the organisation so that it can develop further
strategies for the market expansion plan. Some brief recommendation has also been
represented at the study that will be helpful towards justifying the elements of marketing
mix.
2

Table of Contents
Introduction............................................................................................................................. 4
Discuss important issues for your chosen company when entering a particular country
market...................................................................................................................................... 5
Apply knowledge gained in your previous analysis to the problem of market entry...............7
Apply knowledge gained in your previous analysis to the problem of marketing mix
decisions...................................................................................................................................9
Conclusion.............................................................................................................................. 12
References..............................................................................................................................13
3

Introduction
Zara is a Spanish retail organisation that specialises in fashion products. Their range of
products includes different accessories, clothing, swimwear, shoes, perfume and other
beauty related products. Inditex group is the parent company of the organisation and at the
year of 2017, they were managed to be at the 20 top ranked fashion apparel organisation of
the world. It has stores at 10,000 different locations and their revenue generation has
reached $18.9 billion. Rosalia Mera and Amancio Ortega founded the organisation back at
1975. Recently, Karl-Johan Persson has been elected as the CEP of the organisation. The
organisation had started their business expansion plan back at 1988 in order to make more
revenue out of their preliminary investment.
4

Discuss important issues for your chosen company when entering a particular country
market.
Cultural issues
Major cultural issues that might be face by the organisation Zara at the time of entering at
the market sector of Tuvalu is mainly concerned with the particular living style of the
individuals belonging from the country. From several different instances, it has been found
out that native people belonging from the country Tuvalu mainly live a simple life consist of
building houses, fishing and other agricultural effects (Holtbrügge & Baron, 2013).
Therefore, they do not have any particular interest at different fashion related products that
are generally high priced in comparison with other similar simple cloths. Therefore, it will be
substantially hard for the organisation Zara to sell their fashion related product. Moreover,
the population as well as the annual birth rate of the country is also quite low in comparison
with other international countries. It has been observed that the country only has a
population of 11,000, which is quite low in comparison with some other international
market place at certain extension (Kraus et al., 2016). Therefore, it is quite clear that the
organisation will not be able to target a huge amount of population for increasing the
overall sell of their fashion related products as well as services.
In addition to that, it has also observed that per capita income is quite low at the country.
More than half of the population does not earn on their own as they depend into other
person for their living. The average annual income for normal workforce is estimated at
$1000, which is extensively low. Therefore, people belonging from the county will not opted
to spend their money in buying fashion clothing and other related items at certain
extension. These are the primary cultural barrier of the market expansion program of Zara
at the retail market sector of Tuvalu (Samaha et al., 2014). In addition to all of these, it has
also been experienced that millennial generation are the foremost buyers of Zara’s fashion
related clothing as well as accessories. However, in recent instance the percentage of
millennial are quite low from the perspective of the Tuvalu, which further indicate the
cultural barrier that restricts the business expansion plan of Zara at certain extension.
Moreover, number of annual tourist at the country is also quite low due to its poor
economic condition as well as poor tourism infrastructure (Samiee et al., 2015). Therefore,
5

the organisation will also not be able to target tourists as their primary target consumer.
Zara might face these basic cultural issues at the time of their market expansion program.
Marketing related issues
From several different instances, it is quite clear that the organisation Zara is also going to
face different marketing related issues while expanding their retail business at the sector of
Tuvalu. In addition to that, organisations mainly target their market at the primary position
in order to conduct their marketing related activities at certain extension. However, since
the overall population of the country is quite low comparing others, the organisation will fail
at target their primary market and produce marketing effort at certain extension. In addition
to that, it has also been observed that the country is not enriched in terms of technological
advancement, which describes that the overall numbers of internet users are really
restricted at the country (Talay et al., 2015). Therefore, the country also does not have
extensive amount of people in terms of smart phone user at certain extension. It ultimately
leads towards decreased activity in virtual time. Thus, the organisation will not be able to
conduct digital marketing for the residents of the country, which is the key of marketing
activities in recent context.
The organisation might face other issues while trying to implement other marketing
activities as well. As an instance, the country does not have enough usage of newspaper, the
local government has published the only newspaper, and it is quite difficult for the residents
of the country to get access of the newspaper. Therefore, the organisation might also face
problem while trying to conduct contemporary methods of marketing. Other print media
are also not available at the country, which made it quite hard for the organisation to
conduct their marketing activities (Theodosiou & Leonidou, 2003). Moreover, more than
half of the population does not have personal television as they rely into big screens for
their entertainment purpose. Therefore, commercial marketing is also not adequately
possible for the organisation to perform. Zara while trying to expand their market at Tuvalu
might face these marketing related issues at certain extension.
6

Apply knowledge gained in your previous analysis to the problem of market entry.
FDI (Foreign Direct Investment) can be used by the organisation Zara at the time of making
their market expansion program from the perspective of Tuvalu at certain extension. While
using FDI as a market entry method, the organisation will surely have the possibility of
bringing in their own facility as well as technological aspects towards the targeted country
so that they can conduct the market expansion more epidemically. The exact method
includes the overall free flow of both human resources as well as capital related resources
from one place to the other place at certain extension. The exact method generally need
some extensive knowledge in terms of resource as well as knowledge management so that
the organisation will be able to conduct their marketing activities as per the requirements of
the country.
Therefore, it is quite essential for the exact firm to conduct several activities in order to
transfer their overall knowledge as well as technological advancement towards their
intended market expansion country. In addition to that, it has also been observed from
several different instances that the organisation has to be quite effective at their overall
business performance as without the help of adequate business performance, it will not be
possible for the organisation to success fully conduct their market entry strategy (Venaik &
Brewer, 2013). Moreover, foreign direct investment will automatically enhance the
economical perspective of the targeted country, which will ultimately increase the overall
spending power of the people. It will ultimately result towards getting success at their
overall business expansion plan at certain extension. In addition to that, it has also observed
that since Tuvalu is an economically undeveloped country, the organisation Zara will not be
able to access high end as well as high spending consumers at certain extension. It would be
quite good for the organisation to consider joint venture as the perfect market entry
method. However, since the country does not have many industries and the number as well
as size of retail sector at the country is quite low, the organisation fails at conducting joint
venture strategy for making market expansion.
Therefore, it can be described that the market entry method of FDI will be best suitable for
the organisation at several different instances. However, it has been highly recommended
for the organisation Zara to make lower pricing strategy in order to attract the basic
7

consumer base of the exact country. Moreover, making the method of foreign direct
investment as the method of market expansion since it will provide them the advantage of
capturing a greater and bigger market overall. However, some current problems as well as
issues are closely linked with the market expansion model (Doole & Lowe, 2012). The
exchange rate of the country of the country is quite low in comparison with other countries;
therefore, the method of FDI might not work at the current business sector of Tuvalu.
Moreover, the recent political instability of the country might also limit the overall market
expansion plan at some extension.
8

Apply knowledge gained in your previous analysis to the problem of marketing mix
decisions.
Elements regarding
marketing mix
Application on Zara
Product The organization Zara should consider developing some
adequate marketing strategies in order to apply the
marketing mix decisions effectively. The organisation should
develop such fashion related products that are quite durable
as well as low priced. It will obviously attract the basic
consumer bas belonging from the country Tuvalu in order to
be effective at their marketing activities at certain extension.
The organisation should not minimise or lower their overall
quality of products despite the fact that they need to
consider a lower pricing strategy in general (Kotabe &
Helsen, 2014). Moreover, the beauty related products are
needed to be natural not artificial as people belonging from
the country always prefer natural goods to other artificial
products.
It is needed for the organisation to value the preference of
Tuvalu consumers before making separate products for the
organisation.
Price It is natural that the country is not economically enriched
country. Besides that, there are no other organisations that
are currently operated from the base of the country.
Therefore, the organisation Zara does not need to make
competitive pricing strategy. However, it has been previously
founded that the total spending power of the consumers is
quite low at the country. Therefore, the organisation has to
make lower pricing for their overall products as well as
services for reaching towards their targeted consumer base.
Promotion Since the country is not developed in terms of promotional
9

activities, it will be quite hard for the organisation to conduct
marketing activities at that place. It has been observed that
the organisation will not be able to perform television or
print media related marketing activities due to their
inabilities (Lasserre, 2012). Therefore, the organisation
should consider using posters, billboards and other similar
methods in order to conduct their promotional activities.
Moreover, it has also been suggested towards the
organisation to use some advertisement at the local theatres
and other giant screen, as those are the only way of people
entertainment.
Place The organisation need to choose similar countries as well as
regional places like Tuvalu in order to expand their current
market as it provides them the opportunity of facing a lesser
competitive environment at certain extension. It will provide
them the opportunity of earning more revenue out of their
primary investment at certain extension. Moreover, since
Tuvalu is not an economically advance country, the
organisation might decrease their operational cost while
making their business entry at the country.
Physical Evidence The organisation needs to design their physical architecture
in such way that attracts the normal people belonging from
the country. In addition to that, they need to open stores in
such places that inherit huge value in terms of locally visited
people.
People The basic employees of the organisation needed to be
trained extensively so that they can be effective while
working from that country. Moreover, the employees need
to make good relationship with local people so that they can
maintain effective business atmosphere (Lee & Carter, 2012).
Process The organisation need to make proper investment at making
adequate budgeting plan in order to be successful at their
10

current regulated market. Moreover, cultural heritage of the
country is also needed to be maintained effectively.
Table 1: Marketing Mix
(Source: Created by the learner)
11

Conclusion
From the overall study, it can be concluded that the organisation Zara is going to face a
bunch of different problems at the time of making their market expansion at the target
market of Tuvalu region at certain extension. It has been closely observed that the
organisation might be able to get their desired success despite the fact that they might face
a range of different difficulties. It can also conclude that the organisation needs to lower
their overall product cost by certain level in order to be effective at their market expansion
program. Lastly, it can also conclude that lack of technological advancement is the biggest
problem that will be faced by Zara while making their market expansion program.
12