MSc International Business. International Marketing Module. Module Code: BBM-7-IMG. Referred Coursework. Unit Coordinator: Dr L.

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1 LONDON SOUTH BANK UNIVERSITY FACULTY OFBUSINESS MSc International Business International Marketing Module Module Code: BBM-7-IMG Referred Coursework 2012 Unit Coordinator: Dr L. Boukersi Case Study: Christa Clothing International Instruction: Candidates are required to attempt the 2 questions which have equal weighting. Please note the attached Assessment Criteria Submission Deadline: 20 th August 2012

2 Christa Clothing International Christa Clothing International is a well-known international company headquartered in Blusen City, North Carolina in the United States. Christa specializes in fashion clothing for men and women. In 1991 two 30-year-old former university classmates founded an important business. Mr Frank Carmino and Mr Saul Green, the two founders, built their importing business rapidly and profitably. They soon decided to expand into the fashion business. Christa's success in the United States provided a firm foundation for expansion into Belgium, Germany, and The Netherlands in 1995; followed by Sweden, Finland, Canada, and France in 1996; Denmark, the United Kingdom, Switzerland, and Norway in 1997; Austria in 1998; Spain and Italy in 1999; and Portugal in In 2003 company sales (turnover) were more than US$500 million in the North American and European markets. This level of sales was almost 400% greater than sales in 1994, indicating that company growth had been rapid. Christa is contemplating Asian markets as a source of future growth, especially Hong Kong, Singapore, Thailand, Malaysia, Japan, and Korea. Recently Mr Carmino visited Korea as a tourist. He was not sure that Korea was necessarily the best choice to enter first, but he had a favorable impression from his visit and from the general characteristics of the Korean market, which he felt had great potential. The economy seemed to be growing vigorously, and competition for fashion did not appear to be as strong as in the relatively more mature markets of Japan and Australia. It seemed to be the right time to move into this growing market. Before doing any further planning, Mr Carmino felt he needed further information. He knew that the World Bank had reported population and the purchasing power parity measure of gross national income per capita in these countries to be approximately (in 2002): Population (million) GN! per capita (US$) Hong Kong ,060 Singapore ,090 Thailand ,680 Malaysia ,280 Japan ,070 Korea ,480 Mr Carmino ascertained that Korean market was open to foreign products, and several large, well-

3 known international advertising agencies had branch offices or joint ventures with Korean agencies in Seoul. Korea has well-developed mass media and more than 1 % of gross national product is spent on advertising. Korean GNI per capita continues to rise as recovery from the Asian crisis continues. Its population in 2002 was 47.6 million and is expected to be 50.3 million by 2015, according to estimates by the World Bank. Mr Green, who had headed the European expansion, was a little concerned that the Korean cultural, economic, legal, political, and social conditions were somewhat different from those with which he was familiar. For example, he was aware of the following somewhat different cultural, legal, and political conditions: (1) Korea has experienced somewhat peaceful changes in government through what some were willing to recognize as democratic elections; (2) the Korean culture differed from the US culture with respect to language patterns, religions, the level of individualism vs collectivism, the desire for harmony vs confrontational behavior, and so forth. Mr Green had some experience with these kinds of differences and similarities in Europe, but knew he would need specialized help to enter Korea and other Asian markets. In addition to population, income, and age statistics, market potential in each country depends on many other factors such as local habits and customs of consumers regarding purchasing and use of clothing, availability and consumer use of mass media, and the role of clothing as symbols of the lifestyles of young people. Recently, Mr Green met Cathy Peters, a young vice president of a New York advertising agency. She was born in Germany, has a degree in economics from the University of London, and had lived for several years in Japan as a teenager (where her father headed a US-Japanese joint venture advertising agency). She had several years' experience working as an account executive for US products sold in Korea and had been to Korea several times in a coordinating capacity. Her agency has had a joint venture arrangement in SeOl~1 with a Korean agency for some years. Mr Green and Mr Carmino felt that Ms Peters' multicultural background and Asian experience were such that she would be an ideal person to head Christa's expansion into Asian markets. Ms Peters was hired and given a mandate to study the situation and prepare recommendations to proceed. She began a broad program of desk research to make use of available published statistics and other information available from published sources. She was aware that some companies had tried 'global' branding, advertising, and marketing, and that some had failed while others had succeeded. She was determined to think carefully about the conditions under which advertising objectives, strategies, and executions should or should not be standardized, transferred (or extended) from existing markets to new markets in Asia, and controlled from headquarters or controlled in local markets (as shown in Table # 1).

4 The fashion business The fashion business is complex. There are many suppliers. Brands emerge and vanish rapidly. The average fashion brand life cycle is normally a maximum of seven years. Market offerings consist of manufacturer brands, fake brands (counterfeit labeled products), private brands, and unbranded products. Distribution tends to be broad, varying somewhat from country to country, but often including shops (which can vary from cheap, shabby-looking outlets to high-fashion stores or boutiques), chain stores, street markets, mail order, and even selling from the back of a car. In most countries the Christa collections are moderately proceed; not very expensive, not really cheap. Transactions between traders and retailers are still often made in cash. This fact, combined with the diversity of brands and manufacturers, makes accurate tracking studies of fashion sales, such as Nielsen s, difficult indeed. Competition is fierce, with many brands and manufacturers competing in the marketplace. Companies (and brands) competing with Christa such as Canone, Ciao & Derci, (three Italian brands), Eureka, (a well-known US brand), Mode/Statique (Danish brand) and New Male, (French). Products and market segments Christa offers fashion collections of casual wear that are coordinated with respect to design. Target groups are teenagers and young adults, mainly 'followers.' These target groups consist of those who are urbane, outgoing, and cosmopolitan. They shop for garments that fit their lifestyle, which is one of an attitude of fun, freedom, and individuality. With Christa, people buy a 'way of life.' It is a reflection of people's need and desire to be different. Therefore Christa emphasizes people's personalities with expressions of freedom, personal responsibility, and individuality. Christa fashion casual wear is leisurewear for young, dynamic, colorful, daring, and internationally oriented people. Christa has not advertised in the mass media for over a year. The company felt its brands were well known and could depend on the support of retailers. However, brand awareness, liking, and preference have weakened compared to competitors. Christa may have to consider relaunching its brand or replacing it. Further, there is increasing demand for high quality in fashion, and Christa feels its relatively low quality image may put the company at a competitive disadvantage. The planning cycle is critical to Christa's success. In the fashion industry it is common practice for retailers to buy the next year's collections approximately six months in advance. Thus the manufacturer knows what has to be produced. The advantage is that there is no inventory problem. Everything produced has already been sold. The only problem is to get the goods delivered on time, as promised. One or two weeks' delay can be disastrous. Often delayed shipments are refused by the retailer. Because of the efficiency of its planning cycle, Christa has a delivery guarantee of 95%

5 while other brands in the market often do not reach 70%. For fashion casual wear, designs and styles change every few months. Christa offers a broad range of products from basics (simple trousers, shirts, and sweaters) to more stylish and extrovert clothing. They are not really 'designed' products, but, more accurately, are the commercial translations of top designers. The company originally targeted its collections at year olds but recently split its primary target markets as follows: year-old women and men, and year-old girls and boys. Communication Christa Clothing International starts with catalogs of the available collection and distributes them to retailers. In 1996 Christ a started advertising in Europe and the campaign proved successful. The creative theme was 'Streetlife,' which portrayed young people in the hectic atmosphere of big cities of the world. They are young people who are happy to meet each other and kiss. But the kissing does not denote a love relationship. It is more of a friendly kiss. The fashion is adventurous and extrovert. Christa's expenditure on advertising during the period are shown in Table # 2 The future Christa expects to continue international expansion and to become a truly global company. The general preference is for standardization of product design, production, brand image, advertising, and other promotional efforts. In developed countries competition has been fierce, with many brands competing in each market. With the expansion of the European Union internal market in 2004 competition is expected to intensify. Although Christa has utilized local advertising agencies in each market in the past, it is possible that global advertising may require a global advertising agency. However, one of the big unknowns is how similar consumer-purchasing behavior and product desires are in non-european and non-north American markets. On the one hand, certain brands of jeans sell well worldwide. On the other hand, there is great diversity in cultures with respect to the naming of colors, preferences for particular styles, standards of modesty (or immodesty), types of leisure activities, climate, hair and skin colors, what is considered attractive, and so forth. Table # 1 Dimensions of international advertising to be considered for standardization / localization

6 I. Advertising objectives - Communication tasks - Defined target audience - Specified periods of time II. Advertising message strategies - Theme - Appeals - Positive vs negative approach - Benefits or product/service attributes Information amount and types - Image vs product attributes - Comparisons vs no comparisons Spokesperson vs voice-over colour mix, etc. III. Advertising media strategies - Choice of media categories and vehicles - Size and length of advertising materials - Scheduling patterns: continuity, flighting, pulsing IV. Advertising budgets - Heavy, medium, or lightweight - By product - By market area - By customer classification - By selected media - For selected creative or message approaches Match or not-match competitors Contra-cyclical or not V. Advertising decision processes Table # 2: Christa Clothing International: Total Advertising Expenditure ($ 000) TV Magazines Newspapers // Cinema // Outdoor TOTAL DISCUSSION QUESTIONS Question # 1 Discuss whether Christa Clothing International should enter Asian markets or not. If so, in which countries, and in what order? Question # 2 Assuming Christa decided to enter one or more of the Asian Markets, what should be the company s advertising objectives, message strategies? Justify your answer.

7 Case Study Assessment Criteria Coursework Assessment criteria Total Mark (%) Actual Mark (%) Feedback Comments - Structuring and logical sequencing of the main report components 15 - Writing skills (style, lucidity, attention to details, correct spelling & grammar) 15 - Use of relevant theory to support analysis (Application of theory to practice) 20 - Analytical competence & strength of arguments (depth in analysis, use of analytical methods ) in tackling questions 40 - Originality & applicability of Solutions/ Recommendations 10 Total 100 % OVERALL TOTAL 100 %

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