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Introduction of BU7411 International Marketing Strategy Assignment
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Sapphire is a public business organization that belongs from Pakistan and it is a textile as well as a retail company which is based in Lahore, Pakistan (Ahmad, Alvi & Ahmed, 2021). The company was founded in the year of 2014 by a man named Nabeel Abdullah. The number of employees that are working under the company is 5000 to 10000 employees. The Sapphire Clothing Brand company export textiles to various other regions such as Asia, Australia as well as Europe region. The intended target market of the Sapphire Clothing Brandis is the United States of America and the market US is estimated to grow at a compound annual growth of 3.21 per cent in the forecasted period of 2019 to 2024 (Inshakova, Inshakova & Goncharov, 2020).
1. Research on International Market and Market Entry Strategy
1.1. Critical research of the International Target Market Environment
Cotton is among the most important and natural fibers that is being produced in the Asian region as well as the continents of America for the last 5000 years. The market of the textile industry is primarily represented by the countries such as India, the European Union, China as well as the United States of America (Uddin, 2019). The targeted market for the Sapphire Clothing Brandis also going to be the United States of America, the situation of the textile market in America shows that there are favourable opportunities for the company to expand the business.
It can be discovered that the United States of America is the “major textile market” for the consumption of “special finishes”. The report of Grand View Research of the United States of America showed that mostly all the essential types of special finishes are going to rise in terms of consumer consumption till the year 2025 (Uddin, 2019). The textile industry of the United States of America has already invested around an estimated $23 billion in purchasing the new equipment as well as the land from the year 2006 to 2017.
1.2. Critical analysis of the key issues
The key issue for the Sapphire Clothing Brand market will be the United States of America’s focus on domestic strategies based on “Made in the USA”. This issue is becoming very important to be considered since the costs of fuel are actively rising and especially with this ongoing war between Russia as well as Ukraine pushing the problem to its limit and this is also leading to the high wage demand in the country. According to Kincade et al. (2013), for solving and mitigating this problem, the USA is concentrating and engaging in strategies that are based on domestic production.
Furthermore, the risk of supply disruption in the “supply chain management” and its various linked business operations can be managed effectively in the domestic production as per Bode et al. (2011). During the time of the government of Obama, the roundtable also took place in which the leaders of the business were discussing supporting the brands of “Made-in-USA” as per Ellis (2014). In addition to that, the government of the United States of America is also putting a huge emphasis on creating more employment opportunities with the help of Domestic Production (Yu & Kim, 2018). These are some of the critical issues that the company has to overcome in order to expand and conduct business successfully.
1.3. How Attractive the Target Market is?
There is a huge scope for conducting business in the region of the US, especially in the retail market industry. Sapphire Clothing Brand can get a lot of advantages in expanding its market to the international territory such as America where the estimated growth is 3.21 per cent CAGR over the forecasted period between 2019 to 2024 (Inshakova, Inshakova & Goncharov, 2020). In the United States of America, medical textiles are among the most critical as well as expanding actively as well as in a continuous manner and from the growth rate, it can be observed that the market is the growing textile market (Mordor Intelligence, 2021). The medical textile industry of the United States of America is actively being improved and also resulting in the creation of new commodities while also engaging in innovating new designs.
Another attractive factor behind the success potential in the targeted market i.e., the United States of America. The United States of America is the world leader in “textile research and development” and the constant development of new generations of materials of textile-like electronic textiles which can aid in monitoring the heart rate as well as other critical signs, Conductive fabric with the properties of antistatic, and many more (Mordor Intelligence, 2021). Sapphire Clothing Brand can play a big role in empowering the process of textile research and development and the company can even get the opportunity to grow and make even more innovative and attractive commodities for the consumers of the target market i.e., the United States of America.
1.4. Evaluation of the impact of the above issues on entering the new international market
From the discussion about the critical issues that could be faced by the Sapphire Clothing Brand company are the target market concentration on the domestic strategies. The United States of America is a country that is heavily focused on empowering the country by focusing on creating clothing products that are made in the USA and it also applies to the other domestic brand as well (Yu & Kim, 2018). Due to the focus on its domestic manufacturing strategy, there will be a lot of competition in the market which could potentially affect conducting the business operations in the foreign land of the US.
In addition to that, supply disruption is also among the critical issue that can provide huge losses to Sapphire Clothing Brand company. During this time of the ongoing pandemic as well as the ongoing war between Russia and Ukraine, the supply chain has been completely disrupted (van Hoek & Dobrzykowski, 2021). One of the reasons behind the supply chain disruption is the impacts of the mitigation strategies of the Covid-19 which immensely contributed to decreasing the production of commodities as well as services and the shortage in the supply chain is the evidence of how the United States of America is struggling to return to the levels of pre-pandemic.
The outcome of the disbalance between the demand as well as supply affected all the inventory. Sapphire Clothing Brand has to carefully analyse and come to the conclusion that can aid in choosing the right strategies for overcoming the problem of expanding into the market.
1.5. Recognising and justification of the suitable market entry method
Based on the issues, the suitable and recognised market entry for the Sapphire Clothing Brand and since the company is a very renowned and popular company in Pakistan and the company is also offering its wide range of textile offerings to the Asian Countries, Australia as well as Europe regions. Sapphire Clothing Brand Industry can set up its own stores for the expansion and this is also the most suitable strategy for the brands that specialise in designing as well as different fashion companies. With the opening of new international stores in the region of the United States of America, the company can promote the brand effectively and it can also set up new manufacturing plants for supporting the domestic manufacturing strategies of the United States of America (Watson IV et al., 2018).
Furthermore, another strategy will be to use the franchise market entry for entering the new market. Franchise market entry is among the most favoured business strategy for the various international brands that deals in textile retail or in the fashion industry. Under this market entry strategy, the sapphire market entry can engage in approaching any local business partner in the USA under the “franchise agreement”. The franchisee is going to get all the business ideas, commodities as well as services which are going to be offered to the customer living in the United States of America (Nyambuto, 2021). This can be a safer option for the Sapphire Clothing Brand for expanding into the business. The success of this market entry strategy heavily depends on choosing the right business partner since the domestic business partner will have more knowledge and depending on the scale of the company, the economies of scale can also aid in overcoming the problem of supply chain disruption to some extent.
2. Customer Level Cross-Cultural Research and Analysis
2.1. Identification of the ideal target customer for the product
For the Sapphire Clothing Company, the target customer in the United States of America will be women and men aged 20 to 45. The company also offers its wide range of offerings to the children as well both males and females from the age of 10. The company has offerings which are targeted to the people of class which is the Middle class or relative middle class (Yang & Lee, 2019). Furthermore, the people who are very conscious about fashion and also well educated. The customers who are interested in wearing ethnic clothes or any clothes belonging to Pakistan culture are targeted and ideal for the brand.
Furthermore, the Sapphire Clothing company is focused on providing high-quality unstitched clothes as well as many stitched clothes for the consumers. The unstitched clothes are targeted toward the people that want to modify and create clothes as per their own desire. This also is targeted at the various business organization that manufacture clothes or various clothing commodities in the market in the United States of America (Khayyam et al., 2022). Since America is emerging in terms of a textile retail company, the ideal customer for the Sapphire Clothing Company will be end-users as well as many businesses organization in the US.
From the mission statement of the Sapphire Clothing company, it can be observed that the mission of the business organization is to be identified as a “premier supplier” of the markets that deals in serving the other international as well as the domestic market by giving fabric, textile products as well as quality yarns to aid in satisfying the various needs of the customers (Sapphire, n.d.).
2.2. Recognising the key cross-cultural differences and similarities relevant to the product in evaluating the marketing opportunities as well as challenges
Similarities Between US and Pakistan
As per Hofstede’s Cultural Dimension, there are some cross-cultural similarities between Pakistan and US which can be recognised in the power distance cultural dimension. Pakistan has a score of 55 as compared to the US which has a score of 40 (Mahomed et al., 2022; Khan et al., 2022). Pakistan has the problem of power distribution whereas a country like the US also has this problem but less in comparison to Pakistan. This can affect the business operations in conducting the business in a foreign land like the US.
Differences between US and Pakistan
As per Hofstede’s Cultural Dimension, there are huge differences between US and Pakistan such as Indulgence. Pakistan has zero indulgences which show that the children are controlled by their parents and the culture is very restrained. The youth cannot take their own decisions (Nizamani et al., 2018). However, the US has a score of 68 which shows the opposite culture where the youth are allowed to make their own decision and are not controlled by any guardians or their parents after a certain age (Kraman et al., 2018). This can bring new opportunities for the company in the USA to innovate and make new clothing products.
2.3. Application of Hofstede Cultural Framework in the USA
The power distance score of the US is 40 which shows the country has more stable as well as definite power control as well as effective power distribution.
The US has a score of 90 in the individualism cultural dimension which shows that the country has a huge individualistic society where the individuals put themselves first than any other individuals.
The US has a score of 62 which is quite high and it shows the masculine culture where the people always focus on excelling and buying commodities and services that are best in the market.
The US has a score of 46 which is quite low and it signifies that the US focuses on planning for the future and time is very important for the people in the US but they are fairly open to new ideas and opinions.
The US is not long term oriented since it has a low score of 26 and it can be recognised that the Americans engage in taking the most pragmatic approach and the American business measure their success on a “short term basis”.
The US has a score of 68 which shows the culture mainly revolves around working hard as well as playing hard. The people put emphasis and spending leisure time and also express their desires wholeheartedly.
(Mahomed et al., 2022)
3. Impact of Cross-Cultural Issues on International Marketing Mix Strategy
3.1 Critical Application of International Marketing Mix Theory
- Product: The product strategy and mix for Sapphire’s marketing strategy are as follows: In the premium apparel industry, Sapphire is a household name. A vertically integrated textile manufacturer, it produces cotton yarn, fabric, and completed garments as part of the Sapphire Group of Companies. Starting as a clothing retailer for female customers, Sapphire has now evolved into a full-service lifestyle brand, offering everything from cosmetics to clothing for children and even linen (Mahmoud, 2018). High-end fashionistas and the general public alike are fans of sapphire jewellery. A product line’s availability is determined by consumer demand. To stay on top of the latest fashion trends, Sapphire also partners with local talent.
- Price: The following is Sapphire’s pricing approach in marketing strategy: Affordability and style abound in Sapphire’s offerings. All of Sapphire’s retail locations across the globe provide the most current fashions at considerably lesser costs than other international companies. Sapphire adheres to a cost-cutting approach. A lack of investment in advertising and raw resources enables it to do so. Its entire cost structure is lower than those of its rivals. The cost of Sapphire varies by nation (Khan et al., 2019). When it comes to clothes, the company touts itself as one that is both affordable and of great quality. It’s done market-by-market for the labelling of their goods. Market-based pricing is used by Sapphire to define the maximum amount of money that consumers are prepared to pay. Price-based budgeting for production.
- Place: Sapphire has over 3,000 stores throughout the world and is a vertically integrated retailer. To put it another way, Sapphire is alone in charge of product development, manufacturing, and distribution. No matter where customers go, they will have the same surroundings and experience. The store’s design is contemporary, opulent, and mostly white. It’s important to note that online sales have been restricted to a few nations (Mahmoud, 2018). As a result of this approach, Sapphire has become one of the world’s top fashion retailers, and it seems to be working.
- Promotion: One thing to keep in mind is that Sapphire doesn’t spend nearly as much money on advertising as most other fashion shops. It doesn’t sell itself as aggressively as other corporations do. However, this does not imply that marketing is not a priority. Customers and word of mouth are Sapphire’s primary priorities. Immersion, uniqueness, affordability, and distinction are all pillars of Sapphire’s marketing approach, according to the company’s website (Khan et al., 2019). The company’s showrooms are a clear example of this method. All of the details have been meticulously planned and executed.
- People: The marketing activities of Sapphire are supported in large part by employees who work directly under the company’s sales division. It is important for these professionals to know how to persuade others, but also to demonstrate respect for their clients’ views. It has a customer service section with employees. The organisation may contact these people if they have an issue with a product and they’ll assist to get it solved (Mahmoud, 2018). These workers are trained to treat customers with respect and to try their best to answer their issues.
- Process: As a result of these measures, the corporation ensures that its products are always available at retail locations across the globe. More items are made available to them while orders are placed to refill the company’s inventory. Clients will always be able to get their hands on the products they need. Online orders are placed into the computer system, and the appropriate product is despatched to a delivery service provider based on these orders. Sapphire employs this method (Khan et al., 2019). In order to better serve its customers, Sapphire is continuously engaged in researching market potential. In addition, client input is gathered through the store’s hotline, its social media accounts, or via customer surveys.
- Physical Evidence: Sapphire’s goods are packaged in distinctively coloured containers that make them immediately recognisable on store shelves. Aside from being distinctive in colour and design, the shelves provided by the company also hold them. As a result, customers have an easier time locating these shelves in busy shopping malls (Mahmoud, 2018). Customers may examine Sapphire’s items in high-quality photographs shot from a variety of angles on its user-friendly website.
3.2 Demonstration of the Impact of Cross-Cultural Issues on International Marketing Mix Strategy
An overwhelming majority of Sapphire New York workers questioned by the “Centre for Popular Democracy” stated that black clients have been disproportionately labelled as possible thieves. According to Sapphire USA, the conclusions of research by the "Centre for Popular Democracy" were released without contacting the firm beforehand. There was no genuine prejudice or maltreatment that led to the creation of the fictitious complaint. Sapphire’s diverse staff does not match the claims made in this article, which can’t be substantiated (Park and Jeon, 2018). According to Sapphire USA, the study does not reflect the company’s genuine culture or the experiences of more than 1,500 New York City workers. About half of Sapphire USA’s recent internal advancements were made by Hispanic or African American workers. As a result, Hispanic or African American workers are often given half of all work hours. These data show that the company’s key ideals are diversity and fair opportunity.
This article is based on a lawsuit for $40 million brought by former Sapphire USA Inc. general counsel Ian Miller alleging he was discriminated against in the workplace. As part of a discrimination complaint against the corporation, it is alleged that Miller, who is both Jewish and American and homosexual, was denied employment because he did not meet the company’s "preferred profile." Racial, homophobic, and antisemitic insults were made against him, and he was reportedly excluded from company meetings, given lower increases than his co-workers (Nam and Kannan, 2020). The case reveals the extent to which Sapphire USA is rife with prejudice. The organisation is believed it was critical, in light of the lawsuit’s discoveries, to reflect on the fact that this occurs at all levels. According to the complaint and a report, Sapphire has been accused of selling things with racially offensive designs on a number of previous occasions.
Customers objected in 2007 after a bag embroidered with swastikas was removed from retailers. Cosmetics featuring figures in blackface were marketed by Sapphire in 2013. As recently as August, the shop was the target of a reaction from consumers over two distinct shirt designs, one of which had the phrase "White is the New Black" and the other of which bore a gold star that resembled the uniforms worn by Jewish victims in Nazi extermination camps (Koc, 2020). Retailers in New York City have recently come under fire for their purported racial discrimination. Following accusations of racial discrimination against Macy’s and Barneys by a number of customers, New York’s attorney general launched an inquiry in 2013.
3.3 Implementation of International Marketing Mix Strategy to Reduce Cross-Cultural Issues
International Promotion Strategy
With each of its trademarks, Sapphire aims to differentiate itself from the competition by offering a wide range of items. Customers with varying wants and tastes might be attracted via diversification. As a result, each of Sapphire’s brands has a long-term foothold in the market. Promotion and advertising of new collections is an important part of the marketing strategies of Sapphire (Katsikeas, Leonidou and Zeriti, 2019). The organisation spends up to 4% of their yearly sales on advertising. Effective advertising efforts, according to a new study, may help shops boost their brand’s value and attract more customers.
In order to promote Sapphire, the company depends only on in-store displays. Organizational advertising campaigns are only launched when a new shop is opened in both local and foreign contexts. Even more importantly, the company doesn’t spend more than 1% of its income on advertising and product marketing (Agarwal and Wu, 2018). As compared to H&M and Gap, Inc., a non-advertising approach may appear riskier. Sapphire, on the other hand, makes an effort to lessen the dangers brought on by a lack of advertising by adding additional locations across the globe.
International Place Strategy
A company’s cultural considerations seem to be the most significant portion of its internationalisation strategy. Sapphire demonstrates that a worldwide brand can be built without catering to the preferences of every country’s population. Designers and management at the firm strive to stay up with the latest high-fashion brands and trends in order to bring them to market as quickly as possible at reasonable rates, rather than producing collections based on cultural prejudices (Katsikeas, Leonidou and Zeriti, 2019). For Sapphire, cultural diversity is of secondary relevance as the business expands internationally. As a consequence, 85% to 90% of the merchandise in every shop globally is similar. Only a tenth to a fifteenth of the collection varies across the country.
However, even those things that vary from shop to store aren’t tailored to a single culture or a specific country’s needs. Those shop managers may only choose items from a broader selection, which is restricted to an enlarged variety of goods. Local sales and product information at Sapphire’s headquarters are taken into account when determining the final distribution of items (Agarwal and Wu, 2018). Sapphire is not a clothing and accessory company that caters to the needs of a certain market. Instead, the designers are attempting to build a line of items that may be offered at various points in time depending on the climate.
International Product Strategy
Making things in-house means that the corporation retains complete control over them. The company’s main selling point is that it’s always on top of the current trends. For the most part, new fashions may be found on sale within two to four weeks. Sapphire promptly removes products off the shelves if they aren’t selling. There are a few issues with the United States, the most notable of which is the lack of seasonal change in their range (Katsikeas, Leonidou and Zeriti, 2019). There are a number of challenges to overcome, but Sapphire is aiming to meet the requirements of the local population by creating designs that incorporate modernity with the traditions of the region.
International Pricing Strategy
This is logical, given Sapphire was founded with one goal in mind: to offer a cheap price for its goods to the public. When comparing Sapphire to other high-end brands, the company must understand that we’re talking about the high-end cream of the crop. While certain Sapphire retailers may charge a premium for their products, others may be more accessible (Agarwal and Wu, 2018). However, Sapphire’s primary pricing approach is to charge a premium. By reducing development and training expenses to a minimum, this price is made attainable.
Through evaluating and considering the entire above discussion and data, it becomes concluded that at the heart of Sapphire lies Lahore, Pakistan, where it operates as both a textile manufacturing and retail enterprise. Nabeel Abdullah, the company’s founder, established it in 2014. The firm employs between 5000 and 10000 people. Exports from the Sapphire Textile firm include textiles from Asia, North American and European areas. Sapphire Textile’s planned market is the United States, which is expected to expand at a compound annual growth rate of 3.21% between 2019 and 2024.
Generally, this study has considered the most prominent and effective facts and information regarding Sapphire, which is eager to expand its business in a new international market in the USA. In this aspect, the organisation has faced different kinds of issues regarding cultural changes. Fundamentally, the culture of Pakistan and the USA is totally different from each other. Therefore, the organisation needs to effectively and potentially consider the cultural needs and demands of the people in the USA. Through this, Sapphire will be prominently enhancing its organisational profitability and consistency of business in the new international market of the USA. Moreover, in order to effectively meet the cultural needs and desires of the consumers in the market in the USA, the organisation has significantly utilisation and proposed a marketing mix strategy within the workplace environment. Through this, Sapphire will be able to proficiently execute and operate their organisational businesses in the market of the USA.
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