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This report provides an analysis study of introducing MODOMOTO, a male clothing online retailer brand from Germany to Canadian market. The key objective of this paper is how this company can enter the Canadian market in a way that leads to success and profit. From the analysis, the study found that this market entry can be successful if the findings of this report are executed. MODOMOTO was established in 2011 in Berlin, Germany. The special service of MODOMOTO is to arrange individual packages of clothes compiled by fashion experts and provided to its customers. MODOMOTO is going to enter a growing market of men clothing with an annual growth of 4.14% over the last four years. The demographic characteristics of the relevant customers are segmented by gender and age. The main target group are 18 to 60 years old men, which imply different psychographic characteristics related to VALs. The main competitors discussed in this report are “La Maison Simons”, “Winners Merchants International LP”, and “Sears, Roebuck and Company”. There are also some uncontrollable external forces to consider, which are legal regulations like the “Electronic Commerce Act” and the “Business Practice and Consumer Protection Act”. A further differentiation of the Canadian market entry is the differing taxation of goods. Regarding the cultural forces, MODOMOTO meets the demand of customized goods and services and the trend for shopping online. The Service of MODOMOTO, which is defined as a consumer good has to ensure great customer service as well as good quality products. This strategy of product extension stays in contrast to the communication adoption approach which is needed to become a recognized participant on the Canadian market. In this case MODOMOTO has to differ its communication strategy because customers on the North American market prefer other channels of promotion different to MODOMOTO’s home market. Therefor MODOMOTO has to focus on advertising in broadcasting and electronic media. Regarding the pricing strategy MODOMOTO is limited in its options because it is bound on the manufacturer’s prices. The global product of clothing is distributed with a door-to-door direct selling concept which implies advantages for MODOMOTO: the company can continue to run their online shop from its home market and has only to invest in a new distribution center. This is why MODOMOTO should choose foreign direct investment (FDI) in form of Greenfield investment to secure its unique selling proposition, knowledge, and sovereignty. The resulting key success factors of this analysis are the focus on promotion, convenience and customer service to gain customer loyalty and brand awareness.
Table of Contents
1. Introduction ... 2
2. Current Market Situational Analysis of men clothing in Canada ... 3
2.1 Market Size Potentials, Opportunities, and Segmentations ... 3
2.2 Target Markets of MODOMOTO and Their Characteristics in Canada ... 3
2.2.1 Demographic Characteristics ... 3
2.2.2 Psychographic Characteristics ... 4
2.3. Major Competitors of male Clothing Retailers in Canada ... 4
3. Uncontrollable Market Environments and Constraints Affecting MODOMOTO in Canada ... 5
3.1 Regulations and legal rights ... 5
3.2 Taxation ... 6
3.3 Economic Forces ... 6
3.4 Cultural Forces ... 6
4. Suggested MODOMOTO’s Marketing Mix Strategies to Enter the Canadian Market ... 7
4.1. Product Decision Strategy ... 7
4.2. Promotion Decision Strategy ... 8
4.3. Pricing Decision Strategy ... 10
4.4. Distribution and Market Entry Strategy ... 10
5. Discussions and Suggestions of MODOMOTO’s Key Success factors to enter the Canadian Market ... 11
5.1. Promotion as the first Key Success Factor ... 11
5.2. Convenience and Customer Service as the second Key Success Factor ... 12
6. Conclusion ... 12
APPENDICES ... 14
Appendix 1: Market size and growth rate of men clothing and accessories ... 14
REFERENCES ... 15
The online retailer MODOMOTO was established in 2011 in Berlin, Germany. It sells high quality men clothing from famous brands and has already more than 50.000 customers and 100 employees. The unique selling proposition of MODOMOTO is to create a fast and convenient shopping experience for customers. To reach this goal of convenience and rapidness MODOMOTO offers the customers an arranged unique package of cloth, which is compiled by their fashion stylist.
The purpose of this report is to analyze and discuss the marketing mix element strategies for introducing MODOMOTO men clothing from Germany to the Canadian market. This study will also provide solutions to the problems of entering the Canadian market as an online retailer for men clothing.
The report is organized into six sections: Section 2 provides the analysis of the current market situation of (online) clothing retailers on the Canadian market. In section 3 the market environment and constraints, which are uncontrollable and affecting MODOMOTO will be analyzed. Our suggestions regarding the marketing mix strategies, which are used to enter the Canadian market, are explained in section 4. Further, in section 5 the report will discuss the major key success factors for a successful market entry. The last section will summarize the major findings of this report and point out the main solutions to the encountered problems regarding the market entry of MODOMOTO in Canada.
2. Current Market Situational Analysis of men clothing in Canada
In this section, the report will analyze the Canadian market for male clothing retailers. Descriptions of the market, the relevant target markets, and the major competitors regarding MODOMOTO will be provided and explained.
2.1 Market Size Potentials, Opportunities, and Segmentations
As MODOMOTO is specialized on male clothing, only the market of male clothing in Canada will be analyzed. According to Table 1, the total market size value of men clothing and accessories was $ 8,576.60 million in 2012. Further the average growth rate in this market for the years 2008 to 2012 was 4.14% (Statistics Canada, 2013). These two factors provide a positive initial position for MODOMOTO to enter the Canadian market because of the existing positive growth rate and the high total dollar value of the market segment (see Appendix 1).
2.2 Target Markets of MODOMOTO and Their Characteristics in Canada
The considered target market for MODOMOTO is classified into two characteristics – demographic and psychographic – which will be analyzed in this section.
2.2.1 Demographic Characteristics
Regarding the relevant customers, MODOMOTO uses two demographic characteristics to segment its market. The target market is segmented by gender, as MODOMOTO only provides clothing for men. Further, the target customers are segmented by age, as the provided clothing is for adults between 18 and 60 years of age.
2.2.2 Psychographic Characteristics
MODOMOTO’s target customers can be characterized according to their values, attitudes, and lifestyle as male internet users who want be well dressed and like to try out new ways to shop but do not have the time and/or are not fond of shopping. Therefor they use the convenient service provided through MODOMOTO’s webpage to access the provided services.
2.3. Major Competitors of male Clothing Retailers in Canada
In our market analyses we focus on the three following main competitors: “La Maison Simons”, “Winners Merchants International LP” and “Sears, Roebuck and Company”.
One important competitor in Canada is the big fashion retailer “La Maison Simons” which is a family owned business with about 1800 employees. Its Headquarter is in Quebec City and was founded in 1840. It includes seven stores throughout Canada and an online retail shop providing men and women clothing. Le Maison Simons includes a mix of cheap-chic styles and pricey designer lines with annual sales of more than $300 million. This fashion retailer is an important competitor, because its target group includes also clothes for men and has also an online store for cheap and expensive clothes.
“Winners Merchants International LP” is a retailer chain with off-price Canadian department stores, which is owned by “TJX Companies”. It includes among others clothing and footwear. They promote with a high quality, low prices, newest trends and well-respected brands. Winners Merchants International LP competes in the same market with our product. It is also important to know, that the company want to satisfy the customer with convenience like MODOMOTO.
“Sears, Roebuck and Company” is the leading retailer in Canada with a market share of 10% and 301 stores in Canada therefore it is the most important competitor of our service. Sears is a multinational mid-range department store chain, which includes clothes among other goods and services. The Sears department stores are located in shopping malls. The largest department store is at the Toronto Eaton Centre. Sears has also other subsidiaries like hardware stores and chains of hypermarkets and discount stores. Sears operates also as an online retailer like MODOMOTO. That is another reason wherefore Sears should be considered as an important competitor.
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