The Influence of The Parity Brands In Taiwan - Assignment Example

Part Evaluating published research: In order to focus on the influence of international parity brands on the local industry in Taiwan, the customer’s perception regarding the international and the local brands is an important aspect to study. Unless the customer perceives the brands and provides a difference in value to the products based on their region of origin, the overall impact on the industry is difficult to comprehend. For the purpose of investigating the perception of customers in Taiwan, a research paper “Do consumers perceive differences among national brands, international private labels and local private labels? The case of Taiwan” by Cheng has been reviewed which addresses the area. A research was conducted by Cheung et al to analyze the perception of customers on products based on various parameters like product quality, price, leadership and the difference of the brands based on the origins. Comparisons of this attributes have been carried out between national brands, international private labels, and local private labels. The hypothesis which was held for the research was that the overall quality of the products of the national brands were superior than the products which was manufactured in Taiwan but had international labels, whereas the quality of the international brands were higher than the local private labels. The second hypothesis held in the research conducted was that consumers view that the price of the national brands is higher than that of the products of the international private labels, whereas the price of the international private labels is higher than that of the local private labels. The third hypothesis for the research was that consumers had the conception that national brands account for superior brand leadership in comparison to the international and local private label brands. The fourth and the final hypothesis for the research conducted by Cheng et al was that the brand personality of the international private brands was superior to that of the national brands and the local private labels. The research was based on primary survey and collected the views of 254 respondents all above the age of 16. The research method was based on systematic sampling and the data was gathered from the main railway station of Taipei which is located in Taiwan. Ideas about different parameters from the research In the research conducted much analysis has been done on the context of the quality of the products perceived by the customers and the factor of price has also been considered. It has been highlighted that the firms dealing with high quality products is generally held as superior irrespective of the origin of the products. In the local market the national brands have high popularity owing to the service which they have rendered to the customers over a long period of time. The customers have faith in the national brands to produce attractive products for them in the future. In matters of price perception it was also found that the customers generally prefer to pay less for their products. The customers also has the view that the low price of the products contributes to the lower quality of the products and this has a feeling on them that the international brands which are associated with the higher price also possess better quality than the products with local private labels. This facts drives to a conclusion that the perceived price of the international brands are higher than the national brands and the price of the national brands are also held to be higher than those of the local private label. This also focuses on the aspect that consumers are not worried about the price of a product as long as they are satisfied with the overall quality of the product. In matters of brand leadership, the idea was generated that brand leadership consist of process which supports the overall branding and provides a competitive edge to constantly achieved excellence. Brand leadership is also one of the criteria which successfully guides the customer’s preference and it has been found that national brands has better resources and capabilities in comparison to the locals in order to pose themselves as brand leaders. But international brands posses much more marketing strategies in order to make themselves as brand leaders of the market. Another important concept was highlighted in the research paper was the impact of brand personality on the national brands and the international private labels. The importance of brand personality lies in the fact that it helps to establish a link between the emotions aimed at expressing by the brand and the relationship between the customers. Brand personality also forces the choice of the brand which is consumed in social setting and the brands aims at providing a visible statement to the consumers regarding the product. The popularity of the international labels is much more than that of the national brands as their names and logos is widely known to people from different sections of the society. Thus consumers views the international brands as unique in comparison to the local brands, whereas the brand personality associated with national brands are held to be superior to the private labels. As international firms incur a high amount of cost on the promotion of their products and the advertisement so the customers perceive the product to be of high quality and has a high reliability on the products. The international brands also has higher cosmopolitan image and they are much more desirable and are associated with a sense of prestige in comparisons to the local brands. This also in turn improves the attractiveness among the local customers as they feel that the purchase of the international brands will provide them to reach higher status in the society. Based on the response of the questionnaire it was found out that the national brands proved to be superior in respect of the international brands and international brands outweighed the local private labels in all areas except in the perception of price. The research also highlighted the findings that the product categories of three brands studied in the paper had moderated the price and the brand personality perception. The analysis of the data was conducted by the confirmatory factor analysis so that support to the accuracy of scales could be achieved. The hypothesis held in the research was analyzed by ANOVA test which was performed on the overall data collected (Cheng, et al, 2007, pp.368-376). Implication on the local market: The results of the research conducted by Cheng et all could be significant in order to find out the implication of foreign brands on the local market in Taiwan. Owing to the popularity of the international brands and the national brands, the private labels which constitute to a high proportion of the local market needs to act as market followers so that they can sustain in the market. The perceptions of the local labels operating in the market varies across different segment of consumers and they needs to focus on a wide range of strategies adopted by them so that they can gain significant market shares and also at the same time enjoy the price premium which is being experienced by the local brands and the international labels. The local privatelabels also need to improve the overall quality of the product so that consumers from various segments of the society are attracted towards them. As it has been revealed form the research that there exists no difference in perception of price among the international and the local private labels in the category of shopping goods, therefore the chance of providing stiff competition to the international brands also exists provided the quality of the local labels raises its standard. Based on the results, the international brands also need to be careful with the pricing strategy of goods in Taiwan. In matters of expansion of the market, international brands tend to influence the customers in matters of the high quality of the products. Topic Page No. Executive Summary 6 Introduction 7 Literature review 7-10 Retail and Fashion industry In Taiwan 7-8 Impact of foreign brands in Taiwan 8-9 Research methodology 10 Findings 10-11 Uniqlo 10-11 Zara 11 Disussion 12-13 Conclsuon 13-14 Part 2 Executive Summary: The research conducted studies the impact and the influence of the parity brands in Taiwan. The research was conducted using the primary source of data and organizations like Zara and Uniqlo were chosen to study the impact of the parity brands in Taiwan. The study reveals that the economy of the Taiwan creates an interest among the multinational organizations to invest in the country. Owing to the flexible structure of investment, major brands have opened their business in the country. In matters of fashion brand and retail clothing, the local market is found to be largely hampered by the operation of multinational brands like Zara and Uniqlo. The local brands failed to deliver the quality of the product at a lower price in comparison to the international brands and the marketing strategy of the foreign brands was also instrumental in capturing the market. However the influence of the foreign brands forced the local brands to improve the quality of the products and deliver them to the people at a standard rate. Impact and Influence of international parity brands in Taiwan Introduction: International brands have emerged in the market of Taiwan over a long period of time. The market of Taiwan has been over crowded with the presence of foreign brands like Zara and Uniqlo. The presence of the portfolio of foreign brands has an impact on the local market. The section tries to investigate the influence and the impact of the foreign brands in the local market of Taiwan. Literature Review: Retail and Fashion industry In Taiwan: The presence of positive growth in the economy of Taiwan has attracted the foreign investors to set up their venture in the country. Taiwan experienced a growth of 4.1% to 4.7% between the year 2007 and 2008 (Taiwan Retailing Services Industry Analysis & Investment Opportunities, n. d, p.2). The government of Taiwan has also handled the economy of the country in an efficient way by incorporating various policies, business and investment opportunities in the country. These flexible policies have in turn brought various multinational retail and clothing organizations in the country. Retailing in Taiwan has made a major breakthrough and has outweighed the traditional stores of the country. The success of the industry lies in the fact that it has been able to deliver the needs and changing demands of the customers on a regular basis. The close relationship between the suppliers and the consumers also guides the overall success of the industry. Taiwan has also been favorite destinations for the investors from the highly developed countries for the offshore production as it has reputation for being a reliable partner. The retailing industry in Taiwan employs a workforce of around 420,000 employees. The retail business in Taiwan accounts for almost 47% of the total business. In the retail industry in Taiwan the foreign investors generally invest in the departmental store sector, retail Store sector and in the hypermarket (Taiwan Retailing Services Industry Analysis & Investment Opportunities, n. d, p.6). One of the major segments of the retail market is the fashion clothing market. The domestic fashion clothing market in Taiwan has always had a focus on satisfying the demands of the customers without much concentration on the designs of their clothes. This was basically due to the fact that in Taiwan most of the people were less fashion conscious. The consumers always had their focus on wearing better quality of clothes without much focus on the design of the clothing. However with the emergence of the foreign brands in the country, the overall concept of the fashion changed in the country. The foreign brands in the country constantly develop new products which are rich in class. As there is a presence of the parity of foreign brands, the price factor of the products becomes irrelevant and the consumers also believe that there is negligible difference in the price of the products. Most of the brands operating in the country are western and the people belonging from Taiwan have always had a fascination towards the western brands. The interest among the local people for the foreign brands indeed has provided further opportunities for the foreign brands to get them established in the country. Impact of foreign brands in Taiwan: With the advent of globalization, the strength of the economy of Taiwan has depended heavily on the trading relations with foreign countries specially China. Most of the foreign brands in the country have provided significant competition to the local market of the country especially in the sector of retail. The retail industry of the local market has also tried to undergone rapid changes in their structure and the mode of operation so that they can survive to the challenges posed by the major international brands. One of the notable changes which occurred in Taiwan due to the emergence of the foreign brand is the rapid evolvement of the branded stores and the shopping malls which forced many a departmental stores of the country to shut down their operations. Most of the foreign brands operating in the country had better marketing skills and soon grasped the attention of the customers. The differentiation in the product according to the latest trend in the market also helped the foreign investors to capture the markets on a large scale. In matter of clothing, foreign brands imbibed a new sense of fashion in the country at a price which was almost accessible by the majority of the population (Huang, 2004). Another major difference which was observed in the operation of the foreign brands was that most of the foreign brands adopted the use of online tools to promote their products and eventually sell them in the market. Most of the foreign brands have developed their web portals which facilitate the display of their product and provide secure payment options for the products to be purchased by the consumers (Chow, 2002, p.120). However the local industry in the country never adopted the use of information technology to a vast extent. The foreign brands also changed the whole new experience of shopping by decorating their stores to provide a pleasant ambience to the customers. All this factors provided a look of elegance and the customers easily fell for it. The sophistication in the manufacturing process of the products also enabled them to meet the demands of the customers on a regular basis. Considering the change in the trend of the market some local organizations in the retail sector of Taiwan tried to follow the models incorporated by the foreign brands so that they can also remain in the competition. In the clothing sector, the organizations tried to analyze the demands of the consumers and implemented designed clothing based on the market trend. Though the overall market condition of the retail sector was affected by the foreign brands but an overall renovation took place in the domestic industry of Taiwan. Research Methodology: The research methodology used in the section is primary and questionnaire was used to study the impact which their expansion strategies have had on the local market in Taiwan. For conducting the research, a sample size of 20 employees from different divisions of both the organizations was chosen. The questionnaire framed for the research followed a mixed approach of open and closed ended questions. In order to understand the impact of the foreign brands on the retail market in Taiwan, the brads dealing mostly with clothing have been considered as this segment of the retail industry is accessed by a majority of the population. The research involves the quantitative analysis as data been analyzed to reach a solution. Findings: Uniqlo: Uniqlo is one of the leading retailers in clothing chain which originated in Japan in the year 2005 (About Uniqlo, n.d). Uniqlo has expanded its operation in various parts of the world and has gained popularity in the designing of casual wears and in the process of manufacturing and retailing. Uniqlo recently opened up their branch in Taiwan and aims at opening nearly 100 units in the country which will be dedicatedly handling the sale of the branded products. From the views of the executives gathered from the questionnaire it was also known that the organization also aims at opening 30 units in Taiwan every year. The organization aims to continue with their strategy of running a specialty store with international private label. The organization produces their range of clothing on their own , however at the time of recession the production process of the clothing was outsourced to China as labor was available in cheap over there. Uniqlo also continue with their production process in Taiwan as the labor is cheap over there, as a result Uniqlo contributes in providing employment to a considerable section of the people in Taiwan. However the private labels operating in the country faces enormous competition from Uniqlo as the high quality of the products sold by them at comparatively low cost provides the local manufacturer with no competition at all. The views of the executives gathered from the questionnaire also revealed that the products sold by Uniqlo are also being purchased by the mid income section of the society. The organization also maintains an effective marketing policy to reach out to the fashion conscious people around Taiwan. The results from the questionnaire also revealed a significant thing that the overall popularity popularity of the brand in other parts of the world also helped the organization to gain considerable market share (Tan, n. d). The designs of the products offered by Uniqlo always involve innovation and are in adherence to the latest fashion trends. Some of the local manufacturers operating in the country have adopted the policy to imitate the design of the products of Uniqlo without a concern regarding the quality and selling them at a low price in comparison to what Uniqlo offers. Zara: Zara, the fashion brand from Spain opened up its unit in Taiwan in 2011. The brand had its presence in almost 80 countries before their expansion in Taiwan. The brand has been popular for more than three decades because of the stylish clothing and accessories which has been accepted by people all over (Connor, 2011). The strategy of Zara over the years has been fast paced innovation and the brand is well known for designing more than 10,000 new products every year (Company, n. d). The results of the data collected from the questionnaire involving the executives of Zara also revealed that on setting up their venture in Taiwan, though the consumers are enjoying the facilities of the international branded products but the local market has started facing crunch time as the new brand has changed the overall perception of fashion and the local manufacturers are falling short of their resource to produce the new designed products brought by Zara in the market. The stores of Zara located in Taiwan also provide a pleasant experience to the shoppers by the ambience created inside the store. The local market in Taiwan also falls short to attract their customers in this context as the products are mostly sold through the departmental stores. As a part of their marketing skills Zara has introduced clothing sections which are available in the stores of Spain and this has provided massive interest among the local people to try out the products. Discussion: Impact of parity of Zara and Uniqlo: The entry of global players like Zara and Uniqlo in the market of Taiwan has indeed become a worry for the local industry. The local clothing industry based in Taiwan used to sell low quality of goods at cheaper prices and the local labels operating in the industry provided no concern over the marketing activities of the products. However with the entry of foreign brands in the country, the local manufacturers had to face a variety of crunch situations. As based on the survey from the questionnaire it was found that both the brands of Zara and Uniqlo specialized in producing a wide design of clothing according to the latest fashion trend and this created an interest among the customers to try out different styles of clothing and the local manufacturers faced problem in retaining their age old customers. According to the views of the marketing professionals from the questionnaire was found that the marketing divisions of both the international brands were specialized to deal with various activities in expansion strategies and applied them effectively to draw the attention of a wide section of the society (Cheng, et al, 2005, pp.504-514). The experience provided to the customers in shopping from the units of foreign brands was also significant in drawing them away from the departmental stores. The price factors associated with the goods were also not detrimental to raise any hope for the local manufacturers. As a result the international brands were successful in capturing the majority of the market. The local market was also influenced by the foreign brands and some stress was given to increase the overall standard of the products and initiatives were taken to make the local products popular among the people through marketing skills. However for the local market to survive in such a competition, innovation also needs to be deployed in the product designing. However the overall standard of the retail market based in Taiwan can increase significantly if the local market can pose significant competition to the foreign brands by adopting strategic and operational changes and fulfilling the overall needs of the customer in a regular basis. The local industry can also take the examples of the operational strategies of the international brands in order to set a benchmark for them (Taiwan in global expansion plans for Zara &Uniqlo, 2011). Conclusion: The analysis of the report reflects the fact that the entry of the foreign brands in the emerging market of Taiwan has put the local market out of the competition. The foreign brands have acted as a nemesis for the local markets because of the limitations in the strategies and the operation of the local organizations. On the contrary, the foreign brands had efficient expansion strategies and they effectively cashed on the limitations of the local market (Welsh, et al, 2006, pp.130-149). The launch of variety of designer clothing in the market of Taiwan at an affordable cost along with superb marketing skills attracted the customers from all sections of the society and helped the foreign brands to acquire high proportion of the market share. The recent expansion of Zara and Uniqlo in the market of Taiwan has revealed the deficiencies in the retail segment. The failure of the retail segment in Taiwan can be a worrying cause for the overall economy as many people may suffer from the loss of employment if no steps are taken to modify the current operations. The market of Taiwan is preferred by many other foreign investors in the retail segment and their arrival will surely raise a question on the existence of the local market. The local market needs to focus more on the quality of the products, so that their products are also in demand. The support from the local government is also desired so that the infrastructure of the local industry can be improved. Questionnaire: Name of the respondent: Age: Department: Marital Status: Are the prices of the products at par with the local market? ❑Yes ❑ No How well the organization is doing its business in Taiwan? ❑Good ❑ Average ❑ Bad The products are popular among which section of people (according to income level)? ❑ Upper class ❑ Middle Class ❑Both What are the crucial factors towards expansion in Taiwan? Are the marketing strategies adopted by the organization better than that of the local market? ❑Yes ❑ No How much is the profitability gained in the initial days? Does the organization have any further plans of expansion in market of Taiwan? ❑Yes ❑ No Have the brands outperformed the local market? Which products of the organization have became much popular? Was the experience of shopping provided by the organization preferred by the consumers? ❑Yes ❑ No Did the experience of shopping help them to occupy the market? ❑Yes ❑ No Does the operation of the international brand is a threat to the local market? Is the majority of the marker captured by the organization? ❑Yes ❑ No Has any competition been offered by the local firms? ❑Yes ❑ No How well is the opportunity for growth in the market of Taiwan? References About Uniqlo, (n. d).uniqlo, available at: http://www.uniqlo.com/us/corp/(accessed on January13, 2011) Cheng, J, M, et al. (2005), A Stage Model of International Brand Development, Industrial Marketing Management, Vol34, 504-514 Cheng, J, M, et al. (2007), Do consumers perceive differences among national brands, international private labels and local private labels? The case of Taiwan, Journal of Product & Brand Management, Vol16 (6), 368-376 Chow, P, C, Y (2002). Taiwans modernization in global perspective, Connecticut: Greenwood Publishing Group Company, (n. d).zara, available at:http://www.zara.com/webapp/wcs/stores/servlet/category/tw/en/zara-W2011-s/11112/Company(accessed on January13, 2011) Connor, (2011), Zara comes to Taiwan, t2square, available at: http://www.t2square.org/2011/06/21/zara-comes-to-taiwan/(accessed on January13, 2011) Huang, C, C, (2004). Globalization of fashion industry, china56n, available at: http://www.china56n.com/WEPD/research/research06.php Taiwan in global expansion plans for Zara &Uniqlo, (2011), taiwan543, available at: http://taiwan543.net/2011/11/11/taiwan-in-global-expansion-plans-for-zara-uniqlo/(accessed on January13, 2011) Taiwan Retailing Services Industry Analysis & Investment Opportunities, (n. d), investtaiwan, available at http://investtaiwan.nat.gov.tw/doc/industry/09Retailing_Services_eng.pdf(accessed on January13, 2011) Tan, J, (n. d). 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