International Marketing Expansion to the Markets of Brazil - Business Plan Example

International Marketing Plan for expansion to the markets of Brazil

• Introduction

International marketing is considered to be one of the milestones to cross by the companies, when it comes to their expansion strategy. Companies enter international markets for a number of reasons such as increasing sales, increasing their profits, exposure to new technologies, increasing market share, increasing their brand value etc. While entering an international market, it is very important to understand the internal and external environment of the industry there. This provides a general idea to the company, about the competitors functioning in the market and the profitability of the existing market. Having this knowledge helps the company to understand how to operate in the market in order to survive there in the long run and to properly utilize the opportunities that the market has to offer. In this paper, an international marketing plan will be provided for the company Solovair, for its expansion into the markets of Brazil.

• Footwear industry in Brazil

Amongst all the growing fashion segments in Brazil, footwear industry is the fastest growing (Bruha, 2014). With German and Italian craftsmen moving into the country, footwear production industry came into establishment in the 1820s, in Brazil (Bruha, 2014). Improved technology, industrialized the whole process of manufacturing, which increased its growth to a great extent.

The footwear industry experienced decline in the production process during the mid 1900s. In spite of that, there was a dramatic increase in the shoe sales due to export to the international markets (Bruha, 2014). The main footwear producing areas of Brazil are Rio Grande do Sul, Sao Paulo, Santa Catarina, Ceara and Minas Gerais (Bruha, 2014). The largest producer is the Northeastern region of Brazil which exports 71% of the total Brazilian footwear export. The countries where Brazilian footwear is mainly exported are the United States, France and Argentina. The country enjoys the competitive advantage of producing good quality footwear with comparatively cheap leather. The increasing price of Asian footwear and the growth of the Brazilian footwear industry into international markets are other reasons for the popularity of Brazilian footwear industry (Bruha, 2014).

Brazil ranks third when it comes to footwear production in the world, as per 2014. The industry produces as much as 900 million pairs per year (Data Mark, 2015; Bruha, 2014). It experiences a tough competition from the markets of China and India, which produce as much as 13 billion pairs and 1.2 billion pairs per year respectively (Bruha, 2014).

• About the company

Solovair is a British footwear brand known for its high quality handmade boots. The company was started as a cooperative under the name of Northamptonshire Productive Society (NPS) in the year 1881, by a group of five men (History, 2016). Northamptonshire has always been known for its boots and shoemaking process and the good quality of the products. Till the later nineteenth century, shoes and boots were made by the local manufacturers at homes, who were only paid for the ready pairs when the collectors were there at the doorsteps (History, 2016). The craftsmen had little security of job and the compensation was very poor. They incurred huge losses.

The cooperative was started with the aim of improving the income level, productivity and job security for the shoemakers of Northamptonshire (History, 2016). NPS experienced a rapid growth in the beginning of the 20th Century due to increased industrialization and the later part of the nineteenth century. The company used various methods of manufacturing, which included stuck-on, riveted and stitched, vulcanized and Goodyear welted. The Goodyear welted technology is used by the company in the manufacturing process of its shoe production (History, 2016).

In the year 1995, NPS was renames to Solovair. In the recent years, the company not only manufactures the good quality boots that it is known for, but also incorporates newer technologies such as ‘Soft Suspension’ sole (The Solovair Factory, 2016). The company has managed to maintain their quality and standards even after 135 years of its establishment.

• Market analysis:

It is very important to understand the internal and external environment for any business before entering an international market. A proper analysis of the market always helps the company in planning out its actions and developing competitive advantage in order to survive in the market in the long run.

• • Present position in the market

Solovair is known for its exclusive handmade boots, known for their high quality leather, cuts and durability. The shoes are exclusively positioned in the market with customers belonging to the premium category. Northamptonshire, England is known for its shoemaking history since the ancient times. The company uses this craftsmanship that has been passed on for generations, to manufacture the shoes. It incorporates latest technology along with the old manufacturing techniques, in the process of creating these shoes. This not only makes them comfortable, but also increases the worth of these shoes (The Solovair Factory, 2016).

The shoes are high in demand not only in England, but also in other parts of the world (Solovair, 2016; Raivio, V., 2013). Solovair has its shops in England, but sells its products through its website to other parts of the world. The products are very well known for their looks, comfort level as well as the British heritage associated with them.

Solovair has a wide range of products that are divided into separate categories, which are Boots and Shoes. Boots are further classified into Chelsea and Derby. Shoes are classified into Gibson and Oxford. There is another category of shoes called the Collection. The Collection consists of City and Heritage (Shop, 2016).

• • SWOT Analysis of the company

The SWOT analysis of the company will help in providing an in depth understanding of how Solovair can utilize its strengths and weakness in the best possible way to meet the market requirements (Pahl and Richter, 2009). It also provides an idea to the company about the opportunities and threats that it can face in the market of Brazil.

Image1. SWOT Analysis

(Source: Author’s Creation)

• • PEST Analysis
  • PEST analysis provides the idea of the external environment of the industry where the company is going to function (Bensoussan and Fleisher, 2012). Having an idea of the external environment will keep the company prepared to face the risks that bit can encounter. This will help it in planning its move accordingly.

Political: The political environment of Brazil is quite stable and the government is very active in handling various issues. One problem that the country faces is the issue of corruption (Business Anti- Corruption Portal, 2016). Solovair may have to deal with the high level of corruption which may eventually disrupt the functions of the business.

Economic: The economy of Brazil has undergone many changes and finally has settled down to become a huge consumer-based economy. Brazil is the third largest consumer of the global luxury commodities (Mazza, 2014). This provides a very good opportunity to Solovair to reach out to the consumers of the Brazilian market.

Social: The social need for luxury product in Brazil is very high, where the country stands as one of the largest consumers of luxury products in the developing markets of South America (Roberts, 2014). Being the wealthiest country in Latin America, the people are quite status conscious. This provides a good opportunity for the company to start functioning in the markets of Brazil.

Technological: Technological development is one of the primary requirements for Solovair to grown in any market. The technological environment in Brazil is a growing one, where the government is taking specific efforts in developing it (Mari, 2014). Hence, there is a good opportunity for the company to grow and perform well in the markets of Brazil.

• • Competitive analysis

The footwear industry of Brazil is highly competitive with a number of competitors being active in the market. Many Luxury brands are trying to enter the market with many small companies posing threat to bigger ones as well. The main competition that Solovair is facing a threat form is Dr Martens. Dr. Martens has a diversified product category that includes bags, shoes, and clothes for both men and women. The company poses a serious threat on Solovair, with its ample variety of products and a wider target market.

There are many luxury brands starting their operations in the market of Brazil. These brands deal with many different products, footwear being one of them. This helps them in acquiring a greater market share. Local and popular brands in the country also pose a threat to the company. The company has to device a strong competitive advantage over these brands, by positioning itself as the low cost player, in order to survive in the market in the long run.

• Segmentation, Target and Positioning

The company deals in luxury products. Hence, it can segment the market of Brazil to reach out to the luxury brands users. These people should be willing to pay for premium product. The company can specifically reach out to the socialites, celebrities and the elite people as they are the ones that prefer to use luxury products on a regular basis.

The primary targets of the company should be men of the age group of 25 and above, as Solovair is planning on dealing with only one product line in the markets of Brazil, that is, men’s boots. They should target rich businessmen, socialites and celebrities who would be able to afford the products and would also opt for repeat purchase. The company should position itself as a luxury footwear brand suitable for use in big socialite events, parties, fundraisers, business meetings etc. The company should approach the market as a high quality low cost luxury product, which offers its product at much competitive rates.

• Product, Price, Place and Promotion

Solovair is planning to enter the market of Brazil with only one product category, that is, men’s boots. The company can improvise on the designs and launch new category of boots specifically for the market of Brazil. The company can source the raw material for production locally as it is easy to get good quality leather at cheap prices in Brazil. This will increase the margin for Solovair as it will help the company in saving on transportation cost. This will also help the company in saving on the purchase of raw material as the cost is much cheaper in Brazil than in England.

The market in Brazil is highly competitive. In order to appeal to the customers in Brazilian market, the company should have competitive pricing policy. This will not only help the company in developing a competitive advantage over the competitors, but will also help it in acquiring market share initially.

Solovair should start with two markets in Brazil, in order to understand the market trends. The company can try to enter the market of Rio de Janeiro and Sao Paulo to begin with as these areas are two of the most popular celebrity and socialite hangout destinations in Brazil. Many influential and rich people can be found visiting in these areas frequently. Establishing itself in these two places will help the company in gaining a loyal customer base and to acquire some popularity in the markets of Brazil.

Promotion is Brazil can be done through print media, radio and television. Online advertisement is another way through which the company can promote its products. Special events can be held at the socialite gatherings and parties, in order to gain their attention. Promotional coupons and seasonal offers can be used by the company as means to attract the consumers and increase sales.

• Strategy to Expand into Brazil

The economy of Brazil is experiencing constant growth. This is one of the major reasons for the market to be highly competitive. Many well established as well as new brands are trying to capture this market. Solovair should keep these factors in mind before devising a strategy to enter the market of Brazil.

The company should first decide how it is planning to enter the Brazilian market. Solovair can find it suitable to enter the market through merger, joint venture and exporting. Entering the market through merger or joint venture with an already existing well known brand will help the company in acquiring a familiar face to approach the customers. They will be able to relate to the company in a better way. Exporting can be another option for the company, where the company operates from the home country and exports the goods produced to Brazil to capture the market. This process does not require any direct manufacturing but will involve a significant cost to the company.

The company should then decide if the manufacturing and production unit is going to be locally set up or if the company is going to export the products from its home country. Setting a production unit in Brazil may prove to be very cost efficient for the company as the production cost here is very cheap as compared to England. This will also save a lot of cost in the transportation of the finished products from England to Brazil.

A strong competitive advantage is required by the company in order to survive in the market. Developing a strong competitive advantage will also help the company in creating a brand image and develop a loyal customer base. Competitive pricing can be one of the advantages that the company can have over its rivals. Additionally, it can position itself as a premium quality and durable product based company. It can also relate itself to the British heritage in promoting its products.

• Recommendation

The market of Brazil is very different than UK where Solovair is primarily functional. This requires the company to understand the market clearly before entering it.

The company should be well versed with the laws and regulations of the country. Understanding the regulation will keep it from getting into any type of legal disputes. Solovair should also understand the government and political norms in order to save itself form getting any kind of political turmoil. It is important for the company to keep in mind that Brazil has a high rate of corruption. Its strategies should be devised in a way to keep it from getting into any kind of unethical activity which may affect its brand image later.

Developing a competitive advantage is crucial for Solovair in order to survive in the highly competitive market of Brazil. The company should create a new range of products within the category of boots. Collaborating with local designers in order to create products keeping in mind the tastes and preferences of Brazilians can be a good way of reaching out to the market. As the company is expanding into a completely new market, it has to build a brand image first in the markets of Brazil. Solovair can try to use celebrity marketing as one of its promotional techniques. Using a popular local celebrity face to market to endorse the product can prove to be useful as it will help the customers in relating to the brand.

• Conclusion

Expansion into an international market can be particularly challenging for any company due to lack of experience of operating into that particular market. There are many factors such as political, economic, legal and technological that has to be kept in mind by the company in order to understand the suitability of operating into a particular market. This will also help the company in understanding the return on investments that it is going to receive by acting into this market. The market of Brazil has gone through a number of changes in the past few years and finally has stabilized with a growing economy. This has attracted huge investments from other countries, by luring in big brands which in turn has increased the competition in the market.

With Solovair entering the market of Brazil, the company has a high chance of performing well in the market due to factors like low production cost, availability of cheap and good quality raw material and government interest in improving technology. The company should utilize all these factors for its benefit in developing a strong strategy to launch itself in the market of Brazil.

• Reference List

Bensoussan, B. E. and Fleisher, C. S., 2012. Analysis Without Paralysis: 12 Tools to Make Better Strategic Decisions. New Jersey: FT Press

Bruha, P., 2014. Footwear Industry In Brazil. The Brazil Business [Online] Available at: < http://thebrazilbusiness.com/article/footwear-industry-in-brazil> [Accessed 13 July 2016]

Business Anti- Corruption Portal, 2016. Business Corruption in Brazil. [Online] Available at: < http://www.business-anti-corruption.com/country-profiles/the-americas/brazil/snapshot.aspx> [Accessed 14 July 2016]

Data Mark, 2015. Footwear industry bet on export. [Online] Available at: < http://www.datamark.com.br/en/news/2015/1/footwear-industry-bet-on-export-168655/> [Accessed 14 July 2016]

History, 2016. Solovair [Online] Available at: < https://www.solovair-shoes.com/about-solovair/history/> [Accessed 14 July 2016]

Mari, A., 2014. Brazilian government outlines technology priorities for 2014. ZDNet. [Online] Available at: < http://www.zdnet.com/article/welcome-to-the-harsh-new-it-reality-you-are-the-battlespace/> [Accessed 13 July 2016]

Mazza, M., 2014. Capturing the hearts of Brazil’s luxury consumers. Mc Kinsey & Company. [PDF] Available at: < https://www.mckinseyonmarketingandsales.com/sites/default/files/pdf/CSI_BrazilLuxury.pdf> [Accessed 14 July 2016]

Pahl, N. and Richter, A., 2009. Swot Analysis - Idea, Methodology and a Practical Approach. Munich: GRIN Verlag

Raivio, V., 2013. A Brief History of Shoemaking. Keikari [Online] Available at: < http://www.keikari.com/english/a-brief-history-of-british-shoe-making/> [Accessed 14 July 2016]

Roberts, F., 2014. Beyond The Buzz: The Brazilian Luxury Goods Market. Luxury Society. [Online] Available at: < http://luxurysociety.com/articles/2014/06/beyond-the-buzz-the-brazilian-luxury-goods-market> [Accessed 14 July 2016]

Shop, 2016. Solovair. [Online] Available at: < https://www.solovair-shoes.com/shop/>

Solovair, 2016. History of Solovair and NPS. [Online] Available at: < http://www.solovairdirect.com/pages/history-of-solovair-nps> [Accessed 14 July 2016]

The Solovair Factory, 2016. Solovair. [Online] Available at: < https://www.solovair-shoes.com/about-solovair/the-factory/> [Accessed 14 July 2016]