The Factors That Affect the Success of the Internationalization of a Fashion Brand Essay Example

defined as achieving high profit returns and being in the international market for more than three years. The research attempts to answer the question: how can a fashion brand survive in the international market. This is an important question because there are some international brands such as Marks and Spencer that have failed in some of the international markets it has entered, while there are brands such as Indetex that have achieved phenomenal success in the international market.

The research attempts to fill in the gap of research that has been done in retail internationalization(RI) which has concentrated on other retail businesses such as hypermarkets. These findings cannot be generalized to fashion because there are other factors that differentiate the fashion business from other business sectors. The fashion business has to consider factors such as culture and psychological factors which a hypermarket does not have to consider.

OBJECTIVES

The objective of this study is to find out the factors that are necessary for the success of the internationalization of a fashion brand. . 0 The desktop method was used in this investigation. Ten journals were reviewed, hence secondary data was used. In these journals different methodologies such as in-depth interviews, postal questionnaires, semi-structured interviews and others were employed by the researchers. There are a number of factors that affect the success of the internationalization of a fashion brand as illustrated in figure

Five main ones were selected from the texts. These are market entrance, market selection, motivation to internationalize, and the marketing mix.The way the fashion brand enters the particular international market is crucial to the success of the brand. There are various ways that are adopted by fashion

businesses to enter the new international market. One of the common ways that are used are wholesaling. In a research conducted by Moore, Wigley and Birtwistle (2005), where they looked at two fashion businesses that had experience in internationalization, they found that both entities entered the new market using the wholesaling technique. Though one of the irms was successful in internationalization but the other firm, an American firm was not successful.

The successful firm which is British strictly controlled the wholesale process. The retailers were selected on the basis of their appropriateness to the brand. This guaranteed that the brand had even presentation and the presentation was fitting. Hence the brand was assured of maintaining its reputation (Moore, Wigley and Birtwistle, 2005). Another study that was conducted by Moore found that the company that he was investigating has extensive involvement in the international market in terms of the wholesale distribution.

This company in question reported that 75 per cent of the sales were accounted by their international markets in 1998, and in increased by 53 per cent in 1999 due to their participation in the international market. The internationalizing designers that Moore studied were found to be using wholesaling as a low-risk way of generating cash flow, customer loyalty and market intelligence. This means that wholesaling was used as a way of garnering knowledge about the international market. Another way that fashion businesses opt to enter the international market is through franchising.

This is demonstrated by the Per Una brand under Marks and Spencer that has successful franchises in Taiwan among other places according to Wigley and Chiang (2008). Franchising ensures that the entity may supply the franchisees

with the products through their wholesale business. The fashion brand hence has international presence. Skills are exchanged, especially management skills. The franchisor also learns about the particular management styles that are used in that particular international market. Franchising.

This strategy is chosen for high-risk countries which are culturally distant or have small markets with low sales forecast like Saudi Arabia, Kuwait, Andorra or Malaysia (Flavian and Polo, 2000). Another way of entering the market is through opening a flagship stores within the capital cities. Flagship stores are a sign that the brand has reached a point of maturity where it has the confidence to support its important international markets. It means that the brand can bear scrutiny within a retail setting and that it has a depth of product and a depth to its reputation to sustain a major retail store (Moore, Doherty and Doyle, 2010) .

This is also a crucial factor that affects the success of the internationalization of the fashion brand. In the past years fashion brands opted to expand to countries that were geographically or psychologically or culturally similar. The successful Bristish fashion brand studied by Moore, Wigley and Birtswistle (2005) selected the United States of America (USA), even though it is geographically far, the cultures of the two countries are similar.

According to the one of the managers of the British firm, “Our product suited the lifestyle [in America], especially youth trends away from the preppy look and people ‘dressing down’ at work but still wanting to look stylish and professional. ” The manager added that similarity in language and the understanding of the cultural icons facilitated the building of the brand in

USA (Moore, Wigley and Birtswitle, 2005). This mechanism was initially used by the Spanish fashion brand Zara which is under Indetex. Zara expanded into markets that were geographically or psychologically near to the Spanish market in 1997.

The first market it expanded into was Portugal, this was followed by Zara entering eight countries the following year, namely Kuwait, Lebanon, the United Arab Emirates, Argentina, Venezuela, Great Britain, Japan, and Turkey (Lopez and Ying, 2009). These countries either share geographical proximity or cultural proximity with Spain. According to Lopez and Ying (2009) Zara used these expansion experiences to enter the other foreign the other markets that are not culturally similar. This was commenced by expanding into Israel. The Swedish brand H&M has successfully expanded into markets such as the UK, Singapore, among others.

Initially it expanded into the countries neighbouring Sweden, Norway in 1964, and Denmark in 1967 (Lopez and Ying, 2010) These strategies have been successful but the markets have been saturated especially in North America and the UK. So fashion brands have started embarking into markets that have been explored such as Africa, Asia and South America which are not similar to them culturally or geographically. One of the managers interviewed acknowledged this, “The growth and profits that investors require can no longer come from the markets of the North, be it Europe or America, and certainly not from the

East. These markets have become saturated with competition. Instead, the growth has to come from the markets that are new and receptive to luxury brands, to western symbols of affluence. While these markets are often primitive and inexperienced, these are cash-rich for many fashion designers” (Moore, Fernie

and Burt, 2000) The evidence that fashion brands have expanded into countries that are not culturally similar to them was displayed in Guercini and Runfolo (2010) investigation into the Italian firm Tessilform that has successfully expanded into China.

Guercini and Runfolo (2010) have coined the phrase “psychic distance” to describe the factors such as differences in languages, educations, managerial practices, cultures and industrial developments. The gap in this distance was closed by Tessilform through business networking. The corporation used existing relationships it had in the past with suppliers and customers to reduce this distance. this relationship has grown over the years and the entry strategy was realized with the support of an existing actor also known as a ‘gatekeeper’, which was already in the known by the firm (Guercini and Runfolo, 2010).

This has assisted the firm in gaining knowledge about the market and it has also established new relationships. 6. 3 Motivation to Internationalize There are push and pull factors that motivate the fashion brands to expand internationally. These are also fundamental to the success of the brand in the global market. According to Moore (1997), the push factors are things like domestic market maturity, saturation, restrictive regulatory environment, hostile competitive environment, poor economic conditions and negative social conditions.

The pull factors are underdeveloped retail structure, favourable exchange rates, niche opportunities, innovative retail culture, large markets and good socio-economic conditions. In a research undertaken by Moore, Birtswistle and Wrigley (2005) an American firm that had failed in the internationalization of its fashion brand due to having the push factors as their motivation to internationalize. The American retailer stated that internationalization was hurried before the company was ready

due to the slackening domestic demand.

This compromised on their standards through signing wholesale and franchise agreements which went against their planned strategy (Ibid). For the British firm the expansion into the international market was just the next step according to the marketing manager. Hence the pull factors motivated them to internationalize. The expansion was done before the UK firm became a leading retailer confirming the marketing manager’s assertions (Op cit). Hence the UK firm was proactive in seeking opportunities, while the American firm was reactive, and just saw the foreign opportunities as a way to solve their domestic problems.

The marketing mix is also essential to the success of the fashion brand in the international market. These are pricing, promotion, product, the positioning and place.  The product is at the centre of the fashion business. In order for the fashion firm to succeed internationally there is need for a unique product that is of good quality. The research by Ashworth, Schmidt and Pisch (2006) that looked an approach to a sustainable e-retail and online advantage in lingerie fashion marketing, looked at the factors for an online retail business to succeed.

One of the factors that was found was that the firm developed strong, credible, online brand, with the strategic focus on quality, service and delivery. The firm also continues to search for and add value to the customer. The marketing manager in the firm that had internationalized successfully stated that, “If the product is right, everything else follows. That means having a product that’s good quality, fashionable and makes the customer feel special. ” He is also emphasized on quality of the product.

Hence for a fashion firm

to succeed in the foreign market there has to be uniqueness of the product and quality as well (Moore, Wrigley and Birtswistle, 2005). The Per una product has to undergo innovation to suit the particular culture and climate that the fashion firm is operating in. Otherwise, products are deemed appropriate for foreign markets if they satisfy the “3C” criteria meaning culture, climate and customer – to be offered to foreign stores, the products must suit the individual environmental and consumer characteristics of each market (Wigley and Chiang, 2009).

Pricing

One of the pricing strategies that high fashion brands have adapted is diffusion. In this case high fashion brands produce fashion ranges at a lower price to cater to their less well off customers. Flagship stores provide the retailer with retail space opportunity to develop and adapt new business propositions, such as diffusion ranges…in order to reflect and respond to the fragmented nature of fashion consumption and the increased demand for fashion brands from the less well-off customers, many fashion houses have developed diffusion brands (Moore, Doyle and Doherty, 2010).

A manager at one of the fashion houses that were investigated by Moore, Lawrie and Hallsworth (1997) said of the diffusion line, “make the designer accessible to the middle retail market, who have money to spend, who want the brand but are not too demanding. Really, the movement into diffusion is linked to the drive for greater profits, which is linked to going public. Diffusion gives you the very best margins, so all the effort goes into effective advertising for these brands since image is what the middle market are buying into. Hence through diffusion the fashion house

is able to gain large profit margins.

Promotion

Success of a fashion brand in a foreign market has been attributed to the presentation of alluring brand image through standardised advertising imagery, retail format and similar products using international advertising (Zavrisnik, 2000). Fashion thrives on advertising. Advertising is what creates the identity and the attraction (Moore, Fernie and Burt, 2000) This is essential for the success of the brand because the information about the brand has to reach potential consumers.

The fashion brands use different strategies in advertising and promotion. For instance Per una Taiwan uses window displays, and in-store signage and product packaging. Due to the desire of the franchise holding company to keep confidentiality, they do not grant media interviews (Wigley and Chiang, 2009). In some markets such as the UK, there is the advantage of media exposure. One sales director explained that when they opened stores in Europe they only had local coverage, but when they arrived in Knightsbridge, everyone wanted to know bout them. He added, “…everyone wanted to know us and the world loved us when Princess Diana wore us! ” (Moore, 1997)

The way the fashion brand is communicated to the consumers is very important. The brand image has to be communicated to the consumer through advertising. According to Moore (1997), “like most advanced, consumer-market products, there is little functionally differentiate the fashion product, and as such fashion brand identity and differentiation is founded on the creation of a distinct ‘brand surround. This brand surround is developed through the adoption of distinctive brand name, an array of advertising image reflecting the values of the brand and the target customer group, personality endorsement, product

packaging, as well as through the promotional activities of fashion shows and print editorial. It was Coco Chanel who came up with the concept of not only selling clothes but also selling an experience (Moore, 1997). Place Another component of the marketing mix is the the place. This is the location of the fashion house.

This is usually in line with the positioning of the brand. Where the fashion house is located can have a bearing on how the brand is viewed, whether it is or it is not high-end. As one respondent stated in the research conducted by Moore (1997) on the French fashion firms in London, “In London, we could not secure a shop on Old Bond Street so we leased a site nearby. But we may as well have been on the moon. I cannot emphasise enough the importance of the address in this business. We learned to our cost the impact of getting that address wrong. This could be the difference between the success of a foreign brand in London.

LIMITATIONS

This study had some limitations. Firstly, the data in the internationalization of the fashion brand is very limited with the same scholars such as Moore and Wrigley undertaking these investigations. There is need for more research to be undertaken to fill in this gap. The fashion brands that were sampled were European or American. In the future research should be done on Asia, African and Australian fashion brands that have expanded into the international market. More literature and theories are needed to address the issues in this unique field.

CONCLUSION

In conclusion, the factors such market selection, market entrance, the marketing mix and the firm’s

motivation for entering the international market are some of the crucial factors that are necessary for a fashion brand to succeed. Investigations into fashion brands that are from countries such as Zambia and Malaysia should be done for these results to verified, so that they can be generalized and models can be formed to explain this phenomenon.