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Victoria's Secret South Korean Market Entry Strategy
- 1. SOUTH KOREAN MARKET ENTRY STRATEGY VICTORIA’S SECRET
- 2. VICTORIA’S SECRET SUMMER 2013 ADVERTISEMENT
- 3. WHAT IS OUR BUSINESS?
- 4. COMPANY BACKGROUND • Established in 1977 By Roy Raymond • Purchased by Limited Brands in 1983 – Also own Bath and Body Works, Henri Bendel and La Senza – Well established internationally with a presence in 80 countries • VS primarily sells lingerie and intimate apparel but has expanded • VS has over 1000 stores nationally and has a presence in Canada and the United Kingdom
- 5. GLOBAL MISSION STATEMENT “Limited Brands is committed to building a family of the world's best fashion brands offering captivating customer experiences that drive long-term loyalty and deliver sustained growth for our shareholders.”
- 6. CORE GLOBAL COMPETENCIES “At Limited Brands, we are guided in our work and our interactions with others by four core principles – our values: Customer rules, passion leads to success, inclusion makes us stronger, and it matters how we play the game.”
- 7. WHERE ARE WE NOW?
- 8. SWOT ANALYSIS Strengths: • Strong brand presence and recognition • Well established nationally • Strong marketing mediums on various platforms (online, TV, Catalogs, Fashion show) • Many mediums of shopping (online, store and catalog) • Product diversification – many collections • International presence • Large customer bases targeting large demographic • Victoria Secret annual fashion show • World famous models • Reasonable pricing and good quality • Socially responsible company • Financial Stability • Success of “Pink” Sub brand
- 9. SWOT ANALYSIS Weaknesses: • Negative body image publicity • High marketing costs • Limited international presence • Working conditions in factories located in developing countries • Fake products • Only appeals to women
- 10. SWOT ANALYSIS Opportunities: • Further expansion internationally • Potential for other acquisitions such as La Senza • Possible reward system promotion plan • Develop a stronger international customer base through online shopping • Focus more health body image campaigns – plus size campaigns • Expand into a higher end market • Digital dressing rooms
- 11. SWOT ANALYSIS Threats: • Negative publicity – Criticism for negative body image promotion • Cheaper competitive products • Fake products from China • Labor costs increasing • Increase in new lingerie companies • Economic instability
- 12. ENVIRONMENTAL SCAN Social: • Women beginning to have more rights • Wealthy women • Large urban areas • Hierarchical society • Collectivistic • Feminine Society • High Uncertainty Avoidance • Long term orientation
- 13. ENVIRONMENTAL SCAN Economic: • Macro -> High level of economic growth – US 7th largest trading partner • Micro -> increase in spending – Women have the buying power • Average cost of spending
- 15. ENVIRONMENTAL SCAN Competitive: • Shin Young Wacoal Inc. • Nam Yeung • Good People
- 16. ENVIRONMENTAL SCAN Political & Regulatory: • US Free Trade Agreement (KORUS FTA) with product manufacturing • Work conditions of manufacturing facilities • US ties are based on common values of democracy, human rights, and the rule of law • South Korea vs. North Korea
- 17. ENVIRONMENTAL SCAN Natural: • Natural Hazards • Air pollution in large cities • Water pollution – International agreements • Ozone Layer Protections
- 19. PLAN OBJECTIVES Financial Goals: • Annual sales of $1.7 million per year per location • Increase South Korean market share in the lingerie industry • High Return on income Non-Financial Goals: • Continue to develop products that are in accordance to the mission and vision statement • Establish a larger presence in the Asian starting with South Korea • Develop more beauty products • Continue exploration of new products • Introduce innovative technology • Maintain high ethical standards for production
- 20. TARGET MARKET
- 21. MARKET NEEDS • Korean buyers are looking for reputable brand names (Banana Republic, Coach, DKNY) • Second brands by prestige brands (Marc by Marc Jacobs • Easy, quick access to goods and services online
- 22. GLOABAL BUYER BEHAVIOR • Household finances managed by wives • Changing social mores involving women and labor participation • Lingerie as outerwear, as well as functional purposes • Fashion trends such animal print, and see through top
- 23. GLOBAL INDUSTRY ANALYSIS • Apparel and cosmetic markets dominated by large department store conglomerates • Success of large high-end fashion companies • Strong American brand recognition • Home-shopping (online and television) surging popularity
- 25. WHERE DO WE WANT TO GO?
- 27. POINTS OF DIFFERENCE Product Features Advantages Benefits Victoria’s Secret Lingerie • Many lingerie options • Extensive online store • Custom fit advice services • Less time searching for product • Ability to shop from home • Buy correct size more often • Savings in time • Savings in Time • Savings in Time and $ Shin Young Wacoal Lingerie • Extensive style options • Lower cost hyper- market options • One stop shop for desired styles • Products accessible to average consumer • Savings in Time •Savings in $ Nam Yeung Vivien Corp • Extensive online store • Wide age range appeal • Lower cost hyper- market options • Ability to shop from home • Family shopping • Products accessible to average consumer • Savings in Time • Savings in Time • Savings in $
- 29. HOW DO WE GO THERE?
- 30. MARKETING MIX Product: • Some of our collections include: – Pink – Angels by Victoria’s Secret – Very Sexy – Body
- 31. MARKETING MIX Product: • Bras • Panties • Sleepwear • Swimwear • Sportswear • Clothing • Shoes • Beauty Products
- 32. MARKETING MIX Price: • Keep the price higher than its competitors • Prices based on value – Imported product – High quality, high fashion – Victoria’s Secret brand name
- 33. MARKETING MIX Price: • Similar target market and product perception • Greatest brand power in South Korea lingerie market
- 34. MARKETING MIX Price: • Large range of prices • Victoria’s Secret brand name • High quality = high fashion = high value
- 35. MARKETING MIX Promotion: • Due to popularity of blogs and internet, promote on: – Me2day – Daum Blogs – Egloos – Blogin – Tistory
- 36. MARKETING MIX Publicity: • K-Pop spokes person/Music video • Addition of South Korean Victoria’s Secret Angel
- 37. MARKETING MIX Promotion: • Magazines: – Marie Claire, Cosmopolitan, Elle, High Cut, Instyle magazines
- 38. MARKETING MIX Example of Advertising Etiquette:
- 39. MARKETING MIX PR: • Grand opening • Organize small fashion show in mall • Celebrity event
- 40. MARKETING MIX
- 41. MARKETING MIX Positioning: Low cost Low Quality High Cost High Quality
- 42. TEST MARKET • Test for: – A Limited Time: 1 Month – In a Limited Place: Shinsegae Main Store, Seoul
- 43. MARKETING MIX Place: • Franchise locations at Shinsegae malls (charges royalty fee of 15-30% on commission) • VS franchise locations generate about $1.7 million per store, per year • In South Korea, location determines brand reputation
- 44. MARKETING MIX Place: • Differentiate through use of digital channels • Adapt to high-tech South Korean market • Virtual dressing rooms provides market buzz
- 45. MARKETING MIX Place: • US-South Korea Free Trade Agreement • Duties on apparel related items of 8% • Common trade language • New shipping arrangements for our products
- 46. Virtual Dressing Room Video Demonstration Robina Town Center, Australia
- 47. IMPLEMENTATION
- 48. RESOURCES REQUIRED • Production: – Increase current production taking into account popular products for Korean markets • Human: – Wages for production, distribution, sales, PR, management, advertisers • Operation: – Fixed costs related to rent, store display units and furniture, energy, cleaning, and utilities • Other: – Accounting, communication , administrative, and legal costs (associated with intellectual property)
- 49. ACTION, TIMING, AND RESPONSIBILITY Gantt Chart
- 50. BUDGETING Cost (as a percent of co. revenue) X Average Victoria’s Secret Intl. Franchise Revenue* = Estimated Budget for Each Cost Category Profit 6.8% X $1,700,000 = $115,600 Wages 8.4% X $1,700,000 = $142,800 Purchases 62.5% X $1,700,000 = $1,062,500 Depreciation 2% X $1,700,000 = $34,000 Marketing/A dvertising 15%* X $1,700,000 = $255,000 Rent & Utilities 5.3% X $1,700,000 = $90,100 Total 100% X $1,700,000 = $1,700,000 *Calculations based on single store costs for 1,000 sq.ft. sales space *Data provided by IBISWorld, with adjustment for advertising budget
- 51. ORGANIZATION CHART Leslie H. Wexner Chief Executive Officer, Chairman of the Board of Limited Brands, Inc. Martyn R. Redgrave Executive Vice President, Chief Administrative Officer, Senior Advisor of Limited Brands, Inc. Stuart B. Burgdoerfer Executive Vice President, Chief Financial Officer of Limited Brands, Inc. Jane L. Ramsey Executive Vice President, Human Resources of Limited Brands, Inc. Douglas L. Williams Executive Vice President, General Counsel of Limited Brands, Inc. Charles C. McGuigan Chief Operating Officer, Division Officer of Limited Brands, Inc. Sharen Jester Turney Chief Executive Officer and President of Victoria's Secret Megabrand and Intimate Apparel Nicholas P.M. Coe President and Chief Executive Officer of Bath & Body Works
- 53. Data to Monitor Marketing Dashboard • Monitor: • Weekly Data(ST) • Quarterly Data(LT) In the US
- 54. MARKETING MIX MODIFICATIONS • Product – Standardization • Price – Discount coupons and promotions • Place – Cheongdam-dong – Apgujeong-dong • Promotion – Public’s reaction on forums – Pink product line