The assignment is a marketing plan for a company expanding into a new host country. The Daily Edited is an Australian premium fashion brand which makes bags for men and women to serve both official and professional purposes. The paper is set against the backdrop of the company entering the market of the UAE. The entire paper is divided into three sections to be able to study the entry of TDE in the market of UAE. The first section deals with competitor identification, the second section deals with cultural profile of the people of the UAE while third third section studies their predisposition about products. This is followed by recommendations for the company to enter the market of the UAE.
Competitors of TDE:
The market of the United Arab Emirates is a highly competitive with presence of several multinational premium bag-manufacturing companies. The main competitors of The Daily Edited(TDE) in the market of the UAE are Lacoste from France, Swedish fashion bag maker, H&M, Nike, Adidas and the Spanish bag maker Mango. (Thedailyedited.com. 2017).
Competitive factors:
The following are the competitive factors that are functional in the market of the United Arab Emirates:
Nature of the market:
The fashion market of the UAE is characterised by increasing demands for combination of western and modern Islamic style dressing. The country is experiencing increase in ecommerce purchases of premium fashion articles like bags among women(Bodenstein, Erceg and Guerrieri 2017).
Demand for the product:
The increase in knowledge and acceptance of premium fashionable bags in the UAE has led to increase in the demand for fashionable bags. TDE can enter the market of UAE with its premium fashion bags for women and take advantage of this increase in demand. The company would be able to offer modern bags to the fashion conscious female consumers of the UAE and earn huge profits (Fuchs et al. 2013).
Market Characteristics:
The following are the characteristics of the market of the UAE, which would impact TDE in the country:
Higher disposable income:
The people of the UAE are experiencing increase in income of around five percent in spite falling prices of oil. The GDP of the UAE as shown in the graph below is USD 357.949 billion in the year 2015 and USD 348.743 in the year 2016. This analysis shows that the people of the UAE have more disposable income to buy premium fashionable bags.
Increase in demands for fashionable articles:
The market of the UAE is experiencing increase in demand for fashionable articles due to rise per capita income and exposure to western culture. These two factors have led to the consumers demanding more premium fashion brands like Lacoste. This is evident by the entry and strong presence of international fashion brands in the market of the UAE(Kostøl and Mogstad 2015).
Size of the market:
The size of the market for Islamic style fashion clothing in the country is expected to be worth $ 484 billion by 2019(Nazeer 2017). This trend of fast growth in the size of the fashion market of the UAE shows that international brands like TDE can enter the market and cater to its consumer base to earn high revenue (Limaye 2016).
A very important growth trend in the fashion market of the United Arab Emirates is that the consumers are increasingly spending to purchase fashionable goods like premium women’s bags. Dubai has emerged as an important fashion market where buyers from all world spend buying premium fashionable items (Dalén et al. 2015).
The fashion brands from all round the world are strengthening their presences both offline buy opening stores and by offering premium products on the ecommerce platform. This trend has led to the growth of business and turnover of the premium brands.
The designers today position their premium fashion products in the market of UAE by offering variety of fashion products to achieve product differentiation. They are bringing about innovation in their product lines and applying niche marketing to cater to specified needs of the rich upper class consumers. This market trend has led to more international brands acquiring cultural intelligence to adapt their offerings to the taste of the local people.
Conclusion:
The above discussion shows that the market of the UAE would be profitable for TDE. The brand must enter the market of the country and offer the women consumers with fashionable premium bags. Its products would receive great acceptance in the market owing to acceptance of western culture among the people. The following recommendations can be made to the company:
Islam has a great influence on the culture and dressing pattern of the UAE people. Exposure and acceptance of western culture have laid to the Muslim fuse their own traditional wear with western dressing pattern. This aspect of the culture of the people of the UAE has led to the entry of several western fashion brands into the market of the country (state.gov. 2017).
The United Arab Emirates is a collectivist society and manifest close long-term commitment to family and extended family. The society of the UAE fosters strong relationship among the members of a group (hofstede-insights.com 2017).
The culture and values of the UAE has a profound impact on the purchase decision of the consumers. The purchase decisions of the people are greatly impacted by their culture and values. These two factors have stronger effect while choosing clothes and accessories largely. The women in the country prefer to wear hijaab and abaya as their dresses. The acceptance of western culture has led to the women fusing the western wear along with their traditional Muslim wear. They generally avoid purchasing and wearing short dresses that is common in the western countries. This shows that the culture and values have strong impact on the purchase decision of the women in the UAE.
The following table shows the differences between the culture of Australia and the UAE:
|
Australian Culture |
The UAE’s culture |
|
1. The Australian culture shows low power distance on the Hofstede’s cultural index. This shows the superiors and subordinates share information and the relationship is more informal, direct and participative |
The culture of the UAE shows higher index of power distance and authority is centralised. |
|
2. The Australian culture is highly individualistic. |
The culture of the UAE is collectivist and low on individualistic score. |
|
3. The society in Australia is highly masculine society and is extremely competitive (hofstede-insights.com 2017). |
The UAE is neither masculine nor feminine. |
The success of a product in a foreign market depends largely on consumer attitude and their opinion towards the country of origin. There are various factors like country of origin, consumer ethnocentrism and consumer affinity which TDE needs to consider while entering the market of the UAE. These factors are described as under:
The country of origin has a very deep impact on the consumer predisposition and they decide whether to consume a product depends on its country of origin. The UAE has a high population of Europeans, Asians, Americans and Australian. This demographical trend shows that the premium branded bags from Australia would get ready acceptance in the market
The consumer demographic trends in the UAE show that the nation has a huge population of Asians, Africans, Europeans and Australians. This ethnocentric culture of the market has encouraged consumer ethnocentrism where products from foreign countries find high level of acceptance. This analysis shows that the Australian premium brands of women’s bags, TDE should enter the market of the UAE and offer its products to a huge women consumer base.
Consumer animosity refers to hatred for goods from one country among the consumers of another due to political enmity between the two countries. Consumer animosity acts a hindrance to flow of goods between two countries, which prevent the multinational companies from entering the countries. The market of the United Arab Emirates already experience presence of a large number of fashion brands from Europe and America. This shows that the TDE should enter the economy and will not face consumer animosity.
Consumer disidentification refers to the disregard among consumers towards products made in their own country. The consumers of the UAE enjoy consuming both domestic and foreign products. This shows that there is no consumer disidentification in the market of the UAE and the local brands enjoy strong presence in the market. This demand for both local and foreign products have encouraged thriving of both local and foreign brands which has made the market of the UAE very competitive.
Consumer affinity refers to the bond consumers develop and sustain towards a brand. The presence of large number of foreign brands show the affinity consumers have for foreign brands. This analysis shows that TDE must enter the markets of the UAE and offer premium bags to the female customers and yield high revenue.
References:
Bodenstein, M., Erceg, C.J. and Guerrieri, L., 2017. The effects of foreign shocks when interest rates are at zero. Canadian Journal of Economics/Revue canadienne d’économique, 50(3), pp.660-684.
Link: scholar.google.com/citations?user=OGjC0H0AAAAJ&hl=en
Dalén, M., Ivert, T., Holzmann, M.J. and Sartipy, U., 2015. Household disposable income and long-term survival after cardiac surgery: a Swedish Nationwide Cohort Study in 100,534 patients. Journal of the American College of Cardiology, 66(17), pp.1888-1897.
Link: https://www.ncbi.nlm.nih.gov/pubmed/26493661
Data.worldbank.org. 2017. United Arab Emirates | Data. [online] Available at: https://data.worldbank.org/country/united-arab-emirates?view=chart [Accessed 15 Sep. 2017]. Nazeer, T. 2017. UAE Fashion: A Lucrative Industry For The Business World – Forbes Middle East. [online] Forbes Middle East. Available at: https://www.forbesmiddleeast.com/en/uae-fashion-a-lucrative-industry-for-the-business-world/ [Accessed 15 Sep. 2017].
Dosi, G., Grazzi, M. and Moschella, D., 2017. What do firms know? What do they produce? A new look at the relationship between patenting profiles and patterns of product diversification. Small Business Economics, 48(2), pp.413-429.
Link: https://ideas.repec.org/e/pdo10.html
Fuchs, C., Prandelli, E., Schreier, M. and Dahl, D.W., 2013. All that is users might not be gold: How labeling products as user designed backfires in the context of luxury fashion brands. Journal of Marketing, 77(5), pp.75-91.
Link: https://books.google.co.in/books?isbn=1137601590
Hofstede Insights. 2017. Country Comparison – Hofstede Insights. [online] Available at: https://www.hofstede-insights.com/country-comparison/australia/ [Accessed 9 Oct. 2017].
Kostøl, A.R. and Mogstad, M., 2015. Earnings, Disposable Income, and Consumption of Allowed and Rejected Disability Insurance Applicants. The American Economic Review, 105(5), pp.137-141.
Link: https://www.researchgate.net/publication/276452787_Earnings_Disposable_Income_and_Consumption_of_Allowed_and_Rejected_Disability_Insurance_Applicants
Limaye, A.R., 2016. The Impact of Implied Volatility Index (VIX) and Disposable Income on Real Estate Investment Trust (REITS) (Doctoral dissertation).
Link: https://repositories.tdl.org/tamiu-ir/handle/2152.4/75
Mayer, M.C., Stadler, C. and Hautz, J., 2015. The relationship between product and international diversification: The role of experience. Strategic Management Journal, 36(10), pp.1458-1468.
Link: https://is.muni.cz/el/1423/jaro2016/HMV424/um/Nelson_a_Winter__2002__Evolutionary_theorizing_in_economics.pdf
state.gov. (2017). United Arab Emirates. [online] Available at: https://www.state.gov/documents/organization/171747.pdf [Accessed 9 Oct. 2017].
Thedailyedited.com. 2017. Journal. [online] Available at: https://www.thedailyedited.com/journal#/page/1 [Accessed 15 Sep. 2017].
Yang, Y., Cao, Y. and Yang, L.T.G., 2017. Product diversification and property performance in the urban lodging market: The relationship and its moderators. Tourism Management, 59, pp.363-375.
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