Scandinavian Sportswear A product development
Carolina Olofsson Istituto Europeo di Design 2010
The active sportswear market is forecasted to grow with 3.6 % from 2009 to 2012. The growth will mostly be driven from the demand of professional athletes and the upcoming olympic game 2012. The world price on sportswear is calculated to be fairly stable up to 2016. With this as a background the aim is to introduce a new sportswear idea in to the market. The goal is to set out a marketing plan that includes a production strategy, a geographic market and a identified client. Moreover a distribution strategy and the competitors will be defined. Last a product value and promotional strategy will be developed.
Company Scandinavian Sportswear is a Swedish company that produces sportswear for athletes. The products are distributed in Sweden and the goal is to expand the market to the other Scandinavian countries. For SSW sports is a complete lifestyle and the mission is to create sportswear clothing for every situation. Therefore you will be able to find some of the most advanced sportswear within the collections. Scandinavian sportswear consists of a small group of people with a background from the sportswear sector. The different sportswear solutions is created by the company’s own designers, some of the most creative tech-designers. The production is partly outsourced to different manufacturers that has a specialization in that field. The distribution is mainly through resellers and e-commerce directly from the company’s web site.
Products Luminary are sportswear that glows in the dark. and the garments differentiates it self from other sportswear by it’s special ability to be seen from a very long distance. The features of the sportswear will contribute to your safety when you are out sporting during the evenings. The garments are made of synthetic mixed fibers and LED electroluminescent wires that is sawn in to the fabric. Scandinavian sportswear have a product line for men and woman with a selection of:
JACKET
SHORTS
TOP
PANTS
Production To Identify the production chain the reference product, 6211, Tracksuits, ski suits, swimwear and other garments, N:E:S for men and woman (Exclu. Knitted or Crocheted) has been used. Through the database Eurostat the production opportunities for sportswear have been calculated, which is done by identifying the countries that have the largest export volume of sportswear. Since the company is situated in Sweden the focus has been on the amount of export to Sweden. The countries that have been chosen as potential partners is based on prior knowledge about the sportswear sector i.e countries which usually exports sportswear such as China, India, Korea, Thailand and Vietnam. The used data is in euros and in quantity by 100 kilos. By taking the price divided in quantity a import value from each country can be distinguish. The country with the lowest import value is the most suitable country for SSW to produce in.
Import to EU and Sweden DS-045409-EU27 Trade since 1995 by HS2, 4, 6 and CN8
DS-045409-EU27 Trade since 1995 by HS2, 4, 6 and CN8 Extracted on
2010/09/20 12:58:10
Extracted on
2010/09/20 13:02:28
PERIOD
Jan.-Dec. 2009
PERIOD
Jan.-Dec. 2009
PRODUCT
TRACKSUITS (EXCL. KNITTED OR CROCHETED)
PRODUCT
TRACKSUITS, (EXCL. KNITTED OR CROCHETED)
REPORTER
EU27
SE - SWEDEN
...
PARTNER
FLOW/INDICATORS
VALU/EUROS
VALUE/EUROS
CN CHINA
1 IMPORT
606116537
20708402
IN INDIA
1 IMPORT
69272652
1131312
KR KOREA
1 IMPORT
1385459
17496
TH THAILAND
1 IMPORT
14407834
VN VIET-NAM
1 IMPORT
40542348
...
REPORTER
EU27
SE - SWEDEN
PARTNER
FLOW/INDICATORS
Q/100KG
Q/100KG
CN CHINA
1 IMPORT
568928
14342
IN INDIA
1 IMPORT
44936
769
KR KOREA,
1 IMPORT
501
3
166959
TH THAILAND
1 IMPORT
9550
121
2161430
VN VIET-NAM
1 IMPORT
24463
1752
Import Value China - 20708402/14342=1443.9
India - 1131312/769=1471 Korea - 17496/3= 5832
Thailand - 166959/121= 1380
Vietnam - 2161430/1752 = 1233,7
The highest inflow of sportswear to the EU countries and to Sweden is from Vietnam and China. This indicates that China and Vietnam are the two main producers of sportswear and potential partners for SSW’s production. After a calculation it is shown that Vietnam has the lowest import value and therefore is the most suitable country to produce in.
Design SSW (Sweden)
Production and Production chain All of the designs are created in Sweden at the headquarter in Stockholm. After the finished design the sample is sent to the manufactory partners in Vietnam. Scandinavian sportswear do not own or operate any of the factories, instead the company has a close relationship with the factory partners and SSW is always involved in the production process. The factory partners are responsible for the whole production process from the raw material to the end garment. After the production the garment is shipped back to the headquarter in Stockholm. In Stockholm the technicians adds the Led wires to the garments and the finished product goes for packaging.
Raw material, Mixing synthetic fiber (Vietnam) The fabric (Vietnam)
Dying process
The garment (Vietnam)
Buttons Threads
Transportation(to the factory in (Sweden) LED wires ( aded in the factory in sweden) Luminary sportswear (end product
Packaging
Distribution The distribution strategy will be a selective strategy that have a smaller numbers of distributer in the market. Scandinavian sportswear will work with two distribution channels, E-commerce directly from the company’s website and through retailer that will sell directly to the end user. The focus on E-commerce is based on that Scandinavia is the most online countries in the world which makes internet a good channel for SSW to reach out to the clients. The internet sale will be directly from the homepage and the product delivers by post to the client. The two retailers that SSW will use as distributors are Intersport and Elmo sport, both of these are the largest distributors for sportswear in the Scandinavia market. By choosing two famous distribution it will be easier for SSW as a unknown brand to reach out to the client. The aim is to have direct contact with the distributors since it will give the company the opportunity to adjust the exports and combine the transport to the distributors in Scandinavia. The transportation will mainly be by boat and trucks.
Distribution channels Channel 1
Manufactory
Scandinavian Sportswear
Retailer
End user
E-commerce Channel 2
Manufactory
Scandinavian Sportswear
End user
Product Market The market selection has first been made by considering the nearest market to the company in other words the Scandinavian market. This market has been selected due to that SSW are a small and new company with a lower budget. Therefore it’s is more economical to enter a market that is close to the company geographically and that has a more similar economic and consumer culture. The three countries that has been considerate is Denmark, Finland and Norway and the evaluation is to determine which market that is the most suitable to enter. Through the two databases Eurostat and Cia the amount of import from Sweden to the three countries have been calculated. Furthermore the chosen countries economical situation in their respective market has been evaluated. Withe the calculated data and withe help of the BER analysis one country has been identified as the most suitable market for SSW products.
DS-045409-EU27 Trade since 1995 by HS2, 4, 6 and CN8
DS-045409-EU27 Trade since 1995 by HS2, 4, 6 and CN8
Extracted on
2010/09/20 13:18:19
Extracted on
2010/09/20 13:21:04
PERIOD
Jan.-Dec. 2009
PERIOD
Jan.-Dec. 2009
PRODUCT
TRACKSUITS (EXCL. KNITTED OR CROCHETED)
PRODUCT
TRACKSUITS, (EXCL. KNITTED OR CROCHET
... PARTNER
REPORTER
SE - SWEDEN
FLOW/INDICATORS
VALUE_IN_EUROS
... PARTNER
REPORTER
SE - SWEDEN
FLOW/INDICATORS QUANTITY_IN_100KG
DK DENMARK
2 EXPORT
3365811
DK DENMARK
2 EXPORT
921
FI FINLAND
2 EXPORT
6626717
FI FINLAND
2 EXPORT
2170
NO NORWAY
2 EXPORT
3498409
NO NORWAY
2 EXPORT
1276
Export value: Denmark - 3365811/921= 3654.5
Finland - 66267171/2170 =3053.8
Norway - 3498409/1276 = 2741.7
The country that Sweden has the highest outflow to is Finland that imports twice as much sportswear from Sweden than Norway and Denmark does. Denmark is the country that has the highest import value.
BER
FINLAND
DENMAR
NORWAY
MACROECONOMICS ENVIRONMENT GDP PPP
$34,100 (1)
$36.000 (3)
$57.400 (10)
GDP real growth rate
-8.1% (1)
-4.7 (5)
-1.5% (10)
Inflation rate
0% (10)
1.3% (4)
2.1% (1)
Total Macroeconomic
12
12
21
Value of import from Sweden
3053.8 (4)
3654.5 (10)
2741.7 (1)
Potential costumer by age 16-64
66.8% (10)
65.8% (1)
66.2% (5)
Numbers of internet users
4.383 (5)
4.597 (10)
3.935 (1)
Total Market opportunities
19
21
7
VAT (taxes)
18 (10)
25 (1)
25(1)
Total market barriers
10
1
1
Total
41
34
29
MARKET OPPORTUNITIES
MARKET BARRIERS
The business environment ranking indicates that the Finnish market is the most suitable market for SSW to enter.
Finland is a free market that is highly industrialized and the income in the country is one of the highest in Western Europe. Within EU ,Finland has been one of the best performing countries due to that their economical market has avoided most of the global financial crisis. The country is seen to be a promising sportswear market, ranked 16th in the outwear consummation within the EU. The total clothing market grew by 14 % in the period 2005 to 2009 and the Finnish consumers are very positive towards clothing products. However some experts forecasts a lower growth in clothing expenditure in the nearest future 2010-2012, but there will still be opportunities in the market. The Finnish clothing production industry is among the smallest one in the EU and the manufacturing companies were less than 1% of the labor forces in Finland. The production of clothing that is in the country is specialized in designs for the cold northern weather.The low amount of clothing production and the rising demand for garments indicates that Finland has a need to import clothing /sportswear to it’s market.
Consumer analysis
DEMOGRAPHIC INDICATORS The population in Finland is increasing at a steady rate and the country has 5.35 million inhabitants where 66.8% is between the age 15-64. The urbanization in in the country is 63 % and they have the highest number of single-person households in comparison to all other industrialized countries. The population is also the most online ones in the the world with more mobile phones and internet connection per capita then any other country. PURCHASE POWER The Finnish purchasing power GDP (PPP) has had a positive percentage change the latest year and rose with 7.93% 2006 7.36% 2007 and 2.96% 2008. An exception is for 2009 when GDP declined by -5.12 %. The latest decline in GDP has not yet effected the consumption sector and the consumption rate per head is still high. The average household consumption were 20.000 euro 2009 where the purchases of food declined and purchases of transportation and clothing grew. ATTITUDES TOWARDS FASHION The Finnish consumer mainly values four things in their choice of garments, price, quality, trends and the resistance to weather changes and in the latest year the consumer in Finland has become more price conscious. The indication is based on the fact that more people choose their purchases in clothing on a discounted rate. Another trend is that the consumers also tend to be more quality driven than fashion and brand conscious. SPORTS CULTURE Finland is one the leading countries in Europe for physical activity and 64% of woman and 60% of men are engaged in physical activities and sports at least twice a week. Sports activities are organized mainly by sports club and over 20 % of the population are members of a sport club.
THE IDEAL CONSUMER FOR LUMINARY SPORTSWEAR Need or solution For everyday life during physical activities
The production solution Quality design Technical design Modern design Avant grande design
Groups of buyers High disposable income Technological interest An active life style High product knowledge Single buyer Men and Woman
MATCHING TARGET CONSUMER WITH THE FINNISH CONSUMER Examining the similarities between the consumer analysis and the ideal consumer, it is noticeed that Finland is in high need of major garment solutions matching their active lifestyle in the cities. The Finnish consumer mostly goes for price and quality and has a relatively high income. Furthermore the majority of the Finnish population has a good knowledge when talking about garments and technology. With the above mentioned, it can conclude that their active lifestyle, consumer needs and technical knowledge of the Finnish population is coherent with that of SSW’s ideal consumer.
COMPETITOR Based on the Eurostat data it is possible to define that the main importers of sportswear to Finland is China and Germany which makes them the priority competitors to SSW. Form the calculated value (price divided in quantity) it’s clear that Germany has a higher import value than China which means that sportswear products from Germany will be more expensive in the Finnish market than sportswear products from China The higher value of the German imports indicates that companies situated in Germany produces sportswear that is soled to a higher price with higher quality and specialization. This gives the german companies an external competitive advantage The lower value for imports from China indicates that sportswear companies from China have a internal competitive advantage in producing sportswear. and they sell to a lower price, with a lower quality and specializations. Import of of sportswear to Finland DS-045409-EU27 Trade since 1995 by HS2, 4, 6 and CN8
DS-045409-EU27 Trade since 1995 by HS2, 4, 6 and CN8
Extracted on
2010/09/27 13:42:00
PERIOD
Jan.-Dec. 2009
PRODUCT
TRACKSUITS, (EXCL. KNITTED OR CROCHETED)
...
REPORTER
FI - FINLAND
PARTNER
FLOW/INDICATORS
VALUE/EUROS
CN CHINA
IMPORT
9227128
DE GERMANY
IMPORT
1741175
FR FRANCE
IMPORT
293268
IN INDIA
IMPORT
306741
IT ITALY
IMPORT
778763
KR KOREA
IMPORT
2704
TH THAILAND
IMPORT
136305
VN VIET-NAM
IMPORT
80374
China
9227128/2561
3602
Germany
1741175/456
3818
Extracted on
2010/09/29 03:49:40
PERIOD
Jan.-Dec. 2009
PRODUCT
TRACK-SUITS, (KNITTED OR CROCHETED
... PARTNER
REPORTER
FI - FINLAND
FLOW/INDICATORS QUANTITY_IN_100KG
CN CHINA
IMPORT
2561
DE GERMANY
IMPORT
456
MARKET DIFFERENTIATION To meet the competitors the goal is to have an external advantage on the market, this means that SSW have to focusing on quality and on differentiating the product from its competitors. The differentiation lies in the unique design and technical solution with the LED-lights that is added to the garments. This will higher the product value for the clients and give the company the opportunity to set a higher price on its product. With an external advantage SSW will have the German companies as the closest competitor and they will also be the companies that SSW will be closest to in price. Scandinavian Sportswear will defend its market share on the Finnish market by having a technological innovation in the products and by presenting a completely new design.
PRICE DEFINITION Sportswear of scandinavia is a brand that has a very differentiated product which decreases the number of close competitors and it gives the company more market power. The Luminary sportswear will have a relatively high production cost since it has different production steps and location, special technique and transportation costs from the manufacturer to the distributer. Finland is a market with a high income which gives the clients the ability to pay a little higher price for more quality and functionality The mentioned properties of the product, the production, the market and the competitors pushes SSW to set a higher market prices. The price strategy will be a skimming strategy., which means that the company mainly is reaching out to a client that are willing to pay a higher price for the higher perceived value of the product.The estimated price has been developed after a calculation of the price from the closest competitor. The reference company in the German market is Puma from where an average product price per unit has been calculated. Price position
Competitors Germany (Puma)
Competitors China
Scandinavian Sportswear High
Low
Medium/low
€60
Medium/High €70
High €80
Promotion Scandinavian sportswear is an unknown brand in the Finnish market and therefore the most important is to position the brand on the market, establish a product identity and build customer loyalty. The aim for the promotion is to describe the features of the product to differentiate it from the competitors. This will be done by focusing the promotion budget on web advertisement, promoting in magazines and promotion direct to the distributors. The web advertisement will spread the brand name and make the consumers aware of the brand as a purchasing alternative. The ads will be on the internet since it is a good promotion forum due to that the company focusing on E-commerce. Advertising on the web is also more suitable for SSW’s budget. The placing of the ads will be on sports community forums and homepage for different sports clubs. The promotion in magazines will be focused on Veikkaaja, Finland’s biggest sport magazine.The magazine forum is suitable for the product because it reaches out to a audience that has more knowledge about sports and sportswear. Promotion in a sport magazine will give SSW the opportunity to explain the technical solution and how it will contribute to an active lifestyle. The promotion activities towards the distributor will be designed after the push strategy where SSW will put most of the effort on the distribution channel. The focus on the distributors will stimulate the retailer to put more focus on SSW’s product which hopefully will increase the sales. Promotion Budget Web advertisement
Magazines
Distribution
Total
€26.400 (ad cost/month €2.200
€15.000 (ad cost 2.500 ad)
€33.240 (salary promoter year)
€74.460
35%
20%
45%
100%
SWOT Weaknesses
Strengths SSWʼs technological skills with the LED design
A small and new company A new customer relationship
Innovative and new design is depended on its technology the LED High product quality A higher production cost A smaller production volume Depending on partnership Have found a free spot in the sportswear market ( tech-sportswear)
Depending on external distribution channels
Internal
Opportunities The consumer that finds the product will most likely be loyal to the company since it satisfy a need. Have a big potantial to grow globaly can extend the rang of products A flexible distribution channel (E-commerce)
Threats Sportswear is price sensitive and can be outrival by lower price Companies that have a stable spot on the market Other actors will start to produce the same product The customer finds substitutes and or din’t feel a need for the product A small geographic market
External
PROFIT AND LOSS Financial
Year 2011
Total revenue from sales +VAT
€1.883.200
VAT 18%
€338.976
Total Revenue
€1.544.224
Cost Distribution
€282.480
Promotion
€74.460
Total cost
€356940
Profit
€1.187.284
Total revenue: 20 percent of the Finnish population (5.35 million) is engaged in sports clubs and can therefore be potential consumers. From the competitor analysis we know that there are at lest 8 others actors on the market that will be our competitors. If we split the potential market between SSW and the competitors SSW will get 2.2 percentage of the market share. This will give the company a potential consumers number on 23 540 people. Distribution: The distributer get 15% of sell
MARKETING PLAN The aim is to entering the Finnish sportswear market with a new and innovated product; Luminary sportswear The ideal client for the product is a person that lives an active life style, has a high product knowledge and values function and quality. The distribution strategy is a selective strategy that focuses on limited number of distributers and e-commerce The competitors is mainly companies from China and Germany exporting to Finland. SSW meets the competitors with a external advantage on the market which comes from the unique design and technical solution. The price strategy is the skimming strategy and the products will have a average price of â‚Ź80. The promotion strategy is the push strategy focusing on three promotion channels web advertisement, magazines and promotion towards the distributers. From the profit and loss analysis the new market entry can go wit a positive profit