Market Research
Exporting Izi-Fes to Berlin, Germany
Programme:
IBMS
Date:
22/03/2013
Term:
7
Class:
IBMS 2
Project members:
Silvana Cepesi
Manuela Gomes
Deanira Job
Patience Nesiagho
Faradun Noorzai
Heilyn Sosa
Octavian Stanescu
Letter of authorization
IZI-FES B.V.
Postbus 34017
3005 GA Rotterdam
The Netherlands
04.02.2012
To whom it may concern:
We the undersigned, hereby authorize Sosa and Associates™ to act on our behalf in all
manners relating to development of an Export Plan to Berlin, including signing of all
documents relating to these matters. Any and all acts carried out by Sosa and Associates™
on our behalf shall have the same effect as acts of our own.
This authorization is valid until further written notice from Izi-Fes™.
Sincerely,
Zakaria Elkhanza
Table of contents
Letter of authorization ............................................................................................................. I
Table of contents ................................................................................................................... II
List of illustrations ................................................................................................................. IV
Executive summary ............................................................................................................... V
History ................................................................................................................................... 1
The company ..................................................................................................................... 1
Fashion Capital Berlin ........................................................................................................ 2
The research objective .......................................................................................................... 3
Aims of the research .......................................................................................................... 3
Introduction ........................................................................................................................... 4
Literature review .................................................................................................................... 5
Methodology .......................................................................................................................... 8
Research Objective 1 – Market potential............................................................................ 8
Literature review ............................................................................................................. 8
Methodology................................................................................................................... 9
Research objective 2 – Macro environment ......................................................................11
Research objective 3 - Competition ..................................................................................13
Research objective 4 – Entry mode ..................................................................................14
Research objective 5 – Marketing strategy .......................................................................15
Questionnaire .......................................................................................................................18
Sample plan and size ...........................................................................................................19
The findings..........................................................................................................................22
Research objective 1 – Market potential ...........................................................................22
Limitations .....................................................................................................................23
Conclusion ....................................................................................................................23
Research objective 2 – Macro environment ......................................................................24
Cultural Aspect ..............................................................................................................24
Pestel analysis ..............................................................................................................25
Conclusion ....................................................................................................................31
Research objective 3 - Competition ..................................................................................32
Research objective 4 – Entry mode ..................................................................................34
Indirect export ...............................................................................................................34
Direct exporting .............................................................................................................34
II
Sosa and Associates™
Entry Barriers ................................................................................................................35
Conclusion ....................................................................................................................37
Research objective 5 – Market strategy ............................................................................39
Conclusion ...........................................................................................................................40
Appendices ..........................................................................................................................42
1. Expert opinion ...............................................................................................................42
2. Questionnaire English ...................................................................................................44
3. Questionnaire German ..................................................................................................46
Resources ............................................................................................................................48
III
Sosa and Associates™
List of illustrations
Page 1 .......................................Izi-Fes logo.
Page 1 .......................................Kilims used to make Izi-Fes boots.
Page 7 .......................................Google map of the Friedrichstrasse.
Page 7 .......................................Google street view of the Friedrichstrasse.
Page 10 .....................................A questionnaire.
Page 17 .....................................The four Ps.
Page 19 .....................................Boroughs of Berlin.
Page 20 .....................................Population of Berlin’s boroughs.
Page 21 .....................................Sample size / Confidence interval graph.
Page 22 .....................................Pie chart of interviewees’ usual average spending on boots.
Page 23 .....................................Pie chart of at what prices interviewees are willing to purchase boots.
Page 24 .....................................Hofstede’s dimensions chart of the Netherlands and Germany.
Page 25 .....................................Table of Germany’s population’s origin.
Page 31 .....................................The Voo store.
Page 33 .....................................KaDeWe Berlin logo
Page 33 .....................................Quartier Berlin Departmentstore
Page 33 .....................................Galerie Kaufhof
IV
Sosa and Associates™
Executive summary
Sosa & Associates have carried out a PESTEL analysis to analyze the possible internal and external
environment of Izi-Fes, including Political, Economic, Social, Technological and Legal factors of Berlin
market on a whole, and the impact these factors will have on Izi-Fes Export Plan.
The result of our research shows it is crucial to have similar working hours with the ones already
applicable in Berlin: 8hrs a day. Moreover we should consider the code of conducts to help improve
the working environment Izi-Fes has to guarantee that the social standards are kept when purchasing
the materials used in their production line. For the Germans this is a very important matter, not only
prices are important but also human rights. One code that is in the interest of Izi-Fes is retail trade,
which stands for a better working environment between suppliers in foreign countries.
Important factors to have in mind of the economic environment.
The interest rates stand at 1%, below 2% the price stability will be kept. With low interest we can have
a high demand. Before further conclusion can be made an economic analysis should be done. In order
to have a full financial plan for Izi Fes
Due to the fact that government adds and changes laws and regulations constantly, Izi-Fes have to
keep a constant look out on the legal factors.
Because the boots of Izi-Fes are produced in Morocco and then exported to Berlin.
But since both countries are part of the single European market, no custom fees will have to be paid;
this is a cost-reduction advantage.
Before starting to export Izi-Fes needs to register in Berlin for single tax reference number, regardless
if they are establishing or not a local company. This registration is important for all applicable taxes but
specially for the Vat. Once the registration is done it will take 3 weeks to get the tax number, and only
after obtaining this Izi-Fes can begin exporting to Berlin.
Based on our research into marketing potential in Berlin for Izi-Fes, we would conclude that there is
definitely a possibility for success for the brand. In the Netherlands we have seen the same rise to
bohemian and boho-chic fashion, and Izi-Fes has been able to seize the opportunity of being the first
high end brand to market a high quality and also relatively higher priced fashionable boot.
There is a large potential market of women between the ages of 18 and 35, and Berlin has seen a rise
of economic welfare. This together with the rise of bohemian fashion, as could have been seen during
the fashion week in Berlin, can lead to great successes for Izi- Fes.Especially now, when there is not
yet a brand to which they could be compared.
Entering the Berlin fashion market will face competition with many well-known brands and stores
selling those brands, particularly department stores. Other than that Berlin has many retail store and
small boutique stores. Most of those boutiques stores are owned by young fashion designers. Izi-Fes
has a unique selling point on allot of their competitors. Handmade in a durable way from carpets from
Morocco. Give these boots an environmental friendly image, next to the fact that is fashionable.
Especially with the bohemian fashion trend. This last part will distinguish Izi-Fes with other shoe
brands.
The best mode for Izi-Fes to enter in the Berlin fashion market is by direct export.
Hand made in Morocco and exporting to Germany is the best suitable way. Having a strong hold on
their own distribution that way, they avoid irregularities on protecting trademarks, patents and goodwill.
By opening as an in-shop shop Izi-Fes can reach easily to reach their desired target group without
allot of effort in comparison with opening a store in Berlin.
V
Sosa and Associates™
History
The company
Izi-Fes is a Dutch-based company who deals with manufacturing and
retailing fashion boots intended for the high-end of the market. The
company was launched on 11.11.2011 in Rotterdam. They opened the store
at Weena 103, at a central place in the city centre yet just off the large city
centre shopping street. By being in a more intimate setting but easily
reachable by the main public, they achieved the position of being “the right
people in the right place”. Due to their good positioning but also the quality
of the patented shoes, the efforts put into creating them and also the
sustainable environment in which they are produced (respect towards the
nature, the traditions and the artisans who create the designs), the brand name has grown
exponentially since the launch. Izi-Fes grew into a vibrant name of the nowadays’ fashion industry.
The basis of this company was the passion of 3 siblings with Moroccan roots, which wanted to have a
closer look and give special attention to hand-made, unique designed for each individual,
environmental-friendly boots. The added-value of these boots come from the use of Kilims, which are
flat-woven rugs with a great history and have stories to tell from all over Marocco. Kilims come in a lot
of different styles and patterns which give the boots an authentic and vintage look. This material is
processed by qualified artisans from the city of Fes, who have pure love for their work. With their
bohemian and vintage look, Izi-Fes boots are perfect for today’s fashion (Fes-ion). The concept of
using original handmade products and ancient traditions that outlived generations is something that
makes a pair of Izi-Fes boots so desired. As the designers and owner of this business state, “In
today’s world of merchandising, Izi-Fes wants to help you meditate on the beauty and allure that
handmade quality adds to your personal style. “
Kilims used in Izi-Fes boots
1
Sosa and Associates™
Fashion Capital Berlin – urban, stylish, cool
Two times a year journalist, buyers and fashion people fly from all over the world to Berlin for the
fashion week and the renowned Bread and Butter trade fair incorporating exhibitions and numerous
fashion shows. A huge group of Berlin local designers have now started to sell their clothes in
boutiques in Tokyo, but also they are showing their fashion designs in London and Paris. But their
success doesn’t stop there, they are providing clothes for Hollywood stars. Most of these designers
have attended one the Berlin fashion colleges, having in mind that the annual shows are put together
by graduates.
Berlin was awarded by UNESCO the title City of Design, it has been recognized as a place where you
can achieved great goals with little resources. Berlin has different aspects that can help young
designers in their future innovation, such as; fashion platforms which help the marketing part for a
smaller business, and the rent prices for shops are reasonable. They also have prizes awarded to
developing designers to help them start on their own. For example the new label Augustin Teboul was
established in 2011 following the competition “Start your fashion business”. Furthermore fashion
investors are backing labels, for example Volker Tietgens at Michalsky and Kavier Gauche. This is
enabling promising new labels to expand internationally.
The problem we have under investigation is the export of Izi-Fes boots. We, as the consultancy
agency Sosa and Associates™, have to research and explain all the methods we will be using for
creating a successful export plan. Germany is a member of both the European Union and the World
Trade organization; this membership allows the free movement of goods between Germany and the
other Member States, which of course Netherlands is a part too. Moreover due to the WTO
membership, Germany acts according to the Tariff agreements specified by them. This will ease the
exporting process to Berlin.
We may assume that will always be a demand for shoes and boots, now we need to research if there
will be a demand for the Izi-Fes boots.
“Shoppers today still embrace what is now a worldwide love affair with the shoe commerce. The
concept that we ‘simply have to have them’ is certainly a recent ideology, fuelled by the imaginative
designs of the women’s footwear industry. The lust for shoes continues to ensure that shoe and boot
production is still as popular as ever .” (Wilson, 1974)
2
Sosa and Associates™
The research objective
The research objective is to gather information from our target market – women aged 18-35 who are
willing and able to spend around €250 for boots – to assess if they would prefer buying Izi-Fes boots
over buying other boots or fashion items.
Another research objective is to find out whether the country’s macro- and micro-environment creates
a conducive environment to work and become profitable in.
These objectives have been translated into sub questions that, when answered, provide the
information to solve the management problem.
1. Is there a demand for the product? (Is there market potential?)
2. Are we entering a conducive macro-environment in Germany?
3. How much (and what kind of) competition will we face?
4. Which entry mode fits our clients' needs and desires best?
5. Which marketing strategy will we use to approach our potential consumers?
When all these research objectives have been investigated they will answer our research question,
which is:
Can Izi-Fes successfully enter the Berlin market and become profitable with their high quality,
fashionable boots?
Aims of the research
Sosa and Associates consultancy firm’s goal is to conduct an International Marketing Research Report
for Izi-Fes, based in Rotterdam, Netherlands. We will investigate the feasibility of successfully
exporting their boots in Berlin, Germany.
Our company will have to undertake a research of the German and Berlin’s market and to present our
findings in a Marketing Research Report. In the second phase our company will make a
recommendation to Izi-Fes about exporting the products to Berlin. We will give a clear overview of
what entry mode and best marketing strategy will can best be applied.
The scope of our research will be to help Izi-Fes to overcome any impediments and to be aware of the
market’s variables in order to complete a smooth expansion into the German market.
The research must be able to asses if Germany presents a viable opportunity in terms of market
potential and profitability, to find and present a description of local competitors and threats. Also the
issues related to segmentation, targeting and differentiation will be assessed along with the marketing
mix and tactical activities. In the second part Sosa and Associates will research the implementation
and control possibilities and the entry mode and human resource management. Last but not the least
the cultural and legal aspects should be researched and presented within the report.
In order to fulfil the Izi-Fes international marketing research report, our company will have to carry out
a research study using exploratory and descriptive research design using appropriate research
methodology.
3
Sosa and Associates™
Introduction
We, Sosa and Associates™, were assigned the task to set up an export plan for Izi-Fes. The research
of the export plan was mainly for determining the market potential by conducting extensive market
research and analysis. The result and data of our research will give a clear view of the input based on
which the action plan for creating the best possibilities and optimizing the work for Izi-Fes, will be
based.
This report is based upon three parts where the first part will be mainly determining the situation and
analysing the market and clarifying the possibilities. The project approach will be established via
quantitative and qualitative market research. Also most of the data will be gained through desk
research and company portfolios from the past. By using data banks and commercial models, the
project group will find valuable data in order to outline the plan.
The second part is outlining the analysis and reviewing the data. This part of the research will give the
reader guideline as in how the data has to be interpreted.
In the final part the project group will scope the issue and data and provide solutions and optimizing. It
is within this part where the results of the report will give Izi Fest the proper methods for establishing
the export plan and implementing all the necessary procedures.
The international market research
According to Burns and Bush (2009) marketing research can be defined as “the process of designing,
gathering, analysing, and reporting information that may be used to solve a specific marketing
problem”. The management problem at hand is to identify a market opportunity for Izi-Fes in Berlin.
The first study that needs to be conducted is the market-demand determination. This will be done
through market research.
To research if there actually is a possibility of success, in this project we will perform basic research:
the opportunity identification. We will use the 11 steps of the marketing research process:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Establish the need for marketing research.
Defining the problem.
Establish research objective.
Determine research design.
Identify information types and sources.
Determine methods of accessing data.
Design data collection forms.
Determine sample plan and size.
Collect data.
Analyse data.
Prepare and present final report.
Step 1
We have established the need for marketing research, because the information we need is not yet
available. There is also time to investigate the possibilities.
Step 2 and 3
This have been stated under the heading ‘the research objective’
4
Sosa and Associates™
Literature review
Free Circulation of Goods in the Single European Market -case“The concept of the Single European Market essentially means that goods, services, persons and
capital enjoy the ability to move freely within this market. As a result, imported goods sold in Germany
are exempt from customs duties and procedures if the goods originated in a member state of the
European Union or if the goods have previously been imported into another member state of the
European Union before moving into Germany.”
The advantage we have is that we are free from the obligation to pay customs duties and procedures
because the Netherlands is a member of the state of the European Union and Izi-Fes previously
exported its products to a European country (Ibiza) before wanting to export to Germany.
Some goods may only be imported into Germany under certain conditions. These restricted products
might require a certificate of origin, an import license or other control documents. The importation of
“sensitive goods”, like steel and iron as well as textiles and clothing generally requires an import
license issued by the Federal Office of Economics and Export Control (BAFA). The products of Izi-Fes
are part of the textiles industry so before exporting to Germany we should arrange an import license
issued by BAFA.
Taxation
In Germany, all entrepreneurs who are engaged and independently active in a trade, business or
profession for the purpose of generating income, are liable to value-added-tax, also known as turnover
tax. We should seek for advice on this topic to make sure that we are fully informed about the taxes
that apply to the products of Izi-Fes since VAT (Value added tax) is a very complex subject and there
are many different cases and exceptions. The standard VAT rate for the supplies of goods and
services in Germany is 19 per cent and all goods imported into the German market has to comply to
the rules and regulations such as labelling, packaging materials and quality control.
The place of supply of goods determines whether a transaction is subject to German VAT. Some of
the general rules for determining the place of supply of goods for VAT purposes within Germany are:
The place where the shipping of the goods begins, the place where the goods are located at the time
that the buyer acquires the power to dispose of the goods and so on (look into the export guide, page
19)
Upon registration of a business, a German entrepreneur receives a single tax reference number for all
applicable taxes, including VAT. Foreign companies that are not established in Germany may also
register for VAT without having to establish a local company. This means that whether Izi-Fes will just
export the products or establish a local company in Berlin, we will still have to register for VAT which
may take at least three weeks. A VAT number must be in place before Izi-Fes can start carrying out
business in Germany.
5
Sosa and Associates™
Berlin luxury fashion
The capital of Germany is showcasing the latest collections of world famous brands. But the
significance of all those shows is that many of the participants are creative newcomers. At the
Biannual Berlin Fashion Week, many of those newcomers come and show their collections. At the last
Berlin Fashion Week, there were 120,000 visitors, from 5 to 10th of July 2012. Lots of fashion events
where scheduled around the BFW. One of those was BREAD & BUTTER, the leading international fair
of street wear and urban wear, which alone welcomed 580 visitors. This fashion image is putting Berlin
on the map as a high-developed city with a large fashion industry. Moreover this had its advantage on
the economic growth of the city. According to the Investionsbank Berlin, the Fashion Week alone had
an annual economic output of €119 million and created almost 700 jobs, half of which are permanent.
Looking at the industry employment, the numbers are much higher there: 11,500 employs, 3700
companies since 2000 the percentage of new coming fashion companies peaked at 30%. The
luxurious fashion market, hasn’t set still either. It also is becoming more and more lucrative. Many of
those brands have a store opened in Berlin, which placed Berlin on the 8th place of the European
cities. The local government of Berlin encouraged this growth, by subsidising a coach from the
Kreative Coaching Center, which adds up to the 10 fashion schools it offers next to the collections of
clothes also as fashion education.
One of the most intensive fashion competitions is the Start your Fashion Business, which is presented
at the Fashion week to award the new fashion designers. I consider our participation there was vital
and it would be a good kick-off activity for our company.
Most of the fashion scenes can be found in Spandau between Hackescher Markt and Rosenthaler
Platz in Berlin Mitte. In Alte Schönhauser Straße and the Hackeschen Höfe here you can find one
fashion shop after the other. There is also a shoe level of design, the shoe store TRIPPEN has also a
show room in Europe largest fashion network. Since the 1990s this Berlin based manufacturer of
wooden and leather footwear has been attracting customers from all over the world and is widely
regarded as one of the pioneers of the Berlin design boom.
The current hotspot for fashion lovers is Mulackstraße in Mitte. Here the Berlin designers try to outdo
each other with their unconventional and cutting edge fashion. You have for example the labels Star
styling and Firma Berlin creating fashion for men and women inspired by Bauhaus, which is both
functional and elegant. Last but not least Mulackstraße is also home to Lala Berlin, whose printed
scarves are popular among actresses such as Mischa Barton and Jessica Alba.
When it comes to stores on a grander scale, the Osthafen is the place to find the unique ‘Labels’
fashion centre. This is where brand labels such as Hugo Boss, Esprit, Escada and Tom Tailor have
set up showrooms in order to present their latest collections to the retail trade.
Regulations
Depending on the nature of the product , any good entering the German market is subject to specific
registration , labelling and information requirements. Since these requirements ensure that all imported
products meet health , safety and environmental standards , compliance must be a high priority to IziFes’s marketing strategy.
The German consumers are highly environmentally conscious therefore foreign exporters as Izi-Fes
must be aware of this important aspect. Moreover , Germany has long been a forerunner in the
packaging and packaging waste management area. The packaging materials must comply with both
EU and German regulations in order to secure a successful market entry.
Regarding to the package size and measurements , Izi-Fes must be aware of the EU packaging
measurements directives in order to sell its products in EU. Both the European Union and Germany
,uses the metric standard. There are also precise regulations on labelling products bond for the Single
European Market as consumer protection and information are of fundamental importance.
Selling products in Germany
There is no rule or regulation limiting foreign suppliers in their choice of distribution channels. It is
usually the nature of the product that points to one way of distribution or another.
A considerable amount of consumer goods , textiles , furniture and food stuffs are sold through large
wholesale and retail enterprises. In addition there are trading houses or independent sales agents who
manage the complete line of distribution (ex. They buy the product from the producer , finding
customers and sell it to the end consumer). Trading companies and sales agents are usually
specialized in particular product lines and have good contacts to potential customers in Germany.
Especially for companies new in Germany, choosing an indirect sales channel with local partners can
be the best way of setting foot on the market.
6
Sosa and Associates™
Historical Data Research: Case study: Fashion in Berlin
After reading this report, we have realised how important and in the same time complex the Berlin
fashion industry has been developing into during the last few years. It is now the 3rd European’s most
attractive destination after London and Paris. One very important aspect is the constantly improving
life conditions of the German people in relation to their ability and willingness to spend more on
clothes/ shoes and dedicate extra attention to choosing wisely the brands ; in other words the
customers are becoming fashion-oriented and more aware of the importance of good, quality shoes
like the ones we offer. Izi-Fes can take advantage of this blast of interest from the German people and
also their favouritism in the last times towards the Boho-chic trend; since our boots are expressing this
new, fresh, modern, bohemian look they are expected to be well-received in this market segment.
Secondly, I have found out that fashion is supported also by the political side, so the Fashion
companies can receive competent advice from a coaching program realised in cooperation with the
IBB- we might as well access this too. It sound like a really good idea to me and it also seems
encouraging for the start-up companies, or companies that have just started their expansion like we
do. The government is also planning to expand their intention towards easier access to capital for
growth and internationalisation; nevertheless this can also be a drawback for us since they are
supporting more the local producers/developers, this means extra work for us and fiercer competition.
What is also emphasized in this is the closer look designer give on where to place their stores; apart
from heavy marketing report budget, you have to work hard to be “there where the customers need
you” ; in other words, you’re either on Friederichstrasse or you don’t exist at all. That is also a point to
consider for us when searching a good location for our product; whether if it is for opening a store or
selling our products to [storage house]. Of course, another high priority for us would be to make a
small appearance in the Berlin Fashion week, but we have to consider our budgets first.
All in all, I believe this report will be very helpful throughout our whole research process, as it contains
valuable information, straightforward and trusted as it is published by on behalf of the senate
Department for economics, Technology, and Women’s Issues in June 2008, which can be considered
a validated source and also quite up to date with the current economic-fashion-related situation.
Small part of the Friederichstrasse
Source: Google.StreetView
Source: Google.Maps
7
Sosa and Associates™
Methodology
Research Objective 1 – Market potential
Literature review
BERLIN
Berlin has been trying to catch up with the rest of Germany ever since the fall of the Berlin Wall in
1990. That did not only go for industry, but also culture, technology, etc.
Slowly but steadily the city has been coming up and according to Klaus Brenke (2010), an economist
at the DIW, “Berlin has achieved a turnaround”.
Since 2005 Berlin has seen an annual increase of population, jobs and GDP per capita (however, still
under German average) in a higher percentage than the country’s average. Investments made by the
government into health care, education, entrepreneurship and culture are paying off. Reddy (2009)
reports that the city has become of major interest to artists and young creative minds and for the past
decade, Berlin has cultivated a reputation as one of Europe’s last bastions of bohemia. It has also
getting more and more recognized as a major playground for designers. The bi-annual fashion week is
becoming a must-see must-attend event for internationally established brands as well as home-grown
designers.
From BOHEMIAN to BOHO-chic
The word bohemian comes from the French bohémien, meaning "gypsy. It were not the refugees and
travellers from central Europe, however, that started ‘bohemianism’ (The France of Victor Hugo,
1999). In the 19th century it was mostly people from the bourgeoisie that started to ‘rebel’ against the
role division in society that people were born into (possibly for feeling somewhat guilty for their
privileged lifestyles). The focus was on arts such as painting and writing. People felt the need to close
the gaps and deviate from rules that were placed upon them by society. This also showed in their
wardrobe, it was less and less traditional and more and more comfortable, different and free. The
bohemian style has always been an emphasis on self-expression and freedom, and moving away from
tradition. After several ‘movements’ in the early 20th century, and de women-focused 50s and 60s, the
hippie movement of the 70s is most ingrained and commonly known as the ultimate form of
bohemianism.
Hippies were all about respecting and connecting with the earth and the people in it. The flowy, loose
fitting, clothes became a fashion style that is still present today. The style has distanced from the
mind-set that used to be behind it. Especially in this millennium the bohemian style has grown into
boho-chic. When more people started dressing in bohemian style outfits, designers started to take
notice and created bohemianesque clothing for an upscale market with the accompanying prices. With
celebrities dressing in a bohemian like style, and party island Ibiza being the world’s bohemian capital,
people have embraced that the former bohemian style clothing has transformed into the fashionable
(sometimes fashion forward even) boho-chic. The positive effect is that this enlarged the target
market. Where before the clothes and shoes were of a cheaper and lesser quality targeting people
with a certain lifestyle. Now both bohemian minded people and fashionista’s wanting to keep up with
the latest boho-chic fashion, are looking for quality items that express their lifestyle or their love of
fashion.
8
Sosa and Associates™
Steps 4, 5 and 6 will be investigated per research objective.
The following is based on determining the market-demand.
Methodology
Step 4
I started out making use of exploratory research, collecting information in an unstructured and
informal manner. I was not yet that well aware of fashion in Germany and specifically Berlin. Using
secondary data analysis I gained background information on the product, the target market in the
Netherlands, fashion in Berlin and the economic welfare in Berlin.
− Case analyses performed by colleagues on fashion that has been exported to Berlin before,
gave me an insight on how things work and what to pay attention to when exporting.
− I continued with experience surveys through an interview with one of the founders of Izi Fes
in the Netherlands and talking to young women that wear Izi Fes boots. (Appendix 1)
The next step is to perform descriptive research to describe answers to the questions of who, what,
where, when and how. We will make use of cross-sectional studies to measure units of a sample of
the population, that is representative of the target market, at only one point in time.
Step 5
As mentioned in step 4, the exploratory research has been conducted through the gathering of primary
and secondary information. For the descriptive research to determine whether there is a market for our
product, we will also make us of both primary and secondary information. We will make use of
information that has already been collected (secondary) and then continue to collect information to
specifically help answer the question at hand (primary).
Step 6
The methods we will use to collect the secondary data, are:
We will make use of governments census of the population.
Amt für Statistik Berlin-Brandenburg (2010) and Berlin.de (2013) have information on the population,
the man/woman ratio, the different boroughs, etc. This information will be the basis from which we can
calculate Izi-Fes’ target market and also decide on a sample plan and size.
Published sources of information prepared for public distribution like case studies. Case studies have
been read as a part of the literature review and could be referenced in the results.
In order to validate the secondary data, we will answer the following questions:
− What was the purpose of the study?
− Who collected the information?
− What information was collected?
− How was the information attained?
− How consistent is the information with other information?
We will only make use of sources that have studied different areas with the main and only goal being
to inform others of the statistics. Informational suppliers of statistics, such as government websites,
are considered reliable. Educational websites that contain information that has been uploaded by
professional institutes, such as MacOrr – market research company – are also considered reliable
because of their expertise. Their main purpose of giving visitors access to up-to-date reliable
information, is to be identified as a leader in their field and possibly (hopefully) gain clients.
9
Sosa and Associates™
To gather primary data we will make us of expert opinions and questionnaires.
To validate the questionnaires we have to think carefully about:
− Question formulation
− Sampling method
− Collection method (face to face)
− Translation.
The questions have been carefully formulated to not be bias, leading, loaded or overstated.
The reasoning behind each question, can be read under the heading ‘Questionnaire’ (page 22). How
we came to choose a certain sampling method and sample size, is explained in ‘Sample plan and size’
(page 23).
The collection method will be face-to-face. This way the interviewers can validate that the interviewees
are from a specific borough in Berlin and that they are indeed women between 18 and 35 years of
age. Of course there is no sure way of knowing whether or not the absolute truth has been told, so we
shall use the industry standard of 10% inaccuracy.
The questionnaires are designed in English and have to be translated into the local language,
German. For the translation we will make use of back-translation. This means that the questionnaire
will be translated from English to German by an individual and then the German version will be
translated back into English by another individual. Back-translation is used to make sure that the
questionnaire corresponds.
10
Sosa and Associates™
Research objective 2 – Macro environment
According to Sloman & Hinde the Macro-environment consists of factors which are beyond the control
of the business in terms of Social, Technological, Economical, Political and Cultural aspects related.
These four dimensions of the business environment have as a main purpose to give a better
understanding of all national & international situations in which the business operates as a whole. IziFes is seeking the possibilities to enter the German market, particularly in Berlin. But before entering
any particular market research has to be done in order to find out whether or not it will a good idea to
enter the particular market (Berlin). We are going to find out how we can research the MacroEnvironment of Berlin, and pin point the most important aspects that can affect the entry of Izi-Fes in
Berlin.
In the next lines we will deal with explaining the specific methods we are aiming to use in order to
successfully penetrate the market of Germany, with emphasis on Berlin, in terms of fashion shoes. We
have collected this information using external secondary data, published in the form of an interview by
the Financial Newspaper “The Economist” ; we have also made use of the “Economics for Business”
book, which was our subject for study in term 2, to get a good structure in developing my STEP
analysis. We have also included the website “Berlin.de” as an online informational external database,
even though I could not use all the information available, just the one translated in English, due to the
language barrier; We am nevertheless confident that this info is trustworthy and can be easily
validates as a reliable source due to the collection mode and the fact that the publishers are
experienced gatherers of primary data about the insight of Business world in Berlin.
To begin with, the social and cultural factors are very much interrelated because they refer to all
social attitudes and values among working conditions. This is why one of the important steps when
researching a new market for creating an export plan is to strive for a very good understanding of their
working culture; we have to adapt our strategies, policies, working hours [...] to the current German
existing cultural environment. For example, if the opening hours of the shops on Friederichstrasse, on
a regular Sunday, for all boutiques is usually at 12.00 , and Izi-Fes would implement a 9-to-5 schedule,
we might as well make no sales/profit/awareness because people are not used to going out for
shopping at that might and we might find ourselves paying the employees to stay extra hours at work
while the shop is completely lacking visitors. We should also consider as a social factor the behaviour
of people , their ethical values, how are they used to and expecting to be treated by the sales
assistant/ do they need advice about the shoes or are they just planning to enjoy looking at all of the
models and taking their time in choosing to try one on or not? These are all vital research questions
we should be able to answer before actually opening our first location; the employees should be
provided some extra training and background information about these findings or we can just choose
to hire German sales assistants but then we need to make sure they know how to present our
products in a positive way and that they have a good understanding of the background of our
company, our mission and vision statements.
On the other hand, the technological aspect comes in and here we need to specifically research the
market, the current use of technology, their methods of communication and overall the technologyrelated habits. For example, if 20% of the consumers prefer their digital APP for shopping online, with
returning facilities and low sending costs, we need to approach these customers with an attractive,
well developed, user friendly software they can access everywhere on their phone. Moreover, if our
consumers have developed the habits of inspiring their fashion looks from the Vogue Magazine for
example, we should consider investing in having a separate page for advertising our shoes there; it
may be cost-oriented, but if we also achieve sales with this strategy, we will have high returns
corresponding to our efforts of understanding the market. All this hassle will start paying off once we
start achieving market share and establish a good position on the market.
All in all, I consider we need a thorough research of all the 4 S-T-E-P aspects of the German market in
order to create a successful export plan for Izi-Fes; it is a new market, the product is totally unknown
yet to the customers, but with the correct approach, we might be the next must-have on the German
market. According to my personal opinion, if we understand our market well enough, and we treat our
customers carefully and even better than they expected, we will have a chance at a good market
share in the Berlin fashion environment. After all, the Boho-chic style is the new boiling point at the
moment, and we represent it to a high extent. Berlin Fashion week, here we come!
11
Sosa and Associates™
Economy: All businesses are affected by national and global economic factors. National and global
interest rate and fiscal policy will be set around economic conditions. The climate of the economy
dictates how consumers, suppliers and other organizational stakeholders such as suppliers and
creditors behave within society. An economy undergoing recession will have high unemployment, low
spending power and low stakeholder confidence. Conversely a booming or growing economy will have
low unemployment, high spending power and high stakeholder confidence. If we want to be a
successful organization we will have to respond to economic conditions and stakeholder behaviour.
Furthermore we will need to review the impact economic conditions are having on our competitors and
respond accordingly. In this global business world organizations are affected by economies throughout
the world and not just the countries in which they are based or operate from. Taking this factors into
account we will need to take into account the economy aspect on a whole. For Izi-Fes the economy
aspects of Berlin is very important, Why? Because we want to know whether or not our target group
will be able to pay for one pair of boots 200 euros. If the economy is not growing it means there is a
possible risk of unemployment and low spending. It’s also important to know that exporting Izi-Fes to
Berlin is not just for expansion, is also to make profit or reach the breakeven point in no time. No
economic growth can mean less demand for our product.
Factors that we need to research on the economical Berlin environment are:
 Interest Rates
 The level of inflation Employment level per capita.
 Long term prospects for the economy
Political factors can influence organizations in many ways. These factors can create advantages and
opportunities for organizations. Conversely they can place obligations and duties on organizations.
Political factors can include:
 Legislation such as the minimum wage or anti-discrimination laws.
 Voluntary codes and practices
 Market regulations
 Trade agreements, tariffs or restrictions
 Tax levies and tax breaks
 Type of government regime e.g. communist, democratic, dictatorship
Which means that if any of this legislative obligations can lead to sanctions such as fines, adverse
publicity and imprisonment. Ineffective voluntary codes and practices will often lead to governments
introducing legislation to regulate the activities covered by the codes and practices. In order to avoid
any law breaking we need to do a research base on the topics I mention previously. Why is this
information important for Izi-Fes? In case of having a shop we will need employees, also know what
type of government and laws we will be facing when entering the German market.
After analysing the type of information we will need from political and economic Berlin environment,
am convince that we will need to do a casual research. Why? Because casual research is used to
measure what impact a specific change will have on existing norms and allows you to predict the
future. In other words is a way of seeing how actions now will affect the business in the future.
Moreover to gather all the information needed we will use secondary research. Since secondary
research, the researcher have the necessary data available. These data are made available through
other publications or reports, like newspaper, cases, or annual reports of companies. Which means
we don’t have to do any research from scratch, we can use the information done by other organization
or by publication such as; Chambers of Commerce, Census, and Berlin data base.
In the process of determining the environmental factors we need to consider before entering the
German market, I made use of exploratory research to gain background information of the
problem at hand. The research conducted was unstructured and meant to clarify the hypothesis
that Germany and Netherlands climate is similar, so I could prove that we can use the same
considerations made for when entering the Dutch market with our product. My analysis is based on
secondary data , and this is the data collected by the owners of the company themselves.
Furthermore we had to determine whether our products are affecting in any way the environment, are
up to ecological standards and respect the standards imposed by the government regulations; I have
also used the official website of Izi-fes for obtaining this information. For the validation of these
12
Sosa and Associates™
sources I consider the information reliable because it has been published by the company
executives solely for the purpose of informing the public interested and the potential customers.
Research objective 3 - Competition
This research focuses on the potential competition of IZI Fes in Berlin.
In order to have a sufficient and reliable outcome of this research, we have to take every input of data
in the research. Thus having a large data in the beginning and narrowing down to the specific data we
would like to obtain. That information will play a key role on answering the question(s) on competition
in Berlin for Izi-Fes.
1. Planning:
What should be researched
2. Research objectives:
How big is the competition in Berlin in the shoes market
Which specific shoe (brand) stores face a severe competition
3. Research development
How should the research be taken and which sources should be used
4. Data analysis
Putting all the data (outcome) next to each other and sorting them all out
5. Review and conclusion
Making an conclusion on the outcome of the research and answering the research questions
These are the steps in chronologic order on researching the potential competition in Berlin
Izi-Fes overview
Before researching the other brands, identifying in which category IZI Fes is located will help further in
the research, by focusing on the specific direct competition.
Izi-Fes is a shoe/boots brand based in The Netherlands, Rotterdam. Their shoes are all one of a kind
and hand made from rugs, with different types and many colours, they can be considered very
fashionable, and also their quality is relatively high in relation with the price range scale.
Taken all this information, the following will be done in the research process;
1. Searching of all shoe (brand) stores in city centre Berlin.
2. Searching for all shoe (brand) stores with certain shared products characteristics
3. Searching for all shoes (brand) stores that operate in the same market, direct competition
By first collecting all the data of all shoe stores in the city centre of Berlin (total competition); we can
narrow that number down to a smaller group of shoe (brand) stores.
This will be done in the first and second research. The last research will show us the final result on the
direct potential competition of IZI Fes, if we decide to export their brand in Berlin.
13
Sosa and Associates™
Research objective 4 – Entry mode
In an effort tin introduce Izi Fes products to new customers, we will attempt to enter new, foreign
markets. Entry into a foreign country can be tricky, however, the business must adapt to a new
clientele, new legal regulations and new competition. There are a number of common entry modes
that businesses can use when starting up in a foreign market for example, Joint Venture, exporting,
licensing and so on. The question is, which one will we choose? To be able to make this decision we
first must do a research.
There are a few things that are very important to know and do research about before entering the
international market. The first and in my opinion the most important is to know the company, “Izi Fes”.
It is always good to do a SWOT (Strength, Weakness, Opportunity and Threat) analysis of the
company before entering the market. By doing the SWOT analysis we will know if we can enter the
new market, Berlin, by our own or if we need a local company to back us up and help us enter the
market.
The current market situation
It’s also very important for us to know the current market situation. Market research helps to gather
information that can provide critical insights into consumer buying habits, needs, choices, and
opinions. This can also help us implement the most suitable marketing mix. The two main sources we
can get the marketing research information from are primary research and secondary research. The
primary research involves the collection of new information by conducting market surveys, telephonic
interviews, questionnaires and focus group interviews. We can get this type of information by directly
contacting the potential customers.
Secondary research involves processing data that has already been collected by previous
researchers. Here we can search for reports, press articles and previous market research projects in
order to come to a conclusion. Problems that we can encounter while doing the market research in
Berlin are cultural problems like for example language, literacy, social desirability and also technical
problems like no up-to-date maps, streets have different names, houses not numbered, mail delivery
issues and so on.
Before deciding which entry mode we are going to use we should forecast at least 3 years in advance
for what could be the variable costs (such as salary (if needed), taxes, raw material, other operational
cost) in the plan. Also, we should forecast income and profit for return on investment by calculating the
break-even point in sales and production.
Conclusion
Exploratory research method will enable us know the best entry mode of Izi Fes into the Berlin market.
Whether to export Izi Fes products to Berlin and for example have the brand have its own “space” in a
huge store like for example V&D in the Netherlands. Just export to the customers who order online,
having our own shop in Berlin or to use one of the other entry modes like Joint Venture in which two
businesses combine resources to sell products. Although joint ventures provide foreign companies
with a partner experienced in the foreign market, these partnerships can be difficult to manage and
require a splitting of profits.
14
Sosa and Associates™
Research objective 5 – Marketing strategy
This methodology will allow us to develop a corporate marketing strategy , aligned with the corporate
strategy and vision of Izi-Fes ,to guide its marketing efforts toward a specific set of outcomes. (brand
awareness , store traffic , sales…etc.)
In order to complete the marketing strategy report , the following steps should be followed :
1. Values
2. Vision, Business alignment and Core competencies.
3. Asses current situation (SWOT Analysis , Brand Assessment , PEST Analysis , Competitor
Analysis )
4. Objectives (Marketing objectives scorecard)
5. Strategy (Market requirements , Product Marketing plan , Product development plan ,
Marketing communication plan)
CORPORATE VALUES (Secondary information)
During this stage we will examine Izi-Fes core values to understand how they should influence the
development of the marketing strategy. Even if Izi-Fes’s values aren’t documented , they exist and will
require identification as part of the marketing strategy process. A firm’s core values should exert the
strongest influence on its culture and how it manages its brand.
2 VISION (Secondary information)
The firm’s vision is shaped by its core values. All the functions within the firm must be optimized for
achieving this vision. The vision represents a preferred future destination , and the strategy Izi-Fes will
develop is the map to help them get there. Some of the points that should be followed or answered
during this step are :
How is Izi-Fes positioned?
What business is Izi-Fes in?
What opportunities exist in the market (Berlin, Germany) that Izi-Fes is uniquely qualified to
exploit?
Our company will have to assess the marketing organization’s alignment with the business. This is an
important step in order to assess whether the culture will facilitate the success of Izi-Fes marketing
strategy or if cultural barriers will forbid the ability to execute the proposed marketing strategy.
The core values usually shape the vision of a company. Pursuit of the vision creates core
competencies.
With this assessment our company will have to review and rate Izi-Fes’s competencies in areas of :
Strategic Planning
Customer relationship
Demand
Sales
Human resources
Product development
Technology
Market research
CURRENT SITUATION (Primary information)
In this step we will use SWOT Analysis to assess Izi-Fes ‘s internal strengths , weaknesses ,
opportunities and threats. The SWOT Analysis should be honest , board in focus , considering multiple
time horizons…etc.
A brand status assessment is also required in order to perform an in-depth analysis of Izi-Fes brand.
In the case of Brand Equity is not a strength based on the SWOT Analysis then this assessment
should be conducted anyway.
The current customer status will help us and implied Izi-Fes to develop , track and analyze key
customer figures. Some important factors regarding this are : total number of customers , new
customers , key customers , revenue per customer.
15
Sosa and Associates™
STEP analysis is also required as part of this process in order to analyze Izi-Fes’s industry (shoe /
boots fashion) from political , economic , social and technological perspectives. Two important
questions that need to be answered with this analysis are : How well prepared is Izi-Fes for the forces
affecting its industry ? and Which strategies and tactics should Izi-Fes avoid because they are
destined to fail for reasons beyond its control ?
Our company will also have to research the current competitive situation to assess the competitive
playing field in the industry , of course , related to the German (Berlin) market.
OBJECTIVES (Primary information)
In this stage we will have to determine and state what Izi-Fes want to accomplish. In the next stage we
will determine how to accomplish these objectives. The data and insights gained from the first 3 stages
will be used in guiding our efforts. The two main sets of objectives are : Business objectives and
Marketing objectives.
If Izi-Fes’s business objectives are unknown or undocumented is our task to identify and document
them. In some cases the business and marketing objectives could be the same. Some examples of
business objectives are : maximize profit , grow market share , increase shareholder value…
.Regarding the marketing objectives we along with Izi-Fes will have to determine what Izi-Fes wants to
accomplish with the Marketing Strategy that we are developing.
STRATEGY (Primary information)
At this step , our company , will have to articulate coherent actions that achieve Izi-Fes’s objectives in
each of the following areas :
Market
Product
Communication
Infrastructure
Based on the assessment of Izi-Fes’s situation completed in steps 3 and its objectives from step 4 ,
we will have to determine the pursuing (or not) of the Berlin market (German market) and with which
products.
Each strategies consists of a premeditated risk as you can see from the following examples :
Market penetration – low risk
Product development – moderate risk
Market development – moderate risk
Product diversification – highest risk
The market plan will allow us and Izi-Fes to analyze opportunity in our chosen country (Germany Berlin). Regardless of the approach chosen from step 1 , we will need to develop a plan for this
market.
Following questions should be considered :
How accessible is this new market ?
What size is the market potential ?
Who is the market leader ?
What solutions does Izi-Fes brings in order to solve problems the new market has ?
The strategy of Izi-Fes calls for using their current products in the new market. Our company will have
to develop a marketing plan for them.
The results of the Brand Assessment completed in step 3 will be reviewed to document Izi-Fes
branding objectives , initiative , measures and targets.
If it will be the case our company will have to evaluate , measure , and manage Izi-Fes’s partnerships
and partnering strategy in Berlin. The following question should be asked :
What
are the goals of the partnering strategy?
What
can these partners do that Izi-Fes don’t?
16
Sosa and Associates™
A marketing communication plan has to be developed in order to support this strategy and the product
marketing plans our company created in step 3. The marketing Communications plan will provide
details on :
What needs communicating
Who needs to receive the communication (Internal and External audiences)
Which communication channels to use
When the communication needs to occur\
The four Ps:
In the classic 4 P’s of Marketing - Product , Price , Place and Promotion – the marketing
communication plan is primarily concerned with Promotion. The marketing communication plan is
detailed and includes all communications through all channels such as :
Events
Public relations
Advertising
Social Media
Web and Online
Others
17
Sosa and Associates™
Questionnaire
Step 7 : Designing the questionnaire.
The most important step in gaining primary information is to conduct surveys to research potential
consumers’ willingness and ability to purchase the Izi-Fes boots. For the questionnaire to give us
valuable and usable information, the questions have to be relevant, formulated well and address
different research objectives.
Question 1 is a screening question. This will identify respondents that do not meet the research
qualifications. People that own a single pair of boots are less likely to purchase high priced,
outspoken, branded boots.
Question 2 is a warm-up (and also screening) question to learn about the frequency of the
respondent’s purchasing habits.
Question 3 is a transition question. To determine market potential we ask about the amount the
respondents spend on average on each purchase.
Question 4 is a skip question about the competition we will face when launching the Izi-Fes boots.
Question 5 focuses on the competition and the respondent’s brand loyalty towards their preferred
brand, and their willingness to purchase other brands.
Question 6 determines market potential through the respondent’s willingness to buy high quality,
branded boots at a certain retail price.
Question 7 is concerned with the marketing aspect of launching a new brand of boots. We need to
able to reach consumers where they usually go to find information of fashion and shoes.
Question 8 is to determine potential consumer’s key focus when purchasing new boots. Which
qualities they value most in boots.
Question 9 is to determine whether the respondent would considers her own fashion style to be in line
with that of the Izi-Fes boots.
Question 10 : where do potential consumers like to buy their boots? With this question we find out
about the competition but it also gives us the opportunity to look at these stores as possible selling
points.
Question 11 is the classification question. Knowing about the respondent’s age and occupation can
narrow our target market.
Questionnaire English: Appendix 2.
Questionnaire German: Appendix 3.
18
Sosa and Associates™
Sample plan and size
Step 8 : determining sample plan and size.
The questionnaire can only give us valid and useful information if alongside with the design, also the
sampling methods are decided on carefully.
Sample plan is about the representativeness and refers to the process used to select units from the
population to be included in the sample.
The sample size refers to determining how many elements of the population should be included in the
sample – it deal with the accuracy of the sample, Burns and Bush (2009).
Population
According to Die kleine Berlin-Statistik (2010), that holds statistics for the city, Berlin has 3.443.000
inhabitants – 51 Percent is female, which is 1.755.930. Our target market are females from the age of
18 to 35. The age division in Berlin is based on the entire population of the city. Assuming the
percentages are equal for both men and women, this leads to the following numbers mentioned in Die
kleine Berlin-Statistik (2010):
Age
18 – 24
25 – 34
35 – 44
35
% op people
8,6%
15,4%
15,5%
1,55%
Total women 18 – 35
number of people
151.010
270.413
272.169
27.217
448.640
Those 448.640 women are women with different backgrounds, currently living very different lives. But
considering fashion cuts through geographical and cultural borders, we will target the entire the group.
Different financial backgrounds might lead to different purchasing habits, but this is not necessarily
always the case. Despite not (yet) targeting a subgroup of the 448.640 women in Berlin between the
ages of 18 and 35, we shall use stratified sampling to make the distinction between different
boroughs, and thus possibly financial welfare.
Sample plan
Our sample plan is to make use of
cluster sampling by dividing the target
market of women between 18 and 35
and divide them into women living in
different boroughs of Berlin. We might
also make use of stratified by sampling
by subcategorizing the interviewees in
equal groups based on their ages. Age
categories 18 – 23, 24 – 29, and 30 –
35, all accounting for 33% of the
questionnaires. However, because age
is discovered only when addressing
women, this measure can be decided
upon after the fact.
Source: Berlin.de (2013) Berlin’s boroughs. http://www.berlin.de/berlin-im-ueberblick/politik/bezirke.en.html]
19
Sosa and Associates™
%
9,8
7,9
9,6
9,4
6,6
8,6
9,8
9,2
7,1
7,3
7,7
7,1
Total:
3.423.939
We shall assume that the man/woman ratio in the different boroughs are divided the same way as the
city’s man/woman ratio. With these percentage we will make use of proportionate sampling. This
means that if we choose to interview 100 women in Berlin, 10 have to be from Mitte, 7 from Spandau,
etc. to represent the entire population. To interview these different women, our approach is to go to the
main shopping street or shopping mall in that borough and conduct the interviews. We will specifically
target women that shop in stores that fit the fashion style and quality of the Izi-Fes boots.
Sample size
The sample size is not easy to determine. How many women do we have to interview to gain an
accurate depiction of all the Berlin women aged 18 – 35?
The larger the sample size, the more accurate we can expect the results of the questionnaire to be.
However, the growth in size is not proportional to the growth in accuracy. To calculate the number of
women to interview, we need to decide on an acceptable coincidence interval. Confidence interval is
the plus-or-minus figure usually reported in newspaper or television opinion poll results (MacOrr,
2013). This means that a confidence interval of 5 and 30% of the sample size chooses an answer, you
may assume that for sure between 25% and 35% would choose that exact same answer (5% over and
under 30%).
Confidence level tells you how sure you can be and represents how often the true percentage of the
population who would pick an answer lies within the confidence interval (MacOrr, 2013).
The formula to calculate the sample size to be representative of the entire population is:
𝑆𝑆 =
𝑍 2 ∗ 𝑃 ∗ (1 − 𝑃)
𝐶2
SS = Sample size
Z = Z value (1.96 for 95% confidence level)
P = percentage picking a choice, expressed as decimal (0.5 used for sample size needed)
C = confidence interval, expressed as decimal (1% = 0,01)
[Source: MacOrr, http://www.macorr.com/ (2013)]
20
Sosa and Associates™
Entering different confidence interval into the formula results in the following graph.
C sample size
10000
8000
6000
4000
Sample Size
2000
0
1
2
3
4
5
6
7
8
9 10
0,01
9604
0,02
2401
0,03
1067
0,04
600
0,05
384
0,06
267
0,07
196
0,08
150
0,09
119
0,1
96
Confidence interval
As can be seen in the numbers next to the graph, the increase or decrease does not move linear. The
change in sample size gets smaller and smaller to achieve a 1% difference in confidence interval,
especially from 5% and up. We at Sosa and associated think that 4% is an acceptable interval. We
shall conduct interview with 600 women from the 12 boroughs.
% of Berlin population
questionnaires
Mitte:
10%
60
Friedrichshain-Kreuzberg:
8%
50
Pankow:
10%
60
Charlottenburg-Wilmersdorf:
9%
55
Spandau:
7%
40
Steglitz-Zehlendorf:
9%
50
Tempelhof-Schöneberg:
10%
60
Neukölln:
9%
55
Treptow-Köpenick:
7%
40
Marzahn-Hellersdorf
7%
40
Lichtenberg:
8%
50
Reinickendorf:
7%
40
Borough
21
Sosa and Associates™
The findings
Research objective 1 – Market potential
Secondary data
As discussed in the literature review of research objective 1, Berlin is catching up with the rest of
Germany. Their GDP per capita is rising at a higher percentage than the country’s average. The city
has also become of major interest to artists and young creative minds and Berlin has cultivated a
reputation as one of Europe’s last bastions of bohemia for the past decade; Reddy (2009). This
growing cultural side of Berlin also gives rise to a larger public that has a more bohemian or hippie
style of fashion. During Berlin’s bi-annual fashion week, boho-chic has been proven a target market for
many designers. Izi-Fes boots are very much in line with his trend. The success of large, high end
department stores such as KaDeWe, also supports that there is a market for pricier, luxury items.
Primary data
Expert opinion
An interview with the sales director of Izi-Fes in the Netherlands, gives some insight in how they
operated during the starting-up phase. To research if there was any potential for the product, Izi-Fes
founders went straight up to the people in stores to ask about their desire to have such a high quality,
fashionable boot. The potential consumers were addressed in places they would usually go (stores,
parties, etc.) and they were being ‘interviewed’ by people they could relate to. Young women with the
same sense of style that express themselves through their fashion, and want to stand out in a crowd.
Going up to potential consumers over a period of time and in different places, created a buzz about
the product. People were curious and waiting for this high quality fashion item to hit the stores so they
could finally buy it. By using this same method in Berlin, there is a chance of achieving the same
results.
Questionnaire
Due to the current impossibility to interview potential consumers in the streets and stores of Berlin, we
had them filled out by potential consumers in Maassluis and Den Haag. We choose not to interview
young women in Rotterdam, because there is a likelihood of them already being acquainted with IziFes. There were several questions that specifically focused on researching the market potential.
These questions, answered by 24 interviewees, grant us some insight into the potential consumers’
willingness and ability to purchase the high end, patented Izi-Fes boots. The result show that 2/3 of
the young women (all ages between 20 and 30) says they buy shoes at least two times a year.
How often do you buy new boots?
Only 33% buys only one pair of boots annually, and the rest buy at least 2 pairs per year.
Averagely spent
How much do you usually spend on average for
boots?
The answers have been translated into this graph.
4%
13%
< 49
17%
42%
25%
50 - 99
100 - 149
150 - 199
> 200
22
Sosa and Associates™
How much would you be willing to pay for high
quality, branded boots?
As you can see there is a difference in how much
potential consumers usually spend on average for a
pair of boots and how much they would actually be
willing to pay for high quality, fashionable, patented,
branded boots. More than half of the interviewees
says that would be willing to pay between €150 and
€199 for a pair of boots. Although Izi-Fes boots
usually start at €200, we can still target these young
women. The leap from €199 to €220 isn’t a large one,
so with the right marketing approach, these potential
consumers might become proud Izi-Fes boots
owners as well.
Willingness to spend
8%
0%
< 49
21%
17%
50 - 99
100 - 149
54%
150 - 199
> 200
The last question that focuses on market potential is:
Which qualities are most important to you in boots?
This questions answers what potential consumers value most. And in 100% of the questionnaires
‘style’, ‘comfort’ and ‘quality’ outranked price. This is in line with people’s willingness to purchase boots
that are a little more expensive, even when they don’t necessarily spend that same amount on boots
on average. These results are also a positive outcome for market potentiality of the boots.
Limitations
Despite the bright picture that has been painted on the market potential, there have been quit some
limitations in conducting the research that birthed those figures.
Informational websites for government census divide the population of Berlin into different
subcategories. The Amt für Statistik Berlin-Brandenburg (2010) states that 51% of the population is
female and 49 is male. The population is also divided into age categories. However, it does not say
what percentage is male or female per age category. So inhabitants from 18 to 35 might be 80%
instead of the 51% we calculated with. We also don’t know the man/woman ratio in the different
boroughs.
In this short time-span we were not able to conduct interviews in Germany. We decided to use a small
group of young women from outside of Rotterdam, to be somewhat representative of the women in
Berlin. We based our conclusions on the findings of these 24 young ladies without knowing if women
with the same age and background in Berlin would react similarly.
Conclusion
Based on our research into marketing potential in Berlin for Izi-Fes, we would conclude that there is
definitely a possibility for success for the brand. In the Netherlands we have seen the same rise to
bohemian and boho-chic fashion, and Izi-Fes has been able to seize the opportunity of being the first
high end brand to market a high quality and also relatively higher priced fashionable boot.
There is a large potential market of women between the ages of 18 and 35, and Berlin has seen a rise
of economic welfare. This together with the rise of bohemian fashion, as could have been seen during
the fashion week in Berlin, can lead to great successes for Izi- Fes. Especially now, when there is not
yet a brand to which they could be compared.
23
Sosa and Associates™
Research objective 2 – Macro environment
Cultural Aspect
To analyze the cultural aspect of Germany
we are using the Hofstede dimension. This is
to help us understand the way Germans
behave and how to address them when
doing business with them. Also state the
similarities of the Germans with the
Netherlanders, because the exporters are
from a different culture (Netherlands). This
dimension is based on five dimension’s such
as power distance, individualism, masculinity
vs. femininity, uncertainty avoidance and
long term orientation.
Power distance has to do with the inequality that is experience in the society, and the way we respond
to this. Germany is based on a strong middle class, their rights are extensive and they must be taken
into consideration by managers. A direct communication must be kept between the two parties, and
for the Germans keeping meeting is also important. Germans don’t like to be control and a leader are
only considered when they show experience. Unlike the Germans the Dutch culture has a low power
distance. Where the power is decentralized and the managers count also with the knowledge of their
respective workers. In the Netherlands staff are expected to be heard when having a different opinion.
Individualism is to what extent the German society can be dependent, in this type of society people
tend to take care of them self and their direct family. Germans are categorized as being very
individualistic, in their family is most common to have a direct parent-children relationship. Their loyalty
is based on the personal relation with the other person, they also believe in being self-dependent.
They like to be direct and honest even if it hurts the counterparts, this give them an opportunity to
learn from their mistakes. In this dimension the German and the Netherlanders are relatively the same.
Germans are considered very masculine, one of the things that is highly valued for them is their
performance. Performance is also required at an early age of their life, a perfect example for this is
that they are put at different type of school at the early age of ten. They like to develop their selfesteem by learning from their mistakes, for the Germans they rather live to work. Managers in
Germany are required to be able to make decision, and make sure that is the right one. In other words
being assertive. Here Netherlands has a huge different from Germany, their score is very=y low
compare to the Germans. This means that in the Dutch culture people have a balance between work
and life. Dutch managers support their people and their decision are made by involving everyone in
this act. When a situation arose it is solve by negotiations and agreements, Dutch are known for their
long discussions until consensus has been reached.
On the level of uncertainty avoidance, the Germans have a high score. They have a low tolerance for
ambiguity and vagueness in most day-to-day situations. They tend to be risk averse and favor rules
and a well structured environment over unknown or unstructured situations. In this type of culture you
will find employees tend to stay with one employer for a long period of time, decisions are made by
consensus, traditional gender roles, job roles often require a very high level of expertise, projects are
carefully planned and many rules, laws and regulations are put in place.
In the aspect of long term and short term orientation, the Germans are on the short term. They are
impatience to achieve results on a short period of time, and a strong concern in establishing the truth.
They will like to know if we are doing business yes or no but keeping this decision on a short time.
24
Sosa and Associates™
Pestel analysis
PESTEL RESULTS
POLITICAL
Political factors have a strong influence on companies and organizations. This can give them
advantages, opportunities but it can also give them sanction when the company is not acting
accordingly. These factors can be government regulations or individual politicians who can control the
operation of a company. The analysis of political factors will help a company determine how to
proceed in that particular market. Political factors can be;
 Legislation such as the minimum wage or anti-discrimination laws.
 Voluntary codes and practices
 Type of government regime e.g. communist, democratic, dictatorship
Briefly I will discuss these factors and explain the impact they can provide to companies and
organizations.
Legislation
Minimum wage is the lowest amount an employee can be paid legally for his or her work. At the end of
the year, many governments change the percentage of minimum wages and some don’t. There is no
mandatory minimum wage in Germany, for this reason the rate must be agreed upon directly with the
employer but coming to the conclusion of a fair wage for living. This gives Izi-Fes a great advantage,
because if in the future the decision is to open their own store in Berlin the salaries of the employees
don’t have to be at a high scale. They can be negotiate at a reasonable rate until Izi-Fes is making
enough profit that is higher than the expenses, then the wages can be reconsidered once the
employees gave the best of them during working hours. (international minimum wage rates, 2013).
Labor Law
The federal legislation is the biggest source of labor law, there is not one consolidated labor code. The
labor law standards are put in separate Acts on several issues related to labor, which are added by the
government ordinance. The labor legislation are dictated by labor courts, but in some cases like strike
they are partly or total left to case law. (International Labour organization, 2011).
Employment contracts are usually ended at an unlimited period of time, but it can also be that by
agreement of both employer and employee it can be ended at a limited time. A fixed contract must be
in accordance with the objective conditions such as a specific end date, the completion of a specific
task, or the occurrence of a specific event. When starting a working contract both parties usually agree
to a probation of time, this period can be up to 6 months and can be terminated with two weeks in
advance of notice. The biggest source of termination of employment are the Civil Code and the
Protection Against Dismissals Act. Nevertheless this only apply to company employing 5 or more
permanent staff. For a worker to be eligible for this protection they must have completed a period of 6
working months without interruptions. (International Labour organization, 2011).
Working time is defined as the time from the beginning until the end of work without breaks. The legal
working time is 8 hours per day, except for Sunday and statutory holidays, which are normally seen as
a resting period. The normal weekly working hours are 48hrs but in many cases it can reduced to 38,5
and 35 hours by mutual agreement. (International Labour organization, 2011).
Voluntary Codes & Practices
when social standard are not maintained, the International Labour Organization (ILO) cannot impose
sanctions. For this reason voluntary codes of conduct, private initiatives and quality labels are
important when it comes to implementing labor standards worldwide. The private sector and unions
are working together in introducing social standards. These codes help German companies to ensure
that human rights are been uphold in developing countries like Germany. Not only the prices are
important when deciding in contracting a foreign production company, but also social standards where
companies have to attempt to fulfill these requirements. After the company is aware of the social
standards then regular working hours, decent working conditions, fair wages and the prohibition of
child labor can be enforced. This factors can benefit the German company that will be involve for
example improve product quality. The positive consumer image enjoyed by companies that comply
with social standards can also raise the market value of a business. (12. BMZ Federal Ministry for
Economic Co-Operation and Development, 2012)
25
Sosa and Associates™
Code of Conduct for specific sectors
It’s very complicated for small and medium sized companies and organizations to develop a code of
conduct for their particular business. For this reason several industries of different branches had the
initiatives to develop codes of conduct that apply to entire sectors. An example of code of conduct is
the Common code for the coffee community, but one code that is in the interest of Izi-Fes is retail
trade. This conduct code was developed by the Foreign Trade Association of the German Retail
Trade (AVE) it was done to achieve a better working environment between suppliers in foreign
countries. This rules include rules that are based on the ILO Conventions. The retail companies in
Germany have decided to rate and monitor their suppliers, but also to help them and encourage them
in improving their working environment. This code of conduct long term goal is to improve the lives of
the people in the supplier countries. (12.
BMZ
Federal Ministry for Economic Co-Operation and Development, 2012).
Government
Germany is a Federal Republic whose current leader is Chief Executive Angela Merkel. The chief
executive in Germany typically has a term length of 5 years. Germany's Legislature has 667 seats ,
and the last legislative elections were in 2009. The Federal Republic is a state in which the powers of
the central government are restricted and in which the component parts (states, colonies, or
provinces) retain a degree of self-government, ultimate sovereign power rests with the voters who
chose their governmental representatives.
ECONOMICAL
All businesses are affected by national and global economic factors. National and global interest rate
and fiscal policy will be set around economic conditions. The climate of the economy dictates how
consumers, suppliers and other organizational stakeholders such as suppliers and creditors behave
within society. An economy undergoing recession will have high unemployment, low spending power
and low stakeholder confidence. Conversely a booming or growing economy will have low
unemployment, high spending power and high stakeholder confidence.
For Izi-Fes the economy aspects of Berlin is very important, Why? Because we want to know whether
or not our target group will be able to pay for one pair of boots 200 euros. If the economy is not
growing it means there is a possible risk of unemployment and low spending. It’s also important to
know that exporting Izi-Fes to Berlin is not just for expansion, is also to make profit or reach the
breakeven point in no time. No economic growth can mean less demand for the product.
Factors that we need to research on the economic environment of Berlin are;
o Interest Rates
o The level of inflation Employment level per capita.
o Long term prospects for the economy
Interest rates - Germany is a member of the Euro Area, an economic and monetary union (EMU) of
European Union (EU) member states that have adopted the euro. The Euro Area benchmark interest
rate stands at 1.00 percent. in the Euro Area, interest rate decisions are taken by the Governing
Council of the European Central Bank. The ECB’s Governing Council has defined price stability as a
year-on-year increase in the Harmonized Index of Consumer Prices (HICP) for The Euro Area of
below 2%. The interest rate in Germany was last recorded at 0.75 percent. Interest Rate in Germany
is reported by the . Historically, from 1998 until 2012, Germany Interest Rate averaged 2.6 Percent
reaching an all-time high of 4.8 Percent in October of 2000 and a record low of 0.8 Percent in July of
2012. Ultimately the change in interest rates will influence developments in economic variables such
as output or prices. If interest rates are stable prices will be stable or relatively low, but if the other way
around prices will go high and the demand for products may drop. The chart below includes Germany
historical interest rates. (Germany Interest Rates, 2013).
26
Sosa and Associates™
The level of inflation Employment level per capita
The level of inflation in Germany was recorded at 1.55% last month. The federal statics office of
Germany is in charge of reporting the inflation rate. The most important price index in Germany are
housing, water, electricity, gas and other fuels (31 percent of the total weight), transport (13 percent),
recreation (12 percent) and food and non-alcoholic beverages (10 percent). The index also includes
miscellaneous goods and services (7 percent), clothing and footwear (5 percent) and health (4
percent). The remaining 8 percent of the index is composed by; furnishing and household equipment,
communications and accommodation and catering services. (Germany Inflation Rate, 2013)
Unemployment levels and rates move in a cyclical way, largely related to the general business cycle.
However, other factors such as labor market policies and demographic developments may influence
the short and long-term evolution as well. Unemployment rate in Germany is reported by the Deutsche
Bundesbank. The unemployment rate of Germany is measured by the number of people actively
searching for jobs as a percentage of the labor force. The unemployment rate in Germany have
increased to 5.90 percent in January of 2013 from 5.30 percent in December of 2012. (Germany
Inflation Rate, 2013)
Long term prospect for the German economy
Although the adjustment recession in some euro-area countries and the loss of confidence caused by
the sovereign debt crisis have left their mark, the good structural position of the German economy and
robust global economic developments have kept the upper hand. A high employment rate and strong
wage increases combined with the essentially sound outlook for the future are not only supporting
domestic economic activity; they are also making Germany more attractive to immigrants. The
assumption that the adjustment recession in some euro-area countries will initially continue and
uncertainty will persist but that the euro-area sovereign debt crisis will not escalate. Given their
diversification of sales markets and favorable balance sheet structures, German enterprises appear to
be in good shape on the whole. Nevertheless, if, in addition to the euro-area crises, the major noneuro-area countries were to suffer a more pronounced economic slowdown or the situation in the euro
area were to take another substantial turn for the worse, this would place a considerable strain on
German enterprises. (Deutsche Bundesbank, June 2012).
27
Sosa and Associates™
LEGAL FACTORS
These factor is related to the changes in laws and regulations in the future. Governments tend to add
laws or regulations to many activities that has to do with businesses. Any law that don’t favor the
business market can lead companies and organizations to loss in profit and even to a more tense
working environment. Since Izi-Fes is planning in working on an international market, they will have to
focus on the legal factors for that particular country in this case Berlin. These factors can be;
 Market regulations
 Trade agreements, tariffs or restrictions
 Tax levies and tax breaks
Market regulations & Trade agreements - The idea of the single European market means that
goods, services and people can move freely within this market. Which gives Izi-Fes a good advantage
because is exempted from paying customs fees. Nevertheless if the good are imported from a non EU
country they are entitle to customs, import regulations and must comply with the different requirements
and standards. The free trade gives an important impulse to the growth of global economy and also
help the improvement of our living standards. just like other countries Germany backs up the open
market and the easing going of international trade but within a set of negotiated agreements. Due to
this only a small part of the goods that are trade in Germany are entitle to direct market regulations.
Such as; textiles and steel goods from various third countries are mostly restricted by import fees and
are required an import license. (The German Business Portal , 2013).
For Izi- Fes this information is important because their boots are made from Moroccan carpets. It’s
important because here Izi-Fes has an idea in whether or not they have any regulations to follow when
exporting their product. For the past years countries from the EU, including Germany have signed a
large number of preferential trade agreements. As a result, imports from these countries enjoy
advantages related to reduced customs formalities and costs for entering the European (and German)
markets. To mention a few of the regions and countries benefiting from this preferential they are such
as;
 The European Free Trade Area and European Economic Area (Iceland, Norway,
Liechtenstein, Switzerland)
 Three non-EU Countries in the EC Customs Union (Andorra, San Marino, Turkey)
 Countries of the Pan-Euro-Mediterranean accumulation (EU, EFTA, Turkey, Faroe Islands
and 9 other Mediterranean countries)
 Western Balkan states (Albania, Bosnia and Herzegovina, Croatia, Macedonia and Serbia and
Montenegro) and much more countries and regions.
Tariffs or restriction – the customs duties are calculated depending on the value of the good, which
is equivalent to the value of the sale price. This is proof by showing the purchase invoice, and is
adjusted by adding the costs of transport , insurance and freight in the particular case that is not
included in the purchase invoice. To get the correct information Izi-Fes need to consult the TARRIC
database where all the information on a specific good or product is given. Goods may be imported to
be sold, repaired, temporarily stored or used in the production of other products for re-exportation. For
this reason customs has its procedures which they can be for release for free circulation, inward
processing, outward processing, customs warehousing, transit, temporary importation, processing
under customs surveillance and end-use. Izi- Fes product falls in the category of release for free
circulation, this is the most common use procedure where goods are meant to be sold or used within
Germany they are applicable to custom duties and taxes. (Customs Tariffs Database, 2013).
28
Sosa and Associates™
Taxation
Before starting to export Izi-Fes needs to register in Berlin for single tax reference number, regardless
if we are establishing or not a local company. This registration is important for all applicable taxes but
specially for the Vat. This means that even if we are not establish we are entitle to a percentage of the
Vat, this is an advantage for Izi-Fes because no matter how little it might seem it’s a gain. In Germany,
all entrepreneurs who are engaged and independently active in a trade, business or profession for the
purpose of generating income, are liable to value-added-tax, also known as turnover tax. The German
standard Vat for the supplies of goods and services is 19% but certain goods like books and food and
services are subject to the lower rate of 7 per cent. Having in mind that all goods imported into the
German market has to comply to the rules and regulations such as labelling, packaging materials and
quality control. (Taxation and Custom Union, 2013).
Supply of goods
The German Vat for goods is determined by the place of the goods, there are some rules that are
applicable to this such as; The place where the shipping of the goods begins, The place where the
goods are located at the time that the buyer acquires the power to dispose of the goods, In case of
movements from a special customs warehouse into free circulation within the EU: the location of the
goods when they are put into free circulation counts as the place of supply of goods for VAT purposes,
(Germany Trade & Invest , Aug. 2010)
Supply of services
The place of supply of services depends on whether they are rendered to private consumers (B2C) or
to commercial businesses (B2B). If the recipient is a private consumer, the place of supply is where
the entrepreneur’s business or permanent establishment is based. In B2B-relationships, on the other
hand, the place of supply is usually where the customer’s permanent establishment is located. With
some exceptions such as; Telecommunication services VAT liability exists where the customer is
located, Transportation services VAT liability is incurred where the transport is performed.
Which means that if any of this legislative obligations can lead to sanctions such as fines, adverse
publicity and imprisonment. Ineffective voluntary codes and practices will often lead to governments
introducing legislation to regulate the activities covered by the codes and practices. In order to avoid
any law breaking Izi-Fes needs to keep all of this factors in mind. (Germany Trade & Invest, Aug.
2010).
When assessing the technological aspects of the German market, we can look at the overall latest
improvements in Berlin; transportation and infrastructure are developing fast and this can be an
advantage to us. The administration of Berlin is busy with Berlin Brandenburg international Airport and
to transform the city into a railway hub, but this does not affect our company directly as the
transportation of our product will be done mainly by loading trucks – the usage of this method will bring
us cheap, reliable, fast transportation of our products- we will probably renew the stocks once a month
in the beginning because the products adheres to a very small percentage of buyers so our sales will
probably not be exponential. Another aspect I could find information about regarding technology was
the country’s latest preoccupation about sustainability and environmental protection; as all the
companies are struggling to get a “greener” image, we can also emphasize this with our boots and
with the fact that they are using natural products, and are created with respect towards the nature and
the artisans included in the project.
29
Sosa and Associates™
Going further in the STEP analysis, we discover the social aspects are also relevant in undertaking a
marketing research plan. Doing business in a foreign country is always challenging, but in our case
exporting Izi-Fes boots to Berlin will be easier due to the similarities between the German people and
the Dutch people. According to my research, Berlin’s population does not have a high percentage of
internationals [ out of Total population 3,513,026, only 478,212 are Foreign nationals  only 13,6 %] .
Comparing the information with another source, I have discovered the Expats community is growing in
Germany more and more: last information collected on 31.12.2010 states that the largest groups by
foreign nationality citizens are from Turkey (104.556) , Poland (40.988) , Serbia (19.230), Italy
(15.842), Russia (15.332), United States (12.733), France (13.262), Vietnam (13.199), Croatia
(10.104), Bosnia and Herzegovina (10.198), UK (10.191), Greece (9.301), Austria (9.246), Ukraine
(8.324), Lebanon (7.078), Spain (7.670), Bulgaria (9.988), China (5.632), Thailand (5.037) ; there is
also a large Arabic community, mostly from Lebanon, Palestine and Iraq- no exact numbers availabletogether with a large Vietnamese community- 83.000 people. Of course, all these internationals have
different views, preoccupations and fashion sense; we will target all of them with the same strategy,
because differentiation would be less cost-effective and not at all appropriate for a start-up company
like Izi-Fes.
Country of origin
Population
Turkey
250,000-300,000
Russia (including Russian-Germans)
est.200,000
Poland
est.200,000- 240.000
Arab World
est.70,000
Vietnam
est. 20,000-40,000
Ghana
est. 20,000
China, Croatia, Serbia, United States, Italy, Bosnia, Iran, almost or at least
Greece
20,000
Table created in Wikipedia- related sources available below
Berlin is also seen lately as a city of initiatives due to the expertise concentrated in Berlin and its
renowned institutions in the humanities and sciences that have continued to distinguish the city as a
leading centre of academics and research. In the information society, knowledge is a prerequisite for
responsible political action and for the emergence of innovative prospects. A commitment to the
common good and the concept of an open, socially just, and environmentally appealing city supported
by civil society are two of the guiding principles for Berlin’s future development. The goal here is to
involve as many interest groups as possible in a “local partnership.” This integrative approach also
means continuing to bring East and West together, creating more of a dialogue between the German
and non-German population, and inspiring more of a sense of solidarity between young and old. It
seems that also here we can blend with the authorities’ attempts to create an innovative image of the
city; our products are unique and give the persons that wear them a voice of their own, a way to
express themselves and their preoccupations towards nature-inspired designs and old- antiquetraditional design.
To sum up with, we can say there are several aspects concerning social and technological aspects
that can facilitate our entrance on the German market, as presented above. Further research is of
course needed and this will be undertaken in the next school block. The information collected up to
this moment will only serve as a guideline and motivation for why we have chosen Berlin as our export
destination for the Izi-fes boots.
30
Sosa and Associates™
Legal factors :Due to the fact that government adds and changes laws and regulations constantly, IziFes have to keep a constant look out on the legal factors. The misunderstanding of laws or failure to
comply with these regulations can lead the company to a tense working environment and even
causing a drop in their sales and profit. The legal factors of the German market are : Market
regulations, Trade agreements, tariffs or restrictions, Tax levels and tax breaks. Izi-Fes boots are
produced in Morocco, and then exported to Berlin. Since both countries are part of the single
European market, no custom fees will have to be paid; this is a cost-reduction advantage. The form of
finding out what specific amount for their product they will have to pay is assessing the TARRIC Data
base. Goods may be imported to be sold, repaired, temporarily stored or used in the production of
other products for re-exportation. Izi- Fes product falls in the category of release for free circulation,
this is the most common use procedure where goods are meant to be sold or used within Germany,
for this type of goods customs have duties and taxes applicable to this type of goods. Before starting
to export Izi-Fes needs to register in Berlin for single tax reference number, regardless if they are
establishing or not a local company. This registration is important for all applicable taxes but specially
for the Vat. Once the registration is done it will take 3 weeks to get the tax number, and only after
obtaining this Izi-Fes can begin exporting to Berlin.
Taking into account the information presented in the results of the Environmental analysis, our
conclusion is that the consideration on the environmental factors is of a minimal relativity in
building up our export plan. The reasoning behind this is that the exporting country, Netherlands and
the target country, Germany are neighbouring geographical countries, and also their climate is very
much similar, so the risk that we encounter major natural barriers are reduced to the minimum.
Another reason is the low risk of scarcity for the raw materials because we are not using massproduction but a relatively low inventory quantity, plus the outsourcing happens in Morocco, in a
separate division of the company. Last but not least, Izi-Fes company is dedicating a special
attention to sustainability issues and the creation of every pair of boots is intended with care for the
nature, as emphasized on their website. This is how we, the team of “Sosa and Associates”, are able
to state in our environmental analysis on Germany that the products we intend to export will not affect
in any way the ecosystem of the host country.
Conclusion
Sosa & Associates have carried out a PESTEL analysis to analyze the possible internal and external
environment of Izi-Fes, including Political, Economic, Social, Technological and Legal factors of Berlin
market on a whole, and the impact these factors will have on Izi-fes Export Plan.
Political factors need to be considered because we have to stick to the regulations imposed by the
government regime , voluntary codes and minimum wage standards. The result of our research
shows it is crucial to have similar working hours with the ones already applicable in Berlin: 8hrs a day,
except Sunday and statutory holidays ; there are also segments of the population that need special
conditions : the working hours are fixed for pregnant woman or persons under 18, deviation from this
rules can lead to penalty and sanctions unwanted for a new-entering business like Izi-Fes. Moreover
we should consider the code of conducts to help improve the working environment Izi-Fes has to
guarantee that the social standards are kept when purchasing the materials used in their production
line. For the Germans this is a very important matter, not only prices are important but also human
rights. One code that is in the interest of Izi-Fes is retail trade, which stands for a better working
environment between suppliers in foreign countries.
Economic Factors : Izi-Fes just like other companies will be affected by global and national economic
factors which will determine how consumers will react to our entry in the Berlin market. Important
factors to have in mind of the economic environment are: Interest Rates, The level of inflation
Employment level per capita, Long term prospects for the economy. Since Germany is a part of the
Euro Area, an economic and monetary union (EMU) of European Union (EU), their currency is EURO;
this is an advantage as we do not need to worry about currency rate and extra costs. The Germany
interest rate stands at 1%, once the interest rates are below 2% the price stability can be kept, which
mean the economy is on stable pace. On the other hand if the inflation is too low we can have high
demand but low supply; all in all, thorough economic analysis needs to be done before establishing a
good financial plan to enter the German market with exported products. This can be a good time for
Izi-Fes to enter the German market, given their diversification of sales markets and favourable
balance sheet structures, German enterprises seem to be having good development on a whole.
31
Sosa and Associates™
Research objective 3 - Competition
All shoe stores in city centre of Berlin1 :
Group 1
Depot 2
Overkill
Solebox
Paul’s Boutique
Calypso Shoes
StickaBush
Civilist
Wood Woodo21
Osco
Avesu
Group 2
Saloon Boots & Stuff
14oz
Happy Shop
Andreas Murkudis
Snique
Group 3
Soto
Red Wing Shoes
Shusta
Trippen
Ricardo Cartillone
Stiefel Knecht
Premiate
LaLa Berlin
Darklands
All the mentioned store above are within a 2 to 3 km radios of the city centre of Berlin. As shown in the
table, all stores are put in three groups.
1. 1st group:
These shoe (brand) shops for very little competitions for IZI Fes.
Their common characteristics are:
 Relative cheap
 Provide mainstream shoes
 Not one of kind
2. 2nd group:
Altho
ugh this group does form much more of a competition, it is still not a direct competitor, because of their
products (portfolio). Their common characteristics are
 Many of the stores sell one-of-a-kind shoes
 They fit in the upper-price range of shoes
 Locally very known in Berlin, and amongst the people there
The
part where this group does not form a competition
 Provide different kind of shoes in comparison with IZI Fes
3. 3rd group: This group can be seen as a direct completion within the market. They provide
within the same price range, products are one of a kind, well known in the Berlin fashion
scene.
4. 4th group:
This group can be seen as a direct completion within the market.
They provide within the same price range, products are one of a kind.
Well known in the Berlin fashion scene.
32
Sosa and Associates™
Group 3 and 4
KaDeWe
Tauentzien Straße 21-24, 10789 Berlin
(030 21210, www.kadewe.com).
U2, U1 Wittenberg Platz.
Open 10am-8pm Mon-Sat; 1-6pm Sun.
The largest department store on the European continent and
well over 100-years old.
And since few years has a fresh and hype image among the
people in Berlin.
KaDeWe has well over 50 brand in their store, and one of them being UGS.
(KaWeDe 2013)
Galeries Lafayette
Friedrichstraße 76-78, 10117 Berlin
(030 209480, www.galerieslafayette.de).
U6 Französische Straße.
Open 10am-8pm Mon-Sat.
Also a department store, with a Perisian chic to the
central of Berlin. Located o the “French street”
(Französische Straße). The building has a bright glass structure and hold to allot of known brands
running from well known to independent brands.
Also here one of the direct competitors (UGS) sells their shoes.
Departmentstore Quartier 206
Friedrichstraße 71, 10117 Berlin
(030 2094 6800, www.cabinet206.com).
Französische Straße.
Open 11am-8pm Mon-Fri
10am-6pm Sat.
The department store of Quartier 206 brings a luxurious
edge to the list of department stores.
comparison to KaWeDe and Lafayette, Quartier 206
provides a large amount of product from well-known
luxury brands from all over the world. And brings it to
their store in Berlin.
U6
In
Kaufhof
Alexanderplatz 9
U2, U5, U8, S5, S7, S9, S75
Alexanderplatz
Open at 11 am-8pm
Mon-Sat.
Galeria Kaufhof brings ordinary products for the
common household closer to the customers. From
flipflops to perfumes and back to dinner plates.
Galeria serves it all.
33
Sosa and Associates™
Conclusion
By exploiting the IZI Fes brand in Berlin, IZI Fes will take huge step in the fashion market of Berlin.
And will become well-established fashion brand in the long run.
But of course they won’t be the only one, as the result of the research show.
In total there is a large group of shoes (brand) store that provide/ sell shoe to the people.
Where IZI Fes may have an unique selling point with the one of kind manufacturing and the ecofriendly way of it. There are not the only one, group 2 of the competitors are based on a different kind
of market. But brands from the third group face a much more fears competition. IZI Fes will stand a
chance against them, the sides look positive because of their more fashionable bohemian look and
supported by a large group of young people.
This last advantage will keep IZI Fes above the water level and will get IZI Fes through in the German
market.
Research objective 4 – Entry mode
According to Ball et al. (2002) there are two major types of export modes:
•
Indirect export
•
Direct export
Exporting is the marketing and direct sale of domestically-produced goods in another country. Since
exporting does not require that the goods be produced in the target country, no investment in the
foreign production facilities is required. Most of the costs associated with exporting take the form of
marketing expenses.
Advantages of exporting are that it minimizes risk and investment and that it has speed of entry.
Disadvantages are the entry barriers and the tariffs add to costs.
Indirect export
Indirect export is the process of exporting through domestically based export intermediaries (homebased exporters). These can be manufacturers ‘export agents, export commission agents, export
merchants or international firms. Indirect methods of exporting require less marketing investment, but,
as the exporter has no control over its products in the foreign market, the company lose substantial
control over the marketing process. Advantages of indirect exporting are that the exporting company
can access the market very fast and the company has little or no financial commitment because most
of the times the export partner in the county the company is exporting to, covers most expenses
associated with international sales. Disadvantages are that with this type of export the exporting
company will have lower profit and less control over distribution, sales, marketing etc.. The wrong
choice of distributor may lead to poor market feedback affecting the international success of the
company.
Direct exporting
Direct exporting is the exporting of goods and services by the firm that produces them. This type of
entry mode is called externalization, Izi-Fes will have low control and risk but high flexibility. The firm’s
products are manufactured in the domestic market and then transferred directly to the host country, in
this case Germany. When the direct export entry mode is used the producing firm takes care of
exporting activities and is in direct contact with the first intermediary in the foreign market, for example
a departments store.
A few advantages of direct exporting are that the business trips are much more efficient and effective
because they can meet directly with the customer responsible for selling their product. Also, the
customers provide faster and more direct feedback on the product and its performance in the
marketplace. As Izi-Fes develops in Berlin, they have greater flexibility to improve or redirect the
marketing efforts. It also include more control over the export process, potentially higher profits, and a
34
Sosa and Associates™
closer relationship to the overseas buyer and marketplace, as well as the opportunity to learn what you
can do to boost overall competitiveness.
This type of exporting also gives a better protection of trademarks, patents, goodwill, and other
intangible property.
Disadvantages can be that Izi-Fes may not be able to respond to customer communications as quickly
as a local agent can and since it’s a new brand in Germany it may take time to cultivate a customer
base because they are already used to other brands.
Ball et al. (2002) conclude that if the firm chooses to do its own exporting, it has four basic types of
overseas middle-men from which to choose:
•
Manufacturers’ agents
•
Distributors
•
Retailers
•
Trading companies
Manufacturer’s agents are independent sales representatives of noncompeting suppliers and are
residents of the country or region in which they are conducting business for the firm. They usually work
on a commission basis, pay their own expenses and do not assume any financial responsibility .
Distributors are independent importers that buy for their own account for resale. They may be given
exclusive representation and, in return, agree not to handle the competing brands. Distributers can
buy through manufacturers’ agents when the exporter employs them, or they may send their orders
directly to the firm.
Retailers, especially of consumer products that require little after-sales servicing, are frequently direct
importers. For example If Izi-Fes is exporting its products to a department store, the department store
is considered to be the retailer.
Trading companies are firms that develop international trade and serve as intermediaries between
foreign buyers and domestic sellers and vice versa. So it is basically a firm that connects buyers and
sellers within different countries (can be the same country) but does not get involved in the owning of
the products or services.
Entry Barriers
Export restrictions can be positive or negative depending if Izi-Fes is considering exporting to Berlin
Or setting up a shop in Berlin Market. Mentioned below is some of the Entry
Barriers that can be imposed by the host country.
TAX
In order to export to Berlin, Izi fez has to pay some taxes, although it is exempted from paying
Import duties because Izi- fez in located in the Netherlands which belongs to the European Union.
Minimum thresholds
When importing goods into Germany, duty is not charged, if either the total value of the goods (not
Including shipping charges or insurance) does not exceed €150 or if the amount of duty payable,
Does not exceed €5 (Germanlawjournal 2013). Neither duty nor VAT is payable if the total value of
The goods (not including shipping charges or insurance) does not exceed €22
LANGUAGE
Language difference is considered as an entry barrier when entering a new market. Lack of speaking
and understanding the German language can lead to communication break down and
misunderstanding. Hence Izi-Fes main company is in The Netherlands which speaks Dutch language
and is planning to do business in Berlin which speaks German language, the language difference
could pose as an entry barrier, but if Izi-Fes decides to learn the German language, this will enable
Izi-Fes to understand their target market more better as well as its culture.-
35
Sosa and Associates™
CULTURE
Difference in Culture of the Berlin Market can serve as an entry barrier. The German way of doing
business is different from The Netherlands. German is extremely regulated, has a high affinity for low
risk investment and often bureaucratic. If we do employ staffs for Izi-Fes in Berlin they have to
accustom with our culture, policies, strategies and working hours and Izi-Fes has to learn about the
behavior of the people in Berlin and their norms and ethical values which might be very challenging. If
Izi-Fes intends to employ some staffs in Berlin, they might need to undergo some extra training .It is
also very paramount for Izi-Fes to employ sales representative from Berlin, someone who speaks the
language and understands the culture
The political environment can also have a big impact of Izi fez, as mentioned in the PESTAL analysis
such as legislation on minimum wages, working hours
AdvertisingCreating awareness can be very challenging in the Berlin market, because the customers in Berlin
might be already acquainted and gotten used to the previously existing brands of shoes, and Izi-Fes
might need to spend a lot of money and time in order to create awareness and beat competition. Also
some customers in Berlin might be loyal to established products in Berlin, the presence of established
shoe brands can be a barrier of entry for Izi-fes in Berlin market
Possible department stores.
Since Izi-fes is only exporting the products to Berlin our consultancy group had to look for a
department store where Izi-Fes can fit best in. Izi-Fes is also known for all the celebrities that buy and
wear the handmade boots so we tried to look for a store where they have top brands.
KaDeWe
The KaDeWe is the largest department store in continental Europe and it stocks quite an impressive
range of high end designers
KaDeWe was opened in March 1907. As the leading department store in the country, it presented
customers with an array of desirable goods from around the world - from the latest Paris fashion show
looks to exotic south sea fruits. Always a firm step ahead of the competition, KaDeWe today, as well
as offering a vast variety of products, is also setting new standards in service. Each day up to 180,000
customers from around the world are welcomed in cordially by the KaDeWe before being attended to
on more than 60,000 sq m of sales space by some 2,000 employees, for each of which customer
needs and first class service take pride of priority.
The KaDeWe lies in the heart of Berlin which means you can get there easily from any location,
whatever the form of transport.
This department store sells hundreds of top brands. Looking at only the women’s shoes department,
top brands which of course will also be the competition of Ifzi-Fes are Prada, Armani, Hugo Boss,
GUESS, UGG, Lacoste and so on.
Voo Store
36
Sosa and Associates™
If Izi-Fes wants less competition in the same store they can also sell their products in “Voo Store”.
Voo Store is located in central Kreuzberg, in a backyard on Oranienstrasse. The selection of designers
and products play a key role, with an emphasis on design, creativity and good craftsmanship. As for
the price level of the merchandise, it’s just as varied as the labels and styles on offer. Like there’s
written on the website they emphasis on design, creativity and good craftsmanship, exactly the
competencies of Ifi-Fes.
Other department stores are Galeries Lafayette, Department store Quartier and Galeria Kaufhof.
Conclusion
Based on the findings Sosa & Associates can conclude that the best entry mode for Izi-Fes will be
direct export. This is because it is the exporting of goods by the firm that produces them which is
exactly what Izi-Fes is going to do. They are going to export the products that are hand made by
themselves. This type of exporting also gives a better protection of trademarks, patents, goodwill, and
other intangible property while if they enter the market using indirect import will have less control over
distribution, sales, marketing and so on.
Our consultancy team decided that it’s better for Izi-Fes not to open a new store in Berlin but to export
only the products and have the brand have its own space in a department store. This concept is called
shop-in-shop. One of the disadvantages of direct export is that since it’s a new brand in Germany it
may take time to cultivate a customer base because they are already used to other brands. That’s why
it’s good to first have a shop-in-shop. When the sales go up and Izi-Fes gets enough profit they will
know their brand awareness has gone up and eventually they can open their own shop in Berlin.
Shop-in-shop
The "shop in shop" retail concept is where a brand owner or retailer, in this case Izi-Fes, takes space
in another retailer's store and fits it out to provide selling space dedicated to that secondary company's
products. A shop-in-store agreement is a clear example of how collaboration between producer and
distributor is developing to become a long-term oriented working partnership.
The shop-in-shop concept is the answer for the problem that is facing by many retailers.
Consumer these days are less brand loyal than before the arrival of internet. And in particular the
chance to compare with other brands for the same product.
What shop-in-shop concept provides to the retailers is to have a large scale of diverse products.
(Info.nu)
For Izi-Fes the advantages for a shop-in-shop agreement, with other retailers, is a good way for
building up brand awareness. Besides the advantage of higher potential brand awareness, what IziFes will face with the shop-in-shop agreement. Izi-Fes doesn’t have to consider extra costs in
comparison with opening a store in the centre of Berlin. Thus saving costs.
(Info.nu) But of course there other things that come across when opening a shop in another retailer’s
store. The conditions of opening a shop-in-shop are presented below.
37
Sosa and Associates™
Conditions of shop-in-shops:
 Rental agreement:
Rental agreement where Izi-Fes are granted gross floor area floor selling their products.
In return, the agreement can state that, Izi-Fes will pay a fixed rent for the use of the shop floor space
or Izi-Fes should give away a certain percentage of their profit.
 Business Activities:
Next to the service level, Izi-Fes should agree on the business activities.
In the business activities it will be clearly stated in the responsibilities that apply ton Izi-Fes.
Responsibilities and accountability in the shop floor.
 Service Level Agreement:
Because almost every shop has a certain customer service level, Izi-Fes is bound to meet these
standards. This will come forward in the Service Level Agreements.
(Franchise+,2010)
From the four basic types of overseas middle-men the one that fits best with Izi-Fes is retailer because
they will export their products but still owning the patent and copy right. Contact on behalf of the
exporter is maintained either by the manufactures’ agent or by the exporter’s sales representative
based in the territory or travelling from the home office. (Ball et al. 2002)
From all the possible department stores where Izi-Fes can have its shop-in-shop our consultancy
group can conclude after researching that the best option is KaDeWe because it is one of the largest
department stores in continental Europe and the most known in Germany. This makes it more
attractive for tourist to shop there.
38
Sosa and Associates™
Research objective 5 – Market strategy
SWOT ANALYSIS – IZI FES (Weaknesses and Threats )
Weaknesses
The weaknesses of Izi-Fes refer to the company size. Because Izi-Fes is a small company that is
doing businesses especially in Rotterdam and surroundings , they also have a number of weaknesses
regarding the entrance on the German market.
1. Experience
Exporting to German market involves a certain degree of experience from behalf of the
managers and the ownership. This might be a weakness because of the processes of
exporting , including creating the contacts on the German market , understanding the
consumers , logistics , rules and regulations … The people of Izi-Fes will need to be
familiarized with these processes as they are implemented to a new market.
2. Production capacity
Izi-Fes is currently importing , for the Dutch market , the boots directly from Morocco. The
production capacity can also be a weakness because all Izi-Fes’s boots are made manually
and this can be an impediment in providing the necessary stock for both Dutch and German
markets.
3. Finance
Entering a new market involves a lot of expenditure in marketing and promotion in order to
create brand awareness. Especially for a small company as Izi-Fes is , this can be a problem.
The promotion of the brand costs a lot when we take into consideration television commercials
, radio , internet , advertisement panels , written press advertisement ….etc. Izi-Fes has to be
sure that they have enough money to successfully enter the German (Berlin) market.
Threats
Because is the first time Izi-Fes is expanding into a new market , they should be aware of the threats
coming from that market , its competitors , and also the government and consumer behaviour.
1. Other boots manufacturers already in the market
In Berlin , Izi-Fes will encounter a lot of competition referring to other boots manufacturers that
are present for a longer time in the market and have a bigger experience and understanding of
the market and the consumers. Some examples are : Fashion Boots , Buffalo Boots , Sancho
Boots…etc. Along this , Izi-Fes will also have to pay attention to the mass-producers that
already posses a high market share.
2. Consumer behaviour
Izi-Fes has to pay very much attention of German consumer tastes and behaviour. The
company’s boots are handmade and have a vintage look and is advised to conduct some
research in order to find and reach these kind of customers.
3. Market niche
Izi-Fes’s goal is to reach the women consumers with a medium to high income that are
attracted to vintage and hand made products , like Izi-Fes’s boots. The company’s products
are not designed to mass-production and this means izi-Fes need to pay attention on its niche
market and to reach its customers before other competitors and provide high-quality services
in order to make sure the customer will return and spread the word about Izi-Fes’s boots.
39
Sosa and Associates™
Conclusion
This report has been researched and presented by the consulting company; Sosa and Associates
commissioned by IZI Fes.
The purpose of this research is to find out whether IZI Fes can enter the Berlin fashion market and
come successful (profitable).
Based on this the following questions have been answered:
Is IZI Fes entering a conductive macro-environment in Germany?
Which entry mode fits our clients’ needs and desire best?
How much (and what kind of) competition will IZI Fes face?
How will IZI Fes reach their potential consumers?
Methods of analysis were particularly desk research, including history research of previous brand that
followed the same footsteps, the use of other researches on the German and Berlin fashion market,
secondary sources.
Other method was developing a questionnaire in order to an input of primary source, calculation on the
questionnaire and sample size can be found in the appendices.
Macro-environment
Sosa & Associates have carried out a PESTEL analysis to analyse the possible internal and external
environment of Izi-Fes, including Political, Economic, Social, Technological and Legal factors of Berlin
market on a whole, and the impact these factors will have on Izi-Fes Export Plan.
Political factors need to be considered because we have to stick to the regulations imposed by the
government regime, voluntary codes and minimum wage standards. The result of our research shows
it is crucial to have similar working hours with the ones already applicable in Berlin: 8hrs a day.
Moreover we should consider the code of conducts to help improve the working environment Izi-Fes
has to guarantee that the social standards are kept when purchasing the materials used in their
production line. For the Germans this is a very important matter, not only prices are important but also
human rights. One code that is in the interest of Izi-Fes is retail trade, which stands for a better
working environment between suppliers in foreign countries.
Economic factors Important factors to have in mind of the economic environment are: Interest Rates,
The level of inflation Employment level per capita, Long term prospects for the economy. The
Germany interest rate stands at 1%, once the interest rates are below 2% the price stability can be
kept, which mean the economy is on stable pace. On the other hand if the inflation is too low we can
have high demand but low supply; all in all, thorough economic analysis needs to be done before
establishing a good financial plan to enter the German market with exported products. This can be a
good time for Izi-Fes to enter the German market, given their diversification of sales markets and
favourable balance sheet structures, German enterprises seem to be having good development on a
whole.
Legal factors due to the fact that government adds and changes laws and regulations constantly, IziFes have to keep a constant look out on the legal factors. The legal factors of the German market are:
Market regulations, Trade agreements, tariffs or restrictions, Tax levels and tax breaks. Izi-Fes boots
are produced in Morocco, and then exported to Berlin. Since both countries are part of the single
European market, no custom fees will have to be paid; this is a cost-reduction advantage. Izi- Fes
product falls in the category of release for free circulation, this is the most common use procedure
where goods are meant to be sold or used within Germany, for this type of goods customs have duties
and taxes applicable to this type of goods.
Before starting to export Izi-Fes needs to register in Berlin for single tax reference number, regardless
if they are establishing or not a local company. This registration is important for all applicable taxes but
specially for the Vat. Once the registration is done it will take 3 weeks to get the tax number, and only
after obtaining this Izi-Fes can begin exporting to Berlin.
40
Sosa and Associates™
Market Potential
Based on our research into marketing potential in Berlin for Izi-Fes, we would conclude that there is
definitely a possibility for success for the brand. In the Netherlands we have seen the same rise to
bohemian and boho-chic fashion, and Izi-Fes has been able to seize the opportunity of being the first
high end brand to market a high quality and also relatively higher priced fashionable boot.
There is a large potential market of women between the ages of 18 and 35, and Berlin has seen a rise
of economic welfare. This together with the rise of bohemian fashion, as could have been seen during
the fashion week in Berlin, can lead to great successes for Izi- Fes.
Especially now, when there is not yet a brand to which they could be compared.
Competition
By exploiting the Izi-Fes brand in Berlin, IZI Fes will take huge step in the fashion market of Berlin. And
will become well-established fashion brand in the long run.
But of course they won’t be the only one, as the result of the research show.
In total there is a large group of shoes (brand) store that provide/ sell shoes to the people.
Where Izi-Fes may have a unique selling point with the one of kind manufacturing and the eco-friendly
way of it. There are not the only one, group 2 of the competitors are based on a different kind of
market. But brands from the third group face a much more fears competition.
Izi-Fes will stand a chance against them, the sides look positive because of their more fashionable
bohemian look and supported by a large group of young people.
This last advantage will keep IZI Fes above the water level and will get IZI Fes through in the German
market.
Entry Mode
Based on the findings Sosa & Associates can conclude that the best entry mode for Izi-Fes will be
direct export. This is because it is the exporting of goods by the firm that produces them, which is
exactly what Izi-Fes is going to do.
They are going to export the products that are hand made by themselves. This type of exporting also
gives a better protection of trademarks, patents, goodwill, and other intangible property while if they
enter the market using indirect import will have less control over distribution, sales, marketing and so
on.
Our consultancy team decided that it’s better for Izi-Fes not to open a new store in Berlin but to export
only the products and have the brand have its own space in a department store. This concept is called
shop-in-shop. One of the disadvantages of direct export is that since it’s a new brand in Germany it
may take time to cultivate a customer base because they are already used to other brands. That’s why
it’s good to first have a shop-in-shop. When the sales go up and Izi-Fes gets enough profit they will
know their brand awareness has gone up and eventually they can open their own shop in Berlin.
All and all Sosa and Associates can conclude that by entering the German fashion market in Berlin. Is
a good step for Izi-Fes for building their brand awareness.
Berlin has allot to offer, being the fashion capital, where Izi-Fes can profit from.
Political/legal and economic environment for Izi-Fes are very favourable for entering the German
market. The increasing economic situation of Germany along with the uprising of the bohemian
fashion culture will give Izi-Fes a high marketing potential and a possibility of being successful. Just
like in the Netherlands Izi-Fes can introduce himself as a newcomer in this market and grow into a
head bohemian brand. If taken advantage of this opportunity.
The fastest and easiest way to react to this is by direct export and selling it in retailers by the using the
concept of “shop-in-shops. Opening a retailers shop in the city of Berlin will be hard and a long term
during process. With risks and cots that are all save when the direct export is applies. And sold in
other shops.
41
Sosa and Associates™
Appendices
1. Expert opinion
Interview with: Fadoua Elkhanza
Profession: Sales director at Izi Fes
Date: 23 February 2013
Fadoua Elkhanza is a 24 year old Dutch young woman, with roots in Morocco. In 2011 she and her two brothers
started their own company in selling handmade, bohemian style, fashionable boots called Izi-Fes. Having
witnessed and participated in Izi Fes’ path to success, her view on operations and her advice can make a
difference in how successful our export to Berlin will be.
Fadoua’s official role at the company is that of sales director. However, since she and her two brothers
are the only three employees in the company, they all work together in all areas they feel they can be
of assistance to each other. Fadoua was present before the launch of the product and has contributed
to making the brand what it is today. She had a lot to say about what we can do to make Izi Fes a
success in Berlin.
The interview
What do you think about Sosa and Associates researching the options to export your boots to Berlin?
I think it is a great idea of course! Izi Fes is a great product and needs to go global!
We started selling in Rotterdam only, then expanded to other regions in the country and currently we
are also selling our boots in Ibiza. We are very pleased with our success, but there is a lot more that
we would like to conquer. Berlin is definitely a good option to start our conquest of Germany.
We are in still in the early stages of our research, what areas do you think we need to focus on most?
When my brothers started really seeing potential in success Izi Fes boots could have, we all just dove
in without knowing exactly what we were doing. The area I focused on most was first trying to make
sure that the people that I wanted to have buying our products, were informed of it, and actually like
the boots. This was a very important part, but actually I didn’t experience that much difficulty with it. I
am considered by some as a fashionista. I love fashion, I love looking good, I love finding ‘hidden
fashion’: things that haven’t hit the larger market yet. Rotterdam has a lot of young women very similar
to me. It was not hard to find these girls and to talk to them. I would just go out to parties, address girls
and ask them how they feel about fashion.
Do you consider yourself to be fashion forward? Do you like to find hidden treasures in fashion? Do
you like being the one of the first to have something? How would you like to have a very fashionable
pair of boots that no one else can have? What price is too high to pay for the above mentioned?
Things like that. I felt like I knew their answers already, but you cannot just assume these things, you
have to make sure. I also went to stores where I frequently shop, where I know the personnel, and I
would ask them, and other frequent shoppers in those stores. So I guess you could say that the most
important thing is to make sure that the young women you want to see walking in your boots are
excited by the prospect of them coming onto the market. And actually by talking to them, you make
them curious as well. They are now really curious and want to be the first to have it as soon as the
store opens.
42
Sosa and Associates™
So actually researching the market potential is most important. And creating awareness and curiosity.
What else is something you have failed without?
PROMOTION!!! In the running up to actually opening tour store, in your case it might be before certain
stores start selling our Izi Fes boots, you have to be everywhere. We started in Rotterdam, and our
primary target group was actually the young fashionable ladies of our city. We went to all stores in
Rotterdam that target our target market and spoke to people, placed flyers of their counters. Me and
my brother Zakaria went to every party in every club where we thought we could find possible
customers. I wore the boots, and made sure I looked amazing in them. And we would again just talk to
people, have the DJ promote Izi Fes and announce that the next best party would be at the opening of
our store. And definitely the fastest and easiest way to reach a lot of people: social media! I created a
facebook page for people to visit. I shared it, asked all my friends to share it and within no time the
comments were coming in from people all over the country asking to reserve some boots – we didn’t
of course, we made them come! Our opening was a huge success!!
How did you deal with competition?
There are so many brands of shoes, you could say there is a lot of competition. I, however, did not see
it that way. I compared Izi Fes to Ugg. The desire to buy a pair of Ugg boots will not replace the need
and/or desire to buy a sneaker, a pump, etc. Izi Fes is a unique patented design that is not sold by any
other brand. If you target your potential customers and get them to want to buy a pair, they will buy a
pair regardless of what else is out there. Money is just simply less of an obstacle in fashion than it is with
paying bills.
What do you think the chances are to succeed with Izi Fes in Berlin?
I think that Berlin is the same as Rotterdam, but then with a bigger market potential. Rotterdam is not
as bohemian or boho-chic as Berlin. Berlin is a much more artistic, larger, grander, a fashion
playground. That means more potential, because I think there are a lot more people that will love our
boots. But it also means a lot more real competition than in Rotterdam. They might have more shoes
and boots that somewhat similar. However, luckily Izi Fes is patented so you will not find the same
thing.
We started selling Izi Fes in bohemian fashion world capital Ibiza. There is a lot of competition there
too with regards to bohemian and boho-chic styled shoes. But the uniqueness of every pair of Izi Fes
boots, will always attract consumers. I don’t think you could go wrong in Berlin either.
Last but not least. This is a project for school of course, but would you possibly consider actually
exporting to Berlin?
Yes, definitely! If you guys write an amazing report which shows a lot of opportunities, me and my
brother will be in the car to Berlin to have a look at the options you set out in the report.
43
Sosa and Associates™
2. Questionnaire English
1. How many pairs of boots do you own?
A. 1
B. 2-3
C. 4-6
D. 7 or more
2. How often do you buy new boots?
A. Once every 3 months
B. Once every 6 months
C. Once every year
D. Other, specify ...
3. How much do you usually spend on average for boots?
A. < 49
B. 50 – 99
C. 100 – 149
D. 150 – 199
E. 200 – 299
4. Do you look for a specific brand when buying boots?
A. No (Continue to 6)
B. Yes, please specify ...
5. Are you willing to buy boots from another brand? Please choose a number from 1 (=not at all) to 5
(=definitely).
A. 1
B. 2
C. 3
D. 4
E. 5
6. How much would you be willing to pay for high quality, branded boots?
A. < 49
B. 50 – 99
C. 100 – 149
D. 150 – 199
E. 200 – 299
7. Where do you look for information when you want to buy high quality, branded boots?
A. Online
B. In magazines
C. On television
D. From advertising leaflets
E. Other, specify ...
8. Which qualities are most important to you in boots?
Please rank according to importance.
 Style
 High quality
 Comfort
 Price
 Other, specify ....
44
Sosa and Associates™
9. How would you describe your fashion style?
A. Casual
B. Classical
C. Bohemian/Boho-chic
D. Alternative
E. Other, specify ...
10. Where do you like to shop for boots? List your top 3 stores:
1. ...
2. ...
3. ...
.
.
11.
Age:
Occupation:
.
.
Thank you very much for taking the time to fill out this questionnaire! 
45
Sosa and Associates™
3. Questionnaire German
1. Wie viele Paar Boots/Stiefel haben Sie?
E. 1
F. 2-3
G. 4-6
H. 7 oder mehr
2. Wie oft kaufen Sie neue Boots?
A. Einmal alle 3 Monate
B. Einmal alle 6 Monate
C. Einmal jährlich
D. Anders, bitte angeben ...
3. Wie viel zahlen Sie in der Regel im Durchschnitt für Stiefel?
A. Unter 49
B. 50 bis 99
C. 100 bis 149
D. 150 bis 199
E. 200 bis 299
4. Haben Sie für eine bestimmte Marke schauen beim Kauf von Stiefeln?
A. Nein (Weiter zu 8)
B. Ja, bitte angeben ...
5. Sind Sie bereit andere Marken zu kaufen? Bitte wählen Sie eine Zahl von 1 (= überhaupt nicht) bis
5 (= natürlich).
F. 1
G. 2
H. 3
I. 4
J. 5
6. Wie viel sind Sie bereit zu bezahlen, für hohe Qualität, Marken Boots?
A. Unter 49
B. 50 bis 99
C. 100 bis 149
D. 150 bis 199
E. 200 bis 299
7. Wo sehen Sie nach Informationen zu suchen, wenn Sie hohe Qualität, Marken Stiefeln kaufen
möchten?
A. Online
B. In Zeitschriften
C. Im Fernsehen
D. Von Werbeprospekte
E. Anders, bitte angeben ...
8. Welche Qualitäten der Stiefel sind für Sie am wichtigsten? Bitte ordnen Sie nach Wichtigkeit:
 Stil
 Hohe Qualität
 Komfort
 Preis
 Anders, bitte angeben ...
46
Sosa and Associates™
9. Beschreiben Sie Ihren Mode-Stil?
A. Freizeit/Lässig
B. Klassische
C. Bohemian / Boho-chic
D. Alternative
E. Anders, bitte angeben ...
10. Wo möchten Sie für Stiefel Shop? Listen Sie Ihre Top 3 Geschäften:
4. ...
5. ...
6. ...
.
.
11.
Alter:
Beruf:
.
.
Vielen Dank für Ihre Zeit und für das Ausfüllen des Fragebogens! 
47
Sosa and Associates™
Resources
1. A.B., Doing business in Berlin, Published on: Feb 9th 2011, Available at:
http://www.economist.com/blogs/gulliver/2011/02/doing_business_berlin; Accessed on:
6.03.2013
2. Amt für Statistik Berlin-Brandenburg (2010) ‘Die kleine Berlin-Statistik.’ [Online]. Available at:
http://www.statistik-berlin-brandenburg.de/produkte/kleinestatistik/kBEst_2010_e.pdf
(Accessed: 12 March 2013)
3. Berlin (2013) Berlin’s diverse cultural landscape. Available at: http://www.berlin.de/berlin-imueberblick/kultur/kulturlandschaft.en.html (Accessed: 03 march 2013)
4. Berlin.de (2013) Berlin’s boroughs. Available at: http://www.berlin.de/berlin-imueberblick/politik/bezirke.en.html (Accessed: 17 March 2013)
5. Berlin fashion week (2013) About. Available at: http://www.fashion-week-berlin.com/en/about/
(Accessed: 03 March 2013)
6. Berlin in Brief: Business and Finance; Governmental Source, Author Unknown, Available at:
http://www.berlin.de/international/business/index.en.php ; Accessed on: 6.03.2013
7. Buergin, R. (2011) ‘Poor but sexy’ Berlin economy outstrips Germany as whole, DIW study
shows, ‘Bloomberg’, 11 August [Online]. Available at: http://www.bloomberg.com/news/201008-11/-poor-but-sexy-berlin-economy-outstrips-germany-as-a-whole-diw-study-say.html
(Accessed: 18 February 2013)
8. Christoph Lang, “Berlin consolidates position as fashion capital“, Berlin Business News,
Released
in
2011.
Available
at:
http://www.berlinpartner.de/fileadmin/newsletter_bereich/BBN_en/Berlin_Business_News
_08-11_en.pdf, Accessed on: 4th March 2013
9. Demand Metric Research Corporation. (2012). Developing a Corporate Marketing
Strategy. Available:
http://www.slideshare.net/demandmetric/marketing-strategy-planmethodology-toolkit . Last accessed 3rd Mar 2013.
10. Friedrich,J., Pfeiffer, M. “German Trade and Invest” Your export guide to the German Market,
Released in 2010, Available at: http://www.musavirlikler.gov.tr/5A54D8C7-C2CB4AE6B8DD9C296FD3C692/FinalDownload/DownloadIdEEA4DACBD311E25067260410E78EF9
37/5A54D8C7-C2CB-4AE6-B8DD-9C296FD3C692/upload/D/your-export-guide.pdf , Accessed
on: 4 March, 2013
11. Galeries Lafayette Berlin. (2013). “FAQ”. Available: http://www.galerieslafayette.de/faqenglish/
Last accessed 21st March 2013.
12. “Germany country profile” by the FedEx team; Available at:
http://www.fedex.com/us/international/irc/profiles/irc_de_profile.html ; Accessed on:
04.03.2012
13. Germany Trade & Invest. (2010). Your Export-Guide to the German Market. Available:
http://www.musavirlikler.gov.tr/upload/D/your-export-guide.pdf . Last accessed 4th Mar
2013.
48
Sosa and Associates™
14. Hofstede, G. “what about Germany? “ Hofstede Center [Online]. Available at;
http://geert-hofstede.com/germany.html
(accessed 13-03-2013).
15. History 255 (1999) Bohemianism and Counter-Culture, ‘The France of Victor Hugo’ [Online].
Available at: https://www.mtholyoke.edu/courses/rschwart/hist255/bohem/index.html
(Accessed: 03 March 2013)
16. Izi-Fes The Shop/ Izi-Fes About; written by […] Available at : http://www.izifes.com ; Accessed
on: 04.03.2012
17. Jessica Saltz. (2012). “Berlin's 20 best shops”. Available:
http://www.timeout.com/berlin/features/903/berlins-20-best-shops
Last accessed 21st March 2013.
18. KaDeWe. (2013). “History”. Available: http://www.kadewe.de/en/the_kadewe/history/
Last accessed 21st March 2013.
19. Kotler, P. and Armstrong, G. (2012) Principles of Marketing. 14th edition. England:
Pearson.
20. MacOrr, research solutions online (2013). Sample Size Methodology. Available at:
http://www.macorr.com/sample-size-methodology.htm (Accessed: 17 March 2013)
21. Quartier206. (2013). “Quartier206”. Available: http://www.departmentstorequartier206.com/dsq206_content.html
Last accessed 21st March 2013.
22. Sloman, J. and Hinde, K. Economics for Business, (5th edition) , Chapters 1&2 Published by:
Prentice Hall, ISBN 0-273-70908-9, 2007
23. Reddy, S. (2009) Berlin’s bohemian boom, ‘JC Report’, 13 May [Online]. Available at:
http://jcreport.com/features/fashion-features/lifestyle/2009/05/13/berlins-bohemian-boom/
(Accessed: 18 February 2013)
24. Stratified sampling (2013) Stratified Sampling for Marketing Purposes. Available at:
http://www.stratifiedsampling.net/ (Accessed: 17 March 2013)
25. Stratified sampling (2013) Stratified Sampling vs. Cluster Sampling . Available at:
http://www.stratifiedsampling.net/Stratified-Sampling-Vs.-Cluster-Sampling.html (Accessed: 17
March 2013)
26. Visit Berlin(March 2012) Fashion Capital Berlin urban, stylish, cool, Visit Berlin [Online].
Available
at;
http://press.visitberlin.de/en/news-release/young-renowned-cool%E2%80%93-berlin-is-europe%E2%80%99s-new-fashion-metropolis (Accessed 24-02-2013).
27. Visit
Berlin,
Press
Information,
Visit
Berlin
[Online].
Available
at;
http://press.visitberlin.de/sites/default/files/fashion.pdf (Accessed 24-02-2013).
28. Wikipedia (2013) Bohemian Style. Available at: http://en.wikipedia.org/wiki/Bohemian_style
(Accessed: 03 March 2013)
29. Wikipedia (2013) Bohemian Style. Available at: http://en.wikipedia.org/wiki/Bohemian_style
(Accessed: 03 March 2013)
49
Sosa and Associates™
30. Wikipedia (2013) Boho-chic. Available at: http://en.wikipedia.org/wiki/Boho-chic (Accessed: 03
March 2013)
31. World cities culture report (2013) Berlin. Available at:
http://www.worldcitiesculturereport.com/cities/berlin (Accessed: 18 February 2013)
32. Wilson, E. “A history of shoe fashions” , Available at :
http://happyshoeshappyfeet.com/sitecontrol/xinha/plugins/ExtendedFileManager/demo_im
ages/pdf/history_of_shoes.pdf ; Accessed on: 04.03.2012
33. Wohllaib, N. “Fashion in Berlin- the place to be”, Published: June 2008, Available at:
http://www.berlinpartner.de/fileadmin/chefredaktion/pdf/publikationen/publikationen_en/
Fashion_in_Berlin_en.pdf ; Accessed on: 24.02.2012
34. World cities culture report (2013) Berlin. Available at:
http://www.worldcitiesculturereport.com/cities/berlin (Accessed: 18 February 2013)
50
Sosa and Associates™