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Market Analysis to Establish Retail Textile Companies in Colombia

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Market Analysis to Establish Retail Textile Companies in Colombia Market analysis to establish retail textile companies in Colombia Alexandra Esguerra Fang Karlsson This thesis comprises 15 ECTS credits and is a compulsory part in the Bachelor of Science with a Major in Industrial Engineering – International Business Engineering 180 ECTS credits Nr 1/2013 Market analysis to establish retail textile companies in Colombia Alexandra Esguerra: [email protected] Fang Karlsson: [email protected] Bachelor Thesis Subject Category: Technology University College of Borås School of Engineering SE-501 90 BORÅS Telephone +46 033-435 4640 Examiner: Supervisor’s Daniel Ekwall, PhD name: Supervisor’s University College of Borås address: School of Engineering SE-501 90 BORÅS Client: University College of Borås Date: Keywords: Market analysis, Colombia, Marketing, establishing a product, Sweden and Colombia relation. ii Summary The economic crisis in the last few years has made that companies begin to seek for new market opportunities where they can establish their businesses. Due to the lack of information and data, Colombia is not well known for Swedish textile companies. For this reason, in this market analysis, it is intended to give a clear understanding of the current situation in the Colombian market. Colombia is an emerging country with many opportunities within the textile sector and some new approaches in the last few years have facilitated companies to establish in Colombia. The initiatives from different state and private organizations, has done it easier for doing business. Based on the data that have been collected from different international organization sources, has showed that some factors are important to be considered by the Swedish textile companies when launching in a new market. One of the positive factors in the Colombian market is the increase in the demand for the retail textile sector. Increase in the income level is also attractive for companies because people will be more able to spend in textile products, and the stability that the country is facing are some positive factors; people will be able to spend money in other expenses. The new free trade agreement is an advantage for Swedish companies if they decide to expand to the Colombian market. Since they don’t have barriers for trade, it will make it easier for trading between Colombia and Sweden. But because this new agreement has been signed last year, the results will be visible after some years of relationship. The textile sector in Colombia has had an increase in the sales and the consumption of textile; many international retail companies has established their business in the Colombian market since this market is becoming even more attractive in Latin America. However, it is important to determine which target group is going to be focused on, because there are different social classes in Colombia, and depending of the target group the demand could be different. All the mentioned above and more important factors are covered in this thesis work. There is not a direct answer for our thesis work, however we believe that the information provided here, will be truly helpful to get a general idea of the current situation in the retail textile sector in the Colombian market. iii Abstract The aim with this thesis work is to make a market analyze for Swedish textile companies that are planning to expand their businesses to Colombia. There are some factors and barriers that need to be considered when expanding to new markets, for this reason, in this thesis particular factors are analyzed. The new free trade agreement between Colombia and EU will make it easier for Swedish textile companies to establish in Colombia and import or export from both countries. Since one of us is from Colombia we know that there are absence of Swedish textile companies in Colombia, and there is a need for variation in the textile sector. This new free trade agreement will make this possible. Sources of information that have been used are based principally from literature and Internet. To be able to make the market analyze, there are factors that were considered for example Gross Domestic Product (GDP) and statistics on unemployment rate. In order to access the different statistics needed, it has been used different sources and International organizations web pages such as EU and OECD, which have been helpful to write this thesis and make it faster to find the information required. The analyzes has been made by comparing different statistics from Colombia with Sweden, to see if there is opportunities for Swedish companies to establish themselves in this new market. Our conclusion is that there are good opportunities for Swedish textile companies to establish their business in Colombia because of the increasing demand in the textile sector in the country and the increased income level amongst the population. iv Contents 1. INTRODUCTION ................................................................................................................................................. 1 1.1 BACKGROUND ................................................................................................................................................................. 1 1.2 PURPOSE .......................................................................................................................................................................... 2 1.3 LIMITATIONS ................................................................................................................................................................... 3 1.4 ORGANIZATION OF THESIS ............................................................................................................................................ 3 1.5 PROBLEM DESCRIPTION .................................................................................................................................................... 3 2. METHOD .............................................................................................................................................................. 5 2.1 SECONDARY DATA .............................................................................................................................................................. 5 2.2 LITERATURES REVIEW ....................................................................................................................................................... 5 2.3 INTERNET ............................................................................................................................................................................. 5 2.4 OTHER SOURCES ................................................................................................................................................................. 6 2.5 THE USE OF COLLECTED DATA .......................................................................................................................................... 6 3. THEORETICAL FRAMEWORK ........................................................................................................................ 7 3.1 SEGMENTATION .................................................................................................................................................................. 7 3.1.1 Geographic segmentation ....................................................................................................................................... 7 3.1.2 Demographic segmentation ................................................................................................................................... 7 3.1.3 Psychographic segmentation ................................................................................................................................ 7 3.1.4 Behavioral segmentation ........................................................................................................................................ 7 3.2 TARGETING ...................................................................................................................................................................... 8 3.2.1 Marketing ....................................................................................................................................................................... 8 3.2.2 Market segmentation ................................................................................................................................................ 8 3.2.3 Mass marketing ........................................................................................................................................................... 8 3.2.3 Segmenting markets ................................................................................................................................................. 8 3.2.4 Niche marketing .......................................................................................................................................................... 8 3.2.5 Micromarketing .......................................................................................................................................................... 9 3.3 ESTABLISHMENT BARRIERS ......................................................................................................................................... 9 3.3.1 Economies of Scale ....................................................................................................................................................
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