Entering the Vietnamese Textile and Apparel Consumer Market
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ENTERING THE VIETNAMESE TEXTILE AND APPAREL CONSUMER MARKET Case: Marimekko LAB UNIVERSITY OF APPLIED SCIENCES LTD Bachelor of Business Administration Degree Programme in International Business Spring 2020 Tran Hanh Abstract Author(s) Type of publication Published Tran, Hanh Bachelor’s thesis Spring 2020 Number of pages 73 pages, 6 pages of appendices Title of publication Entering the Vietnamese Textile and Apparel Consumer Market Case: Marimekko Name of Degree Bachelor of Business Administration Abstract The research aims to develop a market study regarding the Vietnamese apparel and textile industry to find out whether Vietnam is a potential market for Marimekko to enter. A market study aids the company in understanding the target market in order to form the right decisions and suitable strategies for entry. Both quantitative and qualitative methods were employed in the research and both secondary and primary data were collected to support the study. Books, journals, articles, and reports are sources of secondary data, while direct interviews and questionnaires are sources of primary data for the thesis. The study was created by analyzing the macro-environment, the current situation of the industry and the important elements of the target market including competitors and consumers. PESTLE and Porter’s Five Forces were used as the research models to find the answers. The study results show that Vietnam is a potential market to Marimekko despite a significant degree of rivalry as well as a low level of brand perception. However, a more in-depth study of the market and more researches on product development for the target market should be conducted before entry to ensure a successful outcome. Keywords Marimekko, Vietnam, consumer market, textiles, apparel CONTENTS 1 INTRODUCTION ............................................................................................................ 1 1.1 Thesis Background ................................................................................................ 1 1.2 Research Objectives, Research Questions, and Limitations ............................... 2 1.3 Research Methodology and Data Collection ........................................................ 3 1.4 Thesis Structure..................................................................................................... 5 2 RESEARCH THEORETICAL FRAMEWORK................................................................ 7 2.1 Market Analysis Definition ..................................................................................... 7 2.2 PESTLE Analysis .................................................................................................. 7 2.3 Porter’s Five Forces ............................................................................................ 10 3 VIETNAMESE APPAREL AND TEXTILE MARKET STUDY ...................................... 12 3.1 Vietnam Overview ............................................................................................... 12 3.2 PESTLE Analysis of the Business Environment in Vietnam .............................. 13 3.3 Porter’s Five Forces Analysis .............................................................................. 23 3.4 Vietnamese Textile and Apparel Market ............................................................. 26 3.5 Consumer Analysis .............................................................................................. 30 3.6 Competitor Analysis ............................................................................................. 34 3.6.1 Big Brands ....................................................................................................... 34 3.6.2 Local Businesses ............................................................................................. 36 4 EMPIRICAL RESEARCH AND DATA ANALYSIS ...................................................... 40 4.1 Marimekko Introduction ....................................................................................... 40 4.2 Data Collection .................................................................................................... 40 4.3 Data Analyses...................................................................................................... 42 5 CONCLUSION ............................................................................................................. 52 5.1 Answers to Research Questions ......................................................................... 52 5.2 Final Remarks...................................................................................................... 54 5.3 Reliability and Validity.......................................................................................... 57 5.4 Suggestions for Further Research ...................................................................... 58 6 SUMMARY ................................................................................................................... 60 LIST OF REFERENCES ..................................................................................................... 62 APPENDICES...................................................................................................................... 74 1 1 INTRODUCTION 1.1 Thesis Background The author had the opportunity to come to Finland for the first time in 2016 to pursue further education. Living and studying in the country, the author gradually fell for its rich culture, its unique language, and its spectacular landscapes of the aurora. But more than anything, it was impressive to the author how this little nation in the Nordic, with the population of just over five million, could bring its brands beyond its borders and succeeded in international markets. Marimekko is one prominent example. The author started to notice the presence of Marimekko everywhere in Finland during her very first months of living in the country. The brand’s unique style of brick and mortar stores are on every major city. It seems that every Finn owns at least one Marimekko product. It may be a dress, a bag, or a purse with the familiar and easy-to-recognize patterns of this brand. When traveling overseas, the author noticed the global collaborations Marimekko had with many big popular brands such as Banana Republic, Target, Clinique, H&M and Uniqlo. It is undeniable that within only the recent decade, Marimekko has increased its global visibility immensely and successfully. The presence of Marimekko is everywhere from Europe to Asia and America. In Asia, Marimekko has many stores in Japan, Singapore, South Korea, Taiwan, Thailand, and China. However, Marimekko has yet to have its first store in Vietnam even though its partner, Uniqlo, has been active in this market since December 2019 (Vietnam Insider 2019). Therefore, the author was motivated to start this research to find out whether the Vietnamese textile and apparel market is promising to Marimekko. It takes a lot of time and effort for an organization to research and make a decision to enter a new market. Then, that organization must make a plan on how it will enter the new market. In addition, it will need to consider most importantly a strategy that will help it first survive and then thrive sustainably in that market among other big and small, local and international competitors. Otherwise, it will cause the company to waste not only its time and efforts, but also the monetary investments it makes to enter and exit from the market. Thus, performing a market study is a crucial step for any organization to take when making an informed decision on entering any new international market. The research will provide Marimekko with a clear panoramic view of the Vietnamese market, which may help them somehow on their way of global market expansion. 2 1.2 Research Objectives, Research Questions, and Limitations Research Objectives and Research Questions No businesses want to fail. Therefore, to avoid unwanted consequences, Marimekko needs to carry out a market research before stepping into the Vietnam market. Doing this helps the company evaluate the potential of the market through analyzing aspects such as Vietnamese culture, the current situation of the country, future forecast, market demand, social trends, etc. Hence, the research objective of the thesis is to develop a market study of Vietnam for Marimekko. It serves as a reference for the company when considering whether or not to enter this dynamically developing southeast Asian country – Vietnam. Thus, the research questions are formed to help the thesis achieve its objectives. The main research question is: Is Vietnam a potential market for Marimekko? Research sub-questions are created in order to find the answer to the main question: • Sub-question 1: How competitive is the target market? • Sub-question 2: What is the volume of demand? • Sub-question 3: Does the target customer group welcome the presence of Marimekko in Vietnam? • Sub-question 4: What are the entry barriers? • Sub-question 5: What are the risks when entering this market? • Sub-question 6: What are viable strategies for Marimekko to enter the market? Answering these questions will help Marimekko understand more about this market, its pros and cons, its dos and do nots. Then, based on what has been studied, the company can make the right decision and develop an effective plan for entering this market. Research Scope and Limitations This thesis aims to develop a study regarding the Vietnamese apparel and textile industry for Marimekko. Thus, the