1. Introduction
1.1 Trend of globalization is increasing strongly every year. Countries are experiencing lower barriers in trade of capital and goods. In today’s time customers also has an easy access for buying products on a global scale. Organizations also have many opportunities to enter in new global markets with more options. New market expansion also provides many potential and opportunities for growth of business while increasing the base of customers according to the sales and demand. This can also be a critical and tricky procedure because of the competitive and social situations. Customers’ tastes and preferences, legal regulations and rules are also different compare to domestic markets.
Boots is a popular British retailer that offers health and beauty products. In 2006 it is merged with Alliance UniChem. It has decided to enlarge and establish business in the market of South Korean. The chain of pharmacy and beauty with Walgreens made a franchise partnership with Emart company ltd ((Walgreens Boots Alliance, 2016). This is known as a leading retailer of hypermarket in South Korea that produces Boots named pharmacy-led, beauty and health franchise.
In today’s time South Korea is known as a leading marketplace for cosmetic and skin care products in Asia. It was the organization’s choice to introduce South Korean customers towards the brand of Boots and offer the organization services and products (Omella Barra, 2016). The organization selected specific market carefully by considering factors like organization economic potential, status, barriers of entry, and intensity at competitive level.
1.2 To enter in to a new marketplace, an effective and detailed screening of new marketplace is very essential, assembling and testing to all available data on marketplace, followed through the best decision to enter. There should be four essential queries which must be considered for a market research at successful level: Who is customer? Where is customer? How does customers purchase? What does do? (Tracy, 2014). The large amount of factors such as internal and external must be taken into accounts for success and maintain a competitive level.
By targeting a market at foreign level, it is important to avoid an approach from dimensions of domestic level. Focus at internal level is essential in place of concentrating on the marketing mix at basic level (Tracy, 2014). It is important to understand the customers and new competitors that will determine the organization success in new market (Tracy, 2014).
It is important to collect right and relevant information to make correct decisions and distribute the resources in correct way that is a very important step for the organization. Valuable info for exporting organizations is directly related with the potential new market. It is followed by factors like legal, infrastructure, politics, cultural, and economics. To conduct the analysis of external environment, this would be suitable to refer to usually utilized tool and evaluate five key chauffeurs in selected market which is recognized as SLEPT. It is important to take into the consideration cultural framework at depth. It is also significant to be aware about the local culture & many factors that influence businesses. This also helps to prepare strategies of market that support these factors by complimenting them.
South Korea is known as a global beauty market leader. Boots organization wants to enter this marketplace by developing a plan to establish its brand name in this marketplace and encounter the competition. Organization had chosen or can choses a different market to enter.
Globalization is increasing around the globe; many markets are not effectively discovered by foreign players, for example health and beauty retail in Denmark. As per the Euromonitor global survey, in Denmark personal and beauty care produced the higher value of retail growth in 2018, by a normal growth in demand for premium and value added products (Denmark Trade and Export guide, 2019). This nation has a wealthy base of customers with disposable income at higher level and also spending at higher level.
It screening, assembling, and testing all are available in depth like research of market, analysis of market, environment, in addition to competition and demand analysis, the organization require to look carefully at the entire popularity of products of health and beauty to measure intensity of competition to understand how they are attractive and profitable for the selected market. Analytical tool known as SLEPT will be cast-off to scan outside environment of the selected nation followed by applying the Porters five force analysis in the organization’s competitive environment, buyers bargaining power and distinguish selected market’s strength and weakness. This discussion will cover the Boots internationalizing and entering in the beauty and health sector of South Korea. This will also cover the offering of new market with the opportunities and threats for the organization. Denmark health and beauty segment of retail will be analyzed to reveal potential opportunities of market threats, if organization were to select this specific market to go in future.
2. Analysis: South Korea
2.1 There are many questions raised by taking a decision to enter in the new international marketplace which raises many concerns regarding how organization services and products will be receive by the new customers. SLEPT analysis will be useful to discover and quantify and look to the social, economic, legal, economic and political atmosphere of new targeted marketplace. This is important to look these factors for chosen market known as a South Korea. It rapidly becomes very clear that the environment, education, welfare at social level, culture, and arts are the main influential part for social enterprises of South Korea. This is highly regarded nation that comes towards sustained development and sustained growth. This has economy accounts at 2 percent of global economy by intersecting to income level of Japanese. Economy runs a present account surplus and debt of South Korea is very low that is less than forty percent of GDP.
Modern culture is deeply rooted in modernization pursuit and Koreans are pretty serious about its rituals of beauty and skincare (CosmoBeautySeoul, 2019). This has generated interest for many international beauty brand to enter in South Korea market and become a part of success by making and presenting own products of beauty that are easily reachable to the customers of South Korea. As per the Mintel, retail researcher the beauty industry of South Korea was estimate to be valued over $13bn (£10bn) in 2017.
The economy of South Korea grew by 3.1 percent yearly in 2018 in the year last three months. People are highly Tech-savvy and informed. The customers of Korea are inclining towards online research products by use of social media. The customers of beauty industry look heavily into ingredients of products and entire quality. Korean customers at average are like to pay prices at premium level for the products that deem of high worth and desire to have.
The key trends in the market of South Korea are increasing preference to natural and organic cosmetics. The customers are increasing and conscious about the product ingredients as like to buy and prefer the use of biological and natural ingredients (CosmoBeautySeoul, 2019). The Ingredients such as organic/natural, stem cells, peptides, and probiotics are in the focus and attention in these days. The customers of Korea are also interested at higher level in the procedure of manufacturing of these products. One of the survey conducted by Phillips in which he described that South Korean women were expecting to look more about the use of natural and organic ingredients and lesser chemicals in products of beauty. There are many hot new trends like anti-oxidants, anti-population, and anti-aging technology. This clearly present and indicates that beauty market of South Korea and customers is immensely demanding.
From a technological stand point, it is essential to link that the nation has the top IT infrastructure at a global stage due to wide use of internet with high-speed as well as smartphones. There are many researches done by customers before buying a product as it is completed by use of social media to discover information of the desired amenities and products. Organizations also take into the serious consideration the reviews of customers. In 2012 a survey taken by the Embrain founded this trend and discovered that 79 percent of consumers check reviews of users before creating a purchase. This survey also discovered that 74 percent users are influenced by written products and services reviews. The use of substantial technology helps the customer to judge the possibility of the product value and find the best price for the best product. Channels of E-commerce have become effectively popular for customers to buy cosmetic products. Channels of distribution are varying to provide accommodation and focus towards the experience of customer. The customers of South Korea demands are segmented and many channels like shop and multi shop have become more common and widespread. In December 2016, for accommodation, group of Shinsegae has launched a boutique by offering a huge selection of many luxury and affordable brands of beauty for accommodating its wide range of consumers.
2.3 Opportunities and threats are offered by this market to the organizations that desires to enter in it while planning to endure, grow, and develop. Prospects take into consideration are disposable revenue at higher level and changing trends of beauty and westernization. As per the report of National Tax service, in 2016, the average income yearly in Seoul was 3, 78, 10,000won, that comes to the 31, 50,000won every month (about £2, 154, 49 GBP) (Trading economics, 2019). The South Korea is known as the 8th largest marketplace of cosmetic by representing 3 percent at worldwide level. There are many variety of the products within the market, the imports at competitive level differentiate nation from existing offerings by identity of brand, exclusive formulations, packaging, and ingredients. Global brands have decent status for its technological advanced formulation of product and safety of products. The spending of customers of South Korea has increased to 221900.10 KRW billing in the 2019 second quarter from 220417.20 KRW billion in the 2019 first quarter. South Korea literacy rate is 98 percent which shows present customers are educated and informed. By looking in the market research it is important to consider and look closer towards the competitors of beauty market. This market covers a large number of regional and global presences like Amorepacific Corporation (holds a prominent share of market), nature republic, Face Shop Inc., Clubclio.Co.Ltd and Dr. Jart+, proposing a high competition, and massive cables like Aritaum that is known as a one-stop, Olive Young a one-stop-shop and multi-brand beauty shop that it approaches to all stuffs of beauty. The number one beauty and health outlet in the nation is Olive Young.
This model presents the market concentration. South Korea is the first in picture. This is important to note that economy of South Korea is open for market of foreign trade. Model of economy of South Korea is not build on principles of free market as give pricing freedom for imported amenities and products as set through the forced of demand and supply. This is a protectionist market that protects domestic industries through quotas of import, enforcing of tariffs, other restrictions, and subsidies towards the imports of competitors at foreign level and creating barriers of trade. This nation has also initiated many efforts to increase openness by agreements of free trade that consist United States and EU. The nation integration in the global economy is pretty low towards import penetration. In July 2019, South Korea imports decreased by the 2.7 percent in a year before to USD 43.70.
Organizations that export to Republic of Korea required specific documents of shipping for clearing the Korean customs. The commercial invoice includes original invoice. There should be two copies presented by the shipping of documents and must consists unit value, entire value, marks, quantity, description of product, information of shipping and certificate of origin.
2.4 Boots is presenting its business visually, this is clear that entire visual Boots outlets are conserved to original state. Specific feature of brand is quite prominent that offer special deals in outlet like (3 for 2 offers) consisting Boots specifically No 7 brand that clearly present. There are adaptions at partial level like the outlet lay-out some presentation of brands/products and selection of product.
Boots is presenting it visually, this is very clear that the entire aesthetic of the outlet of Boots is well-kept to original state, key feature of the organization is quite prominent that offer store deals like (3 for 2 offers), consisting Boots’ specific No 7 brand evidently present. Partial adoption like store lay-out, product/brand presentation and product selection as well. In the biggest store in area of Seoul’s shopping Myengdong, it has comprised a café at the top floor, which is feature one can’t find in the UK. Having a Coffee shop within outlet is an adaption to cater the booming Korean coffee shop market, as a coffee and café culture in South Korea is prominent and Boots has made the excellent choice of fully catering to Korean customer.
In Seoul, one of the stores of Boots was noticeable as local celebrities used to promote some products that sold in store. It has a strong effect on the entire market and products promotion as local customer’s at large number influenced by influencers and celebrities. The entire effort of Boots organization has placed into fitting a catering and local market to customers that is quite obvious and strategic. This is very easy to conclude that adaption level not requires resources of extensive management and higher cost of production and changing design. The entire organization has managed to sustain a brand/product standardization and product presentation (example: No 7 line and Soap & Glory), also consists famous local brands with regular Boots brands. These products are least likely regarded as hold elastic demand. These brands of UK are esteemed at higher level by the Korean customers and purchased regarding its possible fluctuation and increased in value. This is applicable when mentioned brands are not part of Grey marketing which make the availability of original product to consumer at lesser value.
WBA is the most assuredly connected in an interview of its business weaknesses and strengths that takes in consideration nation particular advantages and firm specific advantages. It also provides a strong position for organization to develop an approach and an accurate plan of business to successfully operate and penetrate in specific market. Boots brand presence in South Korea built brand specific products and amenities available more easily to existing customers, it has increased and well-known to local public that unfamiliar with brand. It is generating new opportunities and expanding existing base of customers. It also offers a wider base of profit and stronger positioning in the market to customers.
3 Analysis: Denmark
3.1 Market of Denmark is known as a highly competitive for the industry of personal care by strong and growing trend of wellness and health. The nation is known as a active fellow of EU since 1973 by a higher open and democratic development level. The stable environment of politics make it favorable place for development of business. Denmark’s policies of business targets to permit more free trage on a worlwide level. Global trade policy of Denmark’s is directed in local co-operation by other EU nations. The 70 percent of Danish foreign business is with EU and EU acceding nations. This nation is known as a fellow of European Economic Community that support a higher living standard by effectively developed social services. It is predominantly based on industries of service, manufacturing, and trade. Denmark as a member of EU relies on foreign trade with Europe. The main partners of trading are Sweden, Germany, Norway, United Kingdon, and Netherlands.
In Denmark, education is free. The whole population of adult is literate and as per the digital economy and society index (DESI) 2017, it is the most digital nation among other states of EU states. 94 percent population of Denmarks are online and dynamically involved in use of many online serivces. It has made digital skills advanced at higher level. This nation has a GDP at higher level and population at lower level it present that customers are relatively well-off. In a year households of Denmarks has a £54,000 average diosposable income in which 70 percent is used for consumption.
Population of Denmark is highly tech-savvy. Average Denmark customers is utilizing the skills to find and research the services and product that suit to requirements. Customers of Soutch Korea and Denmark take the lead by use of technologies at digital level, taking up comupting of cloud and use social media at heavy level. Denmark’s cutomers use social media regarding researching of products and services in which they are interested. The organizations has turned to social media to offer and present its products and amenities to the public by reach its target customers.
The expectations of Denmark customers while purchasing a product are highest in Europe regarding quality. Customers of Denmark are similar to South Korea customers as present a rapidly increase interest in natural product that look heavily into ingredients of product. Natural products demand present and drove forward trend of certification. Increase product numbers carry many certificate that known as an eco-label. In 2018, Nordic Swan reached over 2000 certified products. The customers of Denmark beauty industry likes to favor more categories of premium products that include skin care, cosmetics, fragrances, and hair care that reached to stronger growth in value in 2018.
3.2 The marketplace is dominated by the large multinationals regarding worldwide owners of brand with L’Oreal group, Estee Lauder, and Coty. In 2018, these all were the top players and coped to preserve positioning with its strategic and strong marketing. These capture its meeting and attention of customers’ demands. Nation beauty and health retailing is highly dominated with the state-controlled pharmacies Apoteket and Danish specialized beauty and health retailer (equivalent to Boots) Matas. This appearing is very little regarding no universe in this kind of sectoring for global retailers that would be the difficult factors for functioning business trade in Denmark. Although new technologies taste, customers of Denmark is conservative and favor products from organizations that established within the nation for a long period of time.
The World Economic Forum present’s report of competitiveness, 23.2 percent respondents identified rates of tax as the biggest issue. According to Forbes in 2014, Denmark was a number one nation for doing trades. In Denmark, conditions of politics and environment of business are very stable. Financial and legal barriers for doing business are negligible that enable global organization to enter in the market.
3.3 If Boots take a decision in future like to enter in the new market, this is clear organization would enter in a niche marketplace and go counter to the primary market leaders like Matas and Apoteket. These are established within a long time, recognized and trusted by the Denmark customers and retailers of health and beauty. These present the tough and biggest competition challenges. Customer’s purchasing power in market is very high as holds a low cost of switching. There are many number of distribution channels like store of grocery, pharmacies, beauty and drug stores that offers a low differentiation of product, give opportunity to customers to easily chose where that like to do shopping. The customers will make the choice to go in the nearest health and beauty retailer that is the most convenient to purchase the required product.
The organization is required to go by examine the three key aspects of Denmark environment that are normal forces, competition and customer. The internal analysis should favor exclusively organization’s capabilities and resources that would be appropriate towards the Denmark Context. Denmark delivers an environment of welcoming for foreign organizations as economically, there are strict requirements and few barriers for importing products and set a business that should be taken in consideration. The organization would have a look in its chances of possible higher profit from enter to specific marketplace and how it will benefit the organization for long time.
Conclusion
With an alliance by Boots (WBA), E-Mart as a worldwide “distribution giant” and UK’s number one beauty and health brand has a strong presence in Asia through stakes in stores chain in China and 250 outlets in Thailand, elected to venture in the world’s most competitive and advance beauty market. In South Korea market of beauty and health has present the growth of 30 to 40 percent each year, and business likes to promise for WBA.
Factors at external level has a huge influence on the organization success in a foreign market that is significant to focus on internal sources of organization, as holds a great effect on the organization’s overall performance. These kinds of resources generate the organization’s competitive benefit and shape entire competitive strategy. Boots strengthening and competing the image of brand through offering its own special in-house services and brands to the customers of Korea that consists Botanic, Soap & Glory, and Boot’s own No 7 lines of cosmetic that is recognized as a number one brand of beauty in United Kingdom. Customers in market are looked and well informed for quality and exclusively. Constant strong broadcast of external climate, specially strictly following the existing trends and behaviors of customer, the organization will have option to maintain positioning of brand strongly on the marketplace and endure to grow.
Denmark’s market compromises few opportunities by focusing on the trends of customers, organic and environment friendly products and internet retail. The retail industry of health and beauty of Denmark is an industry that recognized by intense competition, high concentration and slow growth. All are important aspects that Boots organization would have to deliberate as would prevent entry. Strong potential competitors own important advantages, satisfying its customer’s preferences and have trust and loyalty.
Reference List
Tracy, B, (2014) Marketing. Amacom
Barra, O. (2016) towards the Boots & Walgreens alliance. Retrieved from www.walgreensBootsallaicne.com
International Marketing Module, Introduction to International Marketing
Euromonitor International; Job Korea; Trend Korea (2019); National Tax Service. Retrieved from https://mordorintelligence.com/industry-report/south-korea
Seoul Cosmetics & Beauty Expo (2019). Retrieved from http://www.cosmobeautyseoul.com/fairDash.do?hl=ENG
Korea Pharmaceutical Traders Association (KPTA). Retrieved from http://www.kpta.or.kr/eng/main/main.asp
U.S. Department of Commerce, Commercial Service, Korea. Retrieved from http://export.gov/southkorea/
