finalassignment strategic global marketing bitis in korea market

As one of the first businesses in Vietnam to successfully penetrate the international market, Biti's has provided products to the world market for more than 30 countries.. Understand wit

BỘ TÀI CHÍNH ĐẠI HỌC TÀI CHÍNH - MARKETING

Class: IP_21DMAO2

Students:

Tran Quéc Huy - 2121011992

Truong Công Quốc Anh - 2121012933

Nguyễn Linh Dan — 2121012310

Nguyễn Hoàng Yén Chi - 2121012880

Nguyễn Hà Kiều Oanh - 2121011816

INDEX

PART 2: MAIN CONTENT 5

1 Execufive Summary and Table ưoŸ COnf€TIÉS =5 cm nh ng me 5

2 Country Selected — South Korea Market 5 2.1 South Korea”s historical developmmerIfs - 5: 22c 2211212 11221111 1e ty 6 2.2 South Korea national business ernvIrOnIM€II - ¿2 2222232333 + rrvve 6 2.2.1 Political and legal environme - c2 221221212 21251 11551 2x22 ke se 6

"Z “ 7 2.2.3 Socio-culturaÏ eiVITORIM€II -.- 2c c3 22112112111 21151 1512115115111 11311 111111 1E 7 2.2.4 Investment eđIVITOTITIIẨ: - - 2: S322 32119151 391351 8535311811111 11831115 1211 re, 7 2.2.5 Government s1ze and tax pỌICY 222221121122 2122211 12 2e He 7 2.3 Market and S1ze Potential of South KOTea - 2111211211 1211 11111111111 xe 8 2.3.1 Market Scale and potentialL - - : 1 22 2112121212511 1221251251111 221tr 8 2.3.2 Market characteristics cccccceccccescssescesessesececeeseceeeseseceesseseseeececseseeeseesee 8 2.3.3 Distribution system S0 212212112 21221121 1011 2121112111215 1 He 9 2.3 Competitive Environment in South Korea - 5: 5c 2c 22c 2E 2222k e2 10

3 Entry Mode Selection n Q1 TH n1 211211211111 111011111 1H ng HH ke lãi KNĐcoi 7 4 II 3.2 LLIC€TSINE - S21 1221221 21121115111 111121512511 1 15 E1 t1 51 t1 51 tk HH HH ch này 12

4, Target Market “dadjliiliiỦỎỦÚỎĨỎÁẤII II 13 4.1 Market Researcl - - - 1 2.12112121111153 15311 1131111121511 111 1511111 11 H111 11 T1 kh 13 Z8 in - 16 4.2.1 DemograplIc: - ¿c1 1121221221111 2115111511111 1151121112212 81 811 1H kh 16 4.2.2 PsychographIC: c1 1121221221511 151 1012110111111 12111011181 key 16 4.2.3 Behavioral Charact€T1SfICS: G1112 21 11111121111 11121111211 211101118 1g 16 h9) 1 -“-“-::1iI Ẽ 17

SL SH Specific cece ccc 17 s2 0i 18

Co jnn ố e -a 19 (On ố e8 19

` SG In 20

6 Marketing Strategles to reach Marketing Objectives coi 20

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285i s8i 2 ae 20 6.2 Pricing SfTafۯV - c1 L1 n1 212 1n 1112211211211 111 n1 H 1H TH He 21 OEWxii10i19i 80v 2n e 22 6.4 Place S{TrafۯV: 0L 0n 1n HH HH HH T1 HH TH He na 24

7 Final Recommendations, Evaluation, Measurement and Control 24

8 References and Áppendices LH n1 1111011211111 rớt 25 References 27

Tables Index

Table 1: Expense Forecast

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PART 1: INTRODUCTION

Global economic integration is an inevitable trend that any country that wants to survive and develop must accept and implement The growing society comes with beneficial trade and cooperation, businesses now not only do domestic business but also target many other foreign markets When governments of countries begin to open

up economic integration, it is an opportunity for large corporations Companies no longer limit their production and business to the domestic market, but businesses are now starting to Expand markets to different countries to seek opportunities and increase profits Participating in business activities in the international market will bring businesses many benefits, open up many development opportunities and earn higher profits To achieve this, assessing the attractiveness of a market is very important, it will affect the success or failure of a business, letting the business know what opportunities or challenges it has from there There are specific strategies As one

of the first businesses in Vietnam to successfully penetrate the international market, Biti's has provided products to the world market for more than 30 countries The company's footwear products have gradually affirmed their position in the international market Among the countries that Biti's penetrates, Korea promises to be a potential market, not only because of market size, Cultural similarities lead to similarities in consumption, but also because trade between the two countries is being strongly promoted Partly because the Governments of the two countries have policies to encourage trade between the two countries to increasingly develop To achieve the desired results, Biti's needs the company's efforts in outlining the correct penetration strategy and implementing it effectively Understand with that in mind, we decided to choose the essay topic "Building Biti's international marketing strategy in the Korean market"

Suppose that after the imposition of a ban on corporate consulting, the CEO of the fashion company acts on behalf of Bitis to work with the organization in the fashion industry and can default on the Global Expansion Group to play an important role in the work of developing products and services in new global markets want to enter the Korean market You have a cross-functional role working closely with different areas

of the business to identify business needs and align strategic approaches Currently you are working with Bitis's marketing department You are required to prepare a follow-up plan for reference and discussion about entering your chosen school in the next 3 years Analyze and evaluate the absorption path of the Korean fashion market

With specialized knowledge and theory on assessing the attractiveness of a market

It's still new, certainly the group's topic still has many shortcomings, our group is looking forward to it received comments as well as input from Lecturers as well class members so we can add more additional knowledge and hands-on equipment like being able to do well on the next topics

PART 2: MAIN CONTENT

1 Executive Summary and Table of Contents

Biti's is a Vietnamese footwear brand founded in 1982 After more than 40 years of

production and business activities with many ups and downs and challenges, now, Biti's has grown and developed with the country, becoming into a reputable, trustworthy and familiar brand with consumers and the pride of Vietnamese people in being a "National Brand" in the field of prestigious and quality Footwear The company has a strong

focus on innovation and sustainability, and has developed a range of products that are

both youthfully stylish, dynamic and comfortable Biti's has expanded rapidly in recent years, with a presence in more than 60 countries worldwide A Biti's product

distribution system stretches from South to North with 07 branch centers, 156 retail

stores market and more than 1,500 retail distribution intermediaries, creating stable

jobs for more than 9,000 workers

The Korean market is known for its trendy, dynamic consumers and extremely

competitive retail market For Biti's to be successful in this market, Biti's will need to

develop a strong brand identity that resonates with Korean consumers This requires a

deep understanding of Korean culture and consumer preferences, as well as a

willingness to adapt a company's products and marketing strategies to meet the specific needs of the market Korea

Despite these challenges, to be successful in the Korean market We are responsible

for guiding and formulating a long-term strategy for Biti's to enter the Korean market

Over the next 3 years, we will definitely help Biti's have high brand recognition and

gradually gain market share from major brands appearing in Korea

2 Country Selected — South Korea Market

Geographic location Korea is located in East Asia, in the south of the Korean Peninsula - a peninsula stretching 1,000km from North to South, in the Northeast part

of the Asian continent The intricate system of rivers and streams and waterways play a very important role in shaping the lifestyle of Korean people and in the country's industrialization processorea's economy is the 4th largest in Asia and the 10th largest in the world South Korea has undergone one of the greatest economic transformations in the past 60 years Despite limitations in geography, natural resources and population (about 28 thousand people of working age out of a total of 51.2 thousand people), Korea has focused on technological development and reform to promote growth, from

a mainly rural agricultural country to urban industry Industry accounts for 35.9% of GDP and 24.8% of the labor force

The Korean economy proves that it has grown incredibly, with higher and higher living standards In Korea, young people are very interested in entertainment, accessories, clothes, etc because they have enough income to reach their daily living standards, and spend a lot of money on appearance Today, the market for clothes, shoes, and accessories is growing rapidly, and the total number of goods is increasing This creates opportunities for all businesses, both domestic and foreign brands

2.1 South Korea’s historical developments

South Korea has undergone significant development over the past few decades

After the Korean War, the country was one of the poorest in the world, with a largely

agricultural economy However, in the 1960s, the government implemented a series of economic policies that focused on export-oriented industrialization, which helped to

transform the country's economy The expansion of South Korea's manufacturing

sector, especially in sectors like electronics, autos, and steel, was one of the main

drivers of its development Through programs like tax breaks, financial aid, and low-

interest loans, the government supported these sectors The focus on education and the

development of human capital was another significant influence Due to significant

government investment in education, South Korea now boasts one of the highest rates

of literacy worldwide Because of this, there is now a workforce with a high level of

expertise that can compete in the global market Strong international economic links

and South Korea's strategic position have also contributed to the country's prosperity

The nation has solid commercial ties with nations like the United States, Japan, and

China and is situated in an area where there is a significant demand for its products All things considered, government policies, investments in human capital and education,

and smart trade partnerships contributed to South Korea's development

2.2 South Korea national business environment

2.2.1 Political and legal environment

Politics Korea is a democratic country, in which supreme power is given to the president After the economic crisis in 1997, Korea implemented reforms and economic freedom Thanks to quick and effective political intervention, the country's growth rate reached an average level and financial factors were stable Continuous government intervention has been a key factor in Korea's development Furthermore, South Korea officially established diplomatic relations with 191 countries (2019), which proves that the government of this country desires strong international cooperation with all other countries in the world Based on those characteristics, Korea's political system becomes effective, focuses on economic development and makes it attractive to foreign investors

From December 12-15, 2021, the official visit to Korea by Politburo Commissioner took place During this event, National Assembly Chairman Vuong Dinh Hue gave a

speech to the Korean press: "It can be said that, after nearly 30 years since the

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establishment of diplomatic relations in 1992, Vietnam's cooperative relations - Korea

has made rapid developments that are rare when compared to bilateral relations

between countries around the world, especially since the two countries upgraded their

relationship to "Vietnam Strategic Cooperative Partnership Korea" in 2009 Korea is

Vietnam's leading important partner in most fields, Vietnam is Korea's key partner in

the enhanced New Southern Policy”

The attachment of the two countries in many aspects has created many conditions

for Vietnamese companies to enter the Korean market This clearly shows that the

Korean market is completely open to businesses from Vietnam

2.2.2, Law

Korea has a legal system belonging to the Continental Europe (written law system)

is, however, heavily influenced by US law in terms of content Therefore, this can be considered a "mixed" legal system with indigenous (Korean) legal elements and imported elements from ancient Chinese law, continental European law and international law Anglo-American law Since Korea became a member of the Organization for Economic Co-operation and Development (OECD), it achieved the status of a developed country and provided one of the most attractive legal incentives for economic development industrial development among OECD countries The incentive solutions offered by the Government are a big attraction for foreign investors such as tax exemptions, cash grants, etc In addition, Vietnam and Korea signed a Free Trade Agreement ( VKFTA) on May 5, 2015 This provides more opportunities for Vietnamese businesses to enter this potential market

2.2.3, Socio-cultural environment

Koreans have a unique language and alphabet system called Hangeul Because it is

relatively simple and limited in number, this writing system is very easy to read

Ilhteracy is almost non-existent in Korea

2.2.4 Investment environment:

The Korean Chamber of Commerce and Industry (KQRCHAM) said that the results

of arecent survey of factors determining investment plans for 95 foreign-invested

enterprises showed that up to 64.2% of enterprises expressed intention to increase

investment in Korea Survey results show that in fact, 53.8% of businesses have

planned to increase investment capital

In recent years, according to the World Bank, Korea is one of the top ten countries

with a favorable environment for business activities in the world Specifically, the

index of ease of doing business is reported by the World Bank Doing Business Index:

In 2011 and 2012, Korea ranked 8th In 2013, it ranked 7th and in 2014, it ranked Sth

In 2018 and 2019, Korea's rankings were 4th and 5th, respectively

2.2.5, Government size and tax policy

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The highest personal income tax rate is up to 42%, and the highest corporate income tax rate is 25% Both rates are subject to a 10% consumption tax The total tax burden

is equivalent to 26.3% of gross domestic income Government spending has amounted

to 32.4% of the country's output (GDP) Average budget surplus is 1.4% Public debt is equivalent to 39.8% of GDP

2.3 Market and Size Potential of South Korea

2.3.1, Market Scale and potential

a) Scale

The fashion industry in Korea is a significant contributor to the country's economy

According to a report by the Korea Creative Content Agency, the Korean fashion

industry was worth approximately $5.5 billion in 2019 The industry includes various

segments such as clothing, footwear, accessories, and cosmetics The Korean fashion

industry is known for its unique and innovative designs, and it has gained popularity

worldwide in recent years

Korea has everything that attracts global investors: a highly trained labor population, world-class infrastructure, public safety, and political stability The customer base in

South Korea is sophisticated and affluent, and they show a strong interest in the newest goods and trends from across the world This is particularly true for younger

generations that have significant disposable income, international exposure, and a

willingness to engage with new products Moreover, the labor force in South Korea is

well regarded for its discipline, loyalty, and education, resulting in an environment ripe for innovation and growth

b) The potential

Korea has a sizable and expanding market for a number of sectors, including

fashion With a middle class that is robust and a population of over 51 million, the

nation is highly urbanized Korean customers are renowned for their passion in beauty

and fashion, as well as their willingness to spend money on high-end goods

Furthermore, with a populace that is tech-savvy and high internet adoption rates,

Korea has a robust digital infrastructure As a result, internet buying and e-commerce

have increased, which has facilitated fashion firms’ ability to connect with customers

nationwide

Korea is also a gateway to other markets in the area due to its advantageous position

in East Asia As a result, Korean fashion labels are becoming more well-known in

Europe and other Asian nations in addition to the US

Due to a mix of internal demand, digital infrastructure, and advantageous location,

Korea's fashion business has a huge market potential

2.3.2 Market characteristics

Rapid growth of mobile shopping Grocery shopping via mobile app with delivery Home delivery has become the norm as people seek convenience More than 60% of Internet purchases are made via mobile devices, while nearly all of the adult population owns a smartphone

The rise of one-person households: Nearly 30% of Korean households are now single-person households with a higher than average disposable income The share is expected to increase rapidly with an aging population and an extremely low birth rate

The need for work-life balance Korea has long been famous for having the longest working hours among OECD countries However, achieving a better work-life balance has become one of the biggest trends in recent years and this has led to government policies limiting maximum working hours

Personal interaction disappearing: Rapidly spreading technology is eliminating personal interaction from shopping Ordering food or drinks at restaurants, ordering goods on e-commerce sites are increasingly popular, grocery stores, movie theaters, many things can now be done with machines or the internet without human interaction 2.3.3 Distribution system

The goods distribution system in Korea is very developed, divided into 6 main distribution channels including: convenience stores, supermarkets, hypermarkets, department stores, retail via Internet and TV

a) Hypermarkets:

The market is dominated by 3 major retail giants, both online and offline Major hypermarkets by brand market share include:

- Emart: 157 locations with 44% market share

- Homeplus: 141 locations with 25.7% market share

- Lotte Mart : 127 locations with 21.3% market share

- Hanaro Club: 25 locations with 8.2% market share

The most popular form of grocery retailing in the market is growing slowly but steadily Recent trends are changing the concept of hypermarkets, stores are divided into "discount" level hypermarkets, " normal” and "premium" Hypermarkets are trying

to innovate with the concept of Shop-in-shop, in-store-restaurant and enhance customer experience

b) Department Stores :

Three large corporations owned department store chains dominate the market are Lotte, Hyundai, Shinsegae Revenues are down due to the impact of internet retail, reduced sales to tourists and changing competitive landscape Department stores also operate their own online stores, as sales of luxury products shift more than to the

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internet New department stores are incorporated into large-scale shopping complexes, instead of individual stores

Retailing via the Internet Retailing products via the internet is rapidly growing as consumers switch to buying all their needs via the internet Growth is driven in particular by supermarket and hypermarket online stores that can quickly supply orders from the nearest stores at no additional cost Besides traditional corporations, many e- commerce platform operators are also gaining market share with differentiated marketing, services and products Purchasing via mobile devices has surpassed purchasing via PC or other devices (60%) and operators are focusing on improving their mobile platforms The main brands involved in this activity are divided into 3 areas:

- Online/Offline retailers: SSG.com, Homeplus, Lotte.com, Hmall

- High-end online-only market: Kurly market

- Open market e-commerce platforms: Coupang, TMON, Gmarket, AUCTION, Eleven Street

2.3 Competitive Environment in South Korea

The Korean footwear market is a fiercely competitive market, with the participation

of many domestic and international brands Bitis' Hunter is one of the new Vietnamese footwear brands entering the market that will face many challenges from competitors

Main competitors:

- SHOOPEN

SHOOPEN shoes are sold at extremely cheap prices This brand also offers a variety

of styles suitable for everyone from the elderly to children such as canvas shoes, sneakers, leather shoes, snow boots,

- KOLCA (Korea)

This brand is similar to VANS, an American sports fashion brand Anyway, this brand is currently very popular among teenagers and college students m Korea KOLCA's design focuses on simplicity KOLCA does not use many colors That's why these sneakers are perfect for everyday use These sneakers are very sporty and youthful KOLCA is not so cheap when you compare this brand with other SPA brands like SHOOPEN However, this brand is growing strongly in Korea and many young Koreans have become loyal fans The brand is expanding its product lines every season and consumers can now choose from an extensive collection of sneakers and apparel

Nike and Puma They recently hired a new design director, and were able to improve the quality and style to almost match mainstream brands

FILA has recently become a trend among young people Their low price policy has attracted many young people Currently FILA is one of the leading sports fashion brands in Korea In addition to the simplicity of FILA's designs, both men and women can wear sports clothes and shoes

=Biti's is expected to provide shoes at prices competitive with competitors but still ensure profits

In addition to direct competitors, Bitis' Hunter faces a number of other factors that affect the competitive environment, including:

Consumer trends: In the past few years, along with the streetwear trend, sports shoes have been a hidden craze in every corner of our lives Sneaker sports shoes are present everywhere from the gym, from the street to the workplace They have become a fashion trend for young people around the world and not only men, but also women are gradually preferring sports shoes Regardless of the circumstances, the demand for shoes is still huge and stable if brands are willing to innovate In the Vietnamese market, the keyword "sports shoes" is searched about 400,000 times each month - demonstrating the huge demand of consumers for this type of product

The development of e-commerce: E-commerce is becoming increasingly popular in Korea, creating opportunities for new brands to enter the market

3 Entry Mode Selection

There are several entry modes that Bitis can consider when entering the Korean market Choosing the most suitable entry mode to enter the Korean market depends on many factors, including the level of investment, business scale, strategic goals and cultural factors However, if Bitis wants to enter the Korean market, exporting and franchising will be the most feasible options

3.1 Exporting

Bitis has considered exporting as a way to break into the South Korean market, but there are a few advantages and disadvantages Selling goods directly to consumers in the target market, either via distributors or agents, is the process of exporting For Bitis, this can be a nice way to test the market without having to commit a large sum of money However, Bitis may encounter a number of difficulties while exporting to South Korea

a) Strength

- Reduce investment costs, quickly enter the market: The strength of exporting to South Korea is to reduce investment costs and enter the market quickly This is because Bitis does not need to establish a physical presence in South Korea, such as a

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subsidiary or joint venture Instead, Biti's can contact local agents or distributors to sell Biti's products outside the Korean market

- Controlling brands and products in Korea: in addition to reducing investment costs and quickly penetrating the market, it also allows Biti's to completely control its brands and products in the Korean market Biti’s can work directly with distributors or agents

to ensure that its products are being sold in accordance with its standards This is

important for Bitis if it wants to maintain a consistent brand image and quality across different markets

b) Weekness

- Trade barriers: The weakness that Biti's may encounter is the trade barriers that the company must overcome when exporting to Korea The majority of the market share of Vietnamese products exported to Korea is still relatively modest, as most Vietnamese products do not meet the quality, regulations and accompanying conditions in Korea

In addition, tariffs and quotas also make selling products on the market more difficult and expensive Bitis need research the trade regulations in South Korea and work with its partners to ensure that it is complying with all relevant laws and regulations

- Logictics: Logistics problem is a weakness that Biti's will encounter when

choosing Exporting It includes shipping costs, customs clearance and other issues and makes it more difficult to get products to consumers in Korea The company needs to cooperate with partners to ensure reliable and efficient supply to meet customer needs

=> “Exporting” is one of the best options for Bitis to enter the Korean market

However, there are also weaknesses and strengths when choosing “Licensing”, with the strengths being quick market penetration with minimal investment and control

over the brand and products In addition to strengths, there will also be weaknesses

such as trade and logistics barriers that Biti's will face when "Exporting"

3.2 Licensing

Bitis has considered Licensing as a way to break into the South Korean market, but there are a few advantages and disadvantages Licensing involves granting a license to

a local company in South Korea to produce and sell Bitis products under its brand

name This can be a good option for Bitis to enter the market without making a

significant investment

a) Strength

- Leverage the local knowledge and expertise: Biti's can take advantage of the

knowledge and expertise of consumers in Korea Because the licensee will have a

better understanding of the local market and consumer preferences This can be

important for Bitis if it wants to tailor its products to meet the specific needs of South Korean consumers

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- Reduce investment costs, penetrate the market quickly: Like Exporting, Licensing allows Bitis to penetrate the market quickly and reduce investment costs to a minimum

It allows Bitis not to need to establish a physical presence in Korea, such as a

subsidiary or joint venture Instead, Bitis can work with a local licensee to produce and sell its products in the market

b) Weakness

- Limited control over its brand and products: Unlike Exporting, Licensing will

make it impossible for Biti's to have complete control over its brand and products

because the licensee will be responsible for production and sell Biti's products on the market It will make it difficult for companies to implement plans in maintaining brand image and quality in the market

- Legal and regulatory challenges: legal and regulatory challenges that Bitis needs to address when licensing in Korea, including: intellectual property protection, contract law and other possible legal issues making it more difficult to protect brands and

products on the market Biti’s needs to thoroughly research the legal and regulatory environment in Korea and work with its licensee to ensure that the company complies with all relevant laws and regulations

=> “Licensing” is one of the best options for Bitis to enter the Korean market

However, there are also weaknesses and strengths when choosing "Licensing", with the strength being penetrating the market quickly with minimal investment and

leveraging the local knowledge and expertise In addition to strengths, there will also

be weaknesses such as not controlling brands and products and facing legal and

regulatory challenges

Relates to the various features of Korea:

South Korea is a highly developed and technologically advanced market with a

strong focus on innovation and quality This means that Bitis will need to ensure that Biti's products meet high standards of product quality and innovation

In addition, Korea is also a highly competitive market, with many long-standing brands and companies competing and holding a lot of market share Bitis will need to differentiate itself from its competitors and establish a strong brand presence in the

market

4 Target Market

4.1 Market Research

Biti’s market research in Korea

Step 1: Information requirement

Biti's, a Vietnamese footwear powerhouse, seeks to conquer the hearts (and feet) of Korean consumers To achieve this, they need key information:

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