You are on page 1of 5

Part II: US Which kind of specialties is Icebreaker confronted with in the US market?

How does the company need to position itself? What are its market-related strengths, weaknesses, opportunities and threats? In 2002 Moon decided to enter the US market as being the most important market for Icebreaker for multiple reasons: firstly, the market with a yearly turnover of $ 2 billion is the largest outdoor market worldwide. Moreover the US market influences the outdoor trends in the European market. As Icebreaker was already selling its products in Europe, it was crucial to understand the US market deeply as well it was expected that the success in the American market would support the success in Europe. With regards to geographic distances, the US market is a lot easier to reach than the European market, as a flight from New Zealand to the US takes only 12 hours whereas it takes 27 hours to Europe. The US market seemed not only be more convenient because of the geographic reach but also because there are no language barriers to overcome opposed to Europe. Finally Moon believed that the Americans had a special affinity for New Zealand. The Americans picture New Zealand as “the lost paradise” and the area from which the Merino wool comes meets the peoples’ idea of paradise. Firstly, Moon searched for a third-party distributor in order to enter the new market. By exploring different partnership opportunities he agreed on a partnership with a manufacturer who had non-competing, outdoor apparel line ready to invest the funds required for building up Icebreaker as an independent brand in the American market. The partnership however did not meet Moon’s expectations: fewer than 50 stores agreed to carry Icebreaker products and in 2003, Icebreaker did not even break sale $250,000 for the season. Moon knew that the products were not sold efficiently enough as in his opinion the partners did not pay enough attention to Icebreaker by for example educating the buyers about the product technology. Moon concluded that he needed tighter control over the distribution by entering the US market by his own. Consequently he did not renew the contract, but instead recruited his own US team based in Ketchum, Idaho and led by Troy Ballard. By entering the US market with his own distribution group Moon had to make some decisions with regards to distribution, positioning and marketing strategies. With regards to the distribution strategy Moon had to decide whether he would position Icebreaker as a technical apparel company or outdoor sports company. He positioned Icebreaker as a technical apparel company by selling the products through outdoor and snow sports retailers and not through fashion retailers. In this respect, the most urgent matters are the

but Moon chose a different strategy. Moon believed that he could differentiate Icebreaker from the US competition by focusing on its point of difference: the origin of the product as well as the product’s high-performance given by the merino wool. which had been already effective in New Zealand. Instead Moon aimed to target the independent stores. REI. The “epicenter” strategy. But he also knew that the apparel had to be adapted to the seasonal trends in order to breathe fresh air into the designs. The established brands are sophisticated and well established so that they are accepted as technical apparel as well as fashionable apparel meaning that the brands can target a broad consumer group.technical features of the product such as durability or breathability. weaknesses. The SWOT analysis summarizes the US entry of Icebreaker in retrospect. Having described the market specialties as well as the distribution and marketing strategy the strengths. One disadvantage of the technical market however is the fact that the distribution is more labor-intensive than the fashionable market as there is only one national chain. Icebreaker competes against giants such as North Face. as they carry an enormous credibility in the industry and thus have the potential to build up Icebreaker’s brand recognition. Apart from the established brands. opportunities and strengths coming from the US are identified. One more disadvantage of this distribution and marketing strategy is that growth potential seemed limited due to the small size of the market having only 300 to 400 stores which are sophisticated enough to carry the Icebreaker story. carry the clothes back home and spread the awareness of Icebreaker in their home markets. which could potentially pave Icebreaker in the stores. despite of their small size. goes hand in hand with the marketing strategy that relies on word-of-mouth communication. Patagonia and Timberland in the US market. The stores are located in selected vacation and resort locations in the US. SmartWool. Strengths • • • • • High quality product Elaborate supply chain Unique product technology creates strong product story Authentic and original brand history Lessons learnt from US entry Weaknesses • • • Low number of distribution partners No presence in national or regional chains offering growth potential Low level of trend oriented designs . is the first company other than Icebreaker which offers merino wool apparel. Vacationers are exposed to Icebreaker apparel in their holidays. an upcoming company.

China is not as strong in terms of specialty outdoor and snow sports retailers in vacation and resort areas compared to the US market. With Ballard’s direct contacts to the retailers as well as the adaption of Icebreaker’s merchandizing led to the fact that the sales were dramatically increasing in the US market: in 2006 the sales were likely to be more than $10 million. Icebreaker will have appear as an outdoor sportswear company with a focus on its fashion features rather than a technical apparel company as in the US. however.Opportunities • Americans affinity for New Zealand • US market as most important outdoor market worldwide • Small geographic distance • No language barrier • US trends as strong influencing factors for European market Threats • Small size of technical apparel market • High Labor intensity of distribution in the outdoor market  few economies of scale • Highly competitive market due to established brands With regard to Icebreaker’s strengths and the opportunities that were identified in the US market. needs to be different from the US strategy due to certain market characteristics. Thus rather fashion oriented retailers are suitable in entering the market. the company would have to appear as a fashionable outdoor sportswear brand and not as a technical apparel company to match the customer profile of these retailers. however. To bring its products onto their shelves. the type of retailers dominant in the Chinese market must be taken into consideration. . weaknesses. opportunities and threats? What kind of distribution strategy is recommended? With Western products increasing in popularity in China and Icebreaker’s endeavour to grow the second foreign market after the US is determined. Part III: China Which kind of specialties is Icebreaker confronted with in the Chinese market? How does the company need to position itself? What are its market-related strengths. The strategy to enter this market. First. When entering the Chinese market. This can be traced back to several reasons. it had been shown that it was the right decision to enter the US market with Icebreaker’s own distribution team after the failure with the third-party distributor.

Consequently. the consumer behaviour is different from the US market. Prada Sport. style and luxury. independent stores Threats • • • Highly competitive market in fashion sector Customer acceptance of natural fibre over synthetics material is raised to question Reluctance of consumers towards outdoor sports • • With regard to Icebreaker’s strengths and the opportunities that were identified in the Chinese market. evolving and very experimental fashion distribution network with regard to Western products Approximately 1000 retailers in high-end retail category in prosperous parts of China + at least twice as much smaller. or even Gucci. is. This is enhanced by the third aspect: Icebreaker’s competitors in the Chinese market. The main question. however. Having described the specialties of the Chinese market Icebreaker’s strengths and weaknesses as well as opportunities and threats coming from this market were identified. This explains why the fashion aspect rather than the technical superiority should be placed in the foreground in order to guarantee Icebreaker’s competitiveness. the company will have to compete against brands like Hugo Boss. June 14. With regard to the retailers and customers.Secondly. it is definitely recommended to enter this market. Chinese customers are very unlikely to be convinced by the products’ technical features as outdoor sports do not enjoy such a great popularity as in the US. Icebreaker needs to emphasize its fashion attributes in terms of quality. 2012) Extensive. . Strengths • • • • • Weaknesses Lack of brand knowledge among retailers and customers Lack of experience in fashion positioning and Chinese market in general No establishment of distribution channels (compared to all other major fashion brands) High quality product • Elaborate supply chain • Unique product technology Authentic and original brand history Financial strength (after success in the • US market) Opportunities • • Popularity of Western products (especially sought by young affluent Chinese) Increase of China’s middle class with a higher disposable income (Source: The Wall Street Journal “Chasing China’s Shoopers”.

in order to achieve certain market coverage and being able to compete. especially personal selling in order to educate distribution reps and retailers about the product technology and its unique benefits. This would lead to a great challenge for the product development and manufacturing process – paradoxically especially if Icebreaker turns out to be a success in China. The main challenge for this type if distribution network is to figure out. When relying on a 3rd-party-distributor. less financial and managerial effort would be necessary compared to own local distribution groups. The uncertainty with regard to the retailers’ expectations can be made up for through market research. brochures etc. Furthermore. Weighing the pros and cons of these two different distribution network concepts we recommend to choose a 3rd-party distributor because of the following reasons.g.whether to use a 3rd-party distributor or – as in the US – to set up own local distribution networks. billboards. – could support Icebreaker in building up brand recognition among consumers. The main challenges of the brand’s and the product technology’s unrenownedess can be compensated through promotional activities. whether theses buyers would embrace the Icebreaker brand for their customers and – if so – if any adaptions need to be conducted. Icebreaker has no experience at all both in the fashion positioning as well as in the Chinese market in general. if the message “one-with-nature” really connects with enough Chinese retailers and their customers. Identifying a Western oriented fashion distribution rep is supposed to be easy. however. on the contrary. is assumed to be rather easy as a real network among these people exists. Icebreaker might need to tailor its existing product line in order to cater for the preferences of Chinese consumers. so Icebreaker could benefit from his market knowledge. Icebreaker would have to be able to deliver replenishment quickly and reliably. First. Finally pull marketing activities – e. but a substantial investment in hiring and management would have to me made. This. Secondly. it is raised to question. A Chinese “Troy Ballard” with the talent and the contact to drive the effort would have to be found. fashion distribution representatives with a Western orientation must be targeted. . flyers. In the latter case Icebreaker would have more control over the distribution.