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Icebreaker The China Entry Decision Case Solution
The company Icebreaker produces sportswear that is made of wool. The prior perception of the material wool was that it was itchy and uncomfortable. However, the company had played on this perception and developed a product made from wool from merino sheep found in New Zealand. This innovativeness has allowed the company to develop a position in the markets of New Zealand, the US and in Europe. The company is presented with an opportunity to enter the Chinese market with its product given the rapid expansion of consumer base in the Chinese market and the increasing Western choices. The Chinese market, however, is challenging because of the focus on fashion, and the lack of financial resources in the company to develop a separate product line for the choices of the Chinese consumers. The recommendation was not to expand into the Chinese market.
Following questions are answered in this case study solution
Analyze how Moon applied Geoffrey Moore’s “Crossing the Chasm” framework in developing the Icebreaker business in New Zealand, Europe, and the US? Provide specific examples based on the case information. Did he need to make any changes to adapt it to a consumer product (versus a technical, B2B market product)?
Should Icebreaker enter the Chinese market? Provide a rationale using information from the case.
If he were to enter the Chinese market, what changes, if any, should he make, compared to the approach used in other markets?
Case Analysis for Icebreaker The China Entry Decision
1. Analyze how Moon applied Geoffrey Moore’s “Crossing the Chasm” framework in developing the Icebreaker business in New Zealand, Europe, and US? Provide specific examples based on the case information. Did he need to make any changes to adapt it to a consumer product (versus a technical, B2B market product)?
Crossing the Chasm framework includes the innovative concept that is adopted over a period by people. The first adopters are called the innovators, then come the early adopters, the early majority, the late majority, and the laggards (Moore, 2009). In this case, the marketing strategy for the company was based on innovativeness. The founder developed the company such that it renewed the way wool was perceived in garments. The basis of the business that was developed in Europe, New Zealand, and the US was innovativeness. In the US, the distribution was not done effectively. The reason was that the distributor did not communicate the difference in the product compared to other wool products. The innovativeness factor was not communicated, hence, initially, the company did not make enough sales. Also, the brand was not emphasized in the distribution that did not help n developing a brand image.
Furthermore, the closeness of the New Zealand market and the US market was an advantage. The wool was obtained from New Zealand, and due to the closeness of language, and the positive perception about New Zealand, the entry into the US market was easier. Also, the markets that Icebreaker entered into were not concerned about fashion and a brand built on fashion, but the technical side of the product. To convert the product from a technical to a fashion-based product, the requirement was to differentiate the newly formed product from the brand image that was established based on the technical side of the product. This would mean the development of a new product category that should be marketed under the same brand name, but different product name.
2. Should Icebreaker enter the Chinese market? Provide a rationale using information from the case.
Before giving the suggestion to entire or not to enter the Chinese market, the strengths, weaknesses, opportunities, and threats will be assessed.
There are two strengths that the company possesses, one is its supply chain. The company is in agreement with suppliers that are the best in the distribution system. Also, the agreement with these suppliers is the long term giving an added advantage to the company. The other strength was the brand image of the company that was an intangible asset for the company. This strength also led to word-of-mouth promotion for the company.
The major weaknesses of the company were their lack of experience in the fashion category. The company had been involved in sportswear, not fashion wear. Also, the suppliers that were the strength of the company were not related to fashion. The Chinese market was not aware of the brand, although the brand was popular in the US market. This meant the development of a brand image in the country from scratch. Also, the company lacked the financial power to develop a company in a new market with a new segment.
The opportunity was the growth in the Chinese market that was predicted to increase in terms of sales by the year 2020. Also, despite the cultural involvement of the Chinese, the people had increasing interests in western-style products.
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