Project a Re-exam

8/19/2019 Project a Re-exam

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Dania Business and Technology Academy ofMarketing Management

2016

UNDERST NDING OF THE M RKET

CrossEyes ApS study case

Group 3:

Simona Mihaela Voroneanu

Andrei Cosmin Honcu

Gais El-A’Asi

Christina Ionescu

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Table of ContentsIntroduction ............................................................................................................................................... 2

Company description ................................................................................................................................ 3

Porter’s f ive forces analysis ...................................................................................................................... 3

New entrants ......................................................................................................................................... 3

Supplier Power ...................................................................................................................................... 3

Buyer Power .......................................................................................................................................... 4

Substitution ........................................................................................................................................... 4

Rivalry ................................................................................................................................................... 4

Political ................................................................................................................................................. 5

Economic .............................................................................................................................................. 5

Social ..................................................................................................................................................... 5

Technological ........................................................................................................................................ 6

Market potential ........................................................................................................................................ 6

Marketing research .................................................................................................................................... 7

Research objectives ............................................................................................................................... 7

Research plan ........................................................................................................................................ 7

Collecting information .......................................................................................................................... 8

Information analysis .............................................................................................................................. 8

Applying the findings............................................................................................................................ 8

Conclusion ................................................................................................................................................ 8

Bibliography............................................................................................................................................ 10


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Introduction

A company must always try to explore all the opportunities that occur in its activity. Offering a new

product, rebrand an old product, improving its position on the market or even entering new markets. But

before taking this step, there should always be a confirmation that it will bring benefits and new

opportunities. To do that we must analyze as much as it is possible what a “new step” is offering and

what are the risks.

That is what CrossEyes AsP is doing. They saw a great opportunity in entering German’s eyewear market

with their product but before that, they want to see if it worth.

This project is aimed to do that, to offer a complete picture of what Germany has to offer for the company

and what are the benefits and the risks. We are trying to shape that “picture” to offer our best responseto the question: Should the company enter or not the German market? and most important Why?

What are the factors that shaped the decision?

To understand that and to give our very best assessment of the country’s potential we used some different

techniques. Firstly, we tried to understand what is the current position of the company, how well there

are doing and what is their competitive advantage.

Secondly, we tried to understand German’s market. We used the proper methods and marketing

techniques to shape our decision as PEST Analysis, to get a general picture of the country and Porter’s

Five Forces Analysis, for understanding our specific industry.

After we understood what is company “made of” and how well is German’s eyewear market is doing we

were able to estimate market potential including the sales potential of CrossEyes AsP .

We used information gathered from databases, analyses and reports and tried to check and recheck the

information before using it.

Even more, we made a marketing plan to show company’s management and marketing department how

to collect data about consumers’ preferences and developed a 5 step marketing research plan.

Finally, after we gathered, systematized, analyzed all the information and knowledge we were able to

give a decision that is presented in the conclusion.


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Company description

CrossEyes ApS is a Danish chain of opticians with the core values of what they call ‘Danish life blood’

and hard work. Theye strongly value intimacy and trust and their ambition is to create a concept for

eyewear and optometry full of attractive products and the best possible service. CrossEyes ApS works in

a space where design and creative people flourish together. Hundreds of custom made CrossEyes ApS

designs in each shop means that CrossEyes ApS offers something to everyone. A corner stone of the

concept is that you always know what you get for your money, there are no hidden extras or fees and

their spectacles are always of the same high quality – that is CrossEyes ApS 1 .

Porter’s five forces analysis

New entrants

In general, the eyewear markets are characterized by a low level of entry, mostly because of common

technology, access to distribution channels, and a low scale threshold. The German market is not an

exception, although the German customer is driven by some characteristics that are hard to aim. A “fast

and easy, but affordable high-quality solutions”2 that is what a German customer is seeking for.

Fortunately, for us, this is what CrossEyes ApS is focused on. As Søren Møller claim, the company is

focused on providing high-qualitative, fast and well-designed products, and this is exactly what is needed

to have a success on the German market.

Supplier Power

The supplier power is low on German’s eyewear market due to the fact that raw materials are easy to

obtain, mostly because in this industry there are common raw materials (plastic, glass, lens, etc.) that

can be easy to obtain from both sources internal and external. Also, there are many competitive suppliers

and the product is standardized.

1 Link 42 Link 2


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Buyer Power

Although there does not exist any contractual or legislative obligation that is linking buyer to the producer

and buyer can easily switch from one producer to another, the buyer power is also low mostly due to the

fact that buyers are fragmented, no buyer has a big influence on product or price3. Also, as we can see,

as many companies already did, producers are taking over own distribution, so they can control the

consumer relationship with the company.

Substitution

The threat of substitutes is also low because it’s difficult to substitute in both cases when we speak about

glasses as a necessity because of trouble with seeing and as a protection from sun. The real threat is

present when spectacles are used just as clothing accessories. And even in that case, it’s hard to replace

glasses with something else.

Rivalry

The rivalry on this market is medium to high due to next factors. Firstly, there are a big number of

competitors that have a well-established brand and a good piece of market share (Filemann, Rodenstock,

and Zeis)4. The big companies are strengthening their position making harder to penetrate the market for

a small or/and medium sized company5. But the market is stable and constantly growing so it makes

possible for small companies to strengthen their position too. Also low switching cost are increasing the

rivalry because the customer can freely switch from one brand to another. But the exit barriers are low,

so abandoning the product or the market does not imply big costs.

All in all, this market is attractive and although there is already a big amount of companies the constant

growth of industry and the characteristics that German customers are seeking for makes this market to

be a good one for our company that perfectly matches with what are the requirements: high-qualitative,

well-designed and low-cost product.

3 Link 84 Link 25 Link 2


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PEST Analysis

Political

Germany is defined by a robust democratic system, the administrative powers being shared between the

executive, judiciary and legislature. The realization of a strong coalition in December 2013 keep

Germany’s stability, at least, until the next elections in 2017. Germany is trying to improve the

relationship with France cooperating in the areas of defense and energy. However, Germany didn’t sign

in 2003 the United Nations Convention against Corruption that affects the country’s reputation in the

matter of anti-corruption laws. Between European Central Bank and Germany, some divergences

occurred in a matter of bank union formation and debt maiming6.

Economic

Although the crisis has hit, Germany stood for it very well and has felt only a small diminution in GDP.

The unemployment rate has followed a downward trajectory, despite most of the EU countries were

struggling with an upward curve. Now Germany is doing very well compared to previous years when in

the 1990s and early 2000s was considering a struggling economy with unemployment more than 10%

(currently 5.1%)7.

Germany has a social market economy with a highly skilled labor force, a large capital stock, a low level

of corruption and a high level of innovation. Germany has one of the highest labor productivity levels inthe world. Even more, its highly innovative small and medium-sized businesses are the major factor

behind its economic resistance during the crisis.

Social

Germany is the largest EU country with more than 80 million people that can be described as a modern,

multicultural country where the family is the most important social reference unit. Other factors are

linked to contemporaneous lifestyles, where for example children tend to spend more time indoors than

playing outside and this practice may have a possible negative effect on children’s eyesight over the long

term. 90% of German population wear glasses, that is a driver of eyewear in the Germany8. Over 60% of

6 Link 47 Link 88 Link 8


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school leavers with 13 years of education were diagnosed with myopia while the myopia rate stood is

27% 9for the one who make only 9 years of education. A third of adults aged 18 to 29 are using

spectacles10.

Technological

Germany's R&D sector has been improved over the years. The government is playing a crucial role by

adopting effective decisions in establishing a link between industry and education through its various

programs. Digital Germany 2015 is an ICT program that has been proposed and approved in order to

improve the potential of its ICT sector. However, Germany still has a demand for professional engineers,

which makes it recruit foreigners to maintain growth and innovation11.

As we can see the Germany in general is a very stable country with a thriving economy that offer us a

big opportunity to sell our products. We think that Germany is a great opportunity that company should

explore and get as many benefits from it as it is possible.

Market potential

In estimating the market potential for German eyewear market we have to understand that the competition

on this market is though. A big and powerful number of companies make even the biggest and well-

known brand to not have more that 20 %12 of market share according to Euromonitor International.

To estimate sales potential for CrossEyes ApS in 2016 we used information about market from

Euromonitor International and tried to investigate the market in order of determining the market share

on the German market.

The forecast sales of eyewear (just spectacles without contact lenses) in 2016 estimated by Euromonitor

Internaitonal is 5595.9 mil. EUR (more than 2015). As we said, the number of competitors of the

CrossEyes ApS on the German market is great and their power is high, so we assumed as the worst case

company will have 0.005-0.001 % of the market in the begging with possibility to get more trough the

time.

9 Link 310 Link 211 Link 412 Link 2


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Sales of eyewear in 2016 ~ 5595.9 mil. EUR (S).

Market share of the CrossEyes ApS ~ 0.0025% (M).

Potential sales in value in EUR (P).

In that case we can conclude to this formula: ∗ = and that will mean: 5,595,900,000 ∗

0.0025% = 148,975

that transformed in local currency will be 1,117,312 DKK that is a very great

revenue considering the market share and the fact that there will be a possibility to improve it.

As we can see an extension on the German market will, even with a small market share, will bring to the

company significant revenue. In this perspective we think that entering the German market is not only a

possibility, but an opportunity that company should use.

Marketing research

To develop a plan for collecting data about what are the German consumer’s preferences as regards of

CrossEyes ApS ’ products we will use a 5 step marketing research plan.

Research objectives

This plan is aimed to understand better what will be the consumer’s preferences regarding our products.

We will need to understand what is a German consumer seeking for, in order to know where should wefocus. We will need to understand what is their opinion regarding to quality, price, assistance, post-

buying service, design.

Research plan

To get our objectives we will need to consult both secondary and primary sources of information.

Although there is a plenty of secondary information that we can get from customer databases, sales stats,

government publications, periodicals and books, commercial data, on-line associations, on-line business

information, we will need also to get information from our potential customers and in our opinion because

spectacles are something personal we will use more qualitative information than quantitative to shape a

better image of what are our customer’s needs.


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Collecting information

In order to collect information from primary sources we will use methods as: focus-group, observational

survey and interviews; because these methods are much more in-depth and will help us make a better

sense of our findings.

Information analysis

After all the data are gather we will try to structure it and to analyze for shaping the trends that are driving

this market. We will compare with our assumption and will see where we were wrong and what we

should focus on more.

Applying the findings

After analyzing and understanding what are the needs and trends of our customers we will make a plan

for applying this information in our marketing strategy and for shaping our next steps.

Conclusion

Although the competitive situation on the German’s eyewear market is not encouraging mostly because

of a big number of competitors and also because of their competitive power, our company already proved

in England that a high-qualitative product at a low to medium price, with a good design and great service

and support&assistance, is a powerful tool that can be used a competitive advantage for paving its way.

After analyzing the macro factors that affect CrossEyes ApS opportunities in Germany we saw that

Germany is attractive for our company for some important reasons as a big amount of people that are

wearing and using spectacles, a good and stable situation from economic and political perspective, a

growing and attractive market that generate great revenue even in the beginning with a market share

smaller than 0.005% and the last one, but not the latter German consumer is seeking for high-qualitative

products with a great support&assistance during the buying and after buying process. And even more, it

is well known that Germans are attracted to Nordic design and styles that will make us have a huge

competitive advantage on this specific market.

All these reasons are making Germany an attractive market for us, also, because our company has

products that will perfectly shape the consumer’s needs.


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Another thing that is very important is market potential. We saw that the eyewear market is well

developed and still growing and is able to generate in 2016, even from the beginning, a huge revenue

that will allow the company to return its investment fast.

Moreover, we developed a market research plan that will show the company how to collect data about

German consumer’s preferences as regards of its products. The market plan also will give a direction to

follow if the company will decide to enter the new market.

After analyzing all the information, we concluded that the Germany has big potential for our company

and that company should explore this opportunity by entering the market. Even more, we think that

CrossEyes ApS will have a huge success from the begging and during its activity as it was in England.


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Bibliography

Books:

Olsen Claus Bang, Aardalsbakke Marianne (2015): AP Marketing Management – Theme Three,

Viborg, McGraw-Hill Education (1)

Euromonitor International: Eyewear in Germany, September 2015 (2)

Euromonitor International: Consumer life-style in Germany, October 2015 (3)

MarketLine: Contry profile Germany, August 2015 (4)

Links:

http://www.crosseyes.com/concept/ (4)

http://www.proff.dk/firma/crosseyes-aps/aarhus-c/detailhandel/14514982-1/ (5)

http://www.tuugo.dk/Companies/crosseyes/0110003588577 (6)

http://www.largestcompanies.com/company/Crosseyes-ApS-2576397/decision-makers (7)

https://en.wikipedia.org/wiki/Germany (8)

Note: All the materials have been seen in the last 48 hours.
http://www.crosseyes.com/concept/http://www.crosseyes.com/concept/http://www.proff.dk/firma/crosseyes-aps/aarhus-c/detailhandel/14514982-1/http://www.proff.dk/firma/crosseyes-aps/aarhus-c/detailhandel/14514982-1/http://www.tuugo.dk/Companies/crosseyes/0110003588577http://www.tuugo.dk/Companies/crosseyes/0110003588577http://www.largestcompanies.com/company/Crosseyes-ApS-2576397/decision-makershttp://www.largestcompanies.com/company/Crosseyes-ApS-2576397/decision-makershttps://en.wikipedia.org/wiki/Germanyhttps://en.wikipedia.org/wiki/Germanyhttps://en.wikipedia.org/wiki/Germanyhttp://www.largestcompanies.com/company/Crosseyes-ApS-2576397/decision-makershttp://www.tuugo.dk/Companies/crosseyes/0110003588577http://www.proff.dk/firma/crosseyes-aps/aarhus-c/detailhandel/14514982-1/http://www.crosseyes.com/concept/

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Project a Re-exam