VAUDE in MalaysiaGlobal Channel Management

Fachhochschule Vorarlberg

International Marketing & Sales, Winter Semester 2017/18

Supervised by:

Tom Fleerackers

Submitted by:

Snezana Majkic

Ilona Schädler

Maria Thiele

Dornbirn, 22.12.2017

Table of Contents1. Target group.....................................................................................................................1

1.1. Main target group.................................................................................................1

1.2. Second target group............................................................................................11.3. Personas main target group................................................................................1

2. Reasons for Malaysia......................................................................................................2

2.1. Geography...........................................................................................................3

2.2. Doing business....................................................................................................42.3. Market for sportswear..........................................................................................4

2.4. Buying behaviour.................................................................................................52.5. IT infrastructure and incoming tourists.................................................................7

2.6. VAUDE distribution channel (Europe).................................................................7

3. Customer Journey...........................................................................................................9

3.1. Discover...............................................................................................................93.2. Research (consider, explore)...............................................................................9

3.3. Moments of truth (decide, experience)................................................................93.4. Customer Engagement........................................................................................9

3.5. Customer journey overview...............................................................................10

Sources A

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1. Target group

1.1. Main target group

Malaysian, secure income & job, “better-situated” enthusiastic about nature young and modern generation of people interested in sports, healthy and active lifestyle increased online shopping behaviour influence of Western world and values touchpoints: sports store in Kuala Lumpur, adventure/activity clubs and guides, e-

commerce platforms due to lack of time

1.2. Second target group

spontaneous buying behaviour willing to pay more if own equipment needs to be renewed on site renting equipment interesting opportunity as traveling by airplane restricts luggage weight not very price sensitive countries: Singapore, Indonesia, China, Brunei, Thailand touchpoints: activity/adventure travel agencies, guided tours, tour operators, resorts,

airport stores, sport stores in Kuala Lumpur only interesting after successful market entry, no focus right now

Identified need: Individualism and spirit of sustainability

1.3. Personas main target group

John, 32 years old, surgeon t Kuala Lumpur Hospitalo Family father and passionate mountain bikero As a family man, he wants to act as a role model for a healthy and sportive

lifestyleo As a surgeon, he is confronted with diseases on a daily basiso Working hours conflict with store opening hours, preference to shop online

“Mountain biking gives me the opportunity to

compensate the private and professional challenges

and experience adventure and passion connected

with benefits for my health.”

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Sally, 24 years old, sales assistant in an international company, seeking for career opportunities

o No children but and no long-term relationshipo In the international job environment, she is confronted with CSR and sustainability

issues in the Western countrieso As these values correspond to her personal interests, she tries to follow a

sustainable lifestyle in Malaysiao She has got an international network of friends and on the weekends, she loves to

spend time with her family on the countrysideo Closely related with nature and enjoys climbing at Mount Kinabalu

“I love to break out from the everyday working life and leave

everything behind me. While climbing, I am able to discover

new perspectives of things that concern me.”

2. Reasons for Malaysia

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2.1. Geography

Strait of Malaccao Accounting for 40% of the worlds tradeo One of the world‘s most important shipping laneso Important from an economic and strategic perspective

Proximity to production site in Vietnamo Using existing distribution channelso Malaysia as distribution platform to ASEAN region o Investments in port development: mega-port deep-sea (Kuantan), re-

development, 3rd terminal in Carey Island (new Malacca gateway port)

Digital Free Trade Zone (DFTZ) at Kuala Lumpur International Airport KLIAo Special trading zone designed to promote the growth of e-commerce and to

capitalize the exponential growth of the internet economyo Making Malaysia the regional fulfilment hub for ASEAN consumerso Serves to facilitate seamless cross-border trade and enable local businesses,

especially SME’s to export their goods easily with the help of leading fulfilment service providers

o Comprises a 17.5ha e-fulfilment hub, a 500,000sq ft. satellite services hub in Bandar - Malaysia’s Kuala Lumpur Internet City - and a virtual e-services platform

o KLIA Aeropolis: airport city development of more than 9,000 acres: 20 of the world’s top-25 freight forwarders have operations at KLIA

o Alibaba logistics: investment of 15bn. USD in global logistics network over the next five years

Mountains and national parks:o Peninsula Malaysia and Malaysian Borneo separated by the South China Sea has

become a hotspot for adventure sportso Mount Kinabalu: tallest mountain in Malaysia (4,095m)o The worlds’ largest discovered cave chambero 28 national parks

Sports opportunities (raining season November-February): o Hiking/Trekking/Nordic Walkingo Rock Climbing: Indoor and Outdoor Opportunitieso Mountaineering/Adventure Racing

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2.2. Doing business

Background Information Regarding the Economyo Malaysia is an upper-middle income country, and one of the most developed

economies in the regiono Gross Domestic Product (GDP) per capita of US$9,546o open economy that is highly trade dependent, with trade reaching 161% of annual

GDP according to the World Trade Organizationo The country has progressed from an economy dependent on agriculture and

primary commodities to one that is manufacturing-based, and is now transforming into a service- and knowledge-driven economy

o Malaysia’s real GDP growth has averaged at 6.4% per year since 1970, outperforming most of its regional peers

o During this period, the economy began to diversify into a leading exporter of electrical appliances, electronic parts and components, palm oil, and natural gas

o In 2010, Malaysia launched the New Economic Model (NEM) and the Economic Transformation Program (ETP), which aims at developing the country into a high income nation by 2020

o The NEM and ETP plans to move the economy further up the value-added chain by attracting investments and focusing on a knowledge-based economy

Ease of Doing Businesso Ease of Doing Business Index: 24th of 190 countries (newest index for 2018; since

2011 Malaysia has improved many conditions for doing business, many reforms)o Corruption Perception Index (2016): 55/176 (Score: 55/100)o ASEAN Free Trade Agreement

Malaysia’s import and export policy is to encourage free trade and generally most imports and exports do not require licenses

2.3. Market for sportswear

Current market situationo Competitors: online and offline offer

Decathlon Malaysia – ecommerce platform and store for sports wear My Core Zone (www.mycorezone.com) - climbing and outdoor recreation

equipmento Stores in Kuala Lumpur (=specialized sports stores)

OGM Outdoor Gear Malaysia, outdoor sports store, Selangor: quality outdoor equipment

Evergreen Cheras, camping Store, Kuala Lumpur, store and online offer Mount XPlorer Outdoor Gear, outdoor sports store, Subang Jaya Lafuma Bangsar, outdoor sports store Guide Pro, outdoor sports store Explorer Outfitter, outdoor sports store The Guide Proshop, outdoor equipment store with online store

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Size and structure of marketo Digital economy for sport and outdoor (Revenue 2017): US$ 21m.o Annual growth rate of 20,9%o User penetration of 5% (expected to rise to 6,9% in 2022)o Most revenue generated in the US (Amazon), China, UK, South Korea, Germanyo Adidas leading position: 15% market share of sales value (strong distribution

network with high availability in department stores, sports goods stores and apparel and footwear specialist retailers) no competitor of VAUDE products

o Launching female-positioned sportswear to target women (healthier and active lifestyle due to rising health consciousness)

o Bargaining and negotiations in shops are expectedo Growing number of consumers tend to purchase sportswear during sales and

promotional periods at lower prices instead of non-sales periods (but: in not the target group!)

Values and lifestyleo Brands like Adidas, Nike, Puma are popular among sportswear consumerso become a popular and common category among young people o identification with a more relaxed lifestyle, greater versatility and comforto Mainly Muslim consumer marketo Happiness Index:

Year Rank

2017 42

2016 47

2015 61

2013 56

2.4. Buying behaviour

Online vs. offline buying behaviouro 90% of the Malaysians purchase online frequently, 56% of these frequently, the

other 34% purchased in the last one to three monthso validates the rise of the online purchase scene in Malaysia

Expectationso The concept and idea of online presence has shifted consumer behaviour in each

of the phases of their own customer journeyo Nowadays, 90% of consumers expect offline stores to have online websites for

their product information browsing option and to purchase directly fromo People who prefer online shopping (55%) vs. those who prefer to shop offline

(45%)o Aim: leveraging online presence and create seamless path-to-purchase for

consumers online

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Stimulio Malaysians get the first stimuli to shop when they surf social media (66%)o one of the most social-media savvy in South-East Asia that spend an average of 5

hours on social mediao direct influence from friends and family is still relevant as 49% agree that their first

thought about shopping stems from their close relativeso Social media and e-commerce websites are both effective online stimuli

(both 72%), followed by brand related websites/apps and video websites such as YouTube, Twitch and Vimeo

Content preferenceso Consumers activities and content preferences in consideration stageo Malaysian multichannel shoppers tend to rely on articles and blogs (56%) as a

source of information, followed by infographics (56%) and videos (40%)o The type of online information they look for are product reviews (70%), product

comparison with other alternatives (57%) and product launch updates (39%)

Payment methodo Across Malaysia, bank transfer is the most preferred payment methodo Credit card is the most preferred payment method in Penang (28%), Perlis (40%),

Selangor (25%) and WP Kuala Lumpur (34%)

Price sensitivity: Price matterso 77% of shoppers agree that promotions such as discounts influences themo Word-of-mouth remains as a relevant factor as 47% of them agree that

recommendations from close relatives trigger them to buyo switching to another brand in the same product category will be more likely due to

promotions, and recommendations from friends and family

Pain pointso Unsure about the product’s authenticity (87%)o The actual product quality is not as promised (81%)o Delivery cost too pricey sometimes (80%)o Suspicious of payment system security (79%)o Delivery takes too long (75%)o Uncertainty of the website’s genuineness (73%)o Limited information about the product on the website (69%)

Online shopping usageo E-commerce in Malaysia provides huge opportunities for businesseso Rate of multichannel customers or multichannel shoppers is increasingo Utilization of online channels in any stage of the purchasing processo Online purchasing is also more diverse, from clothing and footwear, to tech &

gadget accessories up until household products

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The stimuli, consideration, purchase and post-purchase phases can all happen online. Therefore, businesses should craft their online presence to be more seamless and ‘believable’, addressing that there are many consumers with concerns in buying online because they are uncertain of the authenticity or that the products offered are not authentic.

While price proves to be a priority, businesses can diversify its unique selling proposition on their website online. Make it more personal, and engaging, because people do not necessarily buy things online. They have the option to browse the product online and buy it in the offline store. Emphasize on important matters and provide the product information in a detailed fashion. The best thing that could happen from having a seamless, detailed information and at the same time providing a unique user-experience, is word-of-mouth - the purest and most convincing form of persuasion.

2.5. IT infrastructure and incoming tourists

Individuals using the internet Arrival of Tourists Mobile Cellular Subscription

2.6. VAUDE distribution channel (Europe)

VAUDE delivers only to (specialized) retailerso applies also to orders placed on vaude.como retailer acts as shipping partner

VAUDE Franchise Storeso Outlets (four) run by VAUDE o Difference between online and offline sales is lowo Mountain sports is their most important segment

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Year %

2016 78,5

2015 71.1

2014 63.7

Year Per 100

2016 141.2

2015 143.9

2014 148.8

Year Mio.

2016 --

2015 25,7

2014 77.4

Customer service has a high priority for VAUDE They call themselves “VAUDEpedia”

o to help the customer in different situations as for example they recommend to make the cloths waterproof and offer even a service for everyone, who has bought it at VAUDE, to make them waterproof if the customer has not enough time

CSR team as driving force for sustainability Working conditions are very important for VAUDE, they believe that time spent at work is

also time spent living very high commitment in social aspects Very strong corporate values

Advertisemento Social Media Strategy: Facebook, Youtube, Vimeoo Blogs: (Freiluft, Bergzeit)o Green Shape Eco Products VAUDEo Trade fairs Outdoor

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3. Customer Journey

3.1. Discover

The Customer has no concrete intention to buy yet, information about products and brands are collected by the way through experience, observation, storiesFacebook – English (target group Malaysia)

Youtube Channel, Vimeo: MTB, Trails

Blogs: Outdoor Mountain Activity- Outdoor Gear Malaysia ogm.my

VAUDE Trail Running Event: Testimonials and experts Helmut Kotter (climber), Stefan Keck

(extreme mountain climber), promote nature and sustainability values, raise brand

awareness

Provider of guided mountain activities: Equipment testing

SEA Search Engine Advertising (Adwords, Affiliate - Partner)

3.2. Research (consider, explore)

Customer develops need, collection of information, comparison of alternativesConsultation of website VAUDE information about products

Visits flagship store or other specialized sports stores to gather information

3.3. Moments of truth (decide, experience)

Customer has chosen to buy at VAUDE and orders its products via e-commerce platform. Experience of product shows weather decision was good or bad.Partnering with retailers and specialized sports stores outside the capital:

OGM Outdoor Gear Malaysia, Outdoor sports store, Selangor: quality outdoor equipment

Mount XPlorer Outdoor Gear, Outdoor Sports Store, Subang Jaya

Lafuma Bangsar, Outdoor Sports Store / Guide Pro, Outdoor Sports Store / Explorer

Outfitter, Outdoor Sports Store / The Guide Proshop: Outdoor Equipment Store with Online

Store

Supplement to packaging: Thank you note for buying VAUDE product, future events and

further information about the topic sustainability, tips how to self-repair VAUDE products

3.4. Customer Engagement

Interaction of the customer with the company or other customers because of its positive (or negative) experienceNewsletter: information about sustainability issues, upcoming events, new products etc.

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Integration of the customer in the community:

Interaction through selfie “VAUDE in action” on own social media channel (incl. hashtag)

Invitation to rate and promote company and products

3.5. Customer journey overview

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Sources

Ease of Doing Business (2017): Rankings; Online: http :// www . doingbusiness . org / rankings .

Last access 05.11.2017.

Transparency (2017): Corruption Perception Index; Online:

https :// www . transparency . org / country / MYS . Last access 05.11.2017.

Vaude (2017): CSR Report: Online: http://csr-report.vaude.com/gri-en/vaude/our-brand.php.

Last access 05.11.2017.

Country Economy (2017): Malaysia – World Happiness Index. Online:

https://countryeconomy.com/demography/world-happiness-index/malaysia. Last access

05.11.2017.

News 18 (2016): 8 exciting sports you should definitely try in Malaysia. Online:

http://www.news18.com/news/lifestyle/travel-8-exciting-sports-you-should-definitely-try-in-

malaysia-1059235.html . Last access 05.11.2017.

PWC (2017): Doing Business in Malaysia. Online:

https://www.pwc.com/my/en/assets/publications/2017-doing-business-in-msia.pdf. Last

access 05.11.2017.

Rough Guides (n.A.): Sports Outdoor Activies. Online:

https://www.roughguides.com/destinations/asia/malaysia/sports-outdoor-activities/ . Last

access 05.11.2017.

Statista (2017): Sports and Outdoor. Online:

https://www.statista.com/outlook/259/122/sports-outdoor/malaysia#market-arpu . Last access

05.11.2017.

The Load Star (2917): Malaysia Upgrades Logistics and Infrastructure To Support E-

Commerce Ambitions. Online: https://theloadstar.co.uk/malaysia-upgrades-logistics-

infrastructure-support-e-commerce-ambitions/ . Last access 05.11.2017.

World Bank (2017): World Development Indicators. Online:

http://databank.worldbank.org/data/reports.aspx?source=2&country=THA. Last access

05.11.2017.

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