Triangl International Strategy Recommendation

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Eileen Summers
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1 Triangl International Strategy Recommendation December 6th, 2016

2 Table of Contents Overview.. Page 2 SWOT Analysis.... Page 3 Value Chain Configuration... Page 7 Marketing Plan.. Page 9 Conclusion.. Page 12 Appendix. Page 14 Sources.... Page 16 1

3 Brief Overview Triangl is an Australian swimwear line that offers simple and sporty styles in bright neoprene fabric. Their mission is to create high fashion, good quality bathing suits that are relatively inexpensive. They are known for their unique design and fabric; all suits are made of neoprene, which is extremely comfortable as well as flattering. It allows bikinis to hold their shape and look structured and modern. In addition to the quality, Triangl is focused on producing fashion-forward designs. They aim for a simple, classic, and cool look that suit the summer feel (Triangl, 2015). The company s next move will be to enter the Spanish market to capture the 46.7 million Spanish citizens. Financials Based on research in Passport, we predict that Triangl will see 1.24 million euros in the first year of operation. Year two, we predict to see 5.86 million euros in sales and in year three, million euros in sales. These calculations derive from three different steps. First, we examined the amount of sales a competitor (Ralph Lauren) had in 2015 for their swimwear line. They made $4 million in 2015 (Passport). We felt that Triangl could make 5% of those sales. We also thought that Triangl would see a 2% increase in sales between the first and second year and a 3% increase between the second and third year. These numbers came to be $200,000 in year 1, $204,000 in year 2, and $210,120 in year 3. Additionally, we looked at population sizes to examine how Triangl did in Australia for the first three years of operation. The company made $5 million in the first year, $25 million in the second year, and $45 million in the third year. We used these numbers and correlated Australia and Spain s populations to find that Triangl could make $2.47 million the first year, $12.3 million the second year, and $22.28 million the third year. 2

4 To make sure these numbers were not inflated or deflated, we averaged the two together for each year. Finally, we converted from dollars to euros to find our final answer (see appendix 1). SWOT Analysis Internally as a company Triangl has several strengths and weaknesses. One of the major strengths of Triangl is that the company is solely online so this cuts costs immensely. Triangl does not have to pay employees, buy or rent storefront space, worry about a lease, or pay maintenance costs. There is also no inventory needed in distribution centers and there is no need for a trucking company within the distribution center. Being a small company Triangl is able to adapt quickly and become flexible to changes in consumer preferences or swimwear trends in general. Another strength of Triangl is that is endorsed by celebrities. These celebrity endorsements help spread the word about their brand because the celebrities they utilize include Miley Cyrus, Ellie Goulding, Britney Spears, and Kim Kardashian. According to the co-founder, Craig Ellis, The company never pays celebrities, but does send suits to the likes of Kendall Jenner s social circle. Jenner has been spotted on a friend s Instagram account wearing a Triangl design, and tweeted about the brand in 2013 saying triangl swimwear you hooked me up! Thank you! with a photo showing at least five different styles laid out on a bed (Pelley).This influencer marketing is a very cheap form of paid advertising where the budget is essentially in the free products given away so Triangl makes sure to choose their influencers carefully and wisely. Other than absorbing the cost of giving away swimwear to celebrities Triangl does not pay for any advertising; this company is focused on word of mouth advertising. 3

5 The brand image and position of Triangl is also advantageous because they are a high quality trendy swimwear company for women. The use of neoprene for the swimsuits is unique to Triangl and its success because this material is comfortable, flexible, and sporty. The beauty of neoprene is that there is no fuss, no bulge, and the material is wave body friendly due to its seamless fit and structure. Since the company only offers its products online this upgrades the value of the brand because the swimsuits become exclusive as customers can only purchase them from one online location. Production of the swimsuits is in Hong Kong and the owners of the company also live in Hong Kong that makes it easier for designs to get approved faster by the owners. Triangl has many internal weaknesses as well. While being exclusively online was seen as a major strength it can also be viewed as a weakness because they are excluding those consumers that shop solely in brick and mortar locations. By opening up storefronts and expanding the business you could potentially increase profits, but Triangl would also have to incur the costs of opening up a physical location. Another low for only being online is that Triangl cannot reach any consumers who do not have access to the Internet. However, those consumers are more likely to not have the capital and purchasing power to afford Triangl swimwear as one bikini starts at a price of $79. Another disadvantage of Triangl is that there is not a lot of advertising and promotion other than celebrity endorsements and their Instagram account. Triangl should set up a newsletter to send out with new styles that are coming to the website.this company could also consider using promotions such as sales during cyber Monday to increase traction to their website. Triangl might not want to constantly offer sales because this might degrade the brand image but occasionally it is nice because it can increase potential customers by decreasing the cost of a 4

6 swimsuit and enabling some people with less disposable income the ability to afford a Triangl swimsuit. By only offering swimsuits for women Triangl really limits itself to a small target market. If Triangl offered swimwear for men or children it could reach more markets and increase its profits. Another option for expansion would be to offer coverups and other beach accessories along with their swimsuits. The company has also neglected to expand much globally; Triangl is offered in Australia, the United States, Canada, and Mexico. By avoiding other countries in Latin America and Europe Triangl is missing out on profits because these locations would be ideal for their product being surrounded by water, having warm temperatures, and lots of tourists. Triangl is still a relatively new company and is not known by many people since it is exclusively online so the company is still building brand recognition and awareness. Another weakness of Triangl is that the swimsuits do not tailor to all body types which limits the target market. Triangl should offer more sizes for bigger women. Triangl also does not offer any athletic versions of swimsuits and this could increase profits by including women who like to swim for exercise or participate in extreme water sports. Along with internal strengths and weaknesses Triangl also has some opportunities and threats that should be looked at. The external opportunities for Triangl are the warm climates in many locations that make it ideal for sunbathing, swimming, and going to the beach. Spain, which is the country where Triangl is looking to go into has an average temperature of 75 degrees fahrenheit in Barcelona. Another opportunity for Triangl is to appeal to those consumers who have disposable income to spend close to $100 on a swimsuit. The swimwear industry is growing. According to the Global Industry Analysts, Inc., The global market for Swimwear and Beachwear is projected to reach 2.2 billion units valued at US$22.7 billion by 2022, driven by the growing affinity for active and 5

7 healthy lifestyle activities like, swimming, and the strong preference for beachside vacations (Global Industry Analysts, Inc.). There are also opportunities to make swimsuits that have UV protectant because of the growing awareness and concern for skin protection. The tourism industry poses an opportunity for Triangl to target because when many people vacation they are looking to vacation in a beach or coastal area and the European Union offers easy access to locations that provide these options. In the future, Triangl should look at opening up a retail location in a few years to appeal to consumers who only like shopping at brick and mortar stores. This could potentially increase profits for Triangl and expand their market reach. The external threats posed to Triangl expanding to Spain include that the economy has not completely recovered after the 2008 financial crisis. Consumers are not spending as much disposable income on products and services that are not essential to their lives. Also, the unemployment rate is high and it is still expected to be high, as much as 18.7% by the end of the quarter. Another weakness is that in Spain only 4 out of 10 people make purchases online and this is not ideal for a company whose whole premise is online. According to an IPSOS study two out of three Spanish people prefer to try new products rather than stay with the brands they already know. Thus Spain became one of the countries with the lowest index on brand loyalty. Consumption in Spain has suffered a major transformation in the last years. Consumers increasingly demand new, relevant and different products, and this trend toward innovation outweighs the brand itself said Antonio Hernando, Marketing Director IPSOS Spain and he added: Companies are facing two major challenges: first, to continue launching products attractive to consumers, in order to maintain their market value and, on the other hand, to not forget the traditional buyers, loyal to the brand for years (Sarno). Triangl 6

8 faces many threats and weaknesses, but many opportunities and strengths exist for this company in expanding in Spain. Value Chain Configuration Research & Development Triangl originally conducted research and development in Australia to understand their target market more clearly and to keep operations close to company headquarters. As the company began to expand, Triangl moved development to Hong Kong. For entering Spain, Triangl will have to conduct some research about the Spanish culture to see what Spanish citizens look for in swimsuits, their expectations for longevity, and color and price preferences. Because Triangl functions fully as an online retailer, development can stay in Hong Kong to keep production prices down. Sourcing & Production Sourcing and production currently take place in Hong Kong and potentially China. When moving into Spain, sourcing and production will stay in Hong Kong. Again, since a majority of the business is online, moving these elements in the value chain configuration will only add costs to the company because they have no brick-and-mortar stores to move closer to. This is a smart move for the company because it will keep materials close to production, thereby eliminating transportation/shipping costs for Triangl to bring materials in for swimsuit production. Promotion Since Triangl has no brick-and-mortar stores and is completely on the Internet, the company needs to attract consumers who frequently purchase goods online. By using online social media tools, Triangl will capture the attention of those customers who frequent online shopping. 7

9 Triangl also plans to incorporate video as video content sharing represents 87% of Internet usage in Spain (Passport to trade, 2). These videos will be completed in Spain to a) better understand the Spanish culture and b) to connect buyers with a familiar environment. Distribution Triangl relies on e-commerce sales and have no brick-and-mortar stores, and the value chain configuration will not change when moving into Spain. Potentially, Triangl could consider a brick-and-mortar store in 2018/2019--however, this would be an enormous cost for the company to undertake, especially when online sales are working. Therefore, online sales should still be the main source of distribution. Service Again, since the company is based entirely online, service will be start being conducted via the Internet or over the phone. The customer will have to ship their products to Hong Kong for returns or repairs. However, this keeps costs low for Triangl since they only have to pay for shipping costs and not for a store and workers to keep the store running, make repairs, or any of the utilities that come with maintaining a brick-and-mortar store. Overall, the value chain configuration will not change much moving into Spain since Triangl operates fully as an online retailer. While the company may consider adding brick-andmortar stores into countries that enjoy having physical places to shop at, 59% of Spanish residents are Internet users (Ecommerce, 3). With a population of 46.7 million, this bodes well for Triangl if they can capture the attention of their target market. 8

10 Marketing Plan Target Market Triangl s specific target market includes young female adults ranging from 18 to 45 years of age. Triangl offers a variety of swimwear styles that offer little coverage to full coverage depending on the women s style choice. With this range of swimwear available, the target market can be much wider than other swimwear lines. Triangl s target market also has a higher disposable income in order to purchase the high end swimwear. Women value fashion and are health conscious. These women also value high quality products that are made to last longer than competitor s swimwear. The target market is also made up of social beach-goers and women who enjoy sunbathing. Mode of Entry Triangl is able to meet their customers by offering their products via website. Once entering the website, ordering is a simple process. The customer chooses between The United States, Mexico, Canada, Australia, and International. From there the customer just needs to choose which swimsuit and size they want to purchase and have it shipped to their location. Triangl s simple process makes it easy for customers to make purchases at a flat rate price. Position Triangl has positioned the company as a trendy, high quality, and affordable swimwear brand that customers will love. They offer swimwear that while trendy, is made to last for long term wear instead of just one season. They will be highly competitive in Spain as this nation is known to have swimwear that is at the forefront of the fashion industry (Bullock). Asymmetrical color blocking is a currently a big trend in european fashion, which is how most Triangl swimwear pieces are designed (Bullock). 9

11 Triangle will also position itself as a sustainable company. Europe is known to have a high environmental conscious (Rosenthal). Including sustainable initiatives in advertisements will appeal to the Spanish market. Product Triangl offers a variety of swimwear options made for women of a wide age range. Offering many styles and varieties allows for almost any woman to shop at Triangl where competitors often do not offer swimwear for women of all ages and style preferences. Promotion Triangle will use social media, hashtag campaigns, and celebrity endorsements in order to offer promotions for Spain s customers. Triangl uses social media for their advertisements in the United States and sends swimsuits to celebrity, such as the Kardashians, to model the suits and post to social media accounts (Triangl). Triangl will use Spanish celebrities such as Lorena Bernal Pascual, Elsa Pataky, Paz Vega, and Penelope Cruz to endorse the Triangl swimwear line (Said). The company will also focus on their own social media accounts to endorse the swimwear such as YouTube, Tuenti, Facebook, Twitter, Instagram, Snapchat, and Pinterest. In addition, paid advertisements will be used on these social media platforms as well as on billboards, in popular Spanish fashion magazines, and on the sites of fashion bloggers. Triangle will also use the idea of Triangl Girls in Spain. The company describes them as the epitome of summer, our identity and guide on everything we do, and are a hazy, dreamy way of looking at the world (Triangl Girls). These women are sought out by the company to be the official models and spokespeople for the swimwear. Women simply use the hashtag #trianglgirls in their social media posts for a chance to be noticed by the company and 10

12 become a Triangle Girl. Triangl will incorporate Spanish women into their Triangl Girls by promoting the use of #trianglegirlsspain. Distribution Triangl is currently produced and manufactured in Hong Kong. All operations take place in Hong Kong therefore, customers will purchase online and pay a shipping cost plus duties and tariffs to get a Triangl swimsuit. Price Triangl swimwear will be priced the same online no matter what country you are buying from. The swimwear is around $80 (75.08 euros) to $110 ( euros) per suit with a flat rate shipping cost of $20 (18.77). Additionally, duty rates and tariffs are added to the shipping cost at the end of the purchase order. For orders between 22 and 150 euros, there is no duty rate. But if purchases are over 150 euros, there is a 2%-5% duty rate added on to the purchase (Gallego). Regardless of purchase costs, there is a 21% value added tax for all purchases made in Spain. The lowest cost for a swimsuit is $79 and the highest is $129. Because there would be no duty added for the lowest cost swimsuits, the average price would be $ ( euros), including VAT and shipping rate. For the higher end suits, again assuming no duty is added, the average price would be $ ( euros), including VAT and the shipping rate. If a customer were to make a purchase that totalled more than 150 euros, duty charges would be added on to this. See appendix for online checkout with price and flat rate shipping. Counterfeits Triangl is at risk of having other companies copy the Triangl signature style and look. Large retailers such as Target, Victoria s Secret, Pac Sun, Speedo, and Keifer have shown some risk to counterfeiting by mocking the Triangl look. To ensure the quality of the swimwear, 11

13 Triangl posted our online store is the only place in the world where you can buy original, genuine, and authentic triangl bikinis to their website When entering Spain, Triangl will need to adapt colors, styles, and consider modesty when designing new swimwear Triangl practices environmental sustainability by producing swimwear that is made to last instead of making for season. The products are also recyclable and offer waste management services when recycling neoprene products. Conclusion Although Triangl faces many internal weaknesses and external threats a lot of opportunities and strengths exist for this company and have allowed for its success and growth thus far. Triangl s value chain configuration is relatively simple due to all promotion and sales being online, however, Triangl has an opportunity to open up brick and mortar locations to appeal to consumers who prefer this method of shopping. Triangl s position of offering fashionable women s bikinis and promoting them through social media and celebrities has proven effective so far, however, Triangl will have to be aware of cheaper alternatives and counterfeits to their color block swimsuits. 12

14 Appendix Appendix 1 Method Year 1 Year 2 Year 3 Ralph Lauren 5% x $4 mil = $200,000 +2% of Year 1 = $204,000 +3% of Year 2 = $210,120 Population Ratio mil people in Aus; 46.7 mil people in Spain; Triangl $5 mil in sales = mil ($5 mil)= 46.7 mil (x) = $2.47 mil Triangl sales =$25 mil ($25 mil) = 46.7 mil (x)= $12.3 mil Triangl sales = $45 mil mil ($45 mil) = 46.7 mil (x) = $22.28 Average $2.47 mil + $200,000 /2 = $1.33 mil $12.3 mil + $204,000 /2 = $6.25 mil $22.28 mil + $210,120 /2 = $11.24 mil 1.24 mil euros 5.86 mil euros mil euros Source: Statistics (n.d.). Passport--Euromonitor International. Retrieved Dec. 6, 2016 from (Appendix 2) Price and Shipping Triangl. (n.d.). Retrieved December 02, 2016, from 13

15 Sources Barcelona: Annual Weather Averages (n.d.) Retrieved December 02, 2016 from Bullock, T. (2013, February 13). Swimwear on Spanish beaches differs from typical U.S. attire. Retrieved December 02, 2016, from Duty Calculator Country Guides (n.d.) Retrieved November 17, 2016, from Spain/ Gallego, M. (n.d). Duties and taxes required to import to Spain from outside European Union. Retrieved December 4, 2016 from (n.d.). In Ecommerce News Europe. Retrieved from (n.d.). In Passport to Trade. Retrieved from Pelley, L (2016, April 30). Retrieved December 04, Redondo, I. (n.d.) Retrieved November 17, 2016 from Rosenthal, E. (2009, September 28). What Makes Europe Greener than the U.S.? Retrieved 14

16 December 03, 2016, from Said, S. (2013, April 30). The Top 10 Hottest Women of Spain. Retrieved December 02, 2016, From hottest-women-of-spain/ Sarno, A. (2013, August 8). Spaniards Have No Brand Loyalty. Retrieved December 2, 2016, from Social Media and Web 2.0 (n.d.) Retrieved November 17, 2016 from Spain Swimwear (n.d.) Retrieved November 17, 2016 from Spain Unemployment Rate (n.d.) Retrieved November 17, 2016 from Statistics (n.d.). Passport--Euromonitor International. Retrieved Dec. 6, 2016 from Triangl Girls. (n.d.). Retrieved December 02, 2016, from Triangl The Birth of a Brand. (2015, September 30). Retrieved October 15, 2016, from WiseGeek - Can you recycle neoprene? (n.d.) Retrieved November 17, 2016, from 15

17 Zingara (n.d.) Retrieved November 17, 2016 from 16

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