Bachelor Thesis - Kari Traa

Kari Traa AS in the Spanish Market

Bachelor of International Marketing

ESADE & BI Norwegian Business School

Delivery date: 04.06.2014

This paper is done as a part of the undergraduate program at BI Norwegian Business School.This does not entail that BI Norwegian Business School
has cleared the methods applied, the results presented, or the conclusions drawn.

Professor

MartaVila Fernandez-Santacruz

Students

Tina Belsvik

Siri Therese Røiseth

Linn Helen Dyrhaug

JuliaVictoria Granström

Purpose of this Project

This bachelor thesis is our ﬁnal project at BI Norwegian Business School’s
program Bachelor of International Marketing. This report is conducted in the
subject Proyecto de Investigación with Marta Vila Fernandez-Santacruz at
ESADE Business School Barcelona, Spain as our mentor. This report is done in
collaboration with Kari Traa AS, and with the help from Sissel Himle,
Marketing Manager at Kari Traa AS.

Company Presentation
Kari Traa AS

• The founder of Kari Traa AS is the three times Olympic champion Kari Traa
-  During her career she custom made her own skiing-gear and also knitted
beanies for her family and friends birthdays

-  Kari Traa’s own heritage, creativity and passion for design is a big
motivation and her beanies quickly became famous amongst her friends and
ski-colleagues

-  In 2002 in her hometown, Voss, the company Kari Traa AS was founded

• The Kari Traa products are inspired by Norwegian traditions, nature and her
childhood memories. The company produces clothing and accessories for
active girls doing both winter- and summer activities and sports
Active Brands AS

• In 2013 the Norwegian company Active Brands, who own a broad range of
Norwegian sportswear companies, acquired Kari Traa AS

Product Presentation

• Kari Traa’s variety of clothing includes: base layer, trainingwear, outerwear, skiwear, mid
layer and accessories
• In this thesis we are focusing on the base layer products made of merino wool
• Base layer is clothing mainly used under the outerwear when doing winter activities
• The purpose of the base layer is to transport the sweat away from the skin to the next
layers, which makes it feel warmer and more comfortable
• The most suitable material for base layer is either out of wool or synthetic materials
(such as polyester and microﬁber)
- In this thesis we use the term “base layer” when talking about base layer products of all
fabrics. When using the term “merino wool base layer” we only talk about base layer
made of merino wool
• Kari Traa produces all their base layer products in China only

MID-LAYERTRAINING SKIWEAROUTERWEAR ACCESSORIESBASE LAYER
Product Presentation

Base Layer Products

Dry Wear

Base Layer Products

Warm Wear

1. Problem Area Deﬁnition

“Can Spain be a potential new market for Kari Traa
and if so, which entry strategy is most suitable?”

1.1. Limitations

Time and money

•  Because of limited resources we are limiting our research to the
geographical area of Catalonia in Spain

Distribution channels

•  Limited to only distribute products through Internet and sportswear
stores, as Kari Traa only sells through these channels in their foreign
markets

2. Research Problem

Research area

Research methods

Consumer behavior

• Knowledge of base layer
• Price sensitivity
• Information search behavior
• Cultural differences
• Purchasing behavior
The attractiveness of the market

• Competitors
• Substitutes
Secondary information sources

• Kotler’s Consumer Buying Behavior
• Porter’s Five Forces
• Primary research
- Qualitative methods

3. Theoretical Framework

Based on our problem areas, we have chosen to apply some different models in order to
make the list of information needed.
PESTEL: To get a better overview of the different macro environmental factors that might
affect the industry
Hofstede’s Cultural Dimensions Trompenaar’s Cultural Dimensions: We
used these models to understand the cultural differences in behavior between the
Norwegian and Spanish customers
Porter’s Five Forces: Porter’s ﬁve forces is an analyzing tool for helping us to
understand the most important factors within an industry. The model evaluates the
competitive situation
Kotler’s Consumer Buying Behavior: This model helps us understand the
consumers decision making process. Why and how they consume

4.1.1. Industry Information

•  The textile sector is one of the economic activities most affected by the intensive
reorganisation and restructuring process of recent decades. Caused by rapid changes in
the characteristics of demand and market behaviour, as well as by competition from new
producer countries

•  The market is split between three broad groups of products:

-  Clothing

-  Textiles for home and decoration

-  Textiles for technical or industrial use

The Spanish Textile Sector

50 %

30 %

20 %

Three groups of products

Clothing

Home
decoration

Techincal or
industrial use

•  Design is an activity that adds value to a
product and is one of the industry’s most
important option.This is an advantage for Kari
Traa who puts a great effort into design
development


•  In Catalonia, the activity of the textile and clothing industry slowed during 2011,
reﬂecting the deterioration in the economic environment  production fell 0,7%

•  However, the sector still holds a prominent weight in the Catalan economy. Accounting
for 4,4% of Gross Value added and 7,3% of the employment of Catalan
industry

•  Currently, traditional garment making is making way for technical-textile production.
Textiles research is gaining importance, and increasing use is being made of new
technologies applied to textile products and processes. In this context, qualiﬁed technical
personnel who know about innovations in materials and production processes are
becoming a key factor for success




•  The main causes of the decline that Catalonia’s textile industry is suffering

-  Greater competition from emerging economies

-  Increased exports to Europe

-  Trade liberalisation

-  Declining competitiveness of the sector in Europe because of high production costs,
especially wages

-  In addition, the situation has become worse because of the lack of access to credit
brought about by the global economic- and ﬁnancial crisis

•  There are some opportunities in the Spanish textile sector

-  Using technology as a strategic resource (especially in terms of e-commerce)

-  Improving product image

-  Reorientation towards technical textiles

-  Specialised distribution

-  Internationalisation

•  An area of great importance in the introduction of non-traditional activities is marketing and
point-of-sale management. Professional proﬁles with strategically important knowledge that
could play a key role in developing companies’ future plans are needed



•  The sector’s ability to respond to new trends in fashion will be related to the development
of an efﬁcient distribution logistics system. Products are increasingly ephemeral and terms
between demand and delivery is very short.This has resulted in a reduction of the
distance between the companies involved in the different processes and has reduced the
time between the design of a piece and its arrival at the store.This is called short circuit
distribution and might be a difﬁculty for Kari Traa if the local Spanish competitors are able
to deliver products faster than Kari Traa

•  In the EU, textile production fell by 2,6% in 2011, while in clothing the reduction
was double (-5,3%). In Spain the industry’s production level achieved in 2011 is 40,8%
below 2005

EU  textile production - 2,6% (2011)

EU  clothing - 5,3 % (2011)

Spain  production level in 2011 is 40,8 % below 2005



•  The progressive reduction in demand, especially in the second half of 2011, had a negative
impact on the production sector, which fell by 7,4% compared to the previous year.The
behaviour of clothing is more negative (-12,2%) indicating a greater involvement of the
crisis in this activity, due to the structural changes that have affected since the ﬁrst years
of this century

- 7,4%

Reduction
in demand

- 12,2%

Clothing



• In 2006 the average annual household spending for the whole of textile, was about
1,700€, which means that the average annual spending per capita was about 615€.
• Considering the family unit, rather than the individual, in every Spanish home an
average of 1881.44€ was spent on clothing in 2006, representing an increase of 2.5%
over the previous year, and accumulated an increase from 2001 of 14.0% (231.44€)
2006
From
2001:
+14,0%

(231.44€)
Average annual
household spending

1,700€

Per capita: 615€

Family unit spending
(not indvidual)

1881.44€

+ 2,5%



•  The selection of products are ranged by these criteria

1.  Fashion

2.  Design

3.  Quality

4.  Price

5.  Brand (this element is also related to the concept fashion)

Criteria

Fashion

Design

Quality

Price

Brand

4.1.2. PESTEL

Factors

Findings

Consequences

Political

•  Spain is divided into several
regions, which might have their
own political rules

•  Tension between some regions
within Spain

•  Each region manages its own
customs regulations

Economical

•  Unemployment rate in February
2014: 25,6%

•  Financial help from the European
Union (European Commission, and
other members of The EU)

•  People have less money to spend

•  People might have more time to go
shopping

•  This helps the economy in Spain to
compete with other countries
within The EU

Sociocultural

•  Many young women does not have
a job (44,4% in 2011)

•  Fitness and health is modern and
trendy

•  Prestigious to do winter sports
(especially in the mountains)

•  Kari Traa’s segment is severely
affected by the economic crisis

•  Increased demand for sports- and
leisure wear and equipment

•  Demand for winter sports wear

4.1.2. PESTEL

Factors

Findings

Consequences

Technological

•  Increased use of modern
technology such as Internet and
social media

•  Easier for companies to reach- and
communicate with customers

Environmental

•  LIFE program (1992)

-  588 environmental projects
have been ﬁnanced in Spain

•  Environmental regulations

•  More focus on ethical trade and
taking social responsibility

•  Increased focus on running a
sustainable business

•  All companies must follow the
requirements and procedures

•  Requirements for the
corporations within the industry
to emphasize on ethical trade

Legal

•  Spain and Norway connected
through EEA (The European
Economic Area)

•  Spanish-Norwegian Chamber of
Commerce

•  Patents

•  No trade barriers

•  Helps Norwegian companies to
enter the Spanish market

•  The industry has patent laws that
companies must be aware of

Note: These ﬁndings are based on secondary data (books, web pages and persons).The sources can be found in 16. List of Reference

4.1.3. Cultural Dimensions

Hofstede’s Cultural Dimensions

Power Distance (PD)

•  Spain has a higher PD than Norway.The Spanish companies have a hierarchical system versus the Norwegian
egalitarian system.There are more focus on respect – both towards elders and your supervisor, which are important
to take into account when dealing with the Spaniards

Indulgence

•  The Spanish society scores low and are therefore a more restrained country. Societies with a low score have a
tendency to cynicism and pessimism.They do not put much emphasis on their leisure time. Enjoying and indulging is
for some societies wrong. For Kari Traa this can affect the marketing and sales, since the typical Kari Traa-girl enjoys
her clothes and would pay some extra for the extra quality and vibrant design

Pragmatism

•  Spain is a normative country. Spaniards typically live in the moment, and might not have a strict form of rules and
time approach. Kari Traa might for example experience this in situation such as business meetings and the
expectations of the people they alternatively will hire. Dealing with such a country can be a challenge for countries
with the opposite approach

Uncertainty Avoidance

•  The Spanish people score high on this dimension.They might avoid confrontations and might quickly feel that a
discussion or a confrontation is at a personal level. In business between Norway and Spain this can be challenging, as
negotiating and having a discussion is a natural part of a deal

If KariTraa chose to enter Spain there are some cultural differences they need to be aware of to avoid unnecessary
misunderstandings.We chose to use the cultural dimensions by Hofstede andTrompenaars to cover the dissimilarities between
Spain and Norway

Note: see Attachment 1 for scoreboard

4.1.4. Cultural Dimensions

Trompenaars’ Cultural Dimensions

Universalism vs. particularism

•  Spaniards tend to focus more on the relationship than the rules.A good relationship might lead to more trust,
possibly special treatment and sometimes better ﬂexibility. Kari Traa might be used to larger focus on rules and the
importance of a contract, from operating in Scandinavian countries

Individualism vs. collectivism

•  Spain seem to have a collectivist culture compared Norway who has a typical individualist culture. In a collectivist
culture there is a focus on reaching goals together, and people believe that the group is more important than the
individual, because it provides safety and loyalty. Spanish people function better than Norwegians in a group, and more
often regard themselves as a part of a group rather than an individual

Sequential vs. synchronic

•  Spain’s time perception is synchronic. In Spain it is often considered “normal” to show up 15-30 minutes late to a
meeting, even a business meeting.This will differ from region to region and from person to person, but there is a clear
tendency of this. For Norwegian companies, such as Kari Traa, this might be perceived as disrespectful

Internal vs. external control

•  The Spanish culture is relatively inner-directed.As mentioned before; the Spanish companies’ future opportunities are
very much connected to the success of the past, which is typical for an inner-directed culture.This can come forward
in business situations which include planning ahead

4.1.5. Porter’s Five Forces

New
Entrants

Buyers

Suppliers

Substitutes

Rivalry

MED
MED
HIGH
HIGHLOW


Industry Rivalry

MEDIUM

•  The main competitors within the market of base layer in Spain are

-  The North Face

-  ODLO

-  Helly Hansen

-  Quechua*

•  Other than price, the existing competitors are not largely differentiated, and a
low differentiation of products increases industry rivalry

•  The customers switching costs are low and it is easy for the customer to
change- and try different brands, but building customer loyalty is important, as
customers prove to be rather loyal to brands if they ﬁnd a brand they are
satisﬁed with

Note: The Quechua brand is, in Spain, only sold through Decathlon


Industry Rivalry

•  There is a growth in the sportswear industry

-  It is fair to assume that this indicates an increase in demand in the base layer
industry as well

-  Demand is increasing and industry growth is a factor that helps to lower the
industry rivalry

•  In recent years it has been increasing focus on differentiating between products
for men and for women, and on the design.This leads brands to ﬁnd their own
“niche” in the market, which might lower the rivalry


Bargaining Power of Buyers

HIGH

•  There are two types of customers

-  B2B: distributers, retailers and stores

-  B2C: end consumer

•  The strength of the buyers depends on two sets of factors: buyers’ price
sensitivity and the relative bargaining power

•  Both within the B2B- and B2C market the bargaining power is high.There are
low switching costs between the brands for both of the customers, since it is
easy and simple to change the products and the brand you buy. Even though the
main industry with merino wool base layer is not the biggest, the differentiation
between the products is not big enough to affect the switching costs.This might
indicate a strong competition within the industry in getting access to the
business markets, regarding retailers and stores and it is important to have a
good distribution channel and a good relationship with the customer


Bargaining Power of Suppliers

LOW

•  Suppliers have the power to drive up the price or reduce the quality of
customers' goods and services.This bargaining power causes the suppliers to
be seen as a threat

•  In China the prices on raw material have increased, leading to higher
production prices for foreign companies.Also the development of the Chinese
economy has led to higher wages for the workers.This might lead foreign
companies to look outside China for cheaper production sites

•  It is important that the factories/textile companies adhere to the agreements. It
is easy for the buyer to switch supplier, but to have a good relationship with
suppliers is important, so they are somewhat interdependent


Threat of Substitutes

HIGH

• The main substitute for merino wool base layer is all the other types of
clothing, that might function as a base layer, of other synthetic materials such as
cotton, ﬂeece, soft-shell etc.
• In the Spanish market the threat of substitutes is high, because Spaniards does
not quite see the difference or need for merino wool as base layer, when other
synthetic materials cover the same need for a lower price. Also the buyer’s
cost of switching to the substitute is low.This increases the threat of customers
using substitutes


Threat of New Entrants

MEDIUM

•  Many ﬁrms outsource their production to larger production companies in
countries where the production-costs and labor are cheaper.The relationship
with these factories regarding agreements and loyalty, might take years to get

•  The capital-costs and the economies of scales are high to new ﬁrms.As with
production sites the access to channels of distribution is an on-going process
that requires time and effort and all this makes the entry barriers higher

•  The legal aspect with both the international rules for trade and the national
regulations within Spain affects the entry barriers.The World Trade Organization
has rules for international commerce.And the sportswear industry specially
follows the Agreement on Textiles and Clothing (ATC)


Threat of New Entrants

• One aspect in the special niche of merino wool base layer products is the
possibility of entry from existing producers of other types of apparel or sport-
products.The companies who already have production sites and a good
knowledge of the legal aspects, might have a competitive advantage when
entering new markets.
- Those companies might also have an already established customer loyalty
 This might make it difﬁcult for other new companies to enter through the
distributors
• The existing products are not very differentiated.This causes an opportunity for
new innovative and differentiated products


•  To conclude, according to the analyzed ﬁve forces in our type of sports market,
bargaining power and threat of substitutes are high, industry rivalry and threat
of new entrants is medium, and power of suppliers is low.As a result this is a
very competitive industry with many substitutes.This requires a very good
strategy and plan before entering the market

Attractive industry

Unattractive industry

•  High barriers to enter

•  Weak supplier power

•  Weak buyer power

•  Few substitutes

•  Low competition

•  Low barriers to enter

•  Strong supplier power

•  Strong buyer power

•  Many substitutes

•  High competition

Conclusion

Note: This is based on both secondary and primary research

4.2. Conclusion External Analysis

• The sports industry in Spain is a competitive industry with many substitutes
where the customer holds most of the power
• The Spanish market is in a relatively uncertain ﬁnancial position, and the sport
industry has experienced some decline, but with positive prospects
• When entering a new market there is always some cultural differences to be
aware of, but the Spanish and Norwegian culture do not differ too much, so
the differences are manageable and it is absolutely a possible new market in
terms of culture
• It has also been an increased focus on health, meaning Spaniards are paying
more attention to having an active lifestyle with everything that this entails

4.3.1. Internal Analysis

General information

•  Kari Traa AS is a Norwegian sportswear company, created in 2002 by the Norwegian Olympic
champion Kari Traa. She created the company together with her friend, Hans H. Eide, the owner
of Skigutane AS. In 2010 Skigutane merged with the multi-brand company Active Brands

Products

•  Kari Traa started knitting beanies and now the variety of clothing includes: base layer,
trainingwear, outerwear, skiwear, mid layer and accessories

About the base layer products

•  Base layer is clothing mainly under the outerwear when doing winter activities.The purpose of
the base layer is to transport the sweat away from the skin to the next layers, which makes it feel
warmer and more comfortable.The most suitable material for the base layer is either out of
synthetic materials (such as polyester and microﬁber) or wool

General Information, Products Base Layer Information


Segmentation

• “Girls and only girls”. Their given segment is girls and women between the age of 15 and 30 years
old, but the customers might vary between 13-60 years old
Production and distribution

• The production of the base layer products is located in China. In Norway the distribution
happens through Active Brands’ channels. In the Scandinavian countries they have their own sales-
ofﬁces, in Finland an agent and in other European countries they have external distributors
Market

• Kari Traa’s main market is the Scandinavian countries, but they are also present in several
European countries. Also we have found that some Spanish websites for sportswear, also sells
some Kari Traa products. But it is important to mention that Kari Traa does not have any control
over these
Segmentation, Product and Distribution Market


Resources and capacity analysis

This analysis will evaluate the resources and capacity of Kari Traa has

Tangible resources

Resources that are physically visible and touchable

• Employees: Kari Traa had, in 2010, 35 employees within the company. Active Brands had last year
(2013) 73 employees
• Finances: in 2011 Active Brands had a turnover at 400 mill NOK
• Suppliers: Kari Traa’s products are produced in China
• Offices: Kari Traa’s main office is in Voss, Norway, where they also have their showroom that was
opened in 2007. They have distribution offices in Oslo, Åre and Göteborg and a production office in
China. Their mother company Active Brands has offices in Økern, Norway
• Stores: Kari Traa has their own concept store located in Voss, and they also have an online store
which ships to countries all over Europe. Products are distributed through Active Brands’ distribution
channels and are present in several big retail channels in Norway
Resources and Capacity Analysis


Intangible resources

Resources that are not touchable but that the company owns. This includes the logo, knowledge within the company
and the reputation

•  The logo: Kari Traa’s logo is a red butterfly. The butterfly and the red color communicates that the
brand is for girls. Based on basic color theory, red stands for passion, life, power, boldness and
excitement, and all these words might describe the typical Kari Traa girl

•  Knowledge: Kari Traa has through the years developed a good knowledge about the market and found
their own target group. When Active Brands bought Kari Traa they also contributed with much
valuable information about internationalization and also with new existing networks. This is very
beneficial for Kari Traa if they chose to expand to new markets

•  Reputation: Kari Traa is a strong front figure for the brand she founded. Being an Olympic champion in
freestyle skiing, she is well known both in Norway and internationally. Kari Traa market themselves by
participating in events and competitions for girls, in addition to being the sponsor for different female
athletes and teams in Scandinavian. Last year (2013) they also had a TV reality show called “Kari Traa
Jento” – a competition where they would find the new Kari Traa girl, that would get the opportunity to
work closely with Kari Traa herself. Also the brand Kari Traa has received several awards for their
products and communication. In 2009 they got the Marketer of the Year-prize, and they have several
times received The Norwegian Mark for Great Design.

Resources and Capacity Analysis

5. List of Information Needed

We could not ﬁnd all the information we needed in our secondary research to be able to
answer our research areas.We came up with a list with information needed that we used as a
tool during our primary research to answer our research areas in the best possible way

•  The attractiveness of the market  Porter’s Five Force

-  Competitors

-  Suppliers

-  B2B and B2C

-  Economics within the market and the industry

•  The consumer behavior  Kotler’s Consumer Buying Behavior

-  Buyer habits

-  Brand knowledge

-  Information channels

-  Factors when buying

-  Feedback

6.1. Research Design and Method

Exploratory design

• We connect the entire analysis to the Buying Decision Process described in “Introduction
to Modern Marketing” by Fred Selnes.This process gives a good picture of how segments
think and act
• We have conducted ﬁve observations, four focus groups and three in depth interviews with
a phenomenological approach (positivism). Because this provides an insight to the attitudes
of young women and students have towards the brand KariTraa.We examined the
behaviour patterns to these types of girls, and what it takes for them to buy KariTraa
products
• We wanted to understand the target group’s everyday experience and life situation. In a
group setting there can be source of errors related to the inﬂuence of others to respond
equally, and therefore we also conducted in depth interviews as well to ensure information
in this way too. During the focus groups we got the information we needed, so for our in
depth interviews we focused on getting information from experts who has more
knowledge about the market.We also had an in depth interview with a consumer to verify
the information we got in the focus groups

• By conducting individual interviews in addition to the focus groups, we got an advantage
in that we will have a great degree of speciﬁc information
• During the focus groups we had a sample of products from KariTraa
• The ﬁve observations were used to learn about existing brands and their products

Qualitative study


•  The implementation of the focus group and in depth interviews are designed to
identify the three different segmentation variables; demographic-, behavioural- and
attitude variable

-  We choose to map the demographic variables to examine whether gender, age and
income has an inﬂuence when buying wool – and technical sports underwear

-  Attitude variables are important to map in relation to attitude theory, which states
that human behaviour is shaped by attitudes; “an attitude is a learned predisposition
to behave in a consistently positive or negative manner in relation to a given object”

-  Attitudes might be individual, but might also be associated to demographic
variables

-  Behavioural variables examine the purchase frequency of the participants and
which products they are considering when they are making a choice

•  By splitting segmentation variables into these three main areas, we can map and
analyze the responses we get, and get a step closer to answering the problem area
deﬁnition.We have chosen demographic-, behavioural- and attitude variables because
they are important psychographic and demographic segmentation bases

6.2. Overview of the Qualitative Research

Date

Where

Person(s)

Occupation

Method

3rd of April

Barcelona

International girls

Professionals

Focus group

7th of April

Sant Cugat

Spanish girls

Students

Focus group

10th of April

Barcelona

Spanish girls

Students and
professionals

Focus group

13th of April

Barcelona

International girls

Professionals

Focus group

1st of May

Barcelona

Store Manager
The North Face
Barcelona

Store manager

In depth interview

12th of May

Barcelona

Spanish girl

Student

In depth interview

16th of May

Barcelona

Sales
representative
Decathlon
Barcelona

Sales
representative

In depth interview

6.3. Observations

• We did observations at four places in the Barcelona area
- El Corte Ingles
- Intersport
- Decathlon
- La RocaVillage Outlet
• We did an observation in Pas de la Casa, Andorra
• Competitors with base layer products that we found in stores
- The North Face
- ODLO
- Helly Hansen
- Columbia
- Boomerang
- Sport HG
- Decathlon private label: Quechua
• The competitors has mostly synthetic base layer products

6.4.1. Focus Group 1

• Interview objects: Five girls, three no shows
• Age range: 25-35
• Occupation: International women working in Barcelona
• All participants were active women who appreciated a healthy lifestyle.Three of the participants are doing winter
sports in the mountains frequently during the winter.And even though the other half does not do winter sports
regularly, they still use clothes such as base layer, for other types of exercise
• The vast majority of the participants think that merino wool base layer products are not for the Spanish market.They
thought it might be more suitable in Madrid, but not Barcelona.The reason that it exists, to some extent, is because
people go travelling and need to buy it before they go to the mountains or cold places abroad.They all brought up that
the weather in Spain, and especially Barcelona, is too hot to be demanding wool and technical sportswear
• They all mentioned The North Face, Patagonia, Burton, Quechua and Belstaff as brands they knew that produced winter
clothing and associated with winter activities.They all agreed on that base layer sounds boring and they would like
more colors and better design if they had to go shopping for it, but they knew many of the benefits of using base layer
• The participants prefers to first visit the stores to try it on, but since it is often discounts online they would try to look
for a better price there.They understand the price because wool is expensive and the quality seemed good. Some said
that they would see low price as a sign of poor quality
• All of the participants agreed that if they found something nice in a new store they would buy it even if it might not be
their favorite brand.This shows that they would easily buy substitutes
• They all found the name a bit difficult and thought it sounded French and fancy. But even though it was a rather difficult
name, they still liked it
International Working Women


•  Interview objects: Eight girls

•  Age range: 18-21

•  Occupation: Business students

•  The majority of the participants are doing winter sports regularly during the winter, as their families have cabins in
the mountains.The girls were unsure about what base layer was before we explained it, but this might have to do
with language barriers. In the beginning they were a bit more sceptical to the concept of base layer, but throughout
the focus group, as they learned more about the beneﬁts they became more positive

•  It appears that comfort is the most important attribute for base layer in this group. Some of the girls mentioned
that they feel better about themselves if they look “good” while exercising.And they cared more about how they
looked while exercising in the city, than when doing winter sports in the mountains were “nobody sees you”. But
even though they care about design and looks, they are still not willing to pay extra just for the design

•  The participants knew of The North Face, Grifone, Quechua, Salomon, Nike, Descente and Spider as brands that
produced winter clothing.The girls preferred to shop their clothes in stores so they can get professional help and
tips from the personnel in the store. Everyone said that it is the parents that buy the sportswear, so they decide
how much they spend, but they generally prefer to invest more money on i.e. education instead of clothes

•  The Spanish students thought it were pyjamas and that it looked comfortable. Nobody liked the prints, but most
of them were fond of the colours.And also the name “Kari Traa” was difﬁcult to pronounce

Spanish Students


• Interview objects: 10 girls
• Age range: 23-28
• Occupation: Students and professionals
• Most of the participants did not know a lot about base layer and did not know if there was a good selection of base
layer in Spain. Some said that, based on the Spanish life style and weather, they did not think there was a big market
for base layer in Spain.They associate wool base layer with “hot” and “uncomfortable”
• The different brands the group mentioned were Quicksilver,Adidas, Burton, Quechua, Reece, O’Neill, Nike andThe
North Face.They usually were loyal to their chosen brand, but if the price increased a lot they would switch brand.
But despite the fact that they have their favourite brand, they are also open to try something new
• The participants strongly agreed with each other that comfort was the most important attribute when buying
sportswear. Decathlon was the ﬁrst place they would go, mainly because of the prices, except from the ones who did
winter sports frequently, they had invested more previously and would also do that in the future
• Most of the participants agreed that they bought most of their sportswear online, for example Decathlon online
store. Other participants agreed that they would go to the Decathlon store and/or department stores, such as El
Corte Ingles
• The participants thought the brand name sounded weird and French, and almost everyone laughed when they heard
the name.They also think that the look is “too girly” and that the color is “too bright”.They also think it looks like
pyjamas and that it has too much print
Spanish Students and Working Women


•  Interview objects: Seven women, two no shows

•  Age range: 25-29

•  Interview objects: Professionals

•  The participants were all active women who occasionally practise winter sports, but more frequently when
they were younger.They were not sure if they were pleased with the selection of base layer in Spain, but they
also said that because they are not from Spain and only living here for a certain amount of time, they are not
looking to practise winter sports during their stay here

•  In the last focus group participants mentioned Helly Hansen, Mount Everest and Kilimanjaro as winter
clothing producers they knew of.When buying sports clothes they would go to big stores like Intersport,
Sportsmaster, El Corte Ingles and Decathlon.They would look at Nike when buying base layer and they added
that they prefer to stick to the brands they already know of.They most often buy their sport clothes online,
but if they feel the need to get more advice or try it on, they go to the physical store

•  They appreciate to look and feel “cute” and “feminine” while exercising, but the most important factor is that
the clothes have to be functional and comfortable.They choose their products based on design and colour,
and not necessarily on a speciﬁc brand

•  The participants said that price is not so important as long as the quality and function is sufﬁcient. Several
girls also mentioned that the more interested you are in winter sports, the more likely you are to invest.Also
their perception is that if you have some experience with base layer from before, you have a greater
understanding about the price

International Working Women

6.5.1. In Depth Interview 1

• Interview object: Man
• Age: 35
• Occupation: Store Manager at The North Face Store Barcelona
• We conducted an in depth interview with an expert within the sport industry, mainly focusing on the base layer.We
chose an expert since he can give us answers a regular consumer will not be able to
• His perception about the base layer market is that a lot of people use base layer. He states that approximately 300
units are sold during a year. But he also feels that the consumers are not that aware about the benefits the base
layer products can provide. Many of the substitutes used are natural fibre such as cotton. Most people think of base
layer as a warm textile and it is important for the seller to have a good knowledge about base layer, in order to sell.
Most people are not aware of the high prices when it comes to base layer, but they do not mind spending the
money if they are convinced it is worth it
• Many people states that quality is the most important attribute, but in reality people want a nice base layer with
colours that goes with the rest of their skiing equipment, especially women
• Most Spaniards do not have a habit of going on a winter holiday.They might not need base layer clothing in that
specific regard, but might appreciate it in other contexts. Other contexts can be i.e. running, hiking or as a
substitute for a pyjama
• The store manager claims that there is a lot of competition on the base layer market.A lot of competitors are
making the same product, and it is not easy to enter such a market where the existing rivalry is so high. He also
states that the demand for base layer is seasonal


•  We also conducted an in depth interview with a sales representative from Decathlon in Barcelona. By conducting
an in depth interview with both The North Face and Decathlon we get a broader perspective on the base layer
market, as they represent products in two different price categories

•  Also at Decathlon they see that a lot of people use base layer, but it is clear that sales expand around winter- and
Christmas times. But also the customers at Decathlon could beneﬁt from more information. Most customers do
not know what they are looking for and need information and tips from the experts and employees in store.Also
that is why most people buy their base layer in the store, because they want to take advantage of the employees’
competence

•  Decathlon’s biggest advantage is that they offer the cheapest clothing and the customers are purchasing mainly
based on the product price before looks.The sales representative is quite sure that Decathlon is the store in Spain
that sells the most products. Since it is cheapest and has a lot of stores in Catalonia

•  In the recent years the demand for base layer has increased. Decathlon even has TV-commercials for base layer in
the winter. More and more people are buying and learning about base layer, the beneﬁts and different use areas.The
Spaniards are active in team sport, and they are running outside in the summer and inside the gym in the winter.
Also a lot of people go to the mountains to go skiing

•  Interview object: Woman

•  Age: 25

•  Occupation: Sales representative Decathlon Barcelona


• Our last in depth interview was with a female student who is 26 years old and does sports regularly.We appreciate
the value of getting more in depth with both “experts” in the market, but we also wanted to know more about who is
the customer in this market, to get two different views.Therefore we conducted the in depth interview with a female,
as that is most relevant given our segment is “girls and girls only”
• The student thinks that a lot of people are using merino wool base layer, or has a need for it, the only concern is that
Barcelona might not be the best suitable market to start with, because of the weather. Initially she thinks that it is
more use for it in theVasc region and Galicia, as the weather there is colder
• The student thinks that comfort and fit is important, especially when it is underneath other clothing, but price and
quality is what determines whether she makes a purchase or not.Also colour would not be that important if it is only
going to be underneath other clothes
• People who exercise regularly might have better use, or have a greater need for base layer, than the ones who do not
exercise on a regular basis.The ones who do not use base layer might not do so because they do not know the
benefits that come with using base layer. If people do not use base layer, they will use regular clothing, extra legging,
thick coats etc.
• Since there are a lot of people who do not know the benefits that comes with merino wool base layer it would be
necessary with a good marketing strategy that informs the consumer.Also it would be necessary for the employees to
have enough knowledge about the products they are selling.The student would prefer to buy merino wool base layer
in a type of niche boutique, instead of places like El Corte Ingles where employees might not have the same expertise
and knowledge that would be necessary
• Interview object: Woman
• Age: 26
• Occupation: Student

6.6. Conclusion Primary Research

• Throughout every focus group we have seen that there is a low knowledge about the benefits that the merino wool
base layer provides
• The terminology “base layer” is not commonly used, so often some explanation is needed.The perception of merino
wool base layer increases accordingly to increased knowledge.Which means that the more they learn about benefits,
usage and etc. the more positive they are to the product and are more likely to buy it.A crucial factor is that initially
they think they can only use merino wool base layer underneath winter clothes when doing winter sport. But as they
learn about different areas of use (hiking, running, etc.) they are more positive to purchase, and then also the weather
is not as big of an obstacle.They want to make sure that they can use it more in every day life before investing
• It is a common agreement that the name of the brand is not optimal. It is hard to pronounce and they do not
understand the meaning behind it. If entering the Spanish market this is something to take under consideration.Also
the pattern and color was commented on.The vast majority were not fond of all the patterns or the neon colors, but
more positive to the neutral clothes. But everyone liked the fit and the technical design
• In the participants evoked set we could find The North Face, Quechua and Helly Hansen.This means that these are
the brands that are Kari Traa’s possible competitors. It is clear that purchase in store is most common amongst the
Spaniards, within every age.This is because they want the opportunity to try it on, see the fit and get advice from
personnel. But for the international segment this is opposite.They prefer to buy online due to availability and lack of
stress
• It looks as if the price would be an issue, as most of the contestants originally thought that the price on the Kari Traa
products were a bit expensive, at least higher than expected. But we discovered there is a pattern amongst the people
who have bought base layer previously, and how much money they are willing to spend on this type of clothing. If they
have experience from before, they are willing to pay more than the people who do not have any experience

6.6. Conclusion of Primary Research

Need Recognition Problem
Awareness

Information Search

Evaluation of Alternatives

Purchase

Post-Purchase Evaluation

•  Need for keeping warm while exercising

•  Need for merino wool base layer

•  Need for technical sports underwear

•  Browse for product in store rather than the Internet

•  Gathers information from personnel in store

•  Attributes important when buying base layer

1.Quality, 2. Comfort, 3. Price, 4. Looks

•  Purchase is related to need  they buy if they need to (i.e. going
on a trip)

•  Internationals buy on the Internet

•  Spaniards buy in store

•  Participants would recommend the product to friends and family
 if they are satisﬁed with the product and it satisﬁed their
need(s)

Kotler’s Consumer Buying Behavior

7. Answer of Problem Area Definition

“Can Spain be a potential new market for Kari Traa and if
so, which entry strategy is most suitable?”

Based on the secondary and primary research we believe that Spain can be a potential new
market for Kari Traa, but we have found some obstacles and key success factors that are
necessary for the company to take under consideration:

• The brand name might be an obstacle as it is both difficult to understand when you hear
it, and also difficult to pronounce
• The look might be a bit “too much” as the bright colors and heavy patterns are not well
received
• It might be advantageous, initially, to prioritize retail sales and not internet sale
• Since Spaniards are not aware of all the different usage areas regarding merino wool
base layer and also devalues looks as an attribute, it is crucial to educate them on this
when introducing this almost non existent need for fashionable merino wool base layer

7.Answer of Problem Area Deﬁnition

“Can Spain be a potential new market for KariTraa and if so, which
entry strategy is most suitable?”

•  We are in no position to answer this part of the problem area deﬁnition yet,
but after conducting the strategic part we will come back to this question

8. Competitors

After both our secondary and primary research we have found several competitors in the
base layer market in Spain, but the following are the most relevant ones that we will base our
further analysis on

The North Face

• About: An outdoor clothing company, founded in the US, 1968.A well established
brand within its ﬁeld
• Types of products: For women they have a base layer and underwear collection,
consisting of wool products such as tights, tops and socks in black, grey, brown and
blue.They also have their own ski-, snowboard-, hiking-, climbing-, and trail running
collection. Base layer differentiated between men and women
• Price range: €70-80
• Strategy in Spain: Has six stores and nearly 50 distributors in Spain.
One ﬂagship store in Barcelona City and one at
La RocaVillage Outlet, also selling through El Corte Ingles. Own
Spanish online store

8. Competitors

Quechua

•  About: Quechua is a French company, founded in 1997. Makes base layer clothing in
wool for hiking, climbing, skiing and boarding. Sells through the French sport store
Decathlon who has hundreds of stores all over the world. Are one of the largest
companies for mountain gear in the world

•  Types of products: All types of clothing and accessories for hiking, climbing, skiing
and boarding. Segment: active outdoor lovers in all ages.The base layer products are
differentiated between men and women

•  Price range: €10-50

•  Strategy in Spain: Sells through Decathlon Group, who have large sport stores all
around the world, including several in Barcelona.And also sells through their own online
store

8. Competitors

Helly Hansen

• About: Helly Hansen was founded in Norway in 1877 that initially started with
oilskin jackets, trousers and vests. In 1970 they added base layer to their product
portfolio
• Types of products: Outerwear, base layer, sportswear and footwear for
outdoor sports. Base layer differentiated between men and women
• Price: €35-80
• Strategy in Spain: Spanish online store, one ﬂagship store in Barcelona, sells
their base layer through El Corte Ingles and other sport stores

8. Competitors

ODLO

•  About: Established in Norway in 1946. Claims to be the inventor of technical sports
underwear

•  Types of products: Focuses mostly on professional athletes.All range of
sportswear, large portfolio of base layer.The base layer products are differentiated
between men and women

•  Price range: €70

•  Strategy in Spain: Online store with delivery to Spain, sells their base layer at El
Corte Ingles

1. Kari Traa’s Mission

“KARI TRAA INSPIRE WOMEN to a happier, healthier
stronger lifestyle!

We design uncomplicated and straightforward, FEMININE sportswear that women
want to wear.

Kari Traa sportswear is designed, developed and communicated FOR GIRLS – BY
GIRLS who love life, enjoys a juicy burger and seeks excitement and fun!
HAPPIER, HEALTHIER, STRONGER”

1. Kari Traa’s Mission

Analyzing the mission

• Shows the company’s identity well
• Missing goals and economical goals
• Missing the company’s values
• It's important to understand that if Kari Traa wants to expand to new
markets, the mission might have to be changed

2. The Objectives of Kari Traa

The economical goals
• In 2014  have a turnover of 220 mill NOK
• In 2018  have a turnover of 500 mill NOK
Analyzing the objectives

• The objectives of nearly a double turnover in only a four year period could be
an indicator that the company might be willing to take high risks and have big
goals

3. Risk Proﬁtability Binomial

Kari Traa’s risk: HIGH

• Industry (Porter’s Five Forces): The rivalry between the existing ﬁrms in the Spanish
sportswear market is medium. Mainly based on the low number of direct competitors
and the steady growth in the main market
• Attitude of the company: The founder, Kari Traa herself, could be seen as a risk taker in
sense of her previous profession; freestyle skiing, something that could be called a quite
risky sport, and that is a personality trait that she might have tried to implement in her
company as well. The other companies that Active Brands have merged with, are
founded by several professional athletes within various risky sports, which might
contribute to the sister companies pushing themselves to be innovative and risky. The
company is also known for its creative marketing and promotion
• Product range: six product categories
• Existing in many countries: Kari Traa is mainly present in the Scandinavian countries, but
are present in several other countries in Europe, mainly in Germany and Switzerland
(The Alps)

3. Risk Proﬁtability Binomial

• Previous strategies:Always enter new markets with only the merino wool base
layer products, and introducing their other product categories later on
• Type of industry: Since Kari Traa only focuses on a limited segment (girls only)
this can be an indicator of a higher risk from the company’s side
• All these aspects indicate that Kari Traa is a company willing to take rather large
risks; therefore we categorize Kari Traa as a high-risk company.Which affects
the choice of strategy when entering a new market

4. Frame of Reference

WHAT need is being satisfied

• Keeping warm
• Fashion*
• Status
WHO are being satisfied

• Companies
• Spaniards
• Internationals
HOW the need is satisfied

• Merino wool base layer
• Regular wool base layer
• Base layer of other
synthetic materials
• Other sport apparel
*Fashion:When referring to fashion or the fashion attribute during this thesis, we wish to refer to the objective meaning of the term.This means sportswear
where looks is extensively focused on, including new-, trendy-, and popular colors, patterns and design; determined by the fashion industry

5. Macro Segmentation

• We exclude “companies” from our further segmentation since Kari Traa previous
mainly target individual consumers
• We chose Spaniards as a who, since Kari Traa’s goal is to enter the Spanish market
and, therefore will be targeting Spaniards in Spain. We will therefore base our further
strategies on on Spaniards, but we also see that internationals will be indirectly affected
by these
• For the what we chose fashion, as we found in our secondary and primary research
found that this was an attribute missing in the existing merino wool base layer industry
• Kari Traa’s how is through the merino wool base layer clothing, and the whole
assignment will be based on this, seeing as Kari Traa always enterer a new market with
these products ﬁrst

5. Macro Segmentation

The frame of reference matrix leads us to three main macro segments

• Macro 1: Spaniards who want to keep warm and are using merino wool base layer for
this purpose
• Macro 2: Spaniards who want to be fashionable and use merino wool
base layer for this purpose
• Macro 3: Spaniards who want to obtain status and are using merino-wool base layer for
this purpose

We chose to only focus on one macro segment for Kari Traa

• For Kari Traa the difference between status and fashion is not big enough for them to
focus on two different macro segments regarding this
• At the same time we can see that the status attribute might be applicable and be
somewhat implemented into the strategy part
• Also in our risk probability binomial we found that Kari Traa is a high-risk company, and
one of the characteristics of a high-risk company, is that they often have few macro
segments
5.1. Macro Segmentation

Choice of Macro Segment

5.1. Macro Segmentation

Macro 2: Spaniards who want to be fashionable and use merino wool base
layer for this purpose

• In other words: Kari Traa satisﬁes the individual Spaniard’s need for fashionable merino
wool base layer clothing
• The main reasons for this choice were found in our secondary and primary research
-  There is a growing focus on more fashionable sportswear

-  When showing Kari Traa products, participants see the products as fashionable
-  There is a small but growing market for this type of product

-  Few competitors are offering merino wool base layer products with the fashion
attribute

Choice of Macro Segment

• We used the segmentation variables price consciousness and usage
• We used these variables because we learned from our primary research that:
1. Spaniards tend to be price conscious
2. Usage is an important aspect in the sportswear industry – and also because Kari
Traa should aim for broadening the customers perspective regarding usage
areas
6. Micro Segmentation

“Micro segmentation is the practice of breaking large target audiences into smaller groups based
on lifestyle, demographic, geographic and behavioral differences in order to maximize the
effectiveness of contact with each customer.” *
* http://redrokk.com/2013/04/24/micro-segmentation-maximizing-effective-communication/

Usage

Price
consciousness
6. Micro Segmentation

SEASONAL

REGULAR

EXTENSIVE

HIGH

THE TEENAGER

• Young girls between the age of 15-20
• Parents usually buy the product
• The price is the most important
attribute
• Parents rather use money on more
“important” things, i.e. education
• Only use the product a few times a
year
-  Mainly for going on holiday to the
mountains

• Likely to choose substitute products
• Little knowledge of the product and
needs education
THE STUDENT

• Use the product several times a
week – for different types of
activities

• Comfort and price are the most
important attributes

• Open for substitutes products
• Does not have extensive
knowledge about merino wool
base layer
• More thoroughly information
search
• Go to store to gather
information, then buy online to
get the best price
• Conscious when buying
-  But willing to spend money
if it is worth the price

THE WANNABE ATHLETHE

• Use the product extensively – mainly for
one or two activities

• Fit, price looks are important criteria
• Want the best product available
• In depth information search and use
longer time in their decision making
process
• Easily influenced by WOM and
spokespersons
• Want to be perceived as being more
athletic than she actually is
LOW THE FASHIONABLE BUYER

year
-  Might only buy it for a special
occasion as a after-ski etc.

• Looks and fit are the most important
attributes – as they are concerned
about the way they are perceived

-  do not need education about the
products as purchase are based on
looks

• Influenced by trends and WOM and
spokespersons (celebrities, pro-athletes
etc.)

THE YOUNG WORKING
WOMAN

• Use the product regularly for
different activities
• Quality, comfort fit are

• Have their own income and
thereby more likely to “reward”
themselves with more expensive
products

• Quicker information search
-  Likely to do impulse buys
• Brand conscious and loyal
• Easily influenced by WOM
THE PRO ATHLETHE
• Use the product every day
• Quality, comfort fit are important
attributes
• Might be sponsored by many different
brands
• Spend little time on information search
since they are brand loyal and most likely
sponsored
-  If information searching:

  Special magazines
  Reviews online
• May function as spokespersons for other
micro segments
Price
consciousness

Usage

Usage

Price
consciousness
6.1. Micro Segmentation

SEASONAL

REGULAR

EXTENSIVE

HIGH

THE TEENAGER

• Young girls between the age of 15-20
• Parents usually buy the product
• The price is the most important
attribute
• Parents rather use money on more
“important” things, i.e. education
year
-  Mainly for going on holiday to the
mountains

• Likely to choose substitute products
• Little knowledge of the product and
needs education
THE STUDENT

• Use the product several times a
week – for different types of
activities

• Comfort and price are the most

• Open for substitutes products
• Does not have extensive
knowledge about merino wool
base layer
• More thoroughly information
search
• Go to store to gather
information, then buy online to
get the best price
• Conscious when buying
-  But willing to spend money
if it is worth the price

THE WANNABE ATHLETHE

• Use the product extensively – mainly for
one or two activities

• Fit, price looks are important criteria
• Want the best product available
• In depth information search and use
longer time in their decision making
process
• Easily influenced by WOM and
spokespersons
• Want to be perceived as being more
athletic than she actually is
LOW THE FASHIONABLE BUYER

year
-  Might only buy it only for a special
occasion as a after-ski etc.

• Looks and fit are the most important
attributes – as they are concerned
about the way they are perceived

-  do not need education about the
products as purchase are based on
looks

• Influenced by trends and WOM and
spokespersons (celebrities, pro-athletes
etc.)

THE YOUNG WORKING
WOMAN

• Use the product regularly for
different activities
• Quality, comfort fit are

• Have their own income and
thereby more likely to “reward”
themselves with more expensive
products

• Quicker information search
-  Likely to do impulse buys
• Brand conscious and loyal
• Easily influenced by WOM
THE PRO ATHLETHE
• Use the product every day
• Quality, comfort fit are important
attributes
• Might be sponsored by many different
brands
• Spend little time on information search
since they are brand loyal and most likely
sponsored
-  If information searching:

  Special magazines
  Reviews online
• May function as spokespersons for other
micro segments
Price
consciousness

Usage

Choice of Micro Segments

6.1. Micro Segmentation

We chose to focus on three micro segments for Kari Traa

• These are the micro segments who’s needs we believe Kari Traa can satisfy
most effectively
-  These micro segments appreciate the main attributes that differentiate Kari
Traa from its competitors

-  These micro segments are quite similar, however, they are different enough
to base our forthcoming strategy on

Choice of Micro Segments

6.1.1. Micro Segmentation

Most Important Features

The Fashionable Buyer

• The fashionable buyer is very concerned about the way other people perceive her and will
therefore buy products that are trendy, fashionable and provides a certain kind of status
• She will buy the product for special occasions i.e. after-ski, where she will have the opportunity to
show off her clothing
• As the looks of the product is most important, she is not too concerned about learning the actual
benefits about merino wool base layer
The Young Working Woman

• The young working woman is in a position where she has a greater purchasing power.Therefore
she is more likely to “reward” her self with nice things and more expensive products
• Word of Mouth is an effective influential source and the buyer is likely to make impulse decisions
• Quality, comfort and fit will still be important attributes in the purchasing process, but is willing to
pay a higher price if she feels the products are worth it and satisfies her needs

6.1.1. Micro Segmentation

Most Important Features

The Wannabe Athlete
• The wannabe athlete is concerned about how athletic she is perceived, and mainly focuses on or
two activities, which she is practicing several days a week
• As the buyer wants the best product available, to a reasonable price, she will spend a lot of time
researching different alternatives and will weigh them up against each other before making a
decision
• Fit, price and looks are important criteria, but also looks/brand, as she is concerned about how
other athletic persons perceive her and will look towards other spokespersons for inspiration

7. Solution Life Cycle

• Model used to analyze the attractiveness of the product, and determine where our
product (fashionable merino wool base layer) is in its life cycle
• One marketing program suitable for each phase
• Limited to the market for fashionable merino wool base layer in Spain
• We placed the fashionable merino wool base layer market in the introduction phase. This
is based on the fact that it is a generally poor knowledge about merino wool base layer
products amongst the potential customers in Spain. There is an existing base layer market
in Spain, but the supply of fashionable merino wool base layer products are very low and
Kari Traa will be one of the ﬁrst companies to offer this

7. Solution Life Cycle

The Introduction Phase

• The need for immediate proﬁt is not a pressure. The product is promoted to create
awareness and develop a market for the product. The impact on the marketing mix and
strategy is as follows
-  In this phase the brand awareness will be established by the potential customers
-  Promotion is aimed towards innovators and early adopters. Marketing communications
seeks to build product awareness and educate potential customers about the product

8. Strategic SWOT

Environmental
data

Threats

Opportunities

Strengths

Weaknesses

Actions to take

The economic crisis

Less demand for high
cost products
Increasing demand for
quality products since
people want long lasting
products because this is
more economical

Kari Traa has long lasting
quality products

A higher focus on quality
increases the costs for
everybody from supplier
to customer

Investment in product
development

There is an
increasing focus on
being healthy,
meaning eating
healthy, doing
exercise and looking
fit

Higher industry rivalry
due to an increase of
competitors as a result of
increased focus on
training and a healthy
lifestyle

There might be an
increased income for
companies that promote
their products together
with health benefits.

Kari Traa’s mission:
“Kari Traa inspires
women to a happier,
healthier stronger
lifestyle!”

Company image is not
yet established in the
Spanish market

Emphasize on Kari Traa’s
mission to the customers

Focus marketing on this
Increasing use of
social media
amongst the
Spanish people

Customers is vulnerable
to negative feedback
through WOM and social
media

Negative feedback cannot
be controlled and might
reach many customers

Negative feedback might
lead to negative brand
reputation and loss of
customers for the
companies

Easier to reach the
macro segment and
communicate- and
influence them through
WOM

The customer might
perceive positive
feedback on social media
as more reliable than
ordinary advertising done
by the company

Kari Traa already has
good experience using
social medias such as
Facebook, Instagram etc.
Today, Kari Traa is
experienced using this as
a marketing channel

Kari Traa’s social media
strategy is not adapted to
the Spanish market

Keep investing in social
media, such as Instagram,
Facebook, Blogs etc. Aim
for a positive WOM; by
offering what the
consumers expect in
terms of quality, service
and post-purchase
service.Adapt to the
macro segment and
adjust social media
communication towards
Spanish women by doing
research on Spanish
women’s needs

Environmental
data

Threats

Opportunities

Strengths

Weaknesses

Actions to take

Recommendation
from sales personnel
is key

The sales
personnel does
not have enough
knowledge about
the products and
by that does not
provide the
customers with
the information
needed for making
a decision.

Companies with a high
knowledge sales
personnel have an
competitive advantage

Kari Traa sells high
quality products and
have experience in
creating brand
awareness and
educating the
advantages of their
products

Spaniards do not
know the benefits of
the products

Organize training programs for
employees so they hold all the
information needed.

A shop-in-shop experience gives the
customers the opportunity to
experience the Kari Traa environment
and get personal attention from the
sales personnel educated in the benefits
of the product.

Concentrate the marketing on educating
the customers about the benefits of the
product.

Spain is divided into
several regions,
which might have
their own political
rules

Difficulties
regarding import
with the fact that
the different
regions have their
own custom
regulations

The companies that are
aware of this and
adjusts will have
competitive advantages

Based on findings
from the official Kari
Traa homepage; Kari
Traa apparently is
present in several
European countries.
This indicates that the
company is able to
adapt to different
cultures.

Even though they are
present in several
markets, we assume
that Kari Traa does
not have to much
knowledge about the
Spanish market.

Do research about the different political
rules and adjust if necessary.

A possible solution might be to hire a
agent in the specific country, which has
knowledge about the legal and political
rules.

8. Strategic SWOT

8. Strategic SWOT

Environmental
data

Threats

Opportunities

Strengths

Weaknesses

Actions to take

Design is an
attribute that adds
value to a product
and is one of the
sportswear
industry’s fastest
growing trends

The companies that does
not acknowledge the
importance of design and
invest in RD could get
surpassed by competitors

Companies might copy
each other

Companies investing in
design development and
focusing on catching the
innovator/early adopter
(ref. the diffusion
process) might have a

One of Kari Traa’s
main focuses is
design and they have
their own design
department.They
have also won
awards for their
design

Primary research shows
that the Kari Traa design
might not appeal to the
Spanish women. Many of
the respondents say Kari
Traa’s design is “too
much”; too bright colors
or too much patterns

Invest in product design and
research for mapping the
Spanish customers need and
preferences regarding design

Focus on protecting pattern
and design to prevent
competitors from copying the
products and ideas

The unemployment
rate amongst young
Spanish women was
44,4% in 2011

Many women in Spain
might not have the
opportunity to buy high
cost products

Increasing demand for
long lasting high quality
products since this is
more economical in the
long run

Kari Traa focuses on
high quality base
layers that lasts
season after season

Might be too expensive
for some women

They can ﬁnd substitutes
that are less expensive

Invest in product development
to be able to offer a price in
line with what the customer
percieve as reasonable

Emphasize the fact that it is
more economical to buy a
long lasting product of high
quality, instead of buying
several cheaper products

Distribution
(supplier store)
has become
increasingly
important in the
textile industry

Established companies is
already present in the
preferable areas/
locations, also they have
agreements within
different elements of the
value chain.This might
give them a competitive
advantage

Big companies with good
relationships in
distribution have an
since they have good
relationships and might
be able to negotiate the
terms

Kari Traa already has
experience with
different distribution
channels in different
countries

Non-existing distribution
channels in Spain

Invest in creating relationships
with distributors in Spain.

One possibility might be to
use agents who know the
market and already have
relationships with distributors

8. Strategic SWOT

Environmental
data

Threats

Opportunities

Strengths

Weaknesses

Actions to take

An increasing focus
on ethical trade and
taking social
responsibility

If companies do not have
a clear standpoint
regarding CSR and ethical
trade, they might
experience loss of sales
as customers are getting
more and more reluctant
to buy products from
companies not
implementing a CSR
strategy or who act
unethical

Clarify the CSR strategy
and emphasize the
importance of acting
according to ethical
awareness. By investing in
CSR, they might gain
customers making the
companies and earn
money than they initially
spent

It seems as Kari Traa has
good control over their
value chain.

Open vendor list

22 employees in China
who primarily works with
following up on suppliers
(Active Brands)

Does not use fur
anymore on their
products and uses Janus
as their wool supplier,
which avoids animal harm

Kari Traa also sponsors
several organizations,
sport teams and events

Since the production is
outsourced it can be hard
to keep a total control
over the whole value
chain with the producers
and different
intermediaries.

Kari Traa previously has
used fur in their
products, which is a
debated issue, and has
also used wool from
suppliers that do not
meet the Norwegian
standards of animal rights

Continue having a big
focus on ethical behavior
and control organs/
persons responsible for
supervising their parts of-
or the whole value chain

Keep sponsoring
organizations, teams and
events that is coherent
with Kari Traa’s values

8. Strategic SWOT

Environmental
data

Threats

Opportunities

Strengths

Weaknesses

Actions to take

The importance of
the technical
attributes with
sportswear is an
increasing trend,
and companies are
being innovative
with their
technologies applied
to textile products
and processes

Companies that does not
follow this trend and
does not invest in this
might lack behind on the
development and
experience a decrease in
sales

Companies that have a
good RD and follow this
trend might get an

Focus on the attribute of
technical clothing

With no experience in
the Spanish market, its
hard to predict how
Spanish customers are
going to perceive the
technical attributes

In this context, qualiﬁed
technical personnel who
know about innovations
in materials and
production processes are
becoming a key factor for
success.

Use technology as a
strategic resource
(especially in terms of e-
commerce)

Improve product image

Note: These ﬁndings are based on secondary data (see 16. List of reference), and our primary data

8.1. KSFs and DCs

•  From our SWOT analysis we have developed the key success factors and the
distinctive competences

•  The KSFs are based on the external part of the analysis and are a set of factors
that is necessary to conduct to ensure the company’s success

•  The DCs are from the internal aspect and are; “strengths or qualities providing
superior and unique customer value that distinguish a corporation from its
competitors” *

* http://support.paloalto.com/subsystems/help/content/Glossary/Distinctive_Competency__Deﬁnition.htm

8.1. KSFs and DCs

KSFs

DCs

Is this a distinctive
competence for our
company?

Educate consumers about
beneﬁts with product attributes

Educational promotion No

Focus on- and promote a
sustainable business

Focus on human and animal
rights.Acting ethical

No

Differentiation

Emphasizing the fashion- and
ﬁt attribute to the merino
wool base layer market in
Spain

Yes

Price versus utility

High level of quality with
matching prices to get the
desired perception from the
customers point of view

No

8.1. KSFs and DCs

Further Explanation of the Matrix

Educate consumers about benefits with product attributes

•  Educate consumers through promotion with a high level of information, including the different benefits of the
products.Another way of education the consumers is through recommendation from the sales personnel. Due to the
latter Kari Traa can organize training programs for the sales personnel so they hold the information needed. Kari Traa
offers high quality products and have experience regarding creating brand awareness in different countries, but they
are not unique on this area compared to the competitors

Focus on- and promote a sustainable business

•  Consumers are becoming more conscious about the ethical behavior of firms.Therefore it is important for
companies to focus on this, make sure laws and regulations regarding both human and animal welfare is intact and
followed up on. Kari Traa is running a sustainable business, but this is not a distinctive competence

Differentiation

•  A key success factor within this business is to be different. Design is an attribute that adds value to the products and
is one of the industry’s fastest growing trends. Investing in RD and offering products with advanced fitting-, design-
and fashion attributes is a way of achieving this. Regarding this point Kari Traa has a unique contribution with their
fashionable merino wool base layer products

Price versus utility

•  It is crucial that the customers feel that the product they are purchasing matches their expectations. Price is a way of
communicating and the price-level might be an indicator of the degree of quality. Kari Traa offers products with a high
level of quality, with matching prices, but we do not see this as a distinctive competence

8.2. Alternative Strategies

Based on the strategic SWOT we have transformed our “actions to take” into factors that can be included in
alternative strategies. We divided them into short-term and long-term strategic alternatives

Short-term alternatives from entering the market and during the ﬁrst three years

•  Enter the market in special stores where employees have knowledge about the product

•  Organize training programs for employees so they hold all the information needed about the
different products

•  Keep investing in RD to keep up distinctive competences

•  Invest in mapping the Spanish customers preferences

•  Emphasize Kari Traa’s mission in their promotion out to the customers

•  Keep investing in social media and try to keep WOM positive

-  A possible action might be to hire an own “social media manager” responsible for the Spanish
market only

•  Use resources on getting the best agreements and relationships with suppliers and distributors

-  A solution might be to hire purchasing managers and logistics coordination managers with
knowledge about the Spanish market

Actions to Take

8.2. Alternative Strategies

•  Do research about the different political rules and regulations

•  Promote the economic beneﬁts of quality over quantity when buying base layer products

•  Maintain the ethical behavior with focus on human- and animal rights

•  Keep sponsoring organizations, teams and athletes. Reach out to new Spanish sponsor objects that is
coherent with Kari Traa’s values

During their ﬁrst years in a new market Kari Traa might learn more about the needs of the market and
customers. From the knowledge hopefully learned, it would be easier and necessary to develop additional long-
term alternatives

After three years in the market Kari Traa also need to evaluate their performance and success and decide if they
would want to continue in the market

Long-term alternatives after three years in the market

•  Examine the possibility of expanding with the other product lines, and what might be the best
strategy

•  Examine the possibility of developing their own store and/or entering larger stores (i.e. El Corte
Ingles)

Actions to Take

9. Strategic Problem Definition (SPD)

Based on the SWOT analysis we have developed a strategic problem definition for Kari Traa,
which will be the foundation of the strategic part of this thesis

“In a market where the financial situation is uncertain and the competition is strong; how can Kari
Traa position their brand to take advantage of the increasingly active Spanish population and the
growing sports industry? How can KariTraa in the best possible way educate the potential customer
about the value of their creative products and what is the best communication strategy to reach the
right segments?”

10.1. Development Strategy

“If the primary determinant of a ﬁrm’s proﬁtability is the attractiveness of the industry in
which it operates, an important secondary determinant is its position within that
industry.” *

When entering a new market, KariTraa could follow four different competitive strategies
and these are; cost leadership, differentiation, cost focus, differentiation focus**

We chose to exclude cost focus and differentiation focus, because the fashionable
merino wool base layer market is in the introduction phase of the Solution Life Cycle, and
therefore has a broad target

•  The competitive strategy for Kari Traa would be differentiation strategy

Choice of Competitive Strategy

*http://www.quickmba.com/strategy/generic.shtml
**http://www.organicmonitor.com/r2010.htm


•  The reason for why we chose the differentiation strategy is that Kari Traa
offers unique attributes that we believe are valued by the customer, and also are
perceived as better than- or different from the products of the competitors

•  The way Kari Traa is differentiated from its competitors is mainly the design and
focus on combining functionality and fashion. The added value that the
uniqueness provides, might allow Kari Traa to charge a relatively high price for
the products

Choice of Competitive Strategy

• The Ansoff model is a model to indicate where the company is today and the
growth possibility*
Choice of Growth Strategy

*http://www.quickmba.com/strategy/matrix/ansoff/

•  Since base layer is an already developed product, we see the market as existing

•  Yet, as Kari Traa is entering this existing market with a product that, until this
day is more or less non-existing in the Spanish market (fashionable merino
wool base layer), we place the company in the “product development”
square – developing new products targeted to its existing market segments

Choice of Growth Strategy

When entering a new market, KariTraa could follow three different competitive attitude strategies;
be a market challenger-, follower- or nicher.We chose to exclude the option of being market leader
for the simple reason that KariTraa is a relatively small company with no existing market share in
the Spanish industry

Market challenger

•  The companies that are suitable for this strategy might be small, but will be more innovative or
relevant for the consumers than the big competitors and therefore stand a chance against them.
Additionally, challengers need to decide to focus on price-discount, cheaper goods, or prestige goods

Follower

•  This strategy focuses on product imitation rather than innovation and being unique. It exists four
strategies under this topic

1.  The counterfeiter strategy: which means copy regardless of patents and sell illegally

2.  The cloner strategy: based on copying, but includes a small variation so it becomes legal

3.  The imitation strategy: copy from leading companies but maintain some differentiation i.e. price

4.  The adaptor strategy: based on adapting or improving an existing product of a leading
competitor

•  We have not chosen the follower strategy, because Kari Traa wishes to differentiate themselves
from the competitors, and focus more on being innovative, than following

Choice of Competitive Attitude Strategy

Market Nicher

•  Typical market nicher companies normally keep away from large segments.This strategy often works
well with large firms.When a company choose to go with the market nicher strategy they must be
aware of that a low market share might be the case, because they are operating in a big market

•  On the other side the company might also expect high profits because they completely cover some
parts of the market. Niching is profitable because of differentiation.The aim is to know the
customers and fulfill their needs in a better way than the competitors do

For Kari Traa we recommend the market nicher strategy

•  Kari Traa’s previous strategy has always been to enter a new market only launching the merino
wool base layer products first.An explanation for this is that they seek niches when going into new
countries.The niches they try to target are where they can reach their distinct competitive
advantages

•  Through this strategy Kari Traa might increase the customers awareness of the fashionable merino
wool base layer products, and be targeted directly towards the given macro segment; Spaniards who
want to be fashionable and use merino wool base layer for this purpose


•  After getting a certain market share and developing brand awareness in the Spanish
market, we believe that Kari Traa might be able to expand and introduce more items
from their product line, and that this could be a long term goal for the company

•  The level of Kari Traa’s binomial risk and proﬁtability shows that they have the indicators
of a company with the possibility for this

•  In the market challenger strategy Kari Traa could follow an aggressive strategy to gain
market shares, and since there are only a few direct competitors, Kari Traa can try to aim
for the leading role in the industry

-  But this is a strategy that takes time and would be more favorable to implement
later than in the starting phase, after getting experience and establishing brand- and
product awareness


11. Segmentation Strategy

When entering a new market, Kari Traa could follow three different segmentation strategies;
focused, differentiated and undifferentiated

Focused
• This strategy involves concentrating on one speciﬁc micro segment and target this
segment with the same marketing strategies
-  We do not recommend this strategy for Kari Traa because we want them to target
several micro segments

Differentiated
• This strategy involves developing different marketing mixes for each micro segment
-  We do not recommend this strategy for Kari Traa because we think the micro
segments will be most effectively targeted through a common marketing mix

11.1. Segmentation Strategy

Undifferentiated

•  This strategy involves approaching the micro segments as a whole with the same
marketing mix

•  The fashionable merino wool base layer industry is in the introduction phase and the
segments here are less easily differentiated than when the industry is in a later stage of
the solution life cycle

•  It is desirable for a company to ensure growth in a industry, and this is more easily done
when targeting several segments with a common marketing mix, instead of focusing on
just one segment

For Kari Traa we recommend the undifferentiated segmentation strategy

-  In that way Kari Traa might be able to reach out to potential new customers who are
still learning the beneﬁts of merino wool base layer products

Choice of Segmentation Strategy

12. Positioning Strategy

•  Positioning strategy is about perception. How Kari Traa would want to be perceived by
the customers, the competitors and by themselves

•  From the customers point of view Kari Traa would want to be perceived as relevant-
and affordable as possible

-  The term “affordable” is a subjective concept and, in this case Kari Traa would
want the customers to feel that the price matches the utility of the products and
by that be viewed as affordable

-  Based on our research and analysis, we see that by fulﬁlling customers’ needs, and
promoting these, Kari Traa might be able to be perceived as relevant and
affordable

-  To be viewed as affordable Kari Traa should use promotion to educate the
customers about all the beneﬁts of using Kari Traa, including that investing in
quality rather than quantity is more economical

12. Positioning Strategy

• Regarding competitors, Kari Traa could aim to be viewed as unique and hard to copy.
Kari Traa’s merino wool base layer has a unique attribute – the fashion attribute
• The important thing is to differentiate from the competitors. This is something we
believe Kari Traa will manage. Because of Kari Traa’s experience with producing
fashion products, this can be seen as an indicator that this feature can be hard to copy
• In general, it is important that the positioning strategy is clear and easy to
communicate. Kari Traa should aim for that their products are being perceived as the
products with the highest level of ﬁt and fashion, both attributes compared with the
competitors

12.1. Positioning Strategy

1.  Select target public: We chose the target public through the who, what and how –
Spaniards who want to be fashionable and use merino wool base layer for this
purpose
2.  Identify positioning attributes: The most important attributes for Kari Traa’s
target groups are ﬁt and fashion. These are the most important factors because they
cover the needs of the micro segments. Fit and fashion are Kari Traa’s most signiﬁcant
features to differentiate themselves from the competitors, this we found out through
our primary research. It might be appropriate to not promote too many attributes,
that’s why we chose these two. We used these two attributes to position Kari Traa in
the positioning map
Positioning Process – Steps


3.  Discover current positioning and analyze competitive situation: The
current position of Kari Traa in Spain is yet unmentionable since they are only
available through certain webpages, which Kari Traa has no control over. During our
primary research and analyses we saw that Spaniards do not have knowledge about
the brand.An explanation for this is that Kari Traa has yet not entered the Spanish
market

4.  Design positioning proposal: We believe that Kari Traa should want to target
the macro segment; Spaniards who want to be fashionable and use merino wool base layer
for this purpose.This is to get customers who perceive Kari Traa as the company with
products who are including both the highest level of ﬁt, and fashion, and by this
differentiating themselves from the competitors

Positioning Process – Steps


Positioning Map

Fit

Fashion

Why fashion and fit?

•  The perceptual map is about the customers
perception of the product

•  We have chosen fashion and fit as variables in
the map

•  The reason for this is that these are the main
attributes that differentiate Kari Traa’s merino
wool base layer products from the
competitors

•  Through our primary research we also found
that these are attributes the customers value

•  The fashion variable includes the trendy-, and
popular colors, patterns and design

•  With the fit variable we mean an advanced
level of product technology, with an extensive
focus on fitting the female body and its curves

Note: In the primary research every focus group mentioned Quechua (Decathlon), but after conducting the Who,What How we excluded Quechua as a
competitor seeing as they are in a price category Kari Traa’s macro segment do not relate to. But to give an understanding about how the main base layer market
looks like, we chose to include it in the positioning map


When entering a new market, Kari Traa could follow ﬁve different positioning strategies; imitative, challenge the
leader, occupy a niche, explore current dimension and explore latent dimensions

Imitative

•  In an imitative positioning strategy the company choose a positioning strategy similar to a present
successful company. We do not recommend this for Kari Traa since we have found that they should
differentiate themselves from the competitors

Challenge the leader

•  In a challenge the leader strategy the company tries to compete with the biggest operators in the
market. In our case we recommend Kari Traa to focus on niche markets rather than focusing on
competing with the biggest rivals

Occupy a niche

•  In a positioning strategy where, the company occupies a niche, the company choose to focus on a
small part of the market and try to fulﬁll the needs of the consumers in this market better than the
competitors. As mentioned earlier in our competitive attitude part of the thesis, we recommend
Kari Traa to go with the market nicher strategy, which in some ways can be seen in context with the
positioning strategy of occupying a niche. But since Kari Traa adds the new fashion attribute to the
market this is not the strategy we recommend

Choice of Positioning Strategy


Explore current dimension

•  This strategy is when a company uses the attributes already existing in a given market, from a
customer point of view, to position themselves. If Kari Traa choose to enter the Spanish market they
should aim to change the attributes of the merino wool base layer products evaluated by the
customer, and this is the reason why we do not recommend this positioning strategy for Kari Traa.
Because Kari Traa is adding a new attribute (fashion) and should aim towards making the customers
value this attribute, and with this, better differentiate themselves from existing competitors


Explore latent dimension

• The latent strategy is related to the attributes that the competitors cannot offer. Buyers criteria
for purchase are based on the attributes that are already existing in the market. If Kari Traa choose
to enter the Spanish market they can add an attribute, that the competitors do not possess, thus
adding a criteria to the potential customers purchase decision process
For Kari Traa we recommend the explore latent dimensions strategy

• This is because Kari Traa’s merino wool base layer products add a new attribute, the fashion
attribute, which no other competitor offer at this point
• We are still recommending Kari Traa to target to a niche as a competitive attitude strategy (and
this is not to be confused with the occupy a niche for positioning), as they always do when entering
new markets
• Since the fashion attribute of merino wool base layers as for now do not exist in the Spanish
market, this would be the most suitable strategy for the company regarding these dimensions


13. Marketing Mix

• We have found that the fashionable merino wool base layer industry is in the introduction phase,
which means that segments are not as largely differentiated as the ones related to the later stages,
therefore we saw it as more beneﬁcial to choose a undifferentiated segmentation strategy
-  Kari Traa would be developing the same marketing mix for all three chosen micro segments
and they will be getting the same promotion and the same product, in the same place, at the
same price

• Also the company should want to ensure growth in the industry, which is more probable when
targeting several segments with the same marketing mix

13.1. Marketing Mix

Product

!
! ! !
AUGMENTED)PRODUCT
Color
Style
Branding
Fashion
Customer!
Finance
Installation Services
Delivery
Warranties
CORE)PRODUCT
ACTUAL)PRODUCT
Benefit
Quality
There are three different levels of to a product

•  The core

•  The actual

•  The augmented

The core product  The tangible beneﬁt the product gives

•  The need Kari Traa is satisfying is being fashionable
while using merino wool base layer

13.1. Marketing Mix

Product

The actual product  The tangible, physical product
• These are the merino wool base layer products, its design and styles, technical aspects,
quality and Kari Traa’s company branding.Also the product packaging and the product
labeling is in relation to the actual product
• The actual product is standardized: merino wool base layer
• Kari Traa always enter a new market with their merino wool base layer products ﬁrst,
which will be the case in the Spanish market as well, if they choose to enter
• Kari Traa’s product portfolio, regarding merino wool base layer, consists ofVørde, Saga
and Rose.They are all available in several colors and patterns

13.1. Marketing Mix

•  Based on findings in the primary research we recommend the following:

-  Enter with the most “plain” products, like the Saga product line, which comes in
bright colors and design, but are without patterns

  This is because the Spanish customers in the focus groups found that most
patterns were “flashy” and ”too much”

-  Kari Traa communicates the value of their products and we believe it is important to
educate the Spanish customers about the benefits of using merino wool base layer
products

-  Since Kari Traa already have English product labeling on their products, we
recommend them to keep them in English in Spain as well

Product

Bachelor Thesis - Kari Traa

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