Question

ABC Jean Company (ABC) is a US firm that sells custom designed blue jeans. A key selling attribute is that the ABC jeans fit well due to a unique phone app that uses artificial intelligence to calculate body measurements from a cell phone picture. Your US tag line is “Right fit, Every Time.” The digitized customer measurements are sent to an unrelated Chinese manufacturer (XYZ) company. Their software translates the measurements and produces the customized jeans which are sent to ABC’s New York City Warehouse. ABC branded jeans are then sent to ABC owned stores in Toronto, Canada, Mexico City, Mexico, and to U.S. stores in New York and Los Angeles.

ABC’s president, Joe, is seeking to expand its blue jeans operations to include a European city in 2021. A previous study has identified the top two candidate cities are Milan, Italy and Berlin Germany. Joe wants to act quickly while there are few competitors with similar technology. Joe has many questions and concerns that need to be resolved before ABC can proceed.

: 1. Which market should ABC choose (Berlin, Germany or Milan, Italy)?;

2. What organization form should ABC choose to enter this market?;

3. How could ABC gain important future demand information regarding the acceptance of its jeans in the chosen market?;

Answer 1

1. ABC should choose Milan, Italy as it is one of the fashion capitals of the world. If the people here get a feel of the technology and the app and how it works, it would translate into good word of mouth advertising as well a good branding for the company since Milan is a fashion capital and people are associated with fashions. It will also result in an increase in sales and revenue faster than Berlin. Having the first-mover advantage in such a market is the key to establishing oneself and fashion-conscious people will prefer good fitting jeans every time.

2. ABC should use a business corporation with a matrix structure to enter this market since they have a proprietary Digital analytics product which they cannot share with others. The matrix structure is used since it would be good that they professional from their American offices are also involved in the decision making and running the company in the beginning.

3.ABC should use its application to get the feedback of customer about their products and what they feel. They can also track what their customers search on the app and based on the interest and buying patterns, demand can be forecasted. Artificial intelligence and Digital analytics most of the time use the data and can accurately predict what the consumer might buy.