4. After the Otto Group failed in its first effort to enter the US market with Spiegel, why would it try again? 5. How does this latest effort to enter the US market differ from its prior attempt? Opening Case: The Invisible Global Retailer and Its Reentry into USMarketsWhich corporation owris 123 companies, operates in twenty-seven countries, and has been in the mobile-phune business for over a decade? Il you dori't know, you're not alone. Marny people haveri't heard of theOtto Gruup, the German retailing giant that's second only to Amazon in e-commerce and first in theglobal mail-order business. The reason you've likely never heard of the Otto Group is because the firmstays in the hackground while giving its brands the spotlight. This strategy has worked over the company'salmost eighty-year history, and Otto continues to apply it to new moves, such as its social media site, Twofor Fashion. "They are talking ahout fashion, nont about Otto, unless it suits," explained Andreas Frenkler,the company's division manager of new media and e commerce, about the site's launch in 2008. Thesite is now one of the top fashion blogs in Germany and is an integral part of the retailer's marketingstrategy.Leading through Passion, Vision, and StrategyToday, the Otto Group consists of a large number of companies that operate in the major economic zonesof the world. The Otto Group's lines of business include financlal services, multichannel retall, and otherservices. The financial services segment covers an International portfollo of commercial services along thevalue chain of retail companies, such as Information-, collection-, and receivable-management services.The multichannel retail segment covers the Otto Group's worldwide range of retail offerings: goods areImarketed across three distributionn channels-catalogs, e-commerce, and over-the-counter (OTC) retail.The third segment combines the Otto Group's logistics, travel, and other service providers as well assourcing companies. Logistics service providers and sourcing companies support both the Otto Group'smultichannel retail activities and non-Group clients. Travel service providers offer customers travelofferings across all sales channels. Unique to the Otto Group is the combination of travel agencies, directmarketing, and Internet sites. The combined revenue of these three ventures is growing rapidly, evenSaylor URL: http://www.saylor.org/baaksSaylor.org357during the global economic downturn. The travel service revenues for 2010 were 10 billion euros, or about$12 billion.Even though it operates in a variety of market segments, business ideas, and distribution channels-not tomention its regional diversity-the Otto Group sees itself as a community built on shared values. Otto'spassion for success is based on four levels of performance, which together represent the true strength ofthe Otto Group: "Passion for our customers, passion for innovation, passion for sustairability, andpassion for integrated networking." Each one of these performance levels is an Integral element of theOllo Gruup's guikling principle and self-image.Future growth is guided by the Otto Group's Vision 2020 strategy, which is based on achieving a strongpresence in all key markets of the three largest regions Europe, North America, and Asia. In dolng so,the Otto Group relles on Innovative concepts in the multichannel business, on current trends In e-commerce, on OTC retail, and on developments in mobile commerce. In keeping with that vision, its focusfor near-term expansion is on expanding the Group's strong position in Russia and increasing marketshare in other economic areas, such as the Chinese and Brazilian markets. Investment options in coreEuropean markets are continually being reviewed to strengthen the multichannel strategy. As a globaloperating group, Otto aims to have a presence in all major markets and will continue to expand OTCretailing. In 2010, for instance, the Otto Group continued to develop its activities in the growth markets of Centraland Eastern Europe. Through takeovers and the acquisition of further shares in various distance-sellingconcepts, including Quelle Russia, the Otto Group has continued to build on its market leadership inRussian mail order. A further major goal for the future is to expand OTC retail within the multichannelretail segment, making it one of the pillars of Otto alongside its e-commerce and catalog businesses. Thefoundations of value-oriented corporate management are reflected in the uncompromising customerorientation evident in business activities with both end consumers and corporate clients.The strategy envisages targeted investments that provide the Otto Group with "Best in Class" businessmodels. Otto not only draws on an excellent range of customer services as the basis for its success in itscore business of multichannel retailing but also offers an array of retail-related services for its corporateSaylor URL: http://www.saylor.org/booksO 000Saylor.org358clients. In the future, the company is looking to expand these services, moving beyond its core business.The buying organization of the Otto Group has been repositioned under the name Otto International andis now a firm fixture in the world's key sourcing markets. Otto International's corporate clients stand tobenefit directly from the market power of the Otto Group while providing the volumes to make their owncontribution to its growth.The US Market Reentry InitiativeGermany remains the Otto Group's most-important regional sales market, followed by France, the rest ofEurope, North America, and Asia. In the United States, Otto set up a greenfield division called OttoInternational and quietly launched Field & Stream 1871, a brand of outdoor clothing, outerwear, footwear,and accessories, in 2010. The products are available only on the Field & Stream e-commerce site. Asalways, the Otto name is almost nowhere on the site, being visible only on the site's privacy policy page.Industry experts thought it surprising that Otto launched the clothing line because it had previously leftthe US market after its acquisition of Eddie Bauer's parent company, Spiegel, failed in 2009.Still, the Otto Group has received much acclaim for its innovations in the retail arena. For example,according to a Microsoft case study, Otto was the first company (1) to use telephone ordering, (2) toproduce a CD-ROM version of its catalog in the 1990s (to deal with slow dial-up connections), and (3) tobuild one of the largest collections of online merchandise, at http://www.otto.de. 1 So the Otto Groupmay have other innovations planned for Field & Stream. But the US fashion market is saturated withcompetitors. As WWD reported, Otto may do better to focus on growing its own retail brands and utilizingits impressive in-house manufacturing and logistics divisions, which are now Otto's fastest-growingsegment. Otto could use these divisions to build other retail operations-–while keeping a low profile, ofcourse.

In the rapidly increasing world of globalization, it is impossible for any business to operate in…

Answered: 4. After the Otto Group failed in its…

Principles Of Marketing

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ISBN:9780134492513

Author:Kotler, Philip, Armstrong, Gary (gary M.)

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Chapter1: Marketing: Creating Customer Value And Engagement

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4. After the Otto Group failed in its first effort to enter the US market with Spiegel, why would it try again? 5. How does this latest effort to enter the US market differ from its prior attempt?

Opening Case: The Invisible Global Retailer and Its Reentry into US
Markets
Which corporation owris 123 companies, operates in twenty-seven countries, and has been in the mobile-
phune business for over a decade? Il you dori't know, you're not alone. Marny people haveri't heard of the
Otto Gruup, the German retailing giant that's second only to Amazon in e-commerce and first in the
global mail-order business. The reason you've likely never heard of the Otto Group is because the firm
stays in the hackground while giving its brands the spotlight. This strategy has worked over the company's
almost eighty-year history, and Otto continues to apply it to new moves, such as its social media site, Two
for Fashion. "They are talking ahout fashion, nont about Otto, unless it suits," explained Andreas Frenkler,
the company's division manager of new media and e commerce, about the site's launch in 2008. The
site is now one of the top fashion blogs in Germany and is an integral part of the retailer's marketing
strategy.
Leading through Passion, Vision, and Strategy
Today, the Otto Group consists of a large number of companies that operate in the major economic zones
of the world. The Otto Group's lines of business include financlal services, multichannel retall, and other
services. The financial services segment covers an International portfollo of commercial services along the
value chain of retail companies, such as Information-, collection-, and receivable-management services.
The multichannel retail segment covers the Otto Group's worldwide range of retail offerings: goods are
Imarketed across three distributionn channels-catalogs, e-commerce, and over-the-counter (OTC) retail.
The third segment combines the Otto Group's logistics, travel, and other service providers as well as
sourcing companies. Logistics service providers and sourcing companies support both the Otto Group's
multichannel retail activities and non-Group clients. Travel service providers offer customers travel
offerings across all sales channels. Unique to the Otto Group is the combination of travel agencies, direct
marketing, and Internet sites. The combined revenue of these three ventures is growing rapidly, even
Saylor URL: http://www.saylor.org/baaks
Saylor.org
357
during the global economic downturn. The travel service revenues for 2010 were 10 billion euros, or about
$12 billion.
Even though it operates in a variety of market segments, business ideas, and distribution channels-not to
mention its regional diversity-the Otto Group sees itself as a community built on shared values. Otto's
passion for success is based on four levels of performance, which together represent the true strength of
the Otto Group: "Passion for our customers, passion for innovation, passion for sustairability, and
passion for integrated networking." Each one of these performance levels is an Integral element of the
Ollo Gruup's guikling principle and self-image.
Future growth is guided by the Otto Group's Vision 2020 strategy, which is based on achieving a strong
presence in all key markets of the three largest regions Europe, North America, and Asia. In dolng so,
the Otto Group relles on Innovative concepts in the multichannel business, on current trends In e-
commerce, on OTC retail, and on developments in mobile commerce. In keeping with that vision, its focus
for near-term expansion is on expanding the Group's strong position in Russia and increasing market
share in other economic areas, such as the Chinese and Brazilian markets. Investment options in core
European markets are continually being reviewed to strengthen the multichannel strategy. As a global
operating group, Otto aims to have a presence in all major markets and will continue to expand OTC
retailing.

Transcribed Image Text:In 2010, for instance, the Otto Group continued to develop its activities in the growth markets of Central and Eastern Europe. Through takeovers and the acquisition of further shares in various distance-selling concepts, including Quelle Russia, the Otto Group has continued to build on its market leadership in Russian mail order. A further major goal for the future is to expand OTC retail within the multichannel retail segment, making it one of the pillars of Otto alongside its e-commerce and catalog businesses. The foundations of value-oriented corporate management are reflected in the uncompromising customer orientation evident in business activities with both end consumers and corporate clients. The strategy envisages targeted investments that provide the Otto Group with "Best in Class" business models. Otto not only draws on an excellent range of customer services as the basis for its success in its core business of multichannel retailing but also offers an array of retail-related services for its corporate Saylor URL: http://www.saylor.org/books O 000 Saylor.org 358 clients. In the future, the company is looking to expand these services, moving beyond its core business. The buying organization of the Otto Group has been repositioned under the name Otto International and is now a firm fixture in the world's key sourcing markets. Otto International's corporate clients stand to benefit directly from the market power of the Otto Group while providing the volumes to make their own contribution to its growth. The US Market Reentry Initiative Germany remains the Otto Group's most-important regional sales market, followed by France, the rest of Europe, North America, and Asia. In the United States, Otto set up a greenfield division called Otto International and quietly launched Field & Stream 1871, a brand of outdoor clothing, outerwear, footwear, and accessories, in 2010. The products are available only on the Field & Stream e-commerce site. As always, the Otto name is almost nowhere on the site, being visible only on the site's privacy policy page. Industry experts thought it surprising that Otto launched the clothing line because it had previously left the US market after its acquisition of Eddie Bauer's parent company, Spiegel, failed in 2009. Still, the Otto Group has received much acclaim for its innovations in the retail arena. For example, according to a Microsoft case study, Otto was the first company (1) to use telephone ordering, (2) to produce a CD-ROM version of its catalog in the 1990s (to deal with slow dial-up connections), and (3) to build one of the largest collections of online merchandise, at http://www.otto.de. 1 So the Otto Group may have other innovations planned for Field & Stream. But the US fashion market is saturated with competitors. As WWD reported, Otto may do better to focus on growing its own retail brands and utilizing its impressive in-house manufacturing and logistics divisions, which are now Otto's fastest-growing segment. Otto could use these divisions to build other retail operations-–while keeping a low profile, of course.

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