Recommendations on Competitive Advantage of Next Plc - Essay Example

?Marketing Management- Next EXECUTIVE SUMMARY This primary objective of this paper is to offer a set of plausible recommendations to Next Plc to develop a competitive advantage in the global market. India is an emerging retail market and hence, Next Plc must cater this opportunity by repositioning itself. Next Plc is present in India as Next Direct which offers online retailing services for its fashionable apparels and clothes. The fashionable and fad apparels products have shorter life-cycle as fashion of clothes changes very frequently. However, Next Plc is a better performer in introducing the latest and trendy products in market. The target market for Next Direct in India mainly includes young age group of people from urban areas with higher middle income. In India, the domestic as well as some foreign apparel retailers are dominating and they are also offering online retailing services. Hence, it needs to reposition itself by offering comparatively lower priced brand products. The price is a key factor in Indian market and Next Direct must offer better discounts, offers though loyalty cards schemes. Moreover, Next Direct also needs to incorporate ethical marketing concepts for its Indian market by focusing on better consumer satisfaction level. Table of Contents EXECUTIVE SUMMARY 2 INTRODUCTION 4 PLC STAGE 5 TARGET MARKET 7 PRODUCT REPOSITIONING 10 PRICING STRATEGIES 12 ETHICS 13 CONCLUSION 14 RECOMMENDATION 15 REFERENCE 16 BIBLIOGRAPHY 17 INTRODUCTION Next Plc is a UK-based retail chain and it also present in the multiple countries like India, China, European countries, U.S.A. etc. It is primarily engaged in the retailing business of the apparels, accessories, home products and other electrical consumer durable products. In its domestic country, UK and in Eire it has nearly 500 stores. Besides, in International markets, it is operating with more than 180 stores (Next Plc-a, 2011). Recently, the retailer faced a steep fall in its sales revenue during financial crisis of 2007-2008. However, with the recovering economy, Next Plc’s financial statements are recovering with an increase in the sales comparing to the previous financial year. With recovering economy, the competition in the market is expected to intensify as its competitors will try to the recover their losses due to financial crisis during 2008 to 2009 (Clark, 2011). In such situation, Next Plc must try to reposition itself in the competitive market by gaining effective sustainable completive advantages. However, the recovering growth rate of UK (as per GDP real growth rate 1.6%) is much slower in comparison to other developing countries like China and India (CIA, 2011). Therefore, opportunities in these developing countries are far better than other recovering developing countries like UK and U.S.A. Next Plc can try to reposition its apparels in the Indian retail market as Indian economy is growing at a faster rate i.e. 8.3% (CIA-b, 2011). Next Plc can focus on its apparel product segments to reposition itself in Indian market. With enhancing disposable income of the Indian consumers demand for clothes and related accessories are rising (Mirdha, 2011). PLC STAGE Kasse has explained that a PLC “is the period of time, consisting of phases that begins when a product is conceived and ends when the product in no longer available for use” (Kasse, 2008, p.56). The clothes and apparels are generally belongs to the fashionable consumer products and fashion industry keeps changing its trends by introducing multiple product developments as per current trends. Generally, clothes can be categorized into three types i.e. fashion, fad and basic products and hence, as per three types of apparel categories, the PLC is given below. Figure 1: PLC for Apparels and Clothes (Source: Cornell University, 2006) The basic clothes and apparels are already in its declining phase and fashionable clothes are in correct trend. However, the fad clothes have the minimum life cycle as its popularity changes frequently among the youngsters. BCG matrix is a model to evaluate the diversified portfolio of a business and it is helpful in determining the effectiveness, current scenario and future growth of a specific business portfolios. The following figure depicts a BCG model. Figure 2: BCG Matrix (Source: Griffin, 2006, p.219) Currently, Next Plc is offering the retailing business for clothes, accessories, home products, and electronic consumer durable. Next Plc earns the most of its sales revenue from its apparel and clothes and hence, this business segment of Next Plc is at ‘cash cows position’ as its relative share in comparison to total market is low with high growth rate. The market size of the clothing products is very vast and it is growing with increasing demand and the figure is given below. Figure 3: Value Clothing Retail Share of Clothing Market (Source: Verdict, 2007) However, with increasing market demand, the key competitors like Marks and Spenser, Asda have gained the majority of the market share. On the other hand, in spite of lower market share of Next Plc in comparison to tits key competitors, the profitability from clothing products remains high (Next Plc-b, 2008). Therefore, Next Plc’s clothing segments belongs to the ‘cash cow’ category of BCG matrix. TARGET MARKET Targeting a specific market is the primary task for developing customer centric business strategies. Moreover, for brand positioning and repositioning, identification of target market is an essential criteria. The target market can be determined through the process of market segmentation where multiple consumers are categorized as per their demographics and tastes & preferences (Lantos, 2010, p.33). Next is supposed to reposition its fashionable clothes and apparel products in Indian consumers. Hence, it needs to identify the potential customers in Indian market. Next Plc offers highly fashionable and trendy clothes which is also becoming famous among the Indian consumers. Moreover, annual household income of the Indian consumers is rising enhancing their consumers disposable income. The following figure shows annual household income of India. Figure 4: Indian’s Annual Household Income (Source: Dutta, 2005) Moreover, the fashionable clothes are more famous among the young age group of consumers and population of this age group is prominent in India as per the given figure. Figure 5: Indian Population by Age (Source: Adlakha, 1997) As per the above table, the projected population of the young age group is expected to increase and they will be major consumers of fashionable clothes and apparels. Next Plc must focus on the urban consumers as they are more prone to choose fashionable and fad clothes and apparels. Nearly, 30% of the total Indian population are from the urban area (CIA-b, 2011). In the light of the above data, the target market for Next Plc’s apparel products in India can be determined which is given below. Age: 05yrs to 35yrs Income: Higher middle income groups Geographic: Mainly from urban areas Gender: Male and Female Type: Online buyers PRODUCT REPOSITIONING Next Plc is present in India with the brand name of the Next Direct which offers online services. The online selling in India among the youngster consumers is being popular as numbers of tyhe internet users are increasing significantly. During 2009, there were nearly 61.338 million internet users in India (CIA-b, 2011). The following table shows the online shopping trend in India and other developing countries. Figure 6: Online Shopping Frequencies (Source: MasterCard, 2008) In Indian markets, the domestic apparel retailers are the market leaders who are also offering their online service. On the other hand, the leading global retailers of fashionable apparels like M&S are present. The perception map of the Next Direct in accordance with its key competitors is given below. Figure 7: Perception Map of Next Direct (Source: Author’s Creation) As per the above perception map, Next Direct offers highly quality and high cost products for its focused target market. However, in order to compete with these competitors, Next Direct must try to offer high quality products with low cost considering the income level of the target market. In order to reposition, Next Direct should try to identify its probable strategic directions for its Indian market. In this respect, Ansoff Matrix is a useful strategic model which explains four strategic windows in respect of the product and market. The diagram for Ansoff matrix is given below. Figure 8: Ansoff Matrix (Source: Campbell and Craig, 2005, p.105) As per the above market, the market and products are present for the Next Direct, and hence, it needs to increase the online market share in India through market penetration strategy. High quality with lower cost is an effective penetration strategy for Next Direct in India. PRICING STRATEGIES Currently, Next Direct in India offers high cost products and premium brand products for children, men and women consumers. However, the pricing strategy for the Indian online consumers remains quite higher. Moreover, this pricing strategy is not specific for the Indian consumers as Next Direct’s ‘online shopping’ service is present in many countries and prices for the Next Direct is same for its global consumers. This pricing strategy is not effective for competing with its key competitors. Generally the pricing strategy is determined by the demand and supply, but in case of apparel products, the pricing strategy is highly dependent on the manufacturers and price of the competitors (Glock and Kunz, 2005, p.257). Currently, Next Direct will aim to deliver the high brand products which are highly priced. It will be quite difficult for the Next Direct to offer low cost product. However, it will offer those brand products which are suitable for the target markets in accordance to their expenditure level (Mills, 2002, p.293). Moreover, discounts and offers are key factors for successful pricing strategies in order to penetrate the market. Loyalty card is another major pricing tactics for effective pricing strategies (Hall et al, 2007, p.191). The products of high quality brands at reasonable price will be the USP for the NEXT Direct. Therefore, the pricing strategy should the based on the value of the brands. On the other hand, Next Direct should also follow the psychological prising as it is will be effective in influencing the perception of the consumers. Hence, the combination of value pricing and psychological pricing will be the most suitable for Next Direct’s online retailing business in Indian. ETHICS Robinson has explained that “sustainable ethics promotes morally accepted principles geared towards continued development of the environment for the present and future generations” (Robinson, 2007, p.170). According to Pride and Ferrell, the decision makers must develop marketing strategy by “coaching on the ethical issues” and each of the marketing elements must be determined as per the ethical conduct (Pride and Ferrell, 2004, p.101). For conducting ethical marketing in India, some of the marketing elements are structured for Next Direct. Next Direct conducts an online marketing Indian market for its apparels and clothes segments, and hence, the consumers will choose their product through internet. Next Direct must delivered the proper product chosen by the client and the promised quality must be met. The pricing strategy must be in accordance with Indian legal framework as transparency in online market is less. It must charge reasonable price for its products and delivery. Advertisement should not be misguiding and it must deliver the exact information regarding the products and online services. In online shopping, better distributional process is one of the key success factors. The payments should must be safe secure and delivery of the products must be within stipulated timeline. The consumers are core essence of any business. Therefore, consumer satisfaction must be very high. There should not be any gap between the promises and delivered product and services. Moreover, there must be 24X7 consumer care department where consumer can place their complaints and get other details regarding products and services. CONCLUSION This paper has described a development of marketing plan for Next Plc for its online marketing division in the Indian market. Next Plc is present in India as Next Direct, serving the online consumers. The enhancing economic condition of Indian consumer and increasing frequency of online shopping indicates better opportunity in India for Next Direct. For gaining a competitive advantage in India, it will attempt to reposition in itself by redefining its target market. Moreover, for sustainability it must also incorporate its ethics in its marketing strategy. RECOMMENDATION During the financial crisis of the 2007-2008, the global retail market was affected heavily. Next Plc also faced a crisis during 2009 as its sales declined drastically. UK and European market is the main region for Next which generates the highest sales revenue in comparison to other global market. However, these markets are recovering at a very slower rate, and on the other hand, the countries like India and China is developing as a major retail market. Therefore, in order to develop its market in India for Next Direct, an online division of Next Plc some plausible set of recommendations have been given below. Indentify the demographics of potential consumers in India through an extensive marketing research. Conduct a competitor’s analysis for indentifying competitors in online retailing business. Offer fashionable apparels in accordance with consumers’ preferences and market trend. The elements of marketing mix should be consumer centric which should strive to generate higher consumer satisfaction. Consumer service helpline should be developed for consumers. Must meet the promises displayed in website by offering better product and services. For consumer loyalty, it must develop two-way communication and offer loyalty card schemes. REFERENCE Adlakha, A. (April 1997). International Brief: population trends: India. [Pdf]. Available at: http://www.census.gov/ipc/prod/ib-9701.pdf. [Accessed on April 25, 2011]. Campbell, D. J. and Craig, T. (2005). Organisations and the business environment. 2nd ed. Butterworth-Heinemann. CIA-a. (April 14, 2011). The World Factbook: United Kingdom. [Online]. Available at: https://www.cia.gov/library/publications/the-world-factbook/geos/uk.html. [Accessed on April 25, 2011]. CIA-b. (April 6, 2011). The World Factbook: India. [Online]. Available at: https://www.cia.gov/library/publications/the-world-factbook/geos/in.html. [Accessed on April 25, 2011]. Clark, A/. (2011). Christmas chilled the high street, but the winners kept winning. [Online]. Available at: http://www.guardian.co.uk/business/2011/jan/09/high-street-christmas-shopping-sales-snow. [Accessed on April 26, 2011]. Cornell University. (2006). Basic, Fashion, and Fad Products. [Online]. Available at: http://courses.cit.cornell.edu/cuttingedge/lifeCycle/03.htm. [Accessed on April 25, 2011]. Dutta, D. (May 14, 2005). Indian Consumer. [Pdf]. Available at: http://www.3isite.com/articles/Indian_consumer_A_do-it-yourself_kit.pdf. [Accessed on April 25, 2011]. Glock, R. E. and Kunz, G. I. (2005). Apparel Manufacturing: Sewn Product Analysis. 4th ed. Pearson Education India. Griffin, R. W. (2006). Management. 9th ed. Cengage Learning. Hall, D. et al. (2007). Business Studies. Pearson Education India. Kasse, T. (2008). Practical insight into CMMI. 2nd ed. Artech House. Lantos, G P. (2010). Consumer Behavior in Action: Real-Life Applications for Marketing Managers. M.E. Sharpe. MasterCard. (2008). Online Shopping in Asia/Pacific – Pattern, Trends, and Future Growth. [Pdf]. Available at: http://insightbureau.org/insight_reports/mc_insights/2008_Q3_OnlineShopAP.pdf. [Accessed on April 25, 2011]. Mills, G. (2002). Retail pricing strategies and market power. Melbourne Univ. Publishing. Mirdha, R. U. (April 14, 2011). India, a promising RMG destination. [Online]. Available at: http://www.thedailystar.net/newDesign/news-details.php?nid=181617. [Accessed on April 25, 2011]. Next Plc-a. (2011). ABOUT NEXT. [Online]. Available at: http://www.nextplc.co.uk/nextplc/aboutnext/. [Accessed on April 25, 2011]. Next Plc-b. (March 19, 2008). REGULATORY NEWS. [Online]. Available at: http://www.nextplc.co.uk/nextplc/newsevents/rns/rnsitem?id=1205910249nRNSS4234Q. [Accessed on April 28, 2011]. Pride, W. M. and Ferrell, O. C. (2004). Marketing: Concepts & Strategies. 12th ed. Dreamtech Press. Robinson, S, (2007). Engineering, business and professional ethics. Butterworth-Heinemann. Verdict. (2007). UK Value Clothing Retailers 2007. [Pdf]. Available at: http://www.verdict.co.uk/Marketing/dmvt0382m.pdf. [Accessed on April 28, 2011]. BIBLIOGRAPHY Hassan, S. S. & Kaynak, E. (1994). Globalization of consumer markets: structures and strategies. Routledge. Hiebing. (2004). The Successful Marketing Plan: A Disciplined And Comprehensive Approach. Tata McGraw-Hill. Hill, C & Jones, G. (2009). Strategic Management Theory: An Integrated Approach. Cengage Learning. Hoskinsson, R.E., Hitt, M. A. & Ireland, R. D. (2008). Competing for Advantage. Cengage Learning. Larreche. W. M. B. (2006). Marketing Strategy: A Decision Focused Approach. Tata McGraw-Hill. Manlow, V. (2009). Designing Clothes: Culture and Organization of the Fashion Industry. Transaction Publishers. Mc Donald, M. & Dunbar, I. (2007). Market segmentation: how to do it, how to profit from it. Butterworth-Heinemann. Ulwick. (2005). What customers want. Tata McGraw-Hill. Read More

 

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