Consumer Behaviour in the UK High Street Clothing Sector - Essay Example

? Consumer Behaviour in the UK high street clothing sector 12/09 UK consumer retail sector; All the companies of the recent age have been thoroughly affected in wake of the globalization and its consequences from the beginning of 1990s. The effects have been felt in a broader perspective. The companies found it hard to overlook as well as evade the consequences of globalization in these third world countries and now keeping an edge has become a permanent fixation for these companies no matter which channels and courses are taken. No doubt that such global advancement has revolutionized the retail sector as well. Particularly, UK and US can be regarded as the innovators of industry trends. Subsequently, the retail industry in these regions is substantially competitive, organized and efficient with the growth rate of 35%. The feature of urbanization has transformed the retail format of these countries with innovative tactics and business strategies. Wal-Mart, Mark & Spencer, Morrison, Tesco and Sainsbury are some of the leading chains of UK retail industry. The introduction of global competitors on board have not only enhanced the competition in retail sector but also have groomed the taste of consumer base resulting in the wide diversity towards brands and trends with an exceptional taste. (Experian, nd). In the year 2,000 the spending of consumer (worldwide) estimated on clothes marked the figure of US$1 trillion. (al., 2006) Current consumer behavior concepts; Consumer Behaviors is the study of people buying patterns, depicting the what, when and why aspects of buying. Effective understanding of buyer decision making process with social and economical concerns is necessarily to be evaluated in an attempt to understand people’s want and expectations for successful growth. Consumer buying behavior in retail industry is supported by set of six consecutive actions that include: Need / Want acknowledgment. Information hunt Evaluation of substitutes. Buying decision Buying Post Purchase Evaluation. A Model of influencing factors will illustrate various grounds influencing consumer behavior. (Phillip Kotler, 2003) However, the most influencing factors that underpin the ultimate buying decision of consumer are the psychological factor that is being controlled by features like motivation, perception, believes & attitudes and learning. The role of advertising in controlling the psychological factor to steward the others cannot be under estimated. A commentator on American literature claims that, “Advertisements are the pervasive part of the American aural and visual environment. It is impossible to ignore their wider role in providing people a general education in goods, status, values, social roles styles and art”. (Phillips, 1997) (Agnes Nairn) The role of advertising can be regarded as factor to mould consumer towards a specific pattern. The different media outlets used for advertisement includes radio, TV, billboards, internet and even the walls. In the broad spectrum the “can do” aspects of advertising plays a major role in the growth of consumption. A research conducted to unfold the fact witnessed attitude shifts when “shame campaign” was jointly launched by department of Environment in Belfast and National road safety council in Dublin in November 2000. Attitude shifts were monitored by researchers among the core target of 17-24 males and massive increase in understanding that even one drink would affect driving were found as below: ("Industry as a partner for sustainable developments") Marketing Research and Strategy; The role of Marketing Strategy in the words of John Scully can be defined as a series of integrated actions leading to a sustainable competitive advantage. Competitive advantage depicts development of features which are not simultaneously implicated or discovered by competitors. On the wide spectrum a successful strategic marketing management draws its objectives from the corporate mission of the organization, driven by organizational values and embedded in company’s heritage. New marketing communications media includes options of e mail marketing, viral marketing, and wireless marketing (m-marketing or mobile marketing and interactive television (Brassington and Pettitt, 2003). Customer orientation and market segmentation through E Marketing is the gift of modern times with marked differences from traditional media marketing communication. It provides new options for positioning of the product, attaining differential advantage and gaining online value position to pave the way for being customer’s priority. Shifting towards internet as a marketing tool is preferred because of dynamic characteristics like greater potential, enhanced influence and scope of analytical tools that is necessary for constant innovation of strategies. In short, preserving action oriented marketing to influence the consumer behavior. The power of E marketing yields greater insight to consumer behavior, with enhanced capacity for consumer research and analysis to constructively affect consumer recognition. Furthermore, the future of internet marketing is expected to be bright with competitive advantages such as under, Bandwidth increases enabling more powerful applications and real-time communications. More integrated technologies (TV, PCs, Mobile based technologies) making the internet more interesting and accessible infomediaries who will replace traditional intermediaries. Opportunities to attract transient trade. Marks & Spencer; Marks & Spencer is a giant British retailer enjoying impressive market share and customer base of 21 million people and major share of UK retail industry. The growth pattern before a decade experienced a down fall in the previous decade. The financial performance of the organization shows a constant rise. In the year 1994, Mark & Spencer was believed to hold 18% of UK retail market, it was believed to be the only retailer with double digit market share at that time in UK but by the end of the century the critical alarm bell raised when company’s stock fell 34%. Mark & Spencer realized the need of competitive edges to win the consumer’s confidence and induced major changes for a pro active approach. (RETAILING, April,2008). Detail of the profile of M&S customer base from various angles is depicted for an over view. Customer Base Profile by Age The customer base profile from age segmentation marks the major customer base of fifty plus category. (Pratley, 2010). The assumptions behind the reading are that of unfavorable shopping habits and low quality consciousness of the citizens below the segment of mature adults. Moreover, the fact that supports this figure is the availability of broad variety of the choice of teenagers and business students. In addition, the spending power of the segments is also comparatively weal. Customer Base Profile by Gender The fact is that original distribution of customer base according to gender is difficult because of the reasons such as, the predicament of operational data, improper and ambiguous interpretation of variables and vague group impressions. (Palan, 2001) However, based on the hypothesis of personality traits of females with attributing psychological factors the ratio has been developed. In the hypothetical study customer base has higher number of female customers in comparison to male customer. The reason behind the ratio is the observation that females are more prone to shopping than males. Customer Base Profile by Occupation The reputation of M&S in UK retail industry is widely accepted from a family brand perception. A study have been conducted from an ad agency in October revealed the fact that M&S is considered the top family brand in UK on the grounds M&S was able to build such a connection with the consumer that adds value to the family at the time of recession by providing quality stuff at reasonable and affordable price. (Costa, 2011) Customer Base Profile by Level of Education Evident is the fact that the accurate data regarding the education level cannot be obtained from customer on the ground of ethics. Hence, the hypothetic ratios have been developed on logic. The observation incurred in the establishment of logic encompasses the fact that the higher the level of awareness the more favorable is the consumer behavior. Customer Base Profile by Religion The products of M&S are appreciated globally for the quality, style and comfortable shopping environment. However, the segmentation supports the moderately religious people because if their wide acceptability which is rare in extremist. Customer Base Profile by Social Class; The reason behind the strong hold of families in the social class segmentation structure is the fact that the store layout is convenient enough to allure the customer flow with convenience. Moreover, the teenagers share the other major portion of segmentation because of the their nature of early acceptability and persuasion of innovation. Customer Base Profile by Income Class The divisions of food and clothing are the main segments of retail industry (PAFK, 2008). The aspects of quality with style are the elements preferred by upper middle class and high class contrary to the lower middle class and low class which are price and value considerate in nature. Customer Base Profile from psychological aspects Adventure seekers are the major segment shareholder by psychological segmentation because of the fact that M&S is supposed to be a first chain that introduces innovative products with promotion. The other major group is that of hearts with gold. The psychological description of this segment is consumers who have their own parameters of judging the worth of product. Marketing strategy of Marks and Spencer: The role of Marketing Strategy in the words of John Scully can be defined as a series of integrated actions leading to a sustainable competitive advantage. Competitive advantage depicts development of features which are not simultaneously implicated or discovered by competitors. On the wide spectrum a successful strategic marketing management draws its objectives from the corporate mission of the organization, driven by organizational values and embedded in company’s heritage. The associated processes of strategic marketing management include the following; Situational Analysis: A detailed situational analysis preferably by SWOT analysis for detailed understanding of market needs, customer demands and proactive use of competitive intelligence to attain above average results and sustained competitive advantages is essential Develop marketing objectives; To set objectives with an urge to strive for excellence with realistic approach, focusing on the best a firm can achieve, with securing and maintaining a sustainable competitive advantage. Determining the positioning; To determine a position of competitive advantage as in the words of Phillip Kotler to cultivate company's ability to cultivate one or more ways of competitive advantage that differentiates from competitors. Selecting the target markets; To identify attractive market segment classifying target markets. Design a strategic market mix; to design an attractive Market mix using 4 Ps of marketing i.e. Price, Product, distribution and promotion. At present, the formulation of marketing strategy is the most crucial an aspect for the organizations because of rapid change in consumer choice and lots of substitutes available in market. The very concept was realized by the management of Marks and Spencer in the year 1999, after a dreadful revenue declaration. Hence, the management of Marks and Spencer focused over Marketing with a proactive approach as a remedy. The external factors were brought into spotlight that influenced consumer behavior such has price hype, inflation and recession together made the consumer price conscious to a large extent. In that scenario Marks and Spencer launched various promotion sales to attract the customers; the recent to be quoted are clearance sales, promotional offers apart from M&S Penny bazaar sales. This proactive approach won Marks and Spencer a sale of ?500m in the year 2010/11 in this time of recession. (Spencer, nd). Thus, effective communication can be regarded as the most efficient tool of Marks and Spencer that supplement the confidence of its customer base. M&S adoption of opening new stores and developing online home delivery operations points to the direction of how advancement in technology is changing marketing aspect. This strategy might prove to very successful if implement properly especially given the capital strength of M&S. However, dealing with the challenges that may come along with these changes may not be too easy. Getting the right persons to do it properly may prove to be challenging (Best, 2009). The success of the project relies ultimately with the management on how it will maximize on the strengths and minimize the weaknesses. In responding to the new emerging issues in marketing like; globalization, increased competition and others one key thing will be the ultimate weapon to deal with this. The organizations will have to continuous scan the market, get the right information and respond according. Failure to doing proper market research, understanding both the competitors and the customers will lead to eventual collapse of neglecting companies. Problem Identification In responding to the new emerging issues in marketing like; globalization, increased competition and others one key thing will be the ultimate weapon to deal with this. The organizations will have to continuous scan the market, get the right information and respond according. Failure to doing proper market research, understanding both the competitors and the customers will lead to eventual collapse of neglecting companies. The current period is the era of global trade exposure along with inflation and compressed socio economic environment. In the word of an analyst, “a warning of perfect storm hitting the retail sector”. With an aspect to shape the competitive long term trend, modified in the light of present socio economic conditions an initiative to pursue an export of material through UK is suggested. The ground reason behind the suggestion is low contribution of Professional customers in the customer base, also the free market trade and growing technology with low labor cost across border. Hence, the anticipated future of manufacturing industry across the border is expected to flourish in near future. Thus, optimizing the chances of growth in this sector as a raw material provider. The analysis including investigation of internal surveys and statistics of the company’s of same industry in Uk of competitors, with an aim of bridging the gap is an essential factor, strategic drift analysis determine how far of the track the company is, looking at the unrealized strategy and the reason as to why, and the emergent strategy and their advantages to the company as well as product life cycle analysis will help a company on resource allocation and on which strategy to adopt (Johnson and Scholes, 2000). External Influence Factors; The External influence factors that impact on the choice of professional customer can be covered with a PESTEL Analysis; a. Political / Legal; the legislation structure of Singapore is drafted in a manner that makes it compatible for global competitiveness. The Ministry of Trade and Industry have a compact structure of rules and regulations that supports pro enterprise environment. The financial investment schemes supported by government extensively supports trade and commerce. Furthermore, the close and forthright bilateral relation also optimizes the political aspects by encouragement of entrepreneurship in UK. (DFAT, nd) b. Economical: The economic situation of UK pertaining to retail industry is getting more challenging with the passage of time. At present the activity of retail industry is considered more a tool of measuring the viability of the economy because of the reason that it depicts the spending power in general. (Economics, 2011), however, at present the inflation prior the application of VAT have marke the low of 2.0 percent in food and 0.8 percent in non-food. Hence, the observation concerning inflation is that the present marking is only partial which will lay full impact in January after VAT application. c. Social/ Cultural: UK is very business orientated; most business people speak and understand English which is the globally recognized language (Katz, 2008). Business men normally dress in light weight conservative clothing, like dress slacks, long-sleeve shirt with a tie. Business women normally wear skirts below the knee with blouses, and light makeup. Most private business in Uk generally is open Monday through Friday from 9:00 a.m. to 5:00 p.m. and Saturday from 9:30 a.m. to 1:00 p.m. Lunch are taken between noon and 2:00 p.m. (Worldroom.com). d. Technological: Rapid technological growth can be regarded as the heart of growing economy of UK. The strong infrastructure of developing industries working on international standard has amplified the demand of technological maturity and acceptability of e- commerce. In addition, technological modification is also extensively supported in the country to cultivate Prime compatibility. The external factors effecting industry can be transformed into fruitful opportunities, with on time decisive strategically interweaving. For example in past years the changed demographic social set up rapidly altered customer’s expectations. The customer expectation and demands now look forward to customized value added products with consequent believe and behavior pattern. The referrer’s social factor can be addressed as an opportunity by creating awareness of fashion industry followed by practical supporting promotions. In the same way environmental factors can also be observed through research of expected climatic changes and presenting value added products accordingly to show social responsibility. Before a firm determines what plan or strategy to use then it is crucial for her to analyze and have a clear understanding of her current market its challenges and the way to navigate through them. This may be done by carrying out a Strength, Weaknesses, Opportunities and Threats analysis of the current market and therefore devise strategies to deal with them(Barney, 2010). The high performance and zenith achievements oblige stakeholder’s expectations. The successful strategic planning of M&S must meet the stakeholder’s expectations involuntarily in order to attain the defined corporate objectives. The recently upgraded infrastructure of M&S assisted in a number of ways to boost the company’s revenue such as, focus on sales based replenishment, tills advancement, development of groceries online business and adopting measures for improved replenishment. However, in this process of strategical catch up M&S is facing certain teething issues that need rational handling for smooth evolution. Market Research on consumer behavior; An analysis of present situation encompassing store’s operation made the need of certain incorporation evident in marketing strategies that includes utilizing improved means of communication to enhance credibility of corporate image, which is a the necessary need of consumer in this era of rapid development. Sun Tze on Strategy makes it evident that knows your target, know yourself and your victory will not be threatened. Know the terrain; know the weather and your victory will be complete. Recent world is greatly influenced by rapid change and a project can certainly not be isolated from the affects of such external impacts on the Organization. An optimistic application of the principles of marketing to overcome such obstacles through handling of internal / external interactions with exceptional interpersonal skills. In responding to the new emerging issues in project management like; emerging of new technologies, increased competition and others the only key feature that will be the ultimate weapon to deal with scenario is ability to see the project as an open system. The market acceptability and employee relation will be challenging with different situation, probably an exact system of strategy cannot help with coping with such scenarios efficiently Management will have to continuous scan the market, get the right information and respond according. Failure to doing proper market research, understanding both the competitors and the customers will lead to eventual collapse of the project. The solutions yielded for new and advanced forms of information sharing and collaboration to improve process cycles with accelerated growth strategies. In this reference qualitative findings for improvements of practical processes with the utilization of technology can be acquired to overcome such issues Proposition of CRM strategy for monitoring; In any organization or business, regardless of the ownership structure, profit surety (financial or other) is the prime concern of the stakeholders. Therefore, irrespective of social objectives or non commercial purposes, a sound study for sustainability and enhancement of profit seeking is the prime concern of a business, which is only possible with Customer Development. Hence, CRM can be defined as a mean which brings total customer development to an end. Unlike the traditional organizations, technology focused CRM enables to redesign a business from outside in, to develop organization wide, single customer view. Thus, in short the concept of CRM in modern organizational culture like that of Marks & Spencer can be defined as a mean to bridge information for effective decision making throughout the organization. The strategies of CRM can be grouped into the following for an over view; Customer Acquisition; to behold maximum customers in number by being their first and only choice with competitive edge. Customer Retention; Retain the customer in hold by introducing competitive advantages for strengthening the relationship with them. Customer Loyalty; to build strong customer loyalty with offers & programs. Customer Evangelism; Enable loyal customers to become a volunteer sales force. Cost Reduction; To kill excess expenditure of operations and control cost. Improve Productivity; enhance your e-business strategies. Risks & Limitations: The organisation has many legacy systems, lots of small database applications and well established systems for Finance and Membership management, all of which will need to be integrated into the CRM system. It is likely that there will be loads of requirements (worthy & non worthy) identified to be integrated in CRM. Thus, careful evaluation of requisites to build long-term and sustainable management system is essential. There are bright chances that people will reject the CRM approach and not change their business processes or keep old business processes running in parallel as well as using the new CRM business processes. Thus undermining an improvements in efficiency and effectiveness Dissemination Plan; as we know that Marks & Spencer already possess an efficient online customer base. Hence, to add a competitive edge to the strategy of the company, building consumer engagement is an essential factor. Introducing social impacts through plan of corporate responsibility such as developing an infrastructure for collecting used clothes or encouraging research for enhancing durability or developing consumer forums addressed by the officials of Marks & Spenser will certainly bind the customer loyalty, subsequently enhancing the customer base. Conclusion; Alice Carroll wrote in Alice Through the looking Glass, “Now here, you see, it takes all the running you can do to keep you in the same place. If you want to get somewhere else, you must run at least twice as fast as that” (Carlson & Wilmot, 2006). Statistics reveal that only four of the companies that were a part of the Fortune 100 companies in 1900 have able to survive even today. A research conducted by Harvard University stated that most companies loose 50% of their customers in 5 years. Moreover, out of top 12 companies that appeared on Dow Jones index in 1900, only General Electric (GE) is the one that exists (Murray, et.al., 2008). The point behind mentioning these statistics is to reinforce the idea that the only way companies can survive is today’s market is through innovation and change. Therefore, the potential of all the resources should be fully utilized daring to enhance revenue from multi dynamic tactics. References; al., J. M. (2006). Welldressed. University of Cambridge, Cambridge. Costa, M. (2011, Nov 10). Family brands can reap rewards . Retrieved Dec 7, 2011, from Marketing week: http://www.marketingweek.co.uk/trends/family-brands-can-reap-rewards/3031718.article DFAT. (nd). Singapore country brief. Retrieved Nov 23, 2011, from DFAT: http://www.dfat.gov.au/geo/singapore/singapore_country_brief.html Economics, R. (2011, Dec 8). Which is the best measure of retail sales? Retrieved dec 8, 2011, from Retail Economics: http://www.retaileconomics.co.uk/which-is-the-best-measure-of-retail-sales/#more-1529 Experian. (nd). fashion segment. Retrieved Dec 3, 2011, from Experian: http://www.experian.co.uk/business-strategies/fashion-segments.html PAFK. (2008). Retail marketing and new retail idea - Marks & Spencer. Retrieved Dec 7, 2011, from PAFK: http://www.grin.com/en/e-book/91167/retail-marketing-and-new-retail-idea-marks-spencer Palan, K. M. (2001). Gender Identity in Consumer Behaviour research. Academy of Marketing Science , online. Pratley, N. (2010, Nov 9). View Point Column. Retrieved Dec 7, 2011, from The guardian: http://www.guardian.co.uk/business/2010/nov/09/marks-and-spencer-review-nils-pratley RETAILING, M. &. (April,2008). MARKS & SPENCER: A CASE STUDY IN INTERNATIONAL RETAILING. State University of New York Brockport,, New York. Spencer, M. &. (nd). Quality worth every penny. London: M&S. Read More