In this report, the strategic marketing as well as promotional strategies of the Next PLC Company have been highlighted. This is a UK based Retail company dealing in clothes and other essential and decorative home products. A well conducted research have been carried out in this business report, following which detailed analysis using relevant marketing mix theories like 4P have been performed and strategic recommendations have been provided regarding the future improvements have been provided in the concluding section of the report. The core marketing strategy of the company have been analysed by means of 4Ps theory of marketing mix. Along with product, price, promotion as well as place the macro and micro analysis of the company have also been conducted. The major strengths as well as weaknesses of the implied marketing strategy have been evaluated and appropriate recommendations have also been provided in the following part of the report.
The Next PLC organisation had been set up in the year 1982 and currently operates more than at least 500 physical stores all over United Kingdom and over 150 stores outside United Kingdom (Nextplc.co.uk. 2018). Additional channels of sales were configured after the Next Directory launched in 1988. The company also adapted the policy of online sales in 1999. This implies that at a very early stage after the initial layout of the business, the organisation had already resorted to multiple channels for their sales. This retail strategy latter proved to be instrumental for the growth of business and successful implementation of marketing strategies in the future. Within 2000 to 2010, the company had already established themselves as one of the leading and most advanced multi sales channel operating organisation within the domain of retail business in UK and also some other market domains where the company operates (Nextplc.co.uk. 2018).
Since the company had started to spread its business in multiple markets, the main focus of the organisation have been the potential customers of the age group 25 to 45. The middle class of the UK society have always been the major target market segment for the brand and their potential customers include both genders and particularly the people who have good deal of interest over mainstream fashion. However the range of products pertaining to women are more versatile and comes in variable price ranges as this have been one of the earliest strategies of sale for Next PLC. However, the current customer market reveals that the taste and fashion sense of the customers are going through continual change and such potential retail firms like Next PLC ensures that they implement appropriate sales and marketing methodologies so as to serve the needs of the current consumer market.
Market Evaluation
The market, for any profit making organisations is the location where the deliverables of the company meets the clientele that it serves. Analogously, marketing is the policy that is implemented by the company in order to identify the potential customer market and frame strategies such as product development, market mapping and pricing, business promotion and also distribution (Thompson and McLarney 2017). Hence, it is evident that on order to make effective analysis of the marketing strategy of the company, detailed research regarding the current market atmosphere and the target market where the company wants to project itself have to be analysed. The market witnessed a rapid downturn during 2008 (Nextplc.co.uk. 2018). After that, the economic position of the organisation have developed and currently it is in a state of stability. However, the adverse effects of the conservative purchasing trends of the customers would still persist for at least upcoming five to six years.
However Lancaster and Massingham (2017), opines that elaborate research on the purchasing behaviour of the citizens of UK reveals that the despite putting constraint on the spending of their disposable income, purchasing clothes and wearable have been the preferred choice for a large section of men who prioritise spending. This brought about a market growth with a hike in the sales rate by 4.5% annually. As such the consumer spending on clothes and other accessories by the UK citizens have been £49.8 billion in the year 2014 (Storbacka and Nenonen 2015). Owing to the return of consumer confidence, since 2013, the economic status of the clothing industry of United Kingdom revived. Alongside that, the consumer also became more stable economically and their purchasing power began to rise by 6 to 8 % on an average every year since 2013 (Thompson and McLarney 2017) . However, in spite of the turbulent and flexible market conditions, Next Plc. have emerged as a stable performer gradually since its advent. The annual report of the company reveals that in 2012, Next Plc. have been accountable for 7.2% of the total sales volume acquired by the industry of clothing retail in United Kingdom (Nextplc.co.uk 2018). In the next year, the organisation surpassed the sales record of their major competitor Marks and Spencer by 1.5% (Hammett 2018). The current pro forma balance sheet of the company for 2020 shows that they would surpass the estimated sales growth in 2018. The sales strategies that Next PLC have adapted shows that their healthy position of sales during the Christmas period owing to their innovative and enthusiastic marketing management.
The theory of marketing mix can be implemented in this business scenario in order to evaluate the marketing strategy. The components of this theory are the 4 Ps, namely product, place, promotion and price. The traits of product as well as price are related to the products or business genre in which the company operates. However, in the views of Neupane (2015), the genres of product as well as price are related to the market operations and the values that the company delivers to the customers.
Product
This is the entity that the organisation offers to the customers in order to fulfil their business interests. As specified early in this report, the product category of NEXT PLC is mainly mainstream fashion. The products of the company mainly target the middle class men and women who belong to the age group of 25 to 45 years. The mission statement of the company refer that one of the main goals of the company is to ensure that the products offered to the clients are of high quality and the product designs are latest and reflects the attitude of a generation Y person. The same attitude as the production department is also retained by the packaging and branding department so that the ultimate packaged products are elegant and attract the attention of the target customers. According to Blázquez (2014), this persistent focus on the quality retention has been largely helpful in the establishment of Next PLC as a major and countrywide brand in UK and in gaining brand equity surpassing some of the potential and big budget competitors.
This aligns to the pricing strategy that have been undertaken by the company and is an important part of the wholesome strategy that is implemented by the company one of the most important parameter of pricing is that it should be in congruence to the expectations of the customers and should be in alignment to the quality and the purchasing power of the intended customer base of the company. The pricing strategy of Next PLC quite similar to the middle class target customers, follows a median line. The price of the products of Next PLC are not market skimming. On the other hand, the company do not follow the policy of penetration pricing also. Rather, Verhoef, Kannan and Inman (2015), opines that the company wants to portray an image of theirs, among the customers that makes them occupy a neutral space where they offer quality products and latest design and at a suitable price that would suit the budget of the customers.
Penetration pricing methodologies are being implemented by the new and the start-up companies who wants gain major customer share quickly after the launch of the company in the market. As per Ramanathan, Subramanian and Parrott (2017), this is a basic strategy of undercutting major competitors in the market. After the market launch of the company back in 1980s, the company had pertained to such strategies. However, gradually as they got establishment as a major and potential brand, they deviated from such pricing strategy and adapted a neutral pricing policy. Market skimming price policy is also driven by the same motif. They however plan to beat the completion by the dint of higher price which is for them an implication for premium product quality. Next’s policy is of justified pricing (Ennew, Binks and Chiplin 2015). They offer good product quality and keeps the prices moderate so that the customer base keeps enlarging.
As a mid-market retailing agency, the organisation enjoys a stable and established customer base and a continuity of the equal sales rate. They also enjoy a familiarity as a popular market brand in the UK market as the customers of Next PLC always gets justifiably priced products and are satisfied with the product quality on an average. The customers of Next PLC have reported a satisfaction rate of 86.5% in the interim of the UK market (Cho, Rha and Burt 2015). This strategy also offers the company a chance to be flexible regarding the prices for seasonal promotions and also helps the organisation to maintain their competitiveness across all the sales channels through which the company operates, namely the selected Asian, US and Latin American markets.
This is the part of wholesome implemented by the company that enables the product to be projected before the customer base and adapt a sales approach that is feasible as well as conveniently for the company.
The Next PLC Company operates through multiple sales channel whereby the customers are able to browse their desirable products. At present the sales domain of the company includes 500 stores all over the UK and Ireland. This is the original and the most primitive sales adapted by the organisation and hence is one of the most important parts of their strategic sales campaigns. As per Bae et al. (2014), the company is on a drive to open more physical stores around the world and mainly in UK so that the brand equity that exists in sever4al parts of UK where physical stores are not located can be utilised to skim profit and enlarge the base of their potential customers.
Physical stores also add more human elements with the organisation in the form of sales advisors, customer assistance experts and so on. This helps the company to offer better sales experience to the customers. In the opinion of Verhoef, Kannan and Inman (2015), strong and positive shopping experience have the potential to convert the occasional shoppers in to regular and loyal customers.
Another sales channel of the company is the sales directory which is catalogue by means the customer are able to order their desired Next products and accept the ordered products by postal service. A similar channel of sales is the e-commerce platform. Via this platform, the customers of Next PLC are able to shop through websites, mobile applications and various social media platforms that allows the organisation to interact with the customers as well as execute product sales (Blázquez 2014).
The above mentioned sales channels offer customers the convenience of shopping. Alongside, the company gets the opportunity to market their products mores feasibly and approach the target customer section. The choice of ordering from catalogues or online suits the customer group who have busy lifestyle and are not able to avail the option of shopping physically. The development in new technological innovations such as smartphone or internet have made it mandatory for the company to update their online inventories so as to meet the demand of the new age customers.
This certainly throws light on the methods that the company have implemented in order to provide and share information about the product ranges of Next PLC with the group of potential buyers. This is to make the customers more aware of the product features and other advantages that it offers in comparison to the other products of the same genre that it offers. As per Melis et al. (2015), in the recent years the organisation have released very few advertisement campaigns. On the contrary, they have focused on launching smaller campaigns. In comparison to the major clothes retail brands like John Lewis, who focuses on large and costly advertisement campaigns, Next PLC relies on smaller campaigns like online promotions. Next PLC conducts its promotions online through social media, paid websites and through their official websites. The company followed a strategy of posting their classified discount advertisement on the most searched for websites of UK. This campaign was not claimed as highly glamorous nor did it incur high costs. However, as informed by Lemon and Verhoef (2016), the sales conversion rate (online and physical) of the company was hiked by 8.2% as an impact of the campaign for then financial year 2016. Regular updates on Facebook, Twitter and other social media websites have helped the organisation to maintain the popularity as a frontline clothing brand. The organisation have been able to reach out to the millions of followers on the social platforms for Next PLC. Even if staying away from the mainstream television advertisements, the company have flaunted celebrities and preferably sports personalities sporting their wearable in the online ad postings.
Threats of new entrants
The new entrants in the market would all want to follow the strategy of competitive pricing and adapt to multiple channels of sales. They would provide new value propositions to customers and hence demand market share from the target customer base of Next PLC. In order to tackle the threat from the new entrants, Next PLC have to develop their economies of scale so that they can modify the fixed per unit cost.
The majority of the retail organisations of the garment industry procures their raw materials from various and numerous suppliers (Verhoef, Kannan and Inman 2015). Suppliers can effectively reduce the power of the company in the retail market by forcing them to increase pieces to keep their revenue level intact. In turn this would impact the negotiating power over the other suppliers also.
Buyers always shows the tendency to purchase the best products in least prices. Nevertheless, in context of Next PLC, the buyer’s power is not very significant because the customer base is large and variegated. Increasing discount offers always entices the customers and because of this the bar gaining trends of the buyers in the case of the products of Next PLC do not show much turbulence.
The threat of substitutes is not much high in the case of Next PLC as the company operates through multiple sales channels. Besides the company have made their customer offerings much service oriented rather than being product oriented. As an outcome, the threat of substitutes is not a potential challenge for the organisation.
The customer approach design of the various existing operators of the retail clothing market of UK is different. The major competitors of Next Plc. follow a high end pricing strategy and hence the target customer base is different. Whereas this company follows a neutral pricing strategy.
Political Factors
Political tax rate directly influences the company. The corporate tax rate prevents any possibility to reduce prices in future and the income tax rate of UK government limits the purchasing power of the buyers (Lancaster and Massingham 2017). The interest rate in UK is presently 0.5% which is an enticing factor for the organisation which would facilitate the company to perform capital expansion at larger rates and make investments in the foreign product ion units that Next Pc have been planning since 2017.
The economic backdrop since 2007 have been affecting the company’s stability since the negative GDP growth started in 2007. Even after the recovery the economy have been on a flat line with enormous chances of the happening of a double dip recession. This is affecting the company as they are unable to release new stocks readily as the purchasing power of the UK customers is still in uncertainty.
One important factor is that the basic target customer base of the company is aged and the purchasing power is not actually in their hands (Bilgihan, Kandampully and Zhang 2016). However advantages like home delivery and online services are supposed to entice the younger generation also.
The technological advancement have mainly been achieved in terms of the online sales expansions whereby the company have developed the strategy of online listing of their products. Another major technological link up is the alignment to social media marketing tools like Facebook, Twitter, and YouTube and so on. These services require the retail organisation to maintain an IT team for the management of the online sales.
Fragments of both UK law and EU regulations are applicable on the company. In UK, the majority of the production teams of the company are located and as an outcome, the minimum wage regulations have to be followed rigorously by the company.
Inclement weather have imp acted the retail organisations vigorously as they have faced difficulties in making deliveries to customers and the warehouses also (Ennew, Binks and Chiplin 2015). The impact on warehouses have actually prevented the company in fluidly circulating their products to the retail outlets all around UK.
However one weakness of the marketing strategy of the company is the broad customer base. The target market is quite extensive covering a wide age group. The requirements and the demands of such a large customer base keeps on changing with times and the company have to keep informed and updated with these. As Rapp et al. (2015), opines, this can mean that the strategic designs that the company frames can be nullified by the changing customer trends.
The above mentioned weakness can be the root to another issue, which is the lack of a clear image celebrity ambassador. The company lacks specific data about their customer segment and hence unaware of the exact message to send to their clientele through their celebrity ambassador (Themarketingblog.co.uk. 2017).
The advent of online shopping and its growing popularity will create feasible opportunities for the company. However, this would require optimisation and expansion of the service of the organisation to comply with the prospects of digital marketing.
In this context the organisation can make use of the data gathered through the online channels and the social media campaigns. This information can be utilised for the optimisation of store space. The information gathered would help the organisation to decorate their physical stores with the most sought after models of their product line. The less popular products can be shifted to the inventory of the online stores. The online stores incur lower operating costs.
Conclusion
Next PLC occupies a static market position, in a business market that offers steady growth. The company have followed a stringent market policy since the advent and have been reflecting consistency with the consumer base, product line and the price range. The company have always showed positivity towards embracing new sales channels and at present that company have been able to establish themselves as an established brand in the UK market.
However, the company have space for innovation and in spite of the feasible marketing methods that they have implemented, there is acute need for optimisation of the digital sales channels so that they remain consistently in the top chart of the retailing organisations of UK.
References
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