The report aims at providing an overview of marketing in the global context for Marks & Spencer that is seeking expansion into the international markets of Asia for its fashion-clothing brand post the Brexit.
Marks & Spencer represents one of leading retailer of United Kingdom, known for its expensive goods of home décor and dresses (marksandspencer.com 2018). The primary markets of the company are North America and Europe. The company listed in the London Stock Exchange (LSE) with a high international market position having a net worth of close to $6.8 billion. With the motive to expand and diversify, Marks & Spencer, looks forward to leaving the home country and enter into the newer markets. The report thus tries to analyze the chosen destination Asia for the market entry based on the justification and market analysis put forward in the task one. The report presents and justifies set of SMART international objectives for the chosen international market. The report also helps in identification and critical evaluation of the suitable options for the entry modes in the market. The report also tries to portray the best mode of market entry that will help the organization in gaining a competitive advantage. The report also tries to focus on the segmentation with a description of the targeted segments of the customers. The reports help in describing the overall branding of Marks & Spencer in the cross-cultural setting and thereby establish its positing in the newer market. There is also justification of the effective decisions for marketing mix that would help in reaching the target customer segment and help the company in achieving its branding.
The SMART international marketing objectives for expansion in the Asian Market include (Czinkota and Ronkainen 2013):
Growth in the Market Share: The Asian country Myanmar since the year 2008 engaged in the process of democratization and economic liberation that led to the economic growth in the country. In fact, the country represents the economic frontier of Asia with major potential for growth. The annual GDP of the country during the period 2009 – 2013 stood at 6 percent. The expected growth of the GDP for the year 2013 and 2018 stood at 8 percent thereby providing a scope for the growth of market share of Marks& Spencer by 10 percent in a matter of 12 months.
Increase in the Sales: The consumer sentiments remain among most positive in Myanmar. Although according to a MasterCard survey, there is a dip in the shopper’s outlook but the country remain ahead in the South- eastern Asian region. In addition, the country also shows a higher rating on the last confidence index of the consumers. This helps in providing a provision for increasing the sales figure of Marks& Spencer by 10 percent within a period of 12 months.
Enhance Brand Awareness: In recent times, Myanmar has experienced various international brands that has forayed the market with investment in the local processing. Modern retail accounts for close to 10 percent of the market segment. With the increase in the local purchasing power, the consumers have larger exposure to the foreign brands through international travel and internet although the country requires more awareness with an approximate population of 51 million. Therefore, the entry of Marks & Spencer will help in enhancing the brand awareness by 10 percent by the end of this year.
Targeting Newer Customers: Myanmar boosts of the largest population in Southeast Asia that is expected to rise to 56 million by the year 2020. In addition, the increase in the customer sophistication and the growing middle class boosted the sales products like fashion clothing, personal care, beauty and home care products. The scenario helps Marks & Spencer in targeting the sophisticated middle and upper middle class within a period of 12 months.
Enhance Profit: The rising income in Myanmar helps fueled the consumer spending to close to $100 billion per year. Consumers increasingly prefer newer brands thereby making way for Mark& Spencer in earning higher revenue leading to greater profits.
Ensure Cost Control: Marks & Spencer through its entry in the Asian market can control cost by paying less to the to the workers since the government of Myanmar has a minimum daily wage of $2.61 which was lesser than $4.07 worker group rates desired at a specific time.
According to the APM model, the market conditions which Mark & Spencer can choose to enter includes organic, franchise, joint venture and chain acquisition represented by the four quadrant of the model.
Figure 1: APM Model
Source: (Honkova 2017)
Organic Mode: This mode of entry referred to doing business in the foreign markets through the distributors and the agents (Enz, Canina and Palacios-Marques 2013). This represented an elementary level of performing the business activities in foreign countries. For instance, if a software manufacturer of United States exports its products to the UAE via the distributors and the agents then the arrangement is known as an organic mode of entry.
Franchise Mode: This mode of entry works is applicable for the firms having repeatable business models that make it easier for transferring them into the other markets (Baena 2013). There are two criteria for using the model. The first criteria include uniqueness of the business model along with strong recognition brand recognition. The second criteria involve the scope for creation of future competition in the franchise.
Joint Venture Mode: There are five objectives followed for undertaking a joint venture includes, reward / risk sharing, market entry, joint product development, conforming to the regulations of the government and sharing of technology (Chang, Chung and Moon 2013). The benefits include access to the distribution channels and political connections depending on the relationship. However, such alliances become favourable when:
Chain Acquisition: Acquisition refers to the transaction where a firm is able to gain control over another firm through the purchase of its stocks, exchange its own stocks or paying the owners a purchase price in case of private firms (Hennart and Slangen 2015). This particular mode is appealing since it helps the company in getting a quick and established access to the newer market. However, while pursuing a strategy for acquisition Marks & Spencer should examine laws of target country.
Marks & Spencer have chosen the Asian country market of Myanmar. The country is however more conducive to the franchise and organic modes (Elsner 2013). The best entry mode for Marks & Spencer would be the franchise mode for market entry in Asia since the markets of home country is different from that of the target country.
However, this mode of entry helps Mark & Spencer in gaining a competitive advantage. The justification is as follows (Baena 2013):
Ensures Lesser Requirement of the Capital: The franchise mode of entry aids the company in growing with the initial capital investment and further re couples the investment necessary through the sale of the available franchises
Allows Rapid Expansion: This mode of entry allows simultaneous opening of multiple units thereby allowing a gain of foothold over the competitors.
Business Owner in Charge: This mode of entry ensures additional responsibilities to manager thereby demanding great deal of their effort, time and sacrifice. A franchise receives its motivation from business ownership and capital invested.
Better Operation of the Franchise Location: Franchises run with the help of a highly motivated owner instead of the employees. Since the capital of the owner remains at risks so, they are motivated in performing at highest level.
Greater Power of Buying: Franchisors purchasing services and products from franchise network often negotiates on the volume discounts from the suppliers and vendors. Thus, sharing of a portion of savings with the franchisees helps in higher margin of operation and gaining competitive advantage over other business.
Enhanced Recognition and Name: The presence of the additional locations will enhance the name and recognition of the company. Franchising also allows an individual in benefiting from collective growth and power of franchise network. This leads to higher recognition of the name and gain in competitive advantage
Overall Strategy for Gaining Competitive Advantage
The overall strategy with which Mark & Spencer can gain a competitive advantage in the Asian market is through Porter’s generic. This is because it ensures (Tanwar 2013).
There are four different kinds of market segmentation are as follows:
Demographic Segmentation: This is one of the widest as well the simplest type of market segmentation. Maximum companies use it in getting the right kind of population for using the products (Hamka et al. 2014). The demographic segmentation is based on the variables such as gender, age, family size, occupation, income, race, nationality and the religion. However, this type of segmentation is most applicable to the automobile market since it has comes in varied price brackets.
Advantages: This type of segmentation is simple to use and apply since the statistical data of the government is easily available for most countries. This implies cheap and quick availability of suitable data. Segmenting through the demographics makes it easier for the most people to understand. This ranges from the management to the sales to staffs involved in customer service.
Disadvantages: The approach is based on the assumption that consumers within similar demographic group will possess similar needs. This is unlikely in case of the thirty year old who might not have same needs. Hence, the key limitation of the segmentation approach lies in the very little understanding of consumers.
Behavioural Segmentation: This kind of segmentation of the market ensures dividing the population based on behavior, pattern of decision-making and usage. For instance, sport enthusiasts might not prefer the products preferred by the young people (Hjort et al. 2013). Here, the product is marketed depending on the behavior of the individual. Behavioral segmentation is quite common in the markets for smart phones. Marketing during the festivals is another example of the behavioral segmentation.
Advantages: This segmentation style finds application in the mature markets where a firm looks forward to understand the means of activating a non user, target switchers and at the same time undertake the conversion of medium user into a heavy user.
Disadvantages: The approach does not consider why the customers buy the product, their lifestyle and need. Hence, the level of market understanding might not be very high. The approach also relies heavily on obtaining the market intelligence in detail and the use of databases and marketing models for experimentation and market testing.
Psychographic Segmentation: This type of segmentation depends on the lifestyle, activities, interest and opinions of the people for defining the market segment (Park and Jang 2014). The Psychographic segmentation holds similarity with the behavioral segmentation. However, psychographic segmentation primarily takes psychological aspects of in determining the buying behavior of the consumers. Psychographic segmentation finds application in the recent times. Most fashionable clothing brands operates based on psychographic segmentation
Advantages: This particular type of market segmentation provides a better insight to the consumers as person that leads to identification of the underlying motives and needs. Hence, the psychographic segmentation helps in delivering a better understanding of the consumers that helps in the creation of responsive as well as valid segments and their consequent marketing programs.
Disadvantages: This approach forces the organization in having a detailed research/ data/ on its consumer. Therefore, it is more appropriate for the larger organizations and remains beyond the scope of smaller business. The approach also involves concern regarding the interpretation and the data and leads to the creation of the segments that cannot be experienced in actual life
Geographic Segmentation: This kind of segmentation of the market ensures division of people based on geography. Most importantly potential customers have varied needs based on the geography of their location (Phillips 2016). Needs of the consumers also varies across geography. For instance, the company that is marketing heater in colder countries might target air conditioners in the hot countries.
Advantages: This represents a priceless approach for larger company that has operations across various countries since it will allow in consideration of the cultural differences. It is an effective approach for the smaller firms that have limitation of resources and needs to operate within the defined geographic area for ensuring the efficiency of the purposes. The approach also works effectively for countries and cities with major difference in the socio economic status of the various geographic areas and changes in the lifestyle.
Disadvantages: The base of this segmentation is limited since it assumes that all the consumers in geographic area have similarity in the needs. Therefore, geographic segmentation is used in conjunction with other segmentation bases.
Target Customer Segment represents a customer group within the serviceable market towards which the business has aimed its marketing efforts (Thorson and Moore 2013). Target market comprises of the consumers who portrays similarity in characteristics such as location, age, income and location and expresses interest in buying the product or service offered by the business. However, the primary target market refers to those segments of the market towards which the initial efforts for marketing get directed.
Segmentation Basis and Targeting Options
Marks & Spencer targets a customer segment that is measurable, substantial, accessible, differentiable, and actionable. Therefore, its target customer segment is the rich people of Myanmar who have affordability for the designer clothes. Myanmar has a GDP of $ 67.43 billion USD that implies that the people have an increasing income. This in turn also leads to the expansion of the clothing market (Laffy and Walters 2016).
The cross-cultural setting is explained with the help of cultural dimension theory of Hofstede that represents a framework for the cross-cultural communication (de Mooij 2013). It puts forward the impacts of culture of the society on the value of the members and how the values remain relate to the behavior thereby making use of a structure derived through the factor analysis. Four dimensions helps in analysis of the cultural values. These dimension includes, power distance, collectivism-individualism, uncertainty avoidance and femininity-masculinity. Hofstede work helped in establishing a primary tradition of research in the psychology of the cross culture which has also been taken up by various consultants and researchers in various related to the international communication and business. The theory has found usage in the several fields as a research paradigm particularly in the international management, cross-cultural psychology and communication. It happens to be a major source in the cross-cultural fields.
According to Hofstede Model of Cross Cultural Dimension mentioned in table below, it is found that there are similarities between home culture of the Marks & Spencer and the culture of the chosen country of Asia that is Myanmar (García, Rodríguez and Frías 2013). Both United Kingdom and Myanmar have equality of the power distribution at the workplaces. Moreover, the employees of Myanmar prefer working in collaboration with one another that also holds similarity with the work culture of the United Kingdom. Moreover, the managers of the Myanmar provide equivalent power to both the female and the male employees. Therefore, in Myanmar there will be greater work flexibility for the employees of the Marks & Spencer. In addition, the managers of Myanmar remain adaptive to the innovative ideas. Therefore, the Asian country Myanmar will be quite suitable in doing business internationally.
Figure 2: Hofstede Model of Cultural Dimension
Source: (de Mooij 2013)
However, the Asian country Myanmar represents an interesting place for branding of the products since the loyalties of the customers remains fixed on a lesser note compared to the other countries of the world (Hannington 2016). However, effective branding is achieved through Kapferer’s Brand Identity Prism. The model helps in identifying the effective tools for building the identity of the brand. A firm targeting at the development of its brand identity should initially identify the experience of the customers with the brand and the thought that the customer possess about the brand (Urde 2013). Thus, Marks & Spencer can achieve brand identity through consideration of the six sections of the prism. These include:
Personality: The term refers to character developed by the brand. Marks & Spencer can make contact with the Asian consumers by making them realize that they through the adoption of the brand they can actually represent a certain character.
Physique: This criterion represents the identity of the brand in terms of its physical characteristics. The global firm can achieve this in the Asian market through the creation of ideas, emotions and specific images amongst its consumers.
Culture: The culture of a brand helps in determining a link between the organizations. This is also holds true for Marks& Spencer whose products highlight the values of the home country.
Relationship: This helps in signifying the relationship existing between customers’ and the concerned brand. Thus, the company before promoting its brand should understand that the brand also helps in symbolizing certain specific relationship between two different individuals.
Reflection: The aspect helps in signifying the reference directly to a stereotypical consumer of that particular brand. Mark & Spencer should initiate such aspect of its brand in the new market
Self-image: It refers to the mirror held by targeted group. The consumers of the Marks& Spencer can easily think them to be rich since they are being able to afford such expensive clothes
Figure 3: Market Screening or Ranking Model
Source: (Abeliuk et al. 2016)
The above table puts forward the factors of market attractiveness of the Asian country Myanmar. The table puts forward weight value of a country with respect to the attractiveness factor. The totality of the market value will help in demonstrating overall effectiveness of international markets. Thus, the Market Screening table puts forward a larger market size of Myanmar. This implies that Marks & Spencer will have enhanced number of customers for selling the products. Further, the economic growth in Myanmar leads to a situation where the customers have higher disposable incomes. The customers in Myanmar are not only modern but also sophisticated which ensures better positioning of the products for the Mark & Spencer thereby ensuring a better expansion in the international market.
The competitors of Mark& Spencer in the Asian market would be City Mart Holdings and Sein Gay Har.
Figure 4: Positioning Map
Source: (Abeliuk et al. 2016)
The marketing mix decisions for reaching the target customers and the required branding of the products in the Asian country Myanmar is explained based on the Fine Screening or 12 C Model represented below:
Figure 5: Fine Screening or 12C Model
Source: (Gillespie and Riddle 2015)
For expansion in the Asian country of Myanmar, Marks and Spencer will choose to an anatomy of providing high quality products that will help the company in gaining a competitive advantage in the Myanmar market (Huang and Sarigolu 2014). They will specifically target the rich and the upper middle class. Marks & Spencer will resort to newer types of packaging that are easily recyclable and ensure safety. As the company also targets the middle income group so it must try to adapt its quality and pricing strategy accordingly.
Price:
As the people of Myanmar has a higher disposable income so it must set a price that seems reasonable but definitely less than competitors do. The presence of competitors puts forward a challenging situation for Mark & Spencer in determining price. The price should be set in a manner that it maximizes the profitability of the company. Mark & Spencer can adopt a strategy of penetration pricing by initially setting a lower price for rapidly reaching wide fraction of the market.
Place:
The economic development of Myanmar stands at a higher level thereby ensures higher return on the investment for Marks & Spencer. In addition, people of the Myanmar have higher inclination towards the sophisticated and modern life style (Khan 2014). There the organization will experience a higher potential in accessing a larger customer pool. The modes of transportation in the country can be via roads, air and sea. The entry to the market of Myanmar appears easier from the competition perspective due to non-existence of assimilation category. The distribution routes include a complex traditional distribution system followed by the delay in systemization and business customs.
Promotion:
Marks & Spencer adopts a pull strategy in entering the Asian market. This is because a pull strategy helps in motivating the customers in actively seeking out to a specific product and acts best for the newer products that are a strong and visible brand like Marks & Spencers.Myanmar is highly developed in terms of the digital media. Therefore, Marks & Spencer will have wider opportunities in communicating and promoting the organizational value to its customers. Moreover, ample supply of the consumers and the suppliers can aid the organization in building a retail network (Mintz and Currim 2013). The economic growth of the Myanmar has led to the increase in the sales volume of the consumers. However, the challenge lies in the increasing corruption in the country that is hindering the organizational success.
Extended Services Mix:
The extended service mix comes in the form of people, physical evidence and the process. People represent those who remain integral to a service that in this case represents the employees (Mucai Mbaeh and Noor 2013). Companies spend enough time in the training and selection and of the staffs and the people who represents the company to the customers. Myanmar not only puts forward trained people but has an adaptive work culture that will provide an edge to the company. Physical evidence refers to the environment/place in Myanmar that provides service along with any tangible elements that helps in facilitating the communication or performance of the service. The tangible part remains is complementary. The process represents the route of the actual product from the provider to the user. As there are diverse service the processes engaged in carrying out such activities are also varied. The process might be involved in execution and planning but always involved in carrying out services. The extended services mix put forward by Myanmar remains beneficial for the company. However, the company might sometimes face challenge in terms of shortage of intangible elements.
The recommendations include:
Conclusion:
The report ends by providing an insight into the present market situation of Myanmar where Mark & Spencer plans to undergo expansion post the Brexit. The UK based retailer can thus enter Myanmar through proper planning, implementation, control and action. Planning refers to the important technique for project and time management. Proper planning will help the company in reducing the necessary effort and time in the achievement of the goal. Implementation on the other hand refers to the process of turning the plans and the strategies for accomplishment of the goals and the strategic objectives that provides the base for the future course of the action. To attain success in marketing in the global context, the firm must also ensure controlling managerial functions of staffing, planning, implementing, directing and organizing. This also helps in checking the errors and up taking the corrective course of action for achieving the goals.
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