International Marketing and Relations

An analysis of macro and micro factors impacting on the retail market and the market recommendations

Macro environment factors affecting clothing industry are those which lie outside small companies and their competitors (Aziz and Fady, 2013). Macro environment includes these factors that especially impacts business conditions at retail market:

Social factors: Changes in social values and trends impacts the services that retailers sell to the consumers. The retail industry seems to face pressure to include all such practices that are socially integrated such as selling environmentally-friendly products, placing warnings or restrictions on potentially harmful goods, and etc (Rugman, 2002). It has been observed that retailers who fail to conform new social norms in the business practices experiences probabilities of losing business; thus they have to make societal changes in products and services (Longenecker, Moore and Petty, 2003).

Technological factors: Technology not only creates new products for retail companies but also it aids in creating new standardized services. Retail market has made many new changes in service provision where in online selling of services is the major example (Amabile and et.al., 2006). The introduction of Barcoding and computerized billing systems have improved the retail industry because it allows the retailers to emphasize on new processes which can augment business efficiency. Technology is somewhere assisting Next; however somewhere it impedes the activities and business processes especially when the employees are unable to manage their work according to technological facets (Menipaz and Menipaz, 2011).

Legal and Political factors: It is an apparent fact that laws, regulations and other government policies can have a number of positive or negative effects on the retail industry.Government policies seems to hinder businesses by imposing regulations which as a consequence augments costs and leads the industry to emphasize on new systems. The retail industry also relies heavily on government-support; thus proper consideration should be there on legal framework.

Economic factors: The subsequent industry (retail) is entirely driven by the economic environment. Consumer's income power has been increasing thus it increases the ratio of sales and it allows the retailers to sell more valuable goods. This in turn also enhances balance between supply and demand (Nagel, 2012). On the other hand, a sluggish economy decreases consumer confidence and can affect people to spend less on retail products and this further leads to sales declination and as a result, companies have to lower down the prices of products.

Several micro factors are also there in the list that affects retail industry and the major are mentioned in the below section:

Employees: Retail industry is accountable to recruit qualified and skilled people so that ratio of sales can be augmented. Employees must have the potential to use technical equipment so that all the systems can be properly used (Amabile and et.al., 2006).

Distribution channels and suppliers: Retail industry has to emphasize on number of channels and distributors so that final products can be delivered to the clients. Thus, a particular chain needs to be followed; however while doing the same, sometimes issues arises because of many channels.

Competitors: Retail industry is highly influenced by competitor's policies and strategies and this also generates the ratio of substitutes (Ayyagari and et.al., 2008). There are varied players in retail industry who deliver same products and services; hence this augments competition in the same scenario.

An evaluation of market potential (shortlist of markets with potential)

Currently, Next has been managing business in UK and the business could expand the operations in American market because people in America prefer to have retail products on higher quantity. At present, Next plc has around 700 stores out of which 500 are in Ireland and UK and remaining are spread in different continents of Europe. Next is the largest clothing retailer by sales in UK and this is the reason, it is listed in London Stock Exchange. In terms of expansion, Next can establish the business in America because USA has well- established distribution channels for all types of retail companies (The Retail Services Industry in the United States, 2015). The retail service industry would provide an openly competitive environment that fosters the value of business operations and it also spurs innovation that further increases efficacy and reliability of the products. From many research studies, it has been explored that total sales in retail market (USA) is more than $2.5 trillion; thus retailers are considered as the largest contributor in generating employment opportunities (Rugman, 2002). Numerous opportunities for growth exist in the US market because of direct and indirect sellers.

Further, Next can expand in Indian retail market as the Indian retail market lies under the top five retail markets in the world by economic value. Indian market can increase the opportunities of growth and prosperity because the market is getting developed in all the areas (Ayyagari and et.al., 2008). There are varied shopping malls and centers in India; thus Next can select the country respectively. Further, Indian market also allows foreign direct investment in cash which encourages service sector. The government would grant permission for easy entry; therefore legal and political issues will be minimized. Next can also enter into Brazilian market because there are a few entities only who work in retail sector. Brazil has emerged as one of the leading markets in the world and there is huge growth of sales in the retail sector (Aziz and Fady, 2013). The market is also expected to grow continuously over next few years because of constant declining inflation rate. This allows continuous expansion of credit conditions and along with this, demand for durable goods can also be boosted. Brazil market has the potential to maximize the market share of Next plc because there is a shift towards non food products which has maximized the ratio of sales with 24%. Super markets have largely inclined towards non-food products.

Recommend two markets which can be selected and provide justification as well

Next desires to diversify the business; thus appropriate market needs to be selected so that business can get advantages from expansion processes. On the basis of above discussion, Next plc can select Brazilian market because the retail sector in the same country is as innovative as compared to any retail sector in the developed world (Retail Market Industry Brazil, 2013). The retail market is increasingly growing internationally because associated global chains have been creating more opportunities in the country which emerges from economic challenges in the long run. Further, the market could be selected because the retail supply chain in Brazil combines a mix of creative supply chain retail and financiers who operate retail chain directly (Longenecker, Moore and Petty, 2003).

Another market which have been selected by proper screening and above discussion is Indian market. Because this market has great opportunity for retail sector as this market lies under top 5 retail markets so it is hence proved that Next can earn maximum profit out of this market. There is an opportunity to bring innovative and new product line which matches with the Indian culture and lifestyles of people. This will create a positive impact in the minds of people which will be beneficial for the company for increasing sales and turnover. Furthermore, there is a huge distribution channel in this market so company can sell its products by using numerous channels and also through web portal (Wolfe, 2013). The economic condition of Indian market is quite good as well, which can also be considered in order to justify the selection of this market.

Two markets which have been selected after proper screening are Brazilian market and Indian market where Next can establish its business.

Recommendation and justification of market entry strategy

Market entry strategy can be defined as a method which is properly planned in order to deliver the goods and services into new target market. In order to expand the business, organization mainly do the planning to make the strategies for new market entry. Next can also adopt any of the market strategy or combination of two or more strategies to enter into new market by the year of 2016-2017 (Virvilaite, Seinauskiene and Sestokiene, 2011). Next wanted to expand its business through online portals but along with that company has to establish physical stores so that sales can be increased. For entering new market promotion has to be done through physical presence also. Next should adopt some of the strategies which are recommended as follows:

1.Franchising: Company can start the franchisee system so that in other countries it can franchise its brands. This will help in increasing the sales because the franchisee will promote it in the new market (Charles, 2007). This is a very beneficial strategy because it is not possible for the company to open its outlet in each and every country and its management will also become very difficult. For this purpose, it should start franchising its brand so as to increase its turnover.

2.Joint Venture: Next have an opportunity to get joint with other venture in other market such as it can joined hands with footwear famous footwear company so that it becomes more popular and hence, turnover will get increase. It will help the organization to enter a new market in an easier manner and through this objectives of a company will get fulfilled (Doole and Lowe, 2012).

3.Business Alliance: In this Next can sign agreements with other business which is a reputed organization of that market. This can be done so that Next can achieve good returns and turnover will get increases eventually. For example, if Next do the alliance with any e-commerce websites than it can promote its goods through online.

Recommended adaptations for Next’s marketing mix

The potential market which has been selected are Brazil and India. In both the countries, marketing mix can be designed in a different manner while keeping in mind the cultural differences and consumer's behaviour (Bradley, 2005). The adaptation of marketing mix are as follows:

In Brazilian Market

The culture of Brazil is primarily western but there are many people who got settled in Brazil during colonial period made the the country multicultural and multiethnic society. Thus, it can be said that human values and behaviour got formed along with the culture o their society. So Next should make its marketing strategy as described below:

Product: Clothing products should be made as per their lifestyle. The products cannot be much varied as they basically have western culture. But it should be taken care that their values does not get undermine. Next can introduce such dresses which gives the look of beach dresses as they mostly wear such type of dresses (Jones, 2010).

Price: The value of currency of Brazil is lower than UK thus, pricing should be kept at minimal and it has already been discussed that Brazil has huge potential for retail sector than company can put penetration pricing so that more sales can be done.

Place: Company can do the distribution by involving middleman or it can operate its own outlet. As per the market entry strategies which have been suggested above, firm can deliver and distribute its products in form of physical store or through online (Ryans, Griffith and White, 2003).

Promotion: Integrated promotion technique can be adopted by Next. The enterprise can do advertising through TV, newspaper, hoarding on streets so as to attract the customers. Also sales promotion techniques can be adopted. Along with that company can do personal selling also which will help in growing the business.

In Indian Market

This country has totally different culture because there are people with different religion and beliefs exist. For that purpose, Next has to design such marketing mix which can be adopted in Indian markets so that maximum sales can be done (Vrontis and Thrassou, 2007). The proposed marketing mix are as follows:

1. Product: Next can introduce Indian clothes in this market so that sales can be boosted such as Sari, Suits, etc. Along with that western dress should also be offered. Company can also bring organic clothing with the aim of protecting environment. Through this sales can be boosted because this will have a greater impact on the minds of Indian consumers.

2.Price: There is an intense competition in the retail sector in Indian markets so to cope up with the existing competition, company can apply the pricing strategy of penetration pricing. This will help in boosting up the sales and company can achieve its goal of increasing turnover (Wolfe, 2013).

3.Place: There is a wide distribution network in India so the company can adopt the any channel that is one level, two level or three level so that products can be delivered in this country. Company can tie-up with the e-commerce websites so that it can make available the good though online portal.

4.Promotion: Heavy promotion should be done in India by integrating above-the-line techniques and below-the-line techniques. It can compete in Indian markets only by doing heavy promotions. But there should not be any activity in the promotion which can affect the human values of India. Like, in advertising sex appeal should not be done by wearing sari because it is considered to be a traditional dress of India (Virvilaite, Seinauskiene and Sestokiene, 2011).

These marketing mix strategy should has been recommended and Next can adopt these strategies in both new market so as to increase its sales by £150m.

Conclusion

After preparing the report of international marketing it has been concluded that Next has planned to increase its turnover and for that purpose it should emerge into new markets so that more revenue can be generated. The two markets which have been recommended are Brazil and India, where company has an opportunity to expand its market share. To enter into the market, complete environmental analysis has been done so that better opportunities can be assessed and also any barrier can be analyzed so that sooth functioning can be done. The global factors has assessed which could have a greater impact on the company's marketing strategy. Furthermore, it has also been concluded that Indian and Brazil market has more potential than USA market and Next could come up with new range of products. Three market strategy has been recommended so that company can adopt those and enter into the new market. For increasing sales in new market, firm can adopt the different marketing strategy so that cultural cannot be undermined and human behaviour can be included in that.

REFERENCES

• Amabile, T. and et.al., 2006. Assessing the work environment for creativity. Academy of Management. 39(3).pp. 1154-1184.
• Ayyagari, M. and et.al., 2008. How Important Are Financing Constraints? The Role of Finance in the Business Environment. The World Bank Economic Review. 22(3). pp.483-516.
• Aziz, E. A. R. and Fady, R., 2013. Business improvement using organisational goals, Riva technique and e-business development stages: A case study approach. Journal of Enterprise Information Management. 26(5). pp.577-595.
• Bradley, F., 2005. International Marketing Strategy. Financial Times/Prentice Hall.
• Charles, W. L., 2007.International business: competing in the global marketplace.New York: McGraw-Hill.
• Doole, I. and Lowe, R., 2012. International Marketing Strategy: Analysis, Development and Implementation. 6th ed. Cengage Learning.
• Jones, A., 2010. Globalization: Key Thinkers. Polity.
• Longenecker, J. M., Moore, C. W. and Petty, J. W., 2003. Small Business Management. Thompson South- Western.

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