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Marketing strategies at primark plc
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1.0 Introduction
The research report under consideration is
aimed to explore the significant role played by
Marketing Strategies in today's modern and
dynamic business environment. Marketing has gained substantial importance and has become first priority
of decision makers in any organisation.
This document presents a research report analyzing and forecasting marketing environment faced by leading
retailer Primark with special focus on competitive analysis.
Primark Stores Ltd, an Irish upstart and subsidiary of Associated British Foods, is second largest clothing retailer
in terms of sales and revenue with its existence mainly in Ireland, UK, Spain and expanding further in the Europe.
It is believed that soon it will become leading clothing retailer.
This extensive research is aimed at exploring current marketing strategies adopted and evaluating their
effectiveness. The critical review of current segmentation, targeting, positioning and branding strategies of
Primark and an extensive market analysis is carried out to suggest future marketing strategies and growth areas
and to improve and sustain quality of services provided. The expected outcomes of document are
recommendations to use marketing strategies tactically in decision making to enjoy sustainable growth.
1.1 Reason for choosing the topic
I have selected this topic realizing the fact that in today's intensively competitive business environment, financial
successof any company depends on combined efforts of its financial strategy and marketing strategy. In fact, only
those companies thrive in business who works closely with their customers; and, marketing has become a
successful tool to create a relation with customers indirectly. From small to large, every organisation is realizing
that effective marketing strategies can add value and exert tremendous influence over their ability to attract
customers, leaving positive impact on company's performance and profitability.
Marketing is defined as management process that identifies, anticipates and satisfies customer requirements
profitably. It involves integrated analysis, planning and control of marking mix variables (Product, Price,
Promotion and Distribution) to satisfy both individuals' and organizations' objectives (Lancaster and Massingham,
1999). Marketing Environment consists of actors; and forces outside that affect marketing management's ability to
develop and maintain successful relationships with its target customers (For further information on Marketing
Environment, see Appendix I).
1.2 Reason for choosing Retail Industry and Primark
Reason for choosing retail industry for research project is because it is a high profile and constantly changing
business at the sharp end, but now-a-days, retail industry in UKis under high pressure as key factors like troubled
mortgage and housing market, rising fuel prices and utility bills, high interest rates in UK are challenging retail
environment as compared to years of strong growth between 2002 and 2004. Formally retail is defined as sale of
commodities to household or ultimate consumers (Barry and Evans; 1986).Retail industry can be categorised in
various sectors as food retailers, health and beauty retailers, clothing and footwear retailers, home furniture and
household goods retailers etc. But now discount, budget or value retailing in UK has taken on a higher profile over
recent years despite effects of recession. Especially interests have largely centered on growth of value or
discount clothing retail industry.
The organisation under focus in this report is Primark known for selling clothes at budget end of market and it is
second largest clothing retailer in UK in terms of sales and revenue. Reason for choosing Primark is its
wonderfully sustained growth in the worst recession times of history. Retail clothing industry is a fast moving and
complex, high profile and constantly changing business environment which demands that marketing process of a
large retail organisation like Primark should be managed strategically. Report is aimed at evaluating marketing
strategy of Primark and to determine its effectiveness.
2.0 Primark: A Brief Overview Of The Business
Primark is a brilliant and unique organisation with a mission
statement to enrich the life of everyone with fashionable clothing
regardless of social status. It emerged as major force in the British
retail industry, contributing through its low price value and great
quality fashion products for everyone in society as a whole and
leaves remarkable impact on social, environmental and ethical
behavior of people. Primark does not rip off its customers and
presents excellent example of it motto which states look good, pay less Primark, (2010).
Most of their clothes are bought from same factories as other fashion retailers and people producing them are
paid exactly the same whatever label and whatever price in shop. Company's success is based on sourcing
supply cheaply, they buy directly from factories without involving any agents, making clothes with simple designs
and fabrics, only making them in the most popular sizes, buying stock in huge bulks and varieties and targeting
young, fashion-conscious buyers under 35's, offering them high quality, fashion basics at value for money prices.
They are able to offer such good value and good quality because of low mark-ups and big volumes. Their
overhead costs are extremely low as they do not run expensive advertising campaigns; instead they have
wonderful strategic marketing approach that stands them out.
3.0 Marketing Strategy Of Primark
Retail clothing industry is a fast moving and high profile business environment which demands that marketing
process of a retail organisation should be managed strategically. Strategy of an organisation is roadmap towards
attainment of its long term goals and objectives. Strategic marketing management involves implementing
principles of strategic management in the context of marketing function in organisation. At corporate level,
marketing inputs (e.g., competitive analysis, market dynamics, and environmental shifts) are essential for
formulating a corporate strategic plan. Primark has well organized strategic Target marketing and Product
marketing approaches in place.
3.1 Target Marketing Approach
Strategic marketing is about achieving maximum possible differentiation over competition in meeting customer
needs, gaining and sustaining competitive advantage and capitalizing on corporate strength and capabilities. In
today's dynamic environment, it is highly important for companies to relate characteristics and attributes of their
products to customer requirements more closely. Firms are more concerned with the most commercially attractive
segments of market for a given product. This not only increases opportunity but also reduces overall costs
incurred by company. This process is called target marketing and it must be carried out systematically to be
effective and for this purpose it can be divided into three stages as in Figure;
3.1.1 Segmentation
At first stage of segmentation, overall market is divided into distinct groups of buyers who are likely to respond
favourably to different products, services or marketing mix. Company needs to determine most appropriate basis
for segmentation, identify characteristics for each segment and develop criteria to evaluate their commercial
attractiveness and viability. Market segmentation allows managers to see clearly the diversity within their markets
and uncover opportunities that may exist or segments whose needs have not been properly met by other
offerings. Figure, depicts segmentation criteria for consumer market, determines base of segmentation and
explains variables for each base
Some of these segments are easy to determine relatively with low
costs but they are least trusted in terms of determining consumer
choice. Figure below shows predictability of customer choice
behaviour relative to segmentation bases.
Table determines segmentation variables for Primark.
As Primark is tagged a value clothing retailer, clothing is most
important and leading item in its product portfolio follower by
footwear. Its marketing segments are evaluated on basis of clothing
and footwear. Although all above determined segmentations bases and variables are important but demographic
factors are the most straight forward base for segmenting Primark's consumer market, as they are most
meaningful.
Main demographic variables for Primark consumer market are identified as in charts below. All demographic
factors are identified according to their percentage relative attractiveness for targeting them depending upon their
market share for Primark. Hhighlighted segments in diagrams are identified as most meaningful for Primark and
they must be targeted to gain marketing objectives.
3.1.2 Targeting
Next stage of market targeting focuses on evaluating and selecting one or more previously identified market
segments at which to direct marketing resources, developing an appropriate marketing mix for them and develop
segment coverage strategy. This selected segment is made focus of comprehensive marketing plan. Kottler
(1984) suggested that in order for market segmentation to be effective each of the segments must be distinct,
assessable, measurable, and profitable. Once determined which segment attractiveness factors are important,
evaluate each of those factor against selected segments using segment attractiveness evaluation matrix below;
There are four different targeting approaches can be considered to develop marketing mix to meet marketing
objectives. Undifferentiated marketing is used for one marketing mix, targeted towards whole market and
marketing mix (Price, Place, Product, Promotion, Distribution), and targets towards everybody. Differentiated
marketing is used for multiple marketing mixes and involves multiple products, targeted towards multiple
segments. Focused marketing is for one marketing mix and multiple segments with focus on one segment in
particular, who will have control over other segments. Customised marketing is used for one marketing mix per
customer as in figure below;
For Primark, targeting strategy that I have decided to use is differentiated marketing strategy because we have
multiple products and consumers can be segmented into multiple segments, hence best approach to be followed
is differentiated marketing approach. Different segments identified are based on age, sex, life style, income level
and social status and we have multiple products portfolio that can be targeted towards these various segments.
3.1.3 Positioning
In third phase of product positioning all marketing mix elements are designed to fit a given place within a
particular segment. This is how consumer perceives products relative position to competitor's product which is
highly important. It is like developing a marketing strategy aimed at creating and maintaining a desired concept
and image for a product or service in consumer's mind (See Appendix V for further information). Key to success is
identification of attributes that are considered to be more important. Through market research we can identify what
factors (attributes) are key drivers of a consumer's preference for a brand. For instance, it was identified from a
sample of female teenagers that were surveyed, that being trendy and stylish, having a good range of clothing,
and good brand reputation, were most important factors for this target market when selecting a preferred brand
Young Dimension of fashion retailer Primark.
Brand positioning provides insight into brand performance and gives
important inputs for marketing communications used to support a
brand. Through communications, especially advertising, information
can be conveyed about each attribute and in doing so adjust
perceptions customers have of brand. As Primark need to reposition
the perception market has of its brands from range and quality of
clothing to be more trendy and stylish. Primark has emphasized
more on in-store service and convenience; and as Budget Fashion
retailer, they might want to maintain their current positioning of low
price, affordable, but also good value for money.
3.2 Product Marketing Approach
A company's performance is closely linked to its marketing strategies. Each company's strategy must be unique
since each company is different with respect to customer, brands and competitors. I used Ansoff Matrix to
determine product marketing strategies for Primark to set the directions for its business. With this matrix; I plot
current and potential products along one axis and current and potential new markets along other axis. Thus it
demonstrates low and high risk options and helps to think about business growth with new or existing products in
new or existing markets. Each cell of matrix suggests a particular strategic approach. Output from Ansoff matrix is
a series of suggested growth strategies.
Market penetration is a growth strategy where business runs as usual and focuses on selling existing products
into existing markets with good information on competitors and on customer needs. Primark can maintain or
increase market share of its current products by a combination of competitive pricing strategies, advertising, sales
promotion. Primark has extensive portfolio and it cans secure dominance of growth markets and drive out
competitors by more aggressive promotional campaign. For example Primark brand Active, supported by a
pricing strategy designed to make market unattractive for competitors. Primark must uses internal promotion
strategy by introducing loyalty schemes and increases its usage by existing customer. One of penetration strategy
adopted by Primark is expansion of shop floors and opening new stores.
Market development is a growth strategy where business seeks to sell its existing products into new markets.
There are many possible ways of approaching this strategy, including moving to new geographical markets; for
example exporting product to a new country, new product dimensions, new distribution channels, or different
pricing policies to attract different customers or create new market segments. I suggest Primark to move online by
launching high tech website for online sales.
Product development is growth strategy where business aims to introduce new products into existing markets. It
requires development of new competencies and to develop modified products which can appeal to existing
markets. Diversification is a growth strategy where a business launches new products in new markets. This is an
inherently more risk strategy because business is moving into markets in which it has little or no experience. For
a business to adopt a diversification strategy, it must have a clear idea about what it expects to gain from strategy
and an honest assessment of potential risks. Analysing Primark's position and its strategies over past decade, we
can better construct a growth strategy for Primark using Ansoff matrix model below in Figure;
4.2.1 Product Portfolio Analysis
I conducted product portfolio analysis for Primark using BCG Matrix
as in figure below;
Marketing mix refers to set of marketing ingredients and tools a
company can use to pursue its marketing objectives in target
market. According to Lancaster and Massingham; (1999), it is at
marketer's decision to choose from an extensive set of marketing
components to find right combination while marketing a product. 4Ps form basis of marketing mix. Kotler (1996)
describes, Marketing Mix is a social and managerial process by which individuals and groups achieve what they
need and want through creating and exchanging products and value with others.
Marketing Mix is viewed as combination of elements that contribute to success of an organisation. If market
research is carried out effectively, a company can plan a promotion for right product, at right price, and to get it to
their chosen market, in right place.Getting this mix right is critical in order to successfully market a product. 4Ps
are Product, Price, Promotion, Place as shown in figure below;
Primark needs to combine various elements of marketing mix in order to achieve both a competitive advantage in
market place and company objectives. Although company has control over these elements of marketing mix, but
must cater elements in company's environment over which it has little or no control (figure above). For
organisations like Primark although marketing mix must be is consumer-orientated catering not only profitability
but also considering customer needs as in figure,
Table below shows some of marketing mix decisions for Primark including aspects from each of marketing mix
elements.
4.3 Brand Strategy
A successful marketing mix contributes to good marketing of a product; hence there must be a brand strategy in
place. American Marketing Association (AMA) defines a brand as a "name, term, sign, symbol or design, or a
combination of them intended to identify goods and services of one seller or group of sellers and to differentiate
them from those of other sellers. (See Appendix VI for characteristics of a brand). A strong brand strategy can
increase awareness of a company and its offerings in such a way that establishes strong feelings and reactions
and a favorable view towards company as a whole. To begin development of brands strategy for Primark, there
must be clear identification of Primary Target Customer and/or Client, Competition Product and Service Mix,
Unique Selling Proposition
First step in developing brand strategy is defining brands. By defining brand, it's easy to create foundation for all
other components to build on. Brand definition serves as measuring stick in evaluating marketing strategies.
Primark has an extensive brand portfolio;
Brand portfolio usually refers to company's set of brands and/or products. The logic behind having a portfolio of
brands rather than a single brand is possible diversification and risk minimization. Hence brand portfolio is a
treasure trove. Next step is to determine our brands objectives, Primark's branding objectives include:
Delivers message clearly
Confirms your credibility
Connects your target prospects emotionally
Motivates buyer
Concretes User Loyalty
Gaining a specific number of new clients in next year
Positioning company as an industry leader in next 12 months
To succeed in branding company must understand needs and wants of your customers and prospects. Brand
objectives should be comprised of company personality, image, core competencies and characteristics. The
impressions that it makes as well as words people will use to describe company to others, are basic framework of
a brand. With a strong brand company builds credibility, has more influence on its market, and motivates
customers and clients to purchase from it. If done correctly company will be looked at as a leader not a follower.
Identifying marketing targets enables company to find opportunities
available. It gives information needed to focus on buyers that are
interested in what company has to offer. This can save both time
and money in an ever-changing business environment. Power of
brand relies on ability to focus target audiences. That is why
defining target market will help to strengthen Primark's brand's
effectiveness. Target market for Primark is people up to age of 35
who are fashion conscious.
Next step in developing Primark's brand strategy is to perform a careful analysis to determine principal barriers
that it may face. These barriers are also known as market conditions that can keep your product or service from
achieving success. The potential barriers in deploying Primark's brand strategy can competition, timing, financing,
location, lack of demand, suppliers not meeting demands and targets. In order to face these obstacles it's
important to spend time doing a careful analysis of products or service to assist in developing brand, and
positioning products in the market.
Last step in brand strategy is branding company's identity in marketplace where image is all about appearance of
packaging. It's important to realize that packaging always either has a negative or positive influence on purchaser.
A negative impression can detour a potential customer, just as a positive reaction can influence a customer to
buy. A time to pay special attention to packaging is when going to launch a new brand. If you've already built a
strong brand that others recognize often people may not pay as close attention to packaging. Packaging is judged
and represented by business cards and stationery, web site, answering system, presentation of finished products.
Brand equity does not develop instantaneously. A brand needs to be carefully nurtured and marketed so
consumers feel real value and trust towards that brand. When a company manages its brands it has a number of
strategies it can use to further increase its brand value. (See Appendix VI for further explanation). Brand
strategies that are more suitable for Primark are line extension and introduction of new brands. Primark must
focus on its brand management as it's a dynamic and a continuous process that needs consistent investment of
time and it must be allocated a specific budget as it is much more than mere marketing communications. Due to
intangible nature of branding, results may not accrue in a short period of time a it takes time and reinforcement to
build customer loyalty. Successfully out-branding its competitors is a continuous battle for hearts and minds of
your customers. Proposition that Primark's brand strategy makes is very compelling, attractive and unique among
competitive offerings. It must also be consistently reinforced throughout all phases of an organization, from senior
executives to customer service, business development and even business partners.
Primark is respected for quality of its products and cheap prices. If we briefly review business environment and
other factors identified in this report for Primark then we may realize that consumer behaviour is changing and
business environment evolving across retail industry. Concern is rise in supplier's demands regarding price and
costs. If it continues to rise steeply it will damage profits that it is currently enjoying. Reviewing forces and factors
faced by Primark and their impact on organisation, it is obvious that Primark is facing many challenges and
standing at verge of it survival in long term.
Market Research World, 2011 revealed that value fashion sector
sees worst decline for first time in over 16 years - much to gain of
higher-priced retailers, reveals data by TNS Worldpanel Fashion.
While fashion discounters such as Primark, Tesco, George and
Matalan saw a phenomenal sales increase of nearly 30% last
summer, growth has now ground to a hold with sales falling by 1%
over last six months. In contrast, sales of most expensive clothing
are up by 4%, as shoppers head to generally more expensive
retailers such as multiples and mail order retailers. Clothing industry
has been globalised. Strategies followed by clothing firms, to survive in a context of strong pressure from retailers
and from competition from low-wage countries, are a combination of two trends. First trend is relocation of
production to low-wage countries; second one is the development of six added-value activities: niche, Quick
Response, full package, innovation, branding and retail.
Elaine Giles, Research Manager, TNS says, Shoppers are starting to favour higher priced retailers and premium
end of market is performing well. Growth of value sector last year came on back of new store openings and
expansions that brought an influx of new buyers, but now sector seems to have reached saturation point. The only
way, budget retailers can continue their success is to increase spend of existing buyers, something they may
struggle to do given current retail climate.
4.0 Strategic Marketing Environment Analysis
Primark is one of the leading value clothing retailers in UK. It is highly crucial for an organization like Primark to
periodically review its marketing environment to gain competitive advantage in market. Discount cloth retailing in
UK has several characteristics including clearance outlets, core business discounters, planned purchasing at high
volume, own-label or branding, relationships with manufacturers, attracting customers with good image and
service. There are three different analytical tools used to assess marketing environment of an organisation;
Porter's Five Forces Analysis, SWOT Analysis and PESTLE Analysis.
4.1 Porter's Five Forces Analysis
First of all Porter's Analysis is carried out which is a technique for identifying forces which affect competition level
in industry as shown in figure A below;
The threat of new entrants in market is a critical element haunting Primark much as there are less entry barriers
including low entry costs, high volume of suppliers, vast market in India and china, higher growth space in market,
economies of scale, low capital requirements, access to distribution, government policy, low cost product design,
access to necessary inputs. But new entrants in industry are not likely to cut their price to defend their market
position. In an industry experiencing fast market growth, patents, proprietary knowledge, and brand reputation are
also considered as barriers for companies entering industry.
Strategic position of a company depends upon the extent to which what it offers is unique and cannot be replaced
by something else. Primark has strong brand portfolio which is its uniqueness. As for some of products, like
Primark cheap clothing there are alternatives. But there is no substitute for low price of Primark's products.
Determinants of these substitution threats include relative price of substitutes, buyer propensity to substitute.
Buyers/customers have greatest impact on Primark's strategies as
its vision and strategies are customer focused. Hence, it has to cater
changing customer trends, their demands and requirements.
Customer's volume, customer information level and trends,
substitute products pull through, price, product difference, brand
identity, impact on quality, buyers profit and incentives are few
factors that Primark is facing as major challenge in competitive
market.
Suppliers might have high impact on Primark if they are bigger company and have less competitive market for
their products. Primark is facing big challenge from supplier as it has good and long term relationships with its
suppliers build on trust but recently three of its main suppliers are found involved in child labour and Primark has
to cut-off ties with them immediately which is definitely a big blow for Primark. Primark pays its supplier
competitive price for their products to retain them. Primark maintains substitute inputs, and high volume of
supplier to avoid extra costs.
Apart from five forces identified by Porter's Analysis, there are other factors revealed by PESTLE Analysis
challenging Primark's position in competitive market, in figure below;
(For PESTLE Analysis, refer to Appendix II; and for SWOT Analysis, Appendix III)
Strategic marketing analysis of Primark, using different analysis tools reveal that Primark is expanding globally
and being in the global market; Primark has adopted an approach of Think globally, Act locally as stated by
Armstrong, (2006). They are expanding globally but cater needs of local market and fashion trends in local
culture. Primark supports UK's global role by showcasing the best of British fashion to a global customers as well
as it reflects how it builds social cohesion and business ethics between customers and its suppliers.
Primark faced a major blow to its reputation on 24 June, 2008 after being exposed by and undercover report by
BBC exposing it using child labour. Afterwards, Primark's marketing strategy mainly focused to promote itself as
ethical organisation with a clear and strict code of conduct to which all suppliers must adhere and which forms
part of the terms of their contract. Primark supports nearly two million people through its supply contracts worth
700 million and is dedicated to improve their standard of living and quality of life. For this, Primark has
established Primark Better Lives Foundation' (Primark Ethical Trading, 2011 a). In response to the allegations of
use of child labour by its suppliers, identified by Panorama (BBC program) Primark stopped buying from three
factories in southern India for breaking its Code of Conduct. It also took other major initiatives and is now active
member of ETI that announce it Achiever' in year 2009-2010 independent audit (Primark Ethical Trading, 2011 b).
(For further information on ETI and Primark code of conduct, see Appendix IV)
Further apart the positions, greater the opportunity for new brands to enter market, simply because competition is
less intense. For example, in fashion retailing there are numerous brands in marketplace all competing with each
other across differing core attributes, brand reputation, store presence, price, and clothing quality or trendy and
stylish. To show how differing brands might be positioned relative to each other using attribute scores for each
brand of fashion retailer we can measure and map brand positioning for respective brands. Figure below shows
positioning of a number of fashion retailers using dimensions of price, store presence, and trendy and stylish.
Using this list of drivers we can further depict on what we call a
perceptual map how different competing brands of fashion retailers
in market are positioned according to these drivers. Understanding
complexity associated with different attributes and brands can be
made easier by developing a visual representation of each market.
These are known as perceptual maps and they are used to
determine how various brands are perceived according to key
attributes that customers' value. Perceptual mappingrepresent a
geometric comparison of how competing products are perceived
(Sinclair and Stalling, 1990). One thing to note is that closer products/brands are clustered together on a
perceptual map, greater the competition.
Mapping can provide significant insight into how a market operates. It provides marketers with an insight into how
Primark's brands are perceived and it also provides a view about how their competitors' brands are perceived. In
addition to this substitute products can be uncovered, based on their closeness to each other (Day et al., 1979).
All of this data reveals strengths weaknesses that in turn can assist strategic decisions about how to differentiate
on attributes that matter to customers and how to compete more effectively in target market.
4.2 Competitor Analysis
Like any other business, Primark is also facing tough competition from George at ASDA, Tesco, Marks & Spencer,
TK Max, Costco, Next, Zara, New Look, Peacock and Matalan. Analysis for each major competitor determines
that Primark has better business strength and high market share. It has good financial strengths and high
profitability but relatively poor quality of management and low standards of technology position. Primark is paying
least attention to its marketing strategies. Marketing represents boundary between marketplace and company, and
knowledge of current and emerging happenings in marketplace is extremely important in strategic planning
exercise.
In relation to competition, several external forces and environmental changes are faced by Primark that need to
be considered to formulate its marketing strategy. Currently, Primark is facing high competition with quality
competitors like Peacock, Matalan etc. They are offering cheap products as well and growing at tremendous
speed, threatening position of Primark. Most of Primark customers are switching to rivals because of their quality
products and good marketing strategies which Primark lacks. Marks and Spencer, the biggest rival of Primark has
very extensive marketing strategies with strong brand portfolio. They do advertisement on almost every media
available; while Primark do not use even single media for advertisement. Marks and Spencer offers frequent
promotions for its customers, they offer loyalty card, and have online sales portfolio, as well directory sales is
among one of their marketing strategies.
On other hand Primark is not spending much on marketing, advertisement or promotional activities which is a big
setback in their management. From competitors analysis it is clear that even though there are potential threats
and certain weaknesses for Primark, but strengths and opportunities can outperform weaknesses and threats.
Competitive rivalry can be effectively overcome through deployment of cross-selling, pricing and co-branding and
marketing strategies. This approach to sales will not only increase stability of business but also leverage
competitive advantage in target market identified. Sales trends of Primark and its closest rival is Marks and
Spence is clearly show difference in sales growth of both companies over past three years.
5.0 Impact of Marketing Strategies on Financial
Statistics
Financial analysis of Primark shows effectiveness of their marketing
strategies in a more practical way. They have been operating for
several years and they are currently buying out Littlewoods stores,
several of the best of which will be turned into Primark's and rest
sold for a tidy sum to other retailers. It's a good move that should
see the chain expand its empire to reach more customers across
UK. Primark has aggressive expansion plans in UK and on the Continent. It plans to open in Holland and
Germany next year, as well as launching in Portugal. The Independent has learned that it also wants to open at
least one more store on Oxford Street because its existing flagship is overtrading. Primark flagship takes an
average of more than 2.5 million in sales a week. Rival Marks & Spencer has two stores on Oxford Street, while
Next has three.
Figure below shows net capital investment and how much of that is spent only on acquisition of new stores and
renovating them over past 3 years. It indicates that in year 2007 Primark has 5.4 million sq. ft. selling space that
was enhanced to 5.9 million sq. ft. and by end of 2010 it was 6.5 million sq. ft. with a total number of 204 stores.
Financial statistics of Primark present an excellent report of how revenue and operating profits soared in recent
years unlike other high street retailers. Figures reveal a constant increase in revenue and operating profit over
last three years. These figures show growth due to marketing strategies and increase in selling space as well.
But for more analysts, increase in profit with increase in selling space is a deception of growth and they are more
interested in like for like sales which do not account for increase in sales and profits due to increase in selling
space by acquisition and opening more stores. Figure gives a more precise picture of how like for like sales grew
over past three years and especially in year 2010 profitability has grown up to new levels despite much weaker
sterling/dollar exchange rate compared to last two years and has benefited from consistently strong volume
growth.
Year 2010 was exceptional for Primark as its revenue increased by 18% with like-for-like sales growth of 6% and
benefit of continued investment in new stores. In comparison with other high street retailers profit was 35% ahead
and operating margin improved substantially from 10.9% to 12.5%. This improvement was mainly due to sterling's
relative strength against US dollar in first half which benefited cost of goods sourced in dollars and sold in second
half.
However, in financial year of 2011, due to higher cotton prices and freight costs and increases in VAT, already
implemented in Spain and in UK from January 2011, it is expected that growth will be eroded. Primark can still
continue to lead market by maintaining price leadership strategy and by target marketing strategy in long run.
6.0 Findings & Final Conclusion
For Primark to continue delivering value across range of its products, it must develop strong marketing as well as
has to enter online shopping portfolio. They have to compete with rise of online retailers. Although only 4% of
clothing sales are currently made online, this looks set to grow. With many value retailers not yet having capability
to trade online, they may be left behind as this channel becomes increasingly important to fashion industry. The
value sector has had a huge impact on fashion market over past few years and rest of high street has been forced
to slash prices in order to compete. If this influence diminishes, fashion market could become a very different
place to trade in.
The key challenge faced by Primark is critics who unveiled that Primark is involved in unethical trading using child
labour. Other threats are rival companies, customer's changing requirement which has become potential
implications in implementation and success of new marketing strategies and hinder its sustainable growth its
survival in today's competitive world. Primark should focus on brand stretch and family branding strategies to gain
competitive edge over competitors.
Primark is offering wide range of products for its valuable customers. It has a very extensive portfolio of brands
and products to meet changing market needs and demands. But business environment is changing way Primark
stands in today's world and it is facing many challenges. With levels of competition ever increasing, even most
traditionally confident of organizations like Primark are feeling pressures to stay in the game. As technology is
emerging, retail business is taking new shape changing at great speed with increase in number of quality
competitor launching better services. Hence, existing clothing retailers like Primark have to divert from their
traditional path in response to increasing competition. Another major reason for this transformation is that buyers
are developing their taste very rapidly and are becoming more demanding with passage of time. Changes in
internal & external environment factors like competitive market, globalization factors, demographical and social
forces, ethical forces, technological changes, economical factors and political issues are some other major
reasons for various kinds of strategic changes, structural changes, cultural changes, system changes, process
changes within organisations.
7.0 Recommendations
I conclude following measures for Primark to face challenge indicating which segment of strategy has to follow to
achieve these recommendations, concentrate on growth of user-generated content and an emphasis on new
distribution channels such as;
Redesigning and re launch website with high tech online shopping portal (Market and Product
Development Strategy)
Expanding market, explore new markets overseas.(Market Development strategy)
Brand stretch (Product Development Strategy)
Finding new talent of designer (Product Development Strategy)
Offer clothing for a mature market 35+ (Market Penetration Strategy)
Diversify (Introduce new product line)
Introduce range of accessories (Market Penetration Strategy)
Expand current product lines(Market Penetration Strategy)
Introduce new product lines (Diversification, Market Development)
Introduce food Hall or Cafe'(Diversification)
Introduce loyalty card or store card(Diversification, Market Development)
Add fragrance section and pharmacies (Diversification)
Introduce section for electronics (Diversification)
Enter in emerging markets like telecom (Diversification)
Open new outlets (Market Development)
More marketing can be done
New market share expanding their range of clothes (Market Penetration)
New products expanding beyond clothing to include more shoes, handbags etc(Market Penetration)
Start own production factories in countries like china and India to drop cost of production and more less
prices (Diversification )
Introduce customized tailoring and on demand preparation of dresses (Product Development Strategy)
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