Mkt11108 Practice Of Marketing : Assessment Answers

Building on the research you have conducted in the interim coursework, you are required to apply the SOSTAC model to the marketing strategy currently being used by the high street fashion retailer you researched in your interim.  

Each element of SOSTAC should be applied separately, but a holistic overview needs to also be used so that each element is integrated within the company’s strategy. The emphasis of your SOSTAC should be,

Macro environment in the situational analysis,

Price, product and place in your tactics.

An evaluation needs to be undertaken of the effectiveness of the retailer’s current SOSTAC strategy.

To what extent do you believe that the current marketing strategy used by the fashion retailer in the UK market could be implemented in an international market of your choice?

Applying sostac model

The SOSTAC is a marketing model which was founded by PR Smith in 1990 and the model refers to main six elements such as situation analysis, objectives, strategy, tactics, actions and control (Smith and Zook, 2011). According to the SOSTAC model, the macro environment and situational analysis has been done with respect to Next plc as follows-

• Situational analysis- On the basis of the situational analysis, the current situation of the company has been identified that what is the market position, about competitors, strengths and weaknesses of the company etc. Moreover, the managers of the company apply the situational analysis to measure the internal and external environment with respect to organization's customers, capabilities as well as the business environment (Morse et al., 2016). Situational analysis can be done through industry analysis-Porter’s five forces model, SWOT (Strengths, Weaknesses, Opportunities and Threats) and PESTLE (Political, Economic, Social, Technological, Legal and environmental). Hence, on the basis of these analyses, the current situation of Next plc can be easily analyzed that where it is lying in a competitive market.

Figure 1: Procedure of SOSTAC model

(Source: Smith and Zook, 2011)

Pestle analysis

PESTLE analysis is used by organizations to recognize the macro environmental factors which have a direct impact on the performance and strategic management of the company (Zalengera et al., 2014). In this regard, the external environment of Next plc, UK has been analyzed through PESTLE analysis and has also been acknowledged that how the country is supportive or against to respective company.

• Political factors- The Political condition of UK is stable in nature and government is focusing on activities to provoke the reasons that destroy the economy. The UK government is major emphasizing on the maximization of employment opportunities for citizens. Besides this, UK is more successful in comparison to other countries due to political stability. Furthermore, political stability has a contribution in controlling corruption, regulations of law and the effectiveness of government in different sectors (Banco Santander, 2018). According to collected data of 2009, it has been found that the UK government has taken the adequate steps to revise the income tax rate for higher income level people from 45% to 50%. (Thomas, 2018). Hence, it is beneficial for the country to maintain the economy refreshed. Apart from this, Brexit has generated various political issues and uncertainties for the growth of the country.Although, it has developed the new opportunities for the country in the form of Foreign Direct Investment (FDI) and has also been opened the ways of external opportunities for the country (David, 2018). Further, the country has invited the many professional business tycoons to invest in UK industries such as real state, retail, sports, technology etc.
  
  
• Economical factors- Economic conditions of the UK is stronger in comparison to other countries including US, Australia. UK has 5^thhighest Gross Domestic Product (GDP) across the world as well as Europe has 2^nd position and Germany scored 3^rd rank in context to GDP. Further, UK has a large number of populations which is beneficial for small market enterprises (United Kingdom Economy, 2018). Moreover, the country is based on a diversified economy by including both private as well as public sector industries. There is free entry for all countries to invest in different industries through FDI. On the other hand, the respective country has dealt with economic recession during the year of 2008-2009. The highest GDP rate 3.85 has been recorded in 2000 and it was reduced by 3% in 2007 (The Financial Times Ltd, 2016). Hence, it again increases to 3.1% in 2017. There is a low-interest rate in the financial markets as 1.5%; however, the inflation rate has been increased from 3.19% to 4.29% in the year 2009. Besides this, the prices of oil, households, food and beverages have been reduced at the lowest level.
  
  
• Social factors- According to collected data, it has been found that the UK has large consumer market with the population of 65.6 million in 2016 and it has been estimated that it would be maximized by 74 million in coming years of 2039. The country has more aged people than youngsters; hence, it has been found that 18% of the population is above the age of 65 years and 2.4% associated with the age of 85 and over (Thomas, 2018). By considering this, many organizations have invested in different sectors such as healthcare, insurance, real state etc. to manage the old age people. Apart from this, the population of UK has high living standard and diversified cultural people; owing to this, UK companies are proving the expected products to meet the demand of customers (Advameg Inc, 2018).
  
  
• Technological factors- UK has strong and effective telecommunication infrastructure across the world. The country is using the advanced technologies in the telecommunications, mobile and internet industry as fiber optics, microwave radio relays, satellite earth systems etc. (Business case studies, 2018). In 2006, the growth rate on internet connectivity has been increased to 36.2% in 2007 and in telecommunication, the growth rate has been enhanced from 10% to 11% respectively in 2010 and 2011. Besides this, the population of UK is more competitive and skilled in Information technology (IT) field. Moreover, appropriate laws have been amended with respect to intellectual property (PESTLE Analysis, 2018).

On the basis of PESTLE analysis, it has been identified that the external environment of UK is suitable for Next plc and the company can easily expand the business in the potential retail market. The UK has a large consumer market and economic condition is also strong in comparison to other countries such as US, Germany.

Industry analysis- Porter’s five forces model

Industry analysis refers to measuring the external environment of the particular industry that affects the competitive advantage in a specific market area (Dobbs, 2014). In this context, Porter’s five forces model has been used to analyze the competitiveness of the Next plc fashion retail industry in the UK market and also identify the profitability of the current business environment.

Figure 2: Porter's five forces model

(Source: Rothaermel, 2015; Dobbs, 2014)

• Competitive rivalries- Next plc is dealing in fashionable clothes and other trendy accessories in the retail industry. Here, Marks & Spencer group, John Lewis, Harry Corry, Arcadia group ltd, Gartner, Tesco, Debenhams plc, Walmart, New look, River Island et are the top competitors of Next plc who are offering the differentiated products on low-cost pricing policies (Owler Inc, 2018). It indicates that Next plc has a strong competitive market in the retail industry in the UK. Moreover, there are huge chances of shifting of customers as well as suppliers towards the rivalries.
  
  
• Bargaining power of suppliers- Bargaining power of suppliers always affects the regularity of business in a competitive market. According to analysis, it has been recognized that Next plc has several numbers of reliable suppliers who provide the raw material and manufactured products directly or indirectly but they have strong bargaining power in the UK retail industry. Further, suppliers have a right to demand upfront payments and create further pressure on retailer’s cash position (Next plc, 2015). On the other hand, Next plc has strong and constructive relations with suppliers. By considering this, due to the availability of a large number of suppliers and uniqueness of services shows the strong power of suppliers.
• Power of buyers- UK has large consumer market due to the higher number of population and consumers are the king of the market, so the company has to produce the products as per the requirements of buyers. In this regard, it has been found that the bargaining power of buyers is high in the UK market because of the availability of a huge number of competitors. Further, the customers can easily shift to substitute products, reason that price sensitivity as well as changing the cost of the products.
  
  
• Threat of substitutions- Next plc has several competitors in the entire retail industry as Walmart, Tesco, Debenhams plc etc.; hence, there is a higher level of threat of substitute because the competitors offering the products and services on cost-effective price along with differentiation of products. By considering this scenario, the customers can be attracted towards the substitute and productivity of Next plc can be low in comparison to competitors due to the threat.
  
  
• Threat of new entry- UK has a strong economic market which has allowed FDI for the maximization of profits and productivity (Banco Santander, 2018). FDI has opened the door for foreign countries to invest in the local market of UK without any governmental barriers because there is a free entry for the investors and entrepreneurs. Hence, it indicates that a threat of new entry is higher in the UK market which increases the chances of a greater number of rivalries and substitutes for Next Plc. Owing to this, it can affect the optimum outcomes of the respective company in the potential retail market.
  
  
• Objectives- According to macro-environmental analysis, the objectives for Next plc has been determined as follows-
• To maximize the sales volumes by 25% at the end of current financial year
  
  
• To enhance the number of customers by 20% at the year ending 2018
  
  
• To enhance the diversified portfolio of products by involving substitute products of beauty, fashion and occasion wear etc.
  
  
• To improve the ratio of customer service by 15% by offering the quality and to satisfy the consumers
  
  
• To involve more skilled workforce in the management to frame the smart policies
  
  
• Strategy- The company can apply the specific strategy at the international level for the achievement of objectives of Next plc in subject manner. In this regard, growth and product differentiation strategies can be suitable for Next plc to attain the specified objectives. In growth strategy, the company focuses on the expansion of the company in unspecified locations and can attract a large number of customers by offering the new brands with quality products of clothing and other accessories. Further, the company can emphasize on the expansion of product line with a diverse range of fashionable clothes that will be helpful to achieve the objective of maximization of product portfolio; hence, the number of customers can be rise. Ultimately, it affects sales volume and profitability of the company in extending form. On the other hand, differentiation strategy can also be appropriate to achieve the objective of product differentiation along with a cost-effective price. In this context, Next plc can focus on making available a wide variety of products on low prices plus low margins. Consequently, it attracts a greater number of consumers across the world.
  
  
• Tactics- To achieve the objectives, Next plc can adopt social media marketing and online voucher codes to attract a large number of customers towards the company. With the help of social media marketing, Next plc can be connected with online customers because the current era is based on digitization to save time and efforts for shopping of apparel. By considering this, online customers would communicate to offline customers in their regular life; thus, it can be helpful to enhance the number of customers and sales volumes of the company. On the other hand, in online vouchers, the company can include a 10% ratio of discount in seasonal time to attract the consumers and can develop better relations between customers and company.  
  
  
• Action and control- The tactics for Next plc can be applied in a specific way to achieve the stated objectives. To bring the objectives in practicality, tactics can be in an effectual manner, therefore, the company can recruit additional skilled employees to cater the online marketing procedure and required training can be provided to existing capable workforce to deal with the offline customers. In this manner, a link would be maintained between customers and company; hence, it can be supportive to maximize the new buyers for Next Plc. Moreover, the customers can be attracted towards the company due to a diversified portfolio of products of clothing and home products. Apart from this, all over the plan would be controlled in a systematic manner to know that the plan is working or not in the context of the achievement of objectives. In this regard, a weekly review procedure would be implemented to measure the performance of employees for the set goals. All issues will besorted out in the weekly meetings so that employees can be closer to specific objectives of maximization of sales, profitability and customer relationships. If the plan is not working properly then an alternative would be kept as to conduct new workshops and personal communication program would be executed to engage the employees for the attainment of objectives.

Evaluating the effectiveness of next plc’s current sostac strategy

Next plc’s current SOSTAC strategy is relevant to code of practices- COP and multi-channel retailing strategy which is based on the advanced technologies along with digitization of Next Plc. On the basis of this, it has been found that this strategy has opened the immense of opportunities for overseas business along with the growth of UK. Moreover, through digitization, the company is including various ranges of brands to tackle and attract a large number of online customers. Hence, Next plc is focusing on the online businesses according to insights of store customer segmentations along with online buyers which has a major contribution in the growth and success of the respective company (Next plc, 2015).

  Currently, the company is associated with a multi-channel strategy to cover the entire consumer market across the world. In this context, it has been evaluated that this strategy is effective and suitable for Next plc because it is more closure to the set objectives such as sales and profit maximization, diversified portfolio and a greater number of customers etc. Furthermore, investing in cross channels including a directory in which by reviewing a catalog customer can conveniently place the order for buying, hence, the business of Next plc is growing in the fastest way by achieving a huge number of revenues. Moreover, by analysis, it has been recorded that digital sales have been reached at 530 million pounds through the concept of digital strategy (Zhang, 2013). Apart from this, Next plc is using the price discounting policies for more time period to maximize the sales and revenue at online stores by 5.8% a year ago (Vertical Web Media Inc, 2018). In this context, the company is offering a great discounting on first arrivals, at festive season, occasions; however, it is charging the premium prices on exclusive designer’s products to maintain a standard in international fashion and clothing market. Therefore, it shows that the current SOSTAC strategy of Next plc is effectual because it has a major contribution in maximizing the sales volumes as well as profitability by enhancing the number of customers.

Implementing current marketing strategy used by next plc in an international market

Next plc currently using the COP, price discounting and multi-channel strategies to attract a greater number of customers. The company is associated with the customer's demands instead of thinking about competitors. By considering this, Next plc as a fashion retailer can easily implement the existing marketing strategies at the Australian international market. In the current marketing strategy, the company is emphasized on local adaptation, hence, Next plc is providing the designed stores and offering the products on the basis of culture, taste and preferences of customers. In this context, it would be suitable for Next plc to use the current multi-channel strategy in the Australian international market because it relates to supply the wide variety of products and services to consumers through different media channels.

In the local market of UK, Next plc is achieving the profits and developing a large number of customers through differentiation and multi-channel strategy. Thus, the sales volume and productivity of the company has been raised with the application of the current strategy. In this regard, the respective company is profitable in the Australian international market due to a small number of franchise partners, online retailing under direct or indirect channels and availability at online sites. Apart from this, due to differentiation strategy, Next plc can easily create a brand image in the international market of Australia because it is engaged with effective marketing mix as children, men’s and women’s clothing and footwear, home products, holiday shopping criteria and electrical appliances etc. Here, it can be easily stated that Next plc can implement the local marketing strategy of UK at the international market of Australia for the growth and development in the retail sector of fashion clothing.

Conclusion 

On the basis of the report, it has been found that the UK is a suitable market for Next plc because it has favorable external environmental factors towards the company. Owing to SOSTAC model, it has been concluded that Next plc has several competitors across the world, although the company is performing well in the local market of UK due to strong economic conditions as well as political stability. Further, according to Industry analysis, it has been summarized that the bargaining power of suppliers and buyers is at a higher level due to strong competitiveness in the retail market. At the end, it has also been concluded that the current SOSTAC model of Next plc is effective in nature because it is helpful to achieve the set objectives and aim of the company. Hence, it is more associated with the expectations of customers instead of that what competitors are doing.  

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