International marketing can be defined as a process in which organizations focus on their marketing efforts and apply marketing principles in more than one country (International Marketing, 2012). It enables company to increase its productivity and profitability aspects by expanding its business operations and functions in the overseas markets (Keillor, Hult and Babakus, 2015). The present report is based upon Next plc who is the British multinational clothing, footwear and home product retailer. It will discuss the impact of micro and macro factors upon the retail market. It also states market potential and market entry strategy which Next plc needs to adopt to become successful in the overseas market. This report also shows marketing mix for the proposed market which helps company in achieving success.
Impact of micro and macro factors on retail market and the market recommendations
There are several micro and macro factors which closely impact the business operations and activities of Next plc that operates in the retail industry. Micro and macro factors affect the decision making process of company. On one hand, micro factor consists of suppliers, shareholders, employees, customers, media and competitors. On the other hand, political, economical, social, technological, environmental and legal factors are termed as macro factors (Mehta and et.al., 2015). These factors play a significant role in building and sustaining the competitive advantage in the dynamic business arena.
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Customer: Customer is the king of market without which no firm can survive in the business environment. Each and every marketer frames competent strategies to attract the large customer base. Customer’s needs, wants and desires differ from region to region which affects the marketing decisions of Next plc.
Suppliers: It is the one who supplies raw material to company and affects its business activities. Suppliers of the organization also affect its marketing strategies and policies. If supplier provides poor quality of raw then it also affects the quality of final product and customer satisfaction as well (Yeniyurt and et.al., 2015). Along with that, when supplier charges high prices of the raw material then prices of the final product also get affected.
Competitor: Other organization that sells the similar product affects the productivity and profitability aspects of company (Elenkov, 2014). In order to build competitive advantage over rival firms, organization needs to make several marketing efforts.
Media: General public also impacts the decision making process of organization. As per this aspect, company needs to make efforts to satisfy the needs and wants of customers. In addition to this, organization needs to maintain health and safety aspects as per the laws and legislation.
Shareholders: They are also the owner of company and take part in its decision making process. They are highly concerned with the business operations and activities. Shareholders pressurize the organization to increase its profit by framing cost effective strategies.
Employees: In retail industry, success of company highly depends upon the skilled and efficient employees (McGoldrick and et.al., 2015). It also affects the sales and revenue of organization.
Next plc should take international move in Sri Lanka which is a part of Asia. In addition, this area provides more benefits to Next plc in terms of high productivity and profitability. In Asia, tourism rate is very high which enables Next plc to take benefit of wide customer base (Aghaei and et.al., 2014). However, in Nigeria, tourism rate is low as compared to Asia. Besides this, suppliers of innovative products are not available in Sri Lanka as it is a growing country. Further, high-level competitors are not available in the market. In contrary to this, competition rate is very high in Nigeria. Therefore, before moving to the international market, Next plc needs to take into consideration the factors which affect the success of corporation.
Political factors: Government policies and rules also affect the business aspects of company. It differs from country to country so; organization needs to consider all these aspects (Fan, Lau and Zhao, 2015).
Economic factors: It consists of customer perception, age and and income as well as the wealth pattern of country.
Social factors: Social responsibility of marketer towards customers also affects the marketing practices of organization (Asugman and McCullough, 2015). On the basis of this aspect, organization needs to produce the product which is not harmful for the society.
Technological factors: In the present era, technological changes take place frequently. Smooth production and operations of company highly depends upon the technology adopted (Lo and Kennedy, 2014).
Legal factors: Legal policies and regulations differ from country to country. It also affects the business decisions and policies of organization.
Environmental factors: Weather, geographical location, global changes in climate and other environmental effects closely impacts the strategies and policies of company when they move to international market (Li, Richardson and Tuna, 2014).
Political condition of Nigeria is more flexible than the policies of Sri Lanka which acts as a barrier in front of Next plc. Economical condition of Nigeria is more stable whereas, Sri Lanka is a developing country whose economic condition creates hurdles in achieving the success for firm (Bhowal and Paul, 2014). Use of technologies, the production of goods and services is high in Nigeria as compared to Asia. It would be recommended that before taking move to the international market Next plc should assess these factors. By framing suitable strategies and policies, corporation would be able to attain success in the strategic business environment (Esteban-Guitart, 2014).
Evaluating market potential
There are several factors which affect the selection of international entry mode on the basis of market potential available in the country in which they want to take entry. These factors are enumerated as below:
Market size: It is one of the main factors which company needs to consider while they plan to expand their business operations at international level. It closely affects the expansion decisions of company (Lee and et.al., 2014). If market size of country is large then it requires high level of commitment and investment (Bitektine and Haack, 2015). Therefore, before taking entry at the international level, organization needs to assess the market size of country.
Market growth: Success of company highly depends upon the growth potential of country in which they wish to expand their business activities. After assessing the growth pattern or market trends, organization needs to take expansion decision.
Government regulations: Legal laws and legislation affects the entry mode which firm undertakes to enter in the global market. For instance, there are several nations that are having legislation in relation to international business. This presents that every global company needs to have a local partner for the purpose of carrying out business in international market (Marandu, 2015). It creates difficulty in front of the foreign companies who want to expand their business at global level.
Level of competition: Existence of competitors and their contribution in sales in the global market affects the entry mode of other country. This factor plays a crucial role in achieving success in the competitive business environment.
Technology: Technological development of country also affects the entry mode of company that wants to expand their business operations at global level. Besides this, customer awareness in relation to the technological aspects also affects the decisions as well as strategies and policies of the firm (Rothman and Mizrahi, 2014).
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On the basis of above factors of market potential, it has been stated that market size of Nigeria is large while in Sri Lanka, it is very low. By this, Next plc can easily increase its market share. Along with that, growth potential is high in both the countries as they are not still developed. It provides opportunity to Next plc to maximize its sales and gross revenue. Besides this, government restrictions are high in Sri Lanka as against to Nigeria. Therefore, it highly impacts the strategies and policies of Next plc. Level of competition is low in both the nations which attract Next plc to take international move and thereby, in getting global advantage. In Nigeria, customers are highly aware with the technological aspect while in Sri Lanka; there is lack of awareness among people about modern technologies. However, it is to be critically evaluated that online store is more suitable in Nigeria. Whereas, Next plc needs to make focus upon the opening physical store in Sri Lanka to build the global presence.
Selection of two recommended segments by using clear and identified screening criteria
There are several valid reasons which encourage Next plc to take entry in the Asian and African market. With the fact that population of Nigeria is very large, it provides opportunity to Next plc to serve the large customer base. It is one of the main reasons due to which Next plc wishes to expand its business operations in the African market. Besides this, growth potential of Next plc is very high in the African market. Moreover, it is a developing country so; lots of needs and wants of customers are not yet fulfilled (Barrett and Weinstein, 2015). In addition to this, legal rules and policies are more supportive which compels me to select this segment of country or market. Economical condition of Nigeria is better which proves to be more beneficial for Next plc for expanding its business operations management and activities. There is lack of unique or innovative products and services in the African market. Thus, by fulfilling the customer needs, wants and desires, Next plc can build distinct image in the mind of target customers. Through this, firm is able to maximize the sales as well as its profits.
Along with the African market, Next plc has selected the Asian market due to its favorable market conditions. Sri Lanka is the developing country which is still not properly developed. Competition is low in Sri Lanka which attracts Next plc and encourage it to take advantage of this aspect. Besides this, workers are easily available in the Asian market at cheaper rate as compared to other countries (Yang and et.al., 2014). In addition to this, market size or population is also an attractive point on the basis of which Next plc take decision to expand its business activities and functions. Besides this, environmental condition of Asian market is also very supportive which forces company to expand its business operations in these overseas markets.
Recommending market entry strategy to Next plc for these new segments
There are several strategies through which Next plc can enter in the global market. Merger and acquisition, licensing, franchisee, strategic alliance as well as online and physical stores are the ways through which one can expand its business operations and activities. Merger is a tool in which two similar kinds of organizations merge their business and thereby, take global advantages (Oduol and Franzel, 2014). Acquisition is a tool or process in which one firm acquires the business of another enterprise that operates in the similar or another industry. Strategic alliance is also the tool in which two parties make agreement and pursue common goals and objectives.
It would be recommended to Next plc that it should open physical stores in Sri Lanka as potential customers of Sri Lanka are not fond of using with modern technologies. Therefore, they cannot be able to attract large number of customers towards the online retail store. In this condition, physical stores prove to be more suitable for company. Through this, organization is able to serve the customers effectively and efficiently. It also enables company to increase its sales as well as revenue. In contrary to this, Nigeria should take entry in the African market by establishing the online store. It makes the firm able to attract a wide customer base by offering variety of services. As population of Nigeria is very large and they are aware from the technological developments, it shows that literacy rate of Nigeria is good which states that people are able and interested to make shopping through online stores. On the basis of this aspect, Next plc is able to gain success in the global market and can build its strategic presence as well. Along with this, now there is a trend towards shopping from online stores. Today, customers are more interested and enjoy while they do shopping from online stores (De Steur and et.al., 2015). It saves the time of person and provides services to them at cost effective rates. On the basis of these factors, company needs to open online stores in Nigeria.
Marketing mix for the proposed market by taking into consideration the differences in culture and consumer behavior
Marketing mix constitutes the core of a company's marketing system which includes product, price, place and promotional strategies or programs. It assists the organization in improving and building distinct image in the minds of target customers (Hanssens and et.al., 2014). Every marketer needs to take into consideration the differences in culture and consumer behavior while framing marketing mix for different segments.
Marketing mix for Sri Lanka
Product: To make customers highly satisfied, Next plc delivers the quality product such as cloths, footwear and other home products to the customers.
Price: It is the money which buyer of product pays for the purchase made. It is known as price of the product. In order to attract large number of customers, Next plc sets competitive prices for its products and services. Through this, organization is able to attract a wide segment of the market.
Place: Next plc delivers its services through physical store because potential customers of Sri Lanka are not usually interested to purchase the product through online. In addition to this, public of Sri Lanka is not too friendly with the technological facets.
Promotion: To increase the sales and profitability of firm, Next plc uses advertisement as a tool which helps in fulfilling this objective. In addition to this, word of mouth publicity also enables company to attract the customers.
Marketing mix for Nigeria
Product: Next plc provides quality or superior services to its customers which raises the satisfaction level and thereby, builds the customer loyalty.
Price: In order to gain competitive advantage, Next plc sets reasonable prices for its products or services.
Place: Next plc distributes its products or services through online store as in Nigeria, customers possess proper knowledge of technological developments or features. Thus, they are able to purchase the products through online stores.
Promotion: In order to promote the product or services, Next plc placed an advertisement on social networking sites.
From this project report, it has been concluded that Next plc needs to expand its business activities in Sri Lanka and Nigeria. It can be concluded that company needs to undertake several micro and macro factors which impact the retail market. It proves to be more beneficial for company in achieving success. It can be seen in the report that market potential or customer base of an organization is very wide.. It has been assessed from the report that Next plc needs to open physical stores in Sri Lanka. Besides this, organization requires to make use of online stores to deliver the quality and cost effective services to customers. It enables Next plc to build and sustain the competitive advantage.
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