Marketing Evaluation PEST Analysis

Question: Explain Marketing Evaluation Using PEST Analysis? Answer: SWOT Analysis One of the biggest leaps Andrew Ramroop, the owner of Maurice Sedwell made was entering a new market in the US. Maurice Sedwell, originally based in UK experienced a huge business growth in UK and all over the world, which helped the business develop and improve worldwide. From the inputs received from Andrew Ramroop we thought of starting our own business on luxurious fashion accessories in UK. In this context, SWOT analysis of the business is done that is defined as analyzing the internal and external market factors of the company. It is used to analyze the internal market factors of Maurice Sedwell, which involves its weakness and strength. In addition, the external market factors involve the threats and opportunities of the tailoring industry of UK (Campbell, Edgar and Stonehouse, 2011). Weaknesses- Poor RD- The thing that the business lacks is proper research and development, which may result in growth of its competitors by better and innovative marketing techniques. Increasing staff turnover- The tailoring business does encounter a high employee turnover and our company is no exception. Online reach- Being a new company we are still waiting to enter the online market. Thus, it is needed for us to develop our online presence and develop entitys value (Chevalier-Roignant and Trigeorgis, 2011). Strengths- Company Size- Our company, is able to become a strong brand globally within a short period of time, so our company size is quite large. This will help the company get more resources and use it explore new and potential markets, overcome stiff competition and maintain long term sustainability. Cost Benefits- We are successful in cutting down its costs, which helps the company in maintaining higher profits. Low cost approach will help us cut down its price and get an edge over our rivals. Customer Loyalty- Our company, is successful in maintaining a steady and healthy relationship with its customers and also keeps on targeting newer customer bases which helps in improving the customer loyalty (Createadvantage.com, 2015). Threats- Economic Vulnerability- The global economy is quite vulnerable, which means that poor economy can hurt the fashion clothing industry and affect its potential customer base adversely. This could make a short run negative impact on our business and subtract our market value. Currency Volatility- The revenues and costs of the business changes rapidly due to the sudden change in the foreign exchange rate or change in currencies. Rising Competition- The level of competition in the fashion industry of UK is getting intense since 2014, this may affect our business because in a highly competitive market competitors are always introducing superior products (Laursen, 2011). Opportunities- Market Segments- The market of the fashion industry in UK is fragmented into different market segments as per the demographic and geographic factors. This will help us expand our business and improve our market share. Since we enjoy certain cost benefits over our competitors so it will help us explore the segmented UK market better. Online marketability- At present we lack proper reach in the online fashion market but our expertise and skills will help us expand our business in the online market in coming years. Using the online market will help us reach more to a wider audience at a comparatively low expense. Financial Advantage- The financial advantage of our company is measured from its financial statements. This will help us analyze our leverage position and expand our business in new markets. Innovative methods- With the change in technology we will use more innovative ways to produce the best product for our customers at the most affordable prices (Luther, 2011). Market Evaluation Using PEST Analysis In order to evaluate the UK market potential this includes an identified shortlist of markets and selecting the best market. The market analysis of UK fashion industry is done by using the PEST analysis, which are- Political Factors- The political factors in UK is quite stable but there is certain political concern, which may affect the fashion industry. The political concerns mainly include the exploitation of labour, which is mainly available to the country from the developing countries. Moreover, the globalized trading policies, increase in price competition between companies and between countries have adversely affected the labour chain. Due to which several labour and trade unions are restricting the operations of the fashion companies. However, in recent times this issue has been overcome largely but not completely (Reuvid, 2011). Economic Factors- Due to the increase in VAT and customers inclination more to the cheap imported products, the domestic companies have suffered a decline in their business. This impact the UK economy negatively, which has been resulted from the customer shift in choice more towards imported products which are cheaper in price as compared to the domestic products. However, with customer awareness programs the fashion clothing company are able to maintain strong customer base and long-term sustainability. In coming years it is believed that the fashion industry in UK will flourish and with new legal rules and regulations the domestic company will get a safer environment to trade their products (Vitale, Giglierano and Pfoertsch, 2011). Social Factors- The dress code in UK varies with its style and diverse population which includes vintage looks, night dressing, office style and casual style. This will help in encouraging the consumption of the fashion products and help the companies, wholesalers and retailers to determine the apparel types. Moreover people belonging to different age, gender and culture are also influenced and based on their choice and preference are provided with apparels and clothing within their budget. Technological Factors- The country being a developed one enjoys certain technological advantage, which will help the fashion industry to improve their production process. This will help our company use the technology, use it to our benefits, and provide a new and developed service to our customers through our retailers. In this context, we need to improve our RD department and undertake detailed market research and understand all the market factors and avail the benefits of the UK fashion market (Winer and Dhar, 2011). Recommendation for market entry: Analysis on the international luxury product market indicates that the sector is experiencing high growth. The market trend indicates that Chinese luxury product market is growing at a rapid rate. As stated by Atsmon, Dixit Wu, (2015) the Chinese luxury market accounts for almost 20% of the whole industry (Wu and Lin, 2014; Mckinsey.com, 2015). It is evident that entering into Chinese market will enable the organization to enhance its profitability. It is recommended that at the first stage of overseas expansion, the new organization should enter into Chinese market. Justification: As stated by Al Badi,( 2014) profitability of an organization is dependent on the condition of market. Analysis on the condition of Chinese market indicates that customers of the country show interest to purchase luxurious products. Income of Chinese people is increasing significantly. As an impact, the customers are also tending to spend more on luxurious products. Cain, (2014) stated that the consumers are showing a change in their attitude. As more people are becoming interested to lead luxurious lives, their spending on such products is also increasing. Discussion on the economical condition of Chinese population indicates that the people who belong to the upper middle class are increasing their expenses on luxurious products. As availability of luxurious products in Chinese markets is increasing, rate of consumption is also increasing. Dasic, (2014) opined that changes in nature of Chinese consumers is creating new opportunities for the organizations which operate in Chinese mar ket. Analysis on the choice of customers also indicates that the consumers prefer to buy products offered by internationally known brands. However the design and craftsman ship of the products is also emphasized equally. As the new organization is going to sell luxurious products of good quality , expanding business in China will be profitable for the organization. (Refer to appendix 4) Market Evaluation using Porters Five Forces: Figure 1: Porters five forces for Chinese retail market Analysis on the Chinese retail market indicates that the market is highly competitive. As growth rate of the market is quite high , several organizations are giving importance to enter into the market. It indicates that several new entrants may be present in Chinese luxurious product market. However the Government gives importance of growth of local industry. As an impact, entering into Chinese market is more difficult than other markets. Strict government policies also may reduce threats of new entrants in this market. The Chinese fashion industry is already occupied by several large multinational brands such as Zara, HM, Holister along with the Chinese clothing brands such as Boseidang, Trand and Youngor Group (Ferrell, 2014). Being new the market, Maurice Sedwell may face difficulties for attracting the potential customers. As several multinational as well as local brands are present in Chinese fashion market, bargaining power of consumers is also high. The organizations operating in this market faces difficulties to retain customers. Due to presence of lots of substitutes power of suppliers in this market is also high. The analysis indicates that competitive rivalry is quite high in fashion market of China. However demand of European fashion products is also increasing in the country. It reflects that Maurice Sedwell can get new business opportunities after entering China. Segmentation, targeting and positioning strategy: As the size of luxury fashion accessories market is increasing worldwide, expanding business activities outside UK will be effective to enhance profit of the organization. However needs of the customers can vary according to their cultural background (Ferrell, 2014).It is evident that requirements of customers need to be analyzed before development of marketing strategies. It is planned that at primary stage of business expansion, the products will be launched in markets of China. Segmentation- Customer analysis: Analysis on the luxury fashion accessories market of China indicates that it can be considered as one of the largest markets of such products. However the market is also experiencing high growth rate. Analysis on activities of customers in Chinese fashion accessories market also reflects that consumption of such products is dependent on the income of consumers. From the analysis it is evident that the consumers with high economic level and lower middle class are showing less interest to purchase luxurious products. However it is also evident that consumption of luxury products has been increased significantly in last few years. It is expected that the growth rate will continue in 2015 also. (Refer to Appendix 1). Targeting: As stated by (Hanic and Domazet, 2012) the organizations need to identify the most profitable group of consumers in order to enhance growth of business. Analysis on the Chinese consumers indicates that the number of people in upper middles class is increasing. These people are also showing interest to increase consumption of luxurious products. Apart from this, the wealthy people also account for significant portion of the total population It is evident that launching products for consumers of upper middle class and high income group will be beneficial for enhancing profit.( Refer to Appendix 2) Positioning: The organizations need to adopt suitable strategies as per requirements of the consumer (Teimourpour and Heidarzadeh Hanzaee, 2014). In case of the new luxury -product business, the expansion strategies need to be developed in such way so that number of customers can be increased effectively. The decision for positioning in market is developed using Bowmans strategy clock. It is decided that the organization will follow increased price/ standard product strategy for expending their business in China. As the organization is comparatively new, perceived value of the products to consumers may not be high. However the consumers will be provided with products of high standard. Price of the products can be increased later to increase profitability. Recommended marketing mix for proposed market: As the nature of consumers of UK and China is highly different, management of the new organization needs to develop new strategies for marketing mix for consumers of China (Tracy, 2014). Changes in marketing mix strategies will enable the management to meet requirements of consumers more effectively (Wood, 2012). Product: Analysis on the nature of consumers in China indicates that demand of the products such as accessories, hand bags and womens clothes is high. It indicates that selling such products in China will be profitable for the organization. Analysis on the nature of consumers in China also indicates that the customers tend to buy products from internationally known brands. However the customers are also attracted by innovative designs of products. On basis of the analysis , it is evident that we need to sell trendy products of good quality to consumers of China. Price: As our organization is comparatively new to market, it is expected that perceived value of the products offered by our organization will be less. Initially price of the products will be kept low to attract consumers. Later the prices will be increased. Place and process: At the first stage of business expansion, we are planning to sell our products using online shopping portals. As availability of internet is increasing in China, the strategy of online selling will enable the organization to reach the large number of consumers in urban areas. If the products are accepted by consumers, then new stores will be opened in the country. Promotion: In case of promotion also, online media will be used extensively. The social networking sites will be used for informing customers about the products offered by our organization. Using social networking sites will also be effective to get feedback on our new products (Wu and Chen, 2014). However the traditional marketing channels such as advertisements on TV and magazine will also be used. People: Apart from offering customers with standard products, we will also ensure that people who are responsible for delivery of products and services are able to meet requirements of consumers. We will give importance on hiring local people for product and service delivery in China. Physical Evidence: In China, we will give importance on providing promotional offers for the new products. It will enable us to inform consumers about new products introduced by us. It will also be effective to get feedback on our new products. Conclusion: Analysis made in this report on the condition of Chinese market of luxurious indicates that people of are showing interest to purchase luxurious products. As income of Chinese people is increasing significantly, the customers are also showing interest to spend more on luxurious products. Analysis on the economical condition of Chinese society reflects that the people who are belonging to the upper middle class are giving importance on increasing their expenses on luxurious products. As availability of luxurious products in Chinese markets is increasing, rate of consumption is also increasing. On basis of the findings obtained from the report it is evident that launching products for consumers of upper middle class and high income group will be beneficial for enhancing profit. In China the organization is going to follow increased price/ standard product strategy to expend their business. As the organization is comparatively new, perceived value of the products to consumers may not be high. As the nature of consumers of UK and China is highly different, management of the new organization needs to develop new strategies for marketing mix for consumers of China. From the analysis made in this report , it is reflected that management needs to offer trendy products of good quality to consumers of China. Discussion on the pricing strategy indicates that initially price of the products will be kept low but later prices will be increased. Implementation of the strategy of online selling will be beneficial for the organization for selling products to the large number of consumers in urban areas. References Al Badi, K. (2014). The Dimensions of Marketing Mix. Management and Organizational Studies, 2(1). Atsmon, Y., Dixit, V. and Wu, C. (2015). Tapping Chinas luxury-goods market. [online] Mckinsey.com. Available at: https://www.mckinsey.com/insights/marketing_sales/tapping_chinas_luxury-goods_market [Accessed 14 Jul. 2015]. Cain, P. (2014). Brand management and the marketing mix model. J Market Anal, 2(1), pp.33-42. Campbell, D., Edgar, D. and Stonehouse, G. (2011).Business strategy. Houndsmills, Basingstoke, Hampshire: Palgrave Macmillan. Chevalier-Roignant, B. and Trigeorgis, L. (2011).Competitive strategy. Cambridge, Mass.: MIT Press. Createadvantage.com, (2015).Create Advantage | Home. [online] Available at: https://createadvantage.com [Accessed 14 Jul. 2015]. Dasic, D. (2014). Ethical aspects of marketing mix by nonprofit organizations. Posl ekonom, 8(2), pp.315-330. Ferrell, O. (2014). Marketing. South Western Cengage Learning. Hanic, H. and Domazet, I. (2012). Marketing particularities in financial organizations. Marketing, 43(1), pp.3-14. Laursen, G. (2011).Business analytics for Sales and Marketing Managers. Hoboken, N.Y.: John Wiley Sons. Luther, W. (2011).The marketing plan. New York: AMACOM. Mckinsey.com, (2015). Understanding Chinas wealthy. [online] Available at: https://www.mckinsey.com/insights/marketing_sales/understanding_chinas_wealthy [Accessed 14 Jul. 2015]. Reuvid, J. (2011).Business insights. London: Kogan Page. Teimourpour, B. and Heidarzadeh Hanzaee, K. (2014). An analysis of Muslims luxury market in Iran. Journal of Islamic Marketing, 5(2), pp.198-209. Tracy, B. (2014). Marketing. AMACOM. Vitale, R., Giglierano, J. and Pfoertsch, W. (2011).Business-to-business marketing. Boston: Prentice Hall. Winer, R. and Dhar, R. (2011).Marketing management. Boston: Prentice Hall. Wood, M. (2012). Marketing social marketing. Journal of Social Marketing, 2(2), pp.94-102. Wu, S. and Chen, Y. (2014). The Impact of Green Marketing and Perceived Innovation on Purchase Intention for Green Products. IJMS, 6(5). Wu, S. and Lin, S. (2014). The effect of green marketing strategy on business performance: a study of organic farms in Taiwan. Total Quality Management Business Excellence, pp.1-16.