Strategic Marketing Management

CONTENT PAGE

Section                                                                                                                         Page No.

Task 1:

Introduction                                                                                                                            

      1: The general principle of strategic marketing management                                                          3                                                                                                                                                                                                         

1.1: Discuss the role of strategic marketing                                                                                    4                                                                                                                                                                                                    

1.2: Explain the process involved in strategic marketing                                                    5                                                  

                                   

1.3: Evaluate the links between strategic marketing and corporate strategy                                    7

                 

Task 2:

2: Tools used to develop strategic marketing strategy                                                                    10

2.1: Assess the value of models used in strategic planning                                                            13

2.2: Discuss the links between strategic position and marketing tactics                              15

2.3: Analyse the merits of relationship marketing in a given market strategy                                 17

3: Conclusion:                                                                                                                   18

4: References:                                                                                                                    19

Introduction

This report is a study of principles of   Strategic marketing management by considering Primark. Primark Ltd is a subsidiary of Associated British Foods Plc (ABF) It operates stores in the UK, and other European countries. According to Primark Handbook, (2006/2007), Primark is a fashion retail store that was established in Dublin in 1969. Primark is a part of the Associated British Food group (ABF) whose mission is to develop sustainable agricultural practices. Primark has 237 branches across Europe with 156 outlets in the UK.

The company was established in Dublin in 1969, where it trades under the Penney’s brand. Over the years Primark continues to expend and now employs over 27,000 this figure is expected to increase to 30,000 by 2015.

Primark is the UK leading retailer in fashion with over 20 million people visiting their store each week. The company is well known to provide low cost clothing and accessories for women, men and kids.

Strategic marketing

Strategic marketing management is the process of formulation, estimation and implementation of marketing strategy by an organization. Indeed a marketing strategy aimed at differentiating the business in a positive way with respect to its competition through satisfying customer needs.

According to Tony proctor (Strategic Marketing, 2000) a strategy is a plan that integrates an organization’s major goals, policies, decisions and sequences of action into a cohesive whole. It can apply at all levels in an organization and pertain to any of the functional areas of management. Thus there may be production, financial, marketing, personnel and corporate strategies.

Strategic management is about realizing marketing from the strategic perspective of creating customers. The basic principles of Primark include respecting human rights and setting a guideline for appropriate conditions of employment  in its suppliers, employees and vice versa. The basic principle of strategic marketing is to strategically satisfy the needs and demands of existing and potential customers.

The strategic marketing management involves understanding and applying marketing from the perspective through creating customers. In performing this process a number of steps are taken iteratively (Kerin et al, 2007) 

Section 1.1:  The role of strategic marketing in Primark

Marketing has been playing an important role in most organisations over the years. Strategic marketing focuses on how to reach out to customers and how to gain a competitive advantage over the competition. The goal set by the marketing department should, by design, be in line with the company mission and vision; the marketing department of a business needs to work closely with operations, research and development, finance and human resources, Marketing is perhaps the most important activity in a business because it has a direct effect on sales, profitability and sustainability.

Strategic marketing is a process by which organizations obtain what the customers need and want by indentifying, value, communicating and providing it to them. The most important concepts of marketing are customers, needs wants and values. Marketing is strategically concerned with the direction and scope of the long-term activities carried out by the organisation to reach its goals. The organization applies its resources within a changing environment to satisfy customers needs while meeting stakeholder expectations.

The marketing strategy of Primark is to appeal to image conscious people between ages 16-35 who would like to keep up to date with fashion by giving them the chance to buy high fashion at a reduced price. Like most other business Primark’s main objective is to convert customers to consumers. They were able to achieve this by offering their customers cheap products without compromising the quality of their products. In order to achieve this the 7Ps must be taken into consideration, the marketing mix, Products, Price, Promotion, Place, Process, Physical and People. 

Section 1.2: The process involved in strategic marketing

The graph listed above shows 10 steps a company can take to achieve their company objectives. At this time we will only talk about 2 of the 10 steps. The 2 steps to be talked about are the Company Mission, and the marketing objectives & Strategies, relating this to Primark.

Mission

The mission statement of Primark is to provide luxurious clothes to every citizen of the country at a affordable price. The mission statement is the overall goal of the company that direct the company decisions, employees and other associates need some smaller goals which can be worked on for a short time span.

Marketing Objectives and Strategies

 According (Macmillan & Tampoe, 2000), Strategic implementation requires a firm to establish annual objectives, devise policies, motivate employees, and allocate resources so that the formulated strategies can be executed effectively.

Strategic implementation includes developing a strategy-supportive culture, creating an effective organizational structure, redirecting marketing efforts, preparing budgets, developing and utilizing information systems and linking employee compensation to organizational performance.
Historically, the principal benefit of strategic management is to help organization formulate better strategies through the use of a more systematic, logical and rational approach to strategic choice.

According to Macmillan & Tampoe ( 2000), One of the potential benefits of strategic management is it make sure that the organization only follows one direction or path towards the achievement of its business mission, objectives and success. (Marketing - Thinking Made Easy)
The marketing objectives of Primark can be summarized into the following.

Ø  Primark target specific kinds of audience and potential buyers for their clothing material. They devise marketing strategies which are applicable and directed to specific audience only; aiming right at the correct direction.

Ø  The output of the productivity should be measurable in terms of quantity and quality. The amount is important because it will measure the profit the company has made and the other intangible benefits and will determine how much the company has boosted after applying such techniques.

Ø  All of their strategic marketing process are realistic; hence, can be applied in reality and implemented before it is too late. As the competitors of Primark are in constant hurry to gain an advantage over the company, Primark has to execute the devise strategies on time in order to maintain their success in the market.

Ø  The data used in the analysis of deciding strategic marketing planning processes should be accurate and authentic. Any mistake could result into a heavy loss for Primark. Not only would it result in monetary loss, but also the goodwill of the clothing garment retailer would highly be affected.

Section 1.3: Evaluate the links between strategic marketing and corporate strategy at Primark and its link with ABF.

A company is diversified when it is in two or more lines of business. Strategy-making in a diversified company is a bigger picture exercise than crafting a strategy for a single line-of-business. A diversified company needs a multi-industry, multi-business strategy. A strategic action plan must be developed for several different businesses competing in diverse industry environments. (Strategies for Managing a Group.

ABF, PESTLE Analyses, contributes to the Primark co-operative strategy.  Setting corporate strategy objectives means setting those measures of actions and methods which will help the company to achieve its overall mission in a certain timeframe. Corporate strategies are the most basic planning tools underlying all planning and strategic activities (Hamel & Prahalad, 1994). Through sharing its value ABF and Primark establishes strong relationships with its stakeholders that have led them to have an encouraging feedback on the latest annual report about the audit conducted on ethical trade (Hamel & Prahalad, 1994)

The corporate mission of Primark is as follows:

Ø  sourcing products efficiently

Ø  making clothes with simpler designs

Ø   using local fabrics and trims

Ø  focusing on the most popular sizes

Ø  buying in volume

Ø  Not spending heavily on advertising. (Introduction - Providing consumers with ethically sourced)

In order to facilitate such corporate strategy with strategic marketing plans, Primark has devised such marketing schemes that are:

1.      Low in budget and effective

As it doesn’t want to spend high amount of money for advertising its products, minimal money will be spend in this department.

2.       Merchandising

Properly combining colours, styles and visually displaying new season products to catch passers - by attention.

3.       Bulk purchasing

Buying product in large quantity will be cost effective as the cost of producing one garment will be low. Also, the supplier will be happy to work with Primark in future and maintain a strong relationship bond of work with them.

Need of the customer

Primark uses CRM (Customer Relationship Management), a software that enables them to detect high demand products in order to produce large quantities of them to satisfy the high demand while generating Hugh income for the company.

SWOT Analysis

The Success of SWOT analysis is mainly based on how the firm fits its strategy with respect to its environment. The SWOT analysis of Primark attempts to interpret the information they have with respects to its environment that affects the ability of the business to meet its strategic goals (Leigh, N.D). The external analysis of Primark includes the opportunities and threats encountered by the organization and the internal analysis covers strength, weakness

Strengths

v  It has an organized business structure providing its customers with what they want and when they want. By volume Primark is now the second largest clothing retailer. 

v  Primark offers high street quality clothes for cheap prices. The fashion scheme of Primark is solely based on the people between 16- 35 years.

v  Primark has a very strong work force behind them.  Who are well trained to have good knowledge of the products and to offer high customer service.  Primark has over 27,000 employees working for them on daily base, with each individual strategically positioned for optimum performance.

v  Primark has 237 branches across Europe with 156 outlets in the UK; The Company is part of the ETI (Ethical Trading Initiative) which focuses on worker’s rights.

v  Use cheap and skilled labour for the supplying of product.

Opportunities

v  Primark is expanding rapidly with the opening of 47 new stores in the UK and other part of Europe.  Primark will see the door of the 48 store opened in Tottenham court road in September 2012. They also has an opportunity to share their high quality products and services overseas.

v  The opening of the 7 new stores in Spain to battle along its competitors like Zara and other retail out in Spain, Primark is now providing high quality clothes to fashion conscious people.

v  Day by day the demand for latest design with low price are increasing ,this demand opened a Huge marketing opportunities around the globe for Primark.

Weakness

v  One of the main thing for which Primark is criticized of is using child labour

v  Primark has being very successful in capturing the low income earners due to low pricing but they do not have enough checkout point and fitting rooms, hence, customers  end up walking away due to the long queues at these places.

v  Primark do not have security tags on their products, this failure has seen an increase in customer theft, though the CCTV operators security officers try their utmost best to reduce it to the minimal.

Threats

v  Primark’s major threats come from its competitors which are big names in the market with lot of resources like Zara, forever 21, Top shop Next and H&M.  Will it match the needs of the customer in terms of fashion and uniqueness?

v  Complex and volatile business environment customer’s needs and wants are changing and the competition is likely to increase.

v  Increasing labour and raw materials cost can see an increase in Primark pricing structure. 

2: The various tools used to develop a strategic marketing strategy

The graphs below shows the various tools use by companies to develop good marketing strategies. Every company operates differently and would have to adopt the tool that best suit their company marketing strategies.

Primark more favors the PESTLE (Political, Economical, Social-Cultural, Technological, Legal and Environmental and the SWOT Analyses (Strengths, Weakness, Opportunity and Threats.

The identification of these tools has helped Primark to adopted to the changing environment and the continuous changes in human needs and behavior.

According to (Hawes & Crittenden, 1984), states that as a brand, loyalty bond get stronger and they

Are able to expand more and create more demand of their products in the market.

Primark strategy is to keep their customers by keeping their prices low. They were able to achieve by out sourcing 90% of their products to developing countries like Bangladesh, India, China, Turkey and some part of Europe. The major role of strategic marketing starts from planning, analyse, interpreting, implementing and evaluating. 

PESTLE

Ø  Political, Economical, Social-Cultural, Technological, Legal and Environmental

7Ps Marketing mix

Ø  Product , Price, Place, Promotion, People, Process, Physical evidence

SWOT

Ø  Strength, Weakness, opportunity, Threats

ENTREPRENEUR JUNIOR (2011)

Porter 5 forces theory

Ø  Supplier Power, Buyer Power, Competitive Rivalry, Threat of Substitution, Threat of New Entry

According to (freelancerconsulting.com, 2012)

Section 2.1: Access the value of models used in strategic marketing planning, Identify the models used by Primark towards its marketing strategy.

Strategic plan for strategic model provides a long- term plan for success and the framework for clear communication of what is important and what is not. It is a key leadership instrument providing direction for implementation of operational and tactical planning to decide what the company should do.

Developing competency models is crucial to accelerate the growing need of an efficient and effective process of an organization. Strategic success model is a software aided process developed by Haves and Associates to describe the competencies that are very important for success in a given market. Out dated model needs to be replaced or revised and even a new model can be redeveloped using the strategic model building process if it produces unsatisfactory results.

According to (Phillip Kotler, 2007), Model building started with a card-sort process that is facilitated with competency cards and sorting pads for participants.

There are various models that companies can use. Every organisation will use the model that best suit their service in regards to Primark I will discuss Porter 5 forces theory.

Supplier Power

Primark has out sourced 90% of the manufacturing to developing countries like Bangladesh, India, china, Turkey and some part of Europe. Primark does not rely on only one big supplier rather Primark has multiple suppliers across various countries. This is a strategic move by Primark, this strategy reduce the bargaining power of the suppliers therefore the bargaining power of the suppliers are very low.

Buyer Power

In today’s competitive market with raising prices and the rapid downsizing of companies, consumers are forced to cut back on their expenditure. Customers are now looking for cheap products, Primark is able to price their items lower than the competition, hence, more and more customers are now coming to Primark to get value for their money. The buying power of the customers is very high, there are a lot of competitors in the market none of which can compete with Primark when it comes to pricing.

Competitive Rivalry

Competitive rivalry is very high, Primark has to stay focus and ensure their pricing is in line with the customer’s needs. There are a number of similar size players in the market like Topshop, Zara, Forever 21 and H & M. These players are offering similar type products like Primark, each of them are aiming to be the market leader.

Threat of Substitution

Threat of substitutes is very high because there are lots of companies in the market offering similar products at competitive prices, H & M for example. Customers can switch from one product to the other as in today fashion conscious world customers are becoming more and more choosey.

Threat of New Entry

The threat of new entry is very low for Primark because of high setup cost involved. Primark dominate the UK and Europe market by offering very low cost, anyone who is thinking about entering into the market has to think about Primark and the existing competition of Primark. 

Section 2.2: Discuss the links between strategic position and marketing tactic with to Primark

According to (Wisegeek, 2012) Market positioning is the manipulation of a brand or family of brands to create a positive perception in the eyes of the public. If a product is well positioned, it will have strong sales, and it may become the go-to brand for people who need that particular product. Poor positioning, on the other hand, can lead to bad sales and a dubious reputation. A number of things are involved in market positioning, with entire firms specializing in this activity and working with clients to position their products effectively. When a product is released, the company needs to think beyond what the product is for when it comes to positioning. It also should think about the kind of people that would wants to buy the product.

The act of designing the company’s offering an image so that they occupy a meaningful and distinct competitive position in the target customer’s minds (Phillip Kotler 1997).

Primark Targets

Primark marketing targets are women, men and kids with 50% of their products targeted at women wear. They mostly target low income earners, fashion conscious people and also customers from outside of the UK.

Demographic Targets

60% of Primark sales revenue comes from outside the UK. Most of Primark customers are from Europe and the Arab Nation, with a marginal amount coming from the B.R.I.C Nations.

Primark has positioned itself very well in the mind of the customers and the consumers; over the years Primark has been converting more and more consumers into customers. Consumers across the globe knows that they can always find a good bargain at Primark, Primark slogan is “Look Good, Spend Less” and they have managed to live by their slogan this is what their customers are expecting from them.

In order for any business to survive they first need to understand their competitors and the market they are competing in. A number of tools can be used to access the market and understanding the competition better the company has to use the tool that best fit them. 

Tools

ü  SWOT,

ü  PESTLE,

ü  STEEP,

ü  7PS,

ü   PORTER 5 FORCES

ü   PEST

The above mentioned tools are vital and will help Primark maintain a very strong position in the near and for future. A successful retailer like Primark must use effective marketing strategies to deliver what the customers want; the strategic positioning enables Primark to analyze all the factors of the market and continue to be the market leader for cheap products.

Primark has a lot of big competition competing with them; these big players would like to gain better market position. Primark is trying to control the market by flooding it with cheap products; their competitors are unable to keep up with Primark pricing method. These big players are Forever21, Next, M & S, Top shop, New Look, Zara, H & M and many more. What does this mean for Primark? This means Primark can’t afford to fall behind. The Primark team has to be on top of the new market trend and stay focus on the strategies they have set. 

Section 2.3: Analyze the merits of relation marketing in a given strategic marketing strategy. Reflect the role of RM at Primark.

Relationship Marketing

According to Zeithaml and Bitner (2000) Relationship marketing is a philosophy of doing business, it's a strategic device that focuses on keeping and improving current customers whole acquiring new customers. According to Coviello's (1997) states, Relationship Management is an ‘integrative activity involving functions across the organization, with emphasis on facilitating, building and maintaining relationships over the time.

Relationship marketing is a new phenomenon which is a step ahead of traditional marketing. The emphasis here lies on ‘Relationship' between a customer and a product, a customer and an organization (b2c), an organization with other organization (b2b). The overall purpose of Relationship Marketing is to facilitate and maintain customer relationships, which leads to changed focal points and modification of marketing management process. RM tends to provide a superior relationship between a customer and an organization which in return gives an organization competitive advantage.

Primark is a billon pound retail industry and is a part of an even bigger organization “Associated British Food (ABF) there are a lot of companies listed under the ABF group of companies and Primark is the most successful company listed with ABF. Primark  success start from  picking the right manufacturer for the raw material, processing the raw material into finish  products packaging and distributing it to the Primark's stores. Primark has to have a good relationship with their suppliers to ensure consistent quality, service, deliveries on time, and other inward and outward logistics. 

Conclusion

One of the basic principles of Primark is to ensure that it provides its customers with values for money and maintaining the ethical manufacturing standard. In doing so some extra cost are involved but Primark believes that this will enable their business to operate in a sustainable and well managed way.  Sustainability is one of the features of Primark all due to the strategic marketing method that’s has been implemented dissolved in its business practices. By establishing the strong relationships with stakeholders consumers believe that their valued appropriately. 

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