Analysis of Hollensen and the Primark store

compendium of Hollensen and the Primark store fit in to Hollensen (2007) , global martplaceing consists of conclusion and satisfying global nodes needs make better than the competition, and of coordinating marketing activities inside the constraint of the global surround . In that essay , it shines to think just about In what way Primarks st gaitgy could correspond to the needs of cut customers. In other terms, is there an opportunity to Primark to context up itself in France perceive the French environment.Irish garment seller founded in 1969 chthonian the bolt of Penneys ( even in Ireland) , Primark giveed in 2008 3,9% of the global change state retail think of in United Kingdom. and enumerati matchlessd 21827 employees.With a revenue which shake off reached 2,314m in 2009, Primark count today 206 stores split among England as a major(ip)ity with 144 stores ,Ireland Spain, Portugal, Germ either , Netherland and to a greater extent(prenominal) recently in Belgium.Retail deviate of the Associated British food group in which it fit in 2009, 25,5% of the entire revenue of the group, Primark enjoy the constancy and the power that ABF group bring to the retail merchant.With a outline of good timberland for gimcrack damage, Primark is after 40 socio-economic classs of experience recognised the present moment largest retailer in Uk with a profit in 2009-2010 richlyer than it competitors.With a gloomy economic climate which encourages people to formulation after the opportunity to buy cheaper, some leaders of the French way of life market as Zara, Kiabi and HM get the hang watching close this giant that is surrounding France and that nix seems to stop.In today war similar market, satisfying the customers is seen as the only bug of the firm profits. Precisely take aiming our market seems to be the key success factor. In segmenting a market, factors much(prenominal) as geography ,demography, psychographic and behavioura l would be pertinent to analyse .Today, Primarks dodge is to envision an entire concept by dint of exclusively these stores.Al kickoffing to realise frugality of scale in the crossingion and marketing, Primark is adequate to(p) to get upset equipment casualtys. In the stub market analysis, it is relevant to analyse if the site market of Primark in the UK would be suitable and start an opportunity of growth in France.(because changing the target market would bring to much embody for Primark).This essay will focus on the enc treathe part of Primark eyesight the fact that Primarks core competencies is clothes retailing, that home market is a altogether diffe teardrop market in France as well as fuck up clothes and required a particular analysis for each of them. provided, French clothing market could represent a growth opportunity as we will see be deplorable.In 2008, French population from 15 to 35 represented an important part with 38,7% of the sum up population.I n terms of clothing expending, in 2009 men consumption in clothing for the 15-25 reached 3,9millliards nearly the akin than women. further, in a ecumenic way, French men clothes spending is 15% less than women with an average of 360 for the year 2009. After gloomy 2009 year with a settle of the consumption on clothing, 2010 represent the stop of the humiliation of the clothing consumption with a tiny increase of O,2%With a schoolboyish population in expansion, a target market quieten acquire clothes and a customary consumption of clothing which restart, there is an opportunity of growth for Primark in France.If we look at the Internationalisation motives of Hollensen (2007), i of the proactive reason which pushes a company to internationalize is the managerial urge that he defines by a reflection of general entrepreneurial motivation of a confide for continuous growth and market expansions.In the recent year, Primark showed the desire of subjection the western Europe b y entering in sassy country such(prenominal)(prenominal) as recently Belgium. t all(prenominal)y to Bason John, financial conductor if AB foods,the performances of our naked shops in the Iberian peninsula gives us the impulsion to get over our study in the European continent. thus, the first motive which could bring Primark in France could be the desire to become an European player of the formulate through it expansion all over Europe.One of the others proactive motives present by Hollensen is a inappropriate market opportunities and market information. Analytical tool such as PESTLE which allowed to get this information.Both part of the European union, UK and France benefit from the common European Union policy which facilitates ex budge and trade. However, through differentiate aid and by encouraging mergers between French firms to prevent takeovers by foreign firms, French government act against EU policy and still maintain a kind of protectionism. However, France benef its from a Political stability and the policy-making side of France should non represent a threat for Primark.With an increasing unemployment rate and a decreasing consumption the last geezerhood, it seems that the crisis could represent an ally for Primark. charm a take apart about the purchasing power shows that 49% that the under 35years old thinks that their purchasing power has strongly decreased the consumption habits of French goes forward the last opportunity to buy cheaper. As a speculate of clothing in France explain, the success of the gross sales periods shows that the sales drop in the main due to purchase power constraints scarce non as a way rejection.With its dodging sales outlay all the year round, the change in French consumer habits could represent an opportunity .However, the consumer expenditure on clothing is a lot more(prenominal) higher in UK than in France with an expenditure for 2009 of 37805mn decreasing in equation with 2008 in France again st 40472mn in UK ( 46542) increasing in comparison with 2008 plot expenditure in UK continue to growth when it decrease in France , it could get down Primark think that the clothing consumption habits between UK and France ar different and so could represent a threat to Primark murder.Finally for the consumption, gibe to the clothing in France report 2009, by 2013, clothing sales atomic number 18 forecasted to reach 26,980millions, a 2,1 % rise in constant look upon compargond to 2008 which permit hope for Primark a bright future.In spite of the fact that Primark is an Irish company, from a market research and data point of view it is more relevant to analyse the rileibility of the French market through the comparison with the position implementation which is more important than the Irish one (144 shops in England instead of 38 in IrelandHowever, from a financial side , it is more relevant to deal with the Irish headquarter company where the money is going because Irela nd is in eurozone. Alhtough as a report of associated british food explain, in a uncertain economic environment, price and exchange rate volatilities could be the major threats to the groups profitability By dealing with Ireland, Primark escape that kind of risks.In France, fashion remains an important part of the culture. Then , according to a study , French people argon still attached to the brand and the lavishness in the fashion field and would prefer after use the sales period ( 41%) , buy cheapest brand (33%) Then, even if that trend does not automatically represent Primark target market (under 35)which can not of necessity afford luxury brand, French culture in the fashion sector could represent a threat for Primark.France has to face to the ageing of it population. Until 2050, 1/3 of the population will be ageing more than 60 years old. While some of Primarks competitors such as Kiabi (which proposes a fashion for the hale family), could begin a senior marketing by pro posing clothing for senior, Primark could not enjoy this opportunity risking to break its dodging and positioning and lost its target. In an bind about the factors of primarks success, Susan Segal-Horn says The focus part of Primarks strategy is the specific customer segment it focuses With a clear positioning , Primark answers to a special target market needs. Its ageing of population represents an indirect threat for Primark because it does not line of work its target but it could benefice to its competitors which could gain a warlike good.In spite of the fact that the technological aspect is not the most relevant in the implementation of Primark in France, it is important to notice that the evolution and increase of the hot technology influence the consumers to purchase more technological output such as mobile phones, internet, or IT equipment to the detriment of others goods such as clothes.In Primarks case ,legal and environmental factors are linked. accord to a study, fashion industry remain one of the most exploitive in the watchword, some(prenominal) to people and environment However, consumers are more and more aware of the environmental aspect of goods. Often critics for this workers conditions, Primark is now part of Ethical Trading orifice which guarantees the protection of workers and environment.Analysis an environment , it also analysis the hawkish environment to be able to gain a competitive advantage. match to an article about the success of Primark, primark has got teams of buyers in UK and Ireland travel internationally both to detect fashion trends and to seek out the most competitive suppliers Then, by forever and a day looking to reduce its costs Primark prefers to spread its production through a lot of small suppliers which made the power of suppliers low.Highly competitive, the clothing retail industry is al throw full of players. Moreover, the costs to get in the market is real high which make the threat of new entrant s low.This highly competitive market make the power of buyers very high. Indeed, consumers trends in now to look after cheap prices. By having multi choice, they can easily switch from a shop to another.Still due to the multiplayers market, the power of substitutes product is high. Indeed, the competition is more based on the price strategy but the product string that propose all the shop follow the like fashion trend. Then , the products are quite similar from a shop to another.Source clothing in France, Euromonitor international, October 2009As we can see with that figures, clothing industry in France does not stupefy a big driver players but still have some strong brands such as Vivarte which groups 24 brands such as LA HALLE, DEFIMODE.. which are, according to their price strategy similar to Primark and could represent electromotive force competitor.However, brand such as ZARA, HM very ordinary and sensed as trend setters among the French population will represent the bigg est competitor for Primark. But those brand proposing price still higher than Primark, Kiabi, by it price strategy similar to Primark could represent a big competitor from a price strategy side. Add to that direct competition, the increasing of the online shopping. According to the IFM group, online clothing sales increased by 31% in value between July 2007 and June 2008To get a well understanding of the opportunity that Primark has in France, a SWOT analysis will be helpfulAccording to clothing in France report, In terms of market share, the leader have the ability to line up quickly to market demand by go many different collection By proposing a fast fashion strategy, Primark has the opportunity to become an important player in France. However, it will have to face to a high competitive industry with some players already well established and some consumers habits.When a company is considering all doable channel strategies when entering in a new market, there are three major mo des Export, Intermediary (or contractual mode) Hierarchical (or direct enthronement activities).According to Hollensen ( 2007), the choice of the accounting entry mode can not be stated categorically and depend on many internal and outer conditions. By analysing some of the Hollensens factors, we will analyse which way should take Primark to its entry in the French market.As a manager from Primark says in the merged video its quality travel, its value for money travel. Primark is exporting a square strategy, business and know-how. Franchising , one of the intermediate modes allowing to use an entire business in compensation of money could bring the opportunity to Primark to control the major part of it setting up in France.However, by having strong financial resources, Primark is able to choose an entry mode market which could guarantee it a total control of it business and escape the risk link to an international claim (quality control, jurisdiction) . A hierarchical set, e ven highly doubtful and not flexible, seems to be in the setting up of Primark in France the most relevant. According to Hollensen(2007), hierarchical mode is the entry mode where the firm completely owns and control the foreign entry mode and organization.Conscious that few hierarchical modes are possible, the totally owned marcher seems to be the most adapted for Primark setting up in France.Through a total control of it operating companies and by controlling the know how, the decision making, the companys trade secret, the whole owned subsidiary allowed to Primark which have for objectives to become a European player to be utilise more easily a coordinate strategy.Moreover by choosing a Greenfield investment, which is define as direct investment in new facilities or existing facilities instead of an acquisition which acquires an existing firm, Primark would be able to keep its production logistics strategy.Although Primark production strategy is the base of cost saving, main factors of its success. By dealing directly with manufacturers mainly in Asia and by ordering in huge volume, Primark is able to sell at very low price notably thanks to the cheap fag out cost and by realising parsimony of scale.Setting up in a very high competitive market, Primark has to adopte a strategy which will allowed it to gain a competitive advantage.According to Michael porter (1985), there are three basics competitive advantage that a firm can possess Low cost, differentiation, Focus.According to Johnson the low price strategy, seeks to achieve a lower price than competitors whilst maintaining similar perceived product or service benefits to those offered by the competitors. According to Lynch the low cost leader in an industry has built and maintain plant, equipment, labour costs and working practices that deliver the lowest costs in an industry.By always looking for the most competitive suppliers all around the arena and by spreading its production in developing ec onomies which offered low cost labour, Primark is able to control it cost and at the end to propose cheap price to its consumers.According to a menswear controller in UK in an query We do bring extraordinary value to our customers but we do it by bringing extraordinary volume to our factory In proposing the corresponding product everywhere, Primark is able to order huge quantity which allow to realise economy of scale.As the Associated British food report in 2009 summarises Primark offers low price because it purchases very large volumes and has low marks up, minimal advertising and low overheads. The entire Primark concept is built around the control of its logistics, cost and strategy development which allows it to follow a cost leadership strategy when it comes to it setting up in France.By following its strategy, Primark would launch a monetary value war within the French market obliging its competitors to reduce their margins as HM and ZARA already start to do soHowever , as one of the article highlighted it takes a lot of money to look this cheap.and the control of the cost is very hard to manage which explain the choice of the wholly owned subsidiary as market entry mode.IMPLEMENTATION unquestionable by McCarthys around the four major Ps (Product, toll, Place Promotion),the handed-down marketing intermix has received criticisms. Including three others Ps (people, physical evidence, Process) suggested by Booms and Bitners, the 7Ps framework is today the reference to analyse the implementation of a strategy.In favour of the globalization, Levitt argues that, the needs of consumers are more and more homogenized creating a single global market pushing towards a global strategy (standardisation instead of adaptation to the local market). Then, implementation is all about whether adapt or standardize.If we look at the factors favouring standardisation such as the lap of tastes and consumers needs, the economies of scale in RD, production and marketing , then Primark would definitely go towards a standardisation of its strategy when it is setting up in France.Primarks product strategy is to propose the same collection everywhere, with the same clothes in each of its stores which allows them to order in huge quantity and at the end to propose low price. The other part of Primarks product strategy is to put new product on the shelf every week. A season is defined by Primark not as summer, winter or spring but as six week window When Primark will setting up in France, the concept and the product will be the same than in Germany, in SpainHowever there is existing differences between French and English clothing style. Indeed as an article about the French style clothing explain, Bold and bright colored clothes, loud prints or dissever of embellishments are something French women avoid wearing In a general way, the French fashion looks more classical and unprejudiced than the English fashion. According to my shopper experience, Prima rks clothing lines are for some of them flowery, with a lot of prints and really colourful. Moreover the size of the dress that English girls are wearing are very short in comparison with what I am utilize to seeing. An adaptation of the product could be judicious for the setting up in France. However, any adaptation bring costs which could increase the price and do not correspond to Primarks low costs strategy. Primarks product will follow a standardisation strategy in a first time and could like in Spain adapt some clothing lines as the director of the Spanish Primarks explains when he says the taste of the Spanish customers are similar from the British one, in spite of the fact that some clothing collections has been adapted with for example more colour for the Spanish market.When it comes to the determine strategy, some authors proposed a International determine framework which take in account the factors influencing the Pricing strategyIn a general way, as we saw fashion i ndustry are highly competitive and the degree of comparability of Primarks product in the French market is high as Primarks strategy is to propose the same product than its competitors but at a lower Price. If we only take in account that factors Primark would have to tend towards a low Price strategy.However the most influencing factors for the pricing strategy in France is the in corporald and marketing objectives of Primark. Indeed Primarks strategy is to make their customers primarks addict pushing them to come back every week(Primark corporate video, 2010) by notably proposing a fast lamentable product strategy. The target market would be the under 35 which are characterised by a limited income. In order to attract that target and make them come back, Primark has to put a low Price strategy.As we saw in the second part, Primarks strategy is focus on the control of its costs. In notably realising economy of scale and by improving their skills ( what Doole and Lowe called learn ing curve) Primark has honed its business model into a science which allowed Primark to Proposed very low Price.When it comes to the setting up of Primarks in France, Primark will use an aggressive strategy such as market penetration Price that Hollensen (2007) defined as the use of the low prices used by a firm to rapidly increase sales by stimulating growth and increasing market share, but at the same time discouraging competition. which will allow Primark to launch a Price war in the French clothing market.Finally, it is important to notice that Primarks price strategy is allowed by its discourse strategy nearly inexistent with the quasi absence seizure of advertising as an article highlighted when it says Primark is a high street retailer which has a family of brands and focuses much more on buying, logistics and supply chain direction than brandingAccording to Hollensen(2007), standardisation in the communication requires that the firms product has a unique selling proposi tion that is clearly understood by customers. As we already see, Primarks strategy is to sell a unique concept all over its stores which allow it to standardise it communication (even quasi inexistent).When it comes to communication ,while its competitors such as HM or mango spend a lot on advertising , associating their brand name with famous fashion designers, artists or top model, Primark will follow the same way of communication as Zara which does not advertise at all and relies on word of rim and its natural prestige.Indeed Primarks communication is mainly made through its simple and understandable look good, pay less slogan which remain the same in every country even with different languages , through its blue-blooded Logo , through the visibility of its brand ( for example in the Primarks mantrap that people will carry in the street), the agencement of it stores and the people on it. Primarks communication is made through the last three Ps of the marketing mix which are P eople, Process and Physical evidence and not through the ordinary communication tools such as advertising, personal selling more big-ticket(prenominal).However as an article from the Irish times, Primarks strategy is reaching the highest number of authority customers at the lowest cost.Defining by Hollensen (2007) as a Online word of Mouth marketing technique that seeks to exploits existing societal networks to produce exponential function increases in brand awareness, the Viral marketing is one of the tool for Primark in France. Indeed while Primark is not setting up in France, the hearty network facebook already gets more than 20 groups asking for Primark In France such as for example For the opening of a Primark in France or We urgency Primark in France Matching its young targets, often heavy users of internet, enjoying from the expansion of its social network, and corresponding to its strategy of word of mouth to attract the maximum of customers, meshwork through the in ternet viral seems to be a real potential way of communication if France as well as for the company as it is very cheap.According to a study about retailing in France , Apart from Price, proximity and convenience were among the majors needs of French consumers.While Primark is looking for highway and huge surfaces, industrial zone (characterised by cheaper rent but high frequentation) or Big malls (which regroup a oodles of shop and are often situated in highway) seems to be the trounce place for Primark. Moreover a part of Primarks target is the teenagers which are characterised by a low mobility and go shopping in easy get-at-able place.(E.g. The teenager do not have driving licenses and often go to big shopping centers where a lot of shops are together and with an easiest access than the industrial zone).However in order to define what could be the diffusion strategy for Primark in France, it is important to look at the precedent implementation of Primark in Europe. Except in Spain with atomic number 23 stores in Madrid and England with one store in Oxford street (London) Primark do not setting up in the capital. If we look at the German, Belgium and Netherland implementation, Primark has a stores in Frankfurt (richest city in Germany) in Rotterdam ( second city in Netherlands)and in vassal (third most populated city in Belgium). In Portugal it has a stores in Rio Tonto and Amadora (Lisbon metropolitan area).We can see that Primarks implementation in Europe and notably in the recent implementation it also made through rivulet city by not implementing it stores in the capital (often more expensive than the others city) but in important city in the country or in the capital region which could be less expensive and then reduce the costs.Seeing the precedent implementation in Europe and seeing the needs of French consumers and especially the target young target market, a selective coverage in some test area could be relevant and then turn towards an int ensive distribution (which correspond better to a low price and high turnover strategy), if the test is cogitate like in Spain which has now 18 shops.If we look at the Analysis of the first part through the use of Pestle and Porter five forces model, France market in spite of its high competitiveness seems to be ready to welcome Primark. However those models give a snapshot of an industry at a certain point and the fashion industry is fast move and change very quickly. Moreover the habits of expenditure in that sector are highly affected by the external environment. As no one can predict what will happen, the setting up of Primark in France seems to be an opportunity but the external environment if suddenly changed (like the crisis in 2009 which tardily down the expenditure in most of the sector), could make the setting up of Primark more difficult.When Porter propose three distinct generic strategy, a company dreams would be to mix both of them. Indeed when Primark main strategy is cost leadership, it also could be saying that it looks after differentiation notably by not advertising and through its high fast moving product strategy (higher than it competitors). However the in-between strategy is highly risky and not affordableThe mix marketing has to be seen as a basic for the implementation of Primark seeing the current French environment. However a marketing plan has to be flexible during the setting up and during the development of a company in a country according to the chemical reaction and expectations of new customers and in order to match them. This high level of tractability for a marketing mix can not necessarily be affordable by Primark as every change generate new cost.According to the financial director in Primark in a corporate video, there is still a lot of places where were not and where wed adore to be sources. Neighbors of UK, France could be one of those place. Now surrounding France, Primarks success allegory is it following a coun try test strategy before its conquest of France ?