The only way to achieve the successes the business has experienced in the past couple of years in conditions of expansion of profits is to see what opportunities rest coming. To be able to identify these opportunities, the Marketing Team of Next Plc has performed a series of internal and external scans throughout the business.
This report is made up of an evaluation performed on the micro and macro environment of NEXT PLC. The outcomes are presented by means of a SWOT (Strengths, Weaknesses, Opportunities and Dangers) analysis of the company. Furthermore there is a focus on the environment that the company now could be in by a PEST research (Politics, Economic, Social and Technological) and a scan based on the Five Pushes Style of Michael Porter.
Based on the data obtained by the Marketing Team, we have created a Mission Assertion to provide the company vision and a feeling of way.
All all these activities are performed in order to make options for future ways of expedite further growth.
The NEXT Company has been executing very well within the last years, sales have increased with more than 100% since 1995 and it increased 20% in the last yr. If one looks at the competitors on the market: the department store Markings & Spencer and the Arcadia Group (previously Burton), the sales outcomes are less favourable. You may conclude this by looking at desk 1 and 2 down below.
Next Plc is one of the ground breaking companies in the market and was one of the first ever to take up and develop an Online home shopping branch as a higher street shop. Though opponents (Arcadia) also conduct business in this route of retail, it is a highly rewarding way of offering products to customers and has a big growth probable (see table 5). Maybe one of the primary advantages is the low resolved cost that Internet retailing brings with it because of reduced personnel cost and no retailers are needed.
One of the advantages the company also offers established is a good brand posture. The NEXT brand states individual style, good quality and affordability. Everything in the stores is labelled 'NEXT' no other brand comes inside the stores, the brand is identified by the audience as top quality for a realistic price.
1. 2 W E A K N E S S E S :
The Gross Earnings level of NEXT PLC was lower than the previous year. One of the reasons we found of the occurring is that there have been higher stock levels throughout 1999 and there is an increased proportion of sales made at below full price level. (Daily Email, City and Money, 16 Sept 1999)
logo. gifThe expensive pound in contrast to other continental currencies will hamper progress in any main land expedition the business will be participating. The pound is expensive for continental customers and can like mainland stores such as ESPRIT and H&M. topesprit. gifOne can also see this in the company's results of the entire year ended January 2000: Sales in international stores are declining in turnover when researching the change over summer and winter.
1. 3 O P P O R T U N I T I E S
Consumer's preference: Large shops
In a recently available inquiry, Mintel found that most people prefer to shop in large businesses with a major offer of different types and makes of clothing as you can plainly see in Table 5. Especially men, prefer, when each goes out for the purchasing of new clothing, to go to one shop that has it all instead of walking from the main one shop to some other.
logo_skydigital_new. gifThe development of the house shopping channel by means of internet and digital Tv set still is in its infancy and can be exploited more. However, you can see in tabel 5 that the web shopping sales are almost doubling each year.
People are buying increasingly more computers, the real opportunity lies not in this form, yet by means of digital Tv set (see desk 6 and 7). Everyone has a Televsion: 97%, yet not everyone has your personal computer 33% in 1998 with an increase of approximately 5% yearly.
Expand Into new Goal Group
The company could, therefore of the pattern stated at the threat side of the SWOT research, expand into a fresh buyer group. In this manner the company could use the risk of decreasing populace of targeted age group as a chance. To be able to reduce the dangers from reduced sales and get a supplementary benefit from the new people targeted, NEXT can start a shop under a new name or grow the product range in the existing stores.
1. 4 T H R E A T S :
Over Crowded Market
The clothing retail market as well as department stores faces a highly competitive market. The market is overcrowded and still new entries are to arrive from the key land (discussed later). Due to this costs surge and profit comes, for the firms have to make people aware of their products (as can be seen in stand 1 and 2 of this report).
In the future, to help make the market healthy again, there have to be some acquisitions. This must be done in order to lessen supply. In combination with a stabile or weakly fluctuating demand, this can make it easy for companies to rise prices again and reestablish income.
Population of Concentrate on Group Decreases
The number of men and women in the age group that is targeted is declining. That is due to the fact that the baby boomers of the fifties are almost at pension age group and the development of smaller families is sustaining.
The main aim for group of NEXT is people between 18 and 35 so that as shown in table 5, one of the most significant age ranges (25-34) is moving away and as an alternative there is a 6. 5% group moving in in this category of 10-14. This will definitely cause reduced sales within the next 10 years and the retailers must look for another source of income.
The tendency of price offs is ruining the market; records of lower income are via all the firms in the sector, as can be seen in the financials of the competitor companies at the beginning of this statement. The price offs are an final result of the fact of another danger; the market is overcrowded. Since NEXT hasn't acquired much trouble with the growing competition, this problem can injure business critically. If people get accustomed to the price promotions, they'll be reluctant to pay more for the merchandise in the foreseeable future and that means death for the marketplace. One good thing about this occurrence is the fact it'll drive out the harmful part of the market as Sears PLC, who was dismantled this past year. (extracted from Mintel)
Even after knowing the actual fact that the market is over congested, the German fashion retailer ESPRIT desires to re enter the marketplace after abandoning it a couple of years earlier. ESPRIT is a company that has all the required traits of an company to enter in the market, for it has a large capital basis, a great deal of experience and can create economies of range. Also with its brand it has a greatly differentiated product, that will create interest. (The Sunday Times 28 nov 1999)
The expensive pound relative to the continental currencies and the Euro has managed to get hard for English companies to broaden into the continent. This brings a drawback and an advantage; UK products are costly for continental citizens, yet the costs for the company are lower, because you get a great deal of Euro's out of a pound.
Due to the European unification and the regulations that was included with it, the British government cannot do much to steer the industry sector, for this will then be observed as an action resistant to the monopolies legislation.
Also the reluctance of the united kingdom to join the Single European Currency within an entrepreneur's point of view was not such a sensible choice, considering the possible as well as current monetary and business related final results. Some international companies are pulling out or demand to be invoiced in Euro's.
2. 2 E C O N O M I C
As stated at the threats for the business, the population composition is changing due to ageing of the population. The concentration of this groups will transfer to an older one as a result of trend of smaller young families.
People tend to be active in the last couple of years and outdoor weekend activities are popular than previously. The populace is more mobile. On there free time which is willing to spend more on the attributes regarding these activities such as clothing.
On the other palm gleam trend that there surely is more dependence on casual dressing rather than the more formal requirements that used to be present at companies. The introduction of the 'casual Friday' and home working makes this possible.
2. 3 S O C I A L / C U L T U R A L
The consumer's spending budget has more than doubled within the last few years due to the upturn throughout the market.
The ongoing style of the previous few years is the relaxation of dress codes throughout companies. A whole lot of businesses have adopted the 'everyday Fri' as every day where in fact the dress code is less strict and you don't have for formal dressing.
Due to the actual fact that folks are spending additional time in leisure activities, demand for other textiles and clothing was made that would suit their needs in their free time activities. Lively leisure is popular now.
The current technical improvements in clothing are found in the fabrics that have entered the marketplace in the pas couple of years. Concentrate is on comfort, in wearing and caring for the material. Popular are the multi- layered Gore-Tex and the adaptable materials as Lycra. The benefit of these materials is that they are warm, light, slim, convenient to clean.
Also the further development of the web and the relative ease that individuals can acquire clothing without having to leave their residence can be an interesting development in the market. Increasingly more retailers have become multi-channel stores by offering their services online. Types of this are of course www. nextdirectory. co. uk, but also the grocer at www. Tesco. com and bookstores at www. whsmith. co. uk.
* The risk of new entrants is quite low, yet, as stated before, the German ESPRIT company is trying to enter the marketplace. That is an exemption, because ESPRIT has a lot of resources that make this possible as well as a whole lot of experience. In words of product differentiation they are simply in the little league of Levi's and Benneton. These brands have as extra benefits: Image and superior quality.
* Even as already know, the bargaining electricity of our suppliers is very low for there are a lot of companies supplying the forex market so substitution is simple (see desk 10). The situation, however, is the product quality we ask from our suppliers. Most of the suppliers only deliver into this market, yet can also change to other markets (professional clothing) that are less profitable and the amount of competition is fantastic.
* The products that can reduce our sales by means of substitute products or services aren't there, you can find however a 'menace' of Internet portals and other types of home shopping. This isn't a severe hazard for the company already is lively in this channel of advertising. The discount retailing of A-brands as Levi's in retailers through parallel imports can be a problem.
* In the prospect of the consumers there is not much leverage using their company consideration: their money spent on clothing per person is not large enough taking a look at our total sales and their total finances.
* There is certainly some rivalry in the ranks of the marketplace, for there are declining sales scheduled to a decreasing market. To be able to attain customer platform, companies have increased their discount rates and that causes the damage of the marketplace. This is triggered by the fact that folks do not need to pay the full price amount of the merchandise and companies will have to suffice with lower profit margins.
The company's philosophy is to offer quality stylish clothing, accessories and furnishings for a good price. We can ensure good prices because of our own knowledge of the marketplace and by buying in large quantities. Next puts a whole lot of work in guaranteeing and increasing our service to our customers and we constantly seek new ground breaking opportunities to grow our business to fulfil the marketplace needs.
The employees of next all work towards the same goal; providing the customer good value and quality in service in all the company's areas of business and create a profitable company image.
The company has a solid drive to raise the value of the business and actively looks new ways to achieve this goal. We've made sure of this in the past and definitely will continue this craze in the future to be able to increase shareholder riches.
4. 1 E x p l a n a t i o n
After careful examination of the business's features, we arrived to the Objective Statement above, to provide the company a feeling of direction. Discussing the book Marketing Strategy and Management by Michael Baker, we discovered that the following key points should maintain a mission declaration and we give a brief explanation how we inserted them
This is also immediately from the other things that are included, for this provides the way the business wants to be seen: its image.
Concern for shareholders:
Shareholders will be the providers of fund for an organization and there is no activity before there are financial inputs for the company. To be able to secure this in the future, when expansions are current issues, we are in need of extra monetary incentives to attain these goals. The area of the mission statemetn that deals with shareholder wealth is at line 7
Concern for Employees:
Employees are the most important area of the company for they are the direct connect to your visitors and represent the business. To give them a feeling of belonging and a concept of what the business needs from them, the part in line 5 is roofed.
Customer health care:
Next always seeks to give the price, value and quality products and services the higher hands when turning towards customers. This can also be seen in the way the company sees the importance of its staff in relation to its customers.
The company must check out the future and sees it as broadening into new (elements of the) market and bettering the customer care by streamlining activities. In addition, it wants to keep the style of success it has had in the last 5 years
5. C O N C L U S I O N S & P R O P O S A L S
5. 1 OPTION A: ENTER A NEW GENERATION WITH NEW SHOP
As explained in the SWOT examination earlier on in this report, the target group of NEXT is reducing in size due to the fact that the bay boomers are moving out. There may be a likelihood to increase income by getting into this area of the market, as the CEO of Esprit, Heinz Krogner, says in the Times of 28 November 1999: ' The population is getting elderly however, not in their behaviour. People do not need to look old, they want to dress young'.
People of more mature age are more established and have more money and leisure time. Also stated in this report that there is a propensity to tune your clothes to the free time spending and that is another possibility to increase turnover and therewith earnings.
5. 2 OPTION B: GO INTO NEW PRODUCT AREA:
Search another product area, where the concentrate on group is interested; during research, there was a affirmation in Mintel that you of the causes of degradation of sales was the actual fact that young people spend more on technology (cell phones, sound providers, etc). This addition to the merchandise range offering, can create a 'total package deal' and lift the product selection of clothing and accessories to a new level.
Th problem is that we will be presenting different brands into our product offering and that will decrease the degree of exclusiveness of your products, for we've only sold NEXT top quality products up to now.
5. 3 OPTION C: INCREASE SHOP SIZES AND PRODUCT OFFERINGS:
In a written report of Mintel, it concluded that men prefer to look in the major shops where there was everything readily available, in order that they only had to visit one shop to be able to choose the things they sought.
If you increase shop sizes and therefore increase the number and types of clothing and accessories, it will have a larger impression on the potential customer. Larger shops also create greater economies of level and this brings on favourability in pricings looking at the competition and the necessity to lower our set costs
5. 4 R E C O M E N D A T I O N S
As the marketing office of the company, we claim that we grow our services as explained under option A.
Option B provides a lot of negatives with it including personnel training and even more competition. For certain, the customer must be educated to learn that the NEXT Company provides personal audio tracks and other accessories.
As a drawback of option C we see that will not generate that much extra deal, yet reduce our set costs. A company must not see lowering cost as their center objective when there can be an possibility to increase sales and develop a base for even more growth as stated in option A.
The number of folks outside our regular aim for group will surpass the quantity in it in the near future (as is seen in table 8) and that is why we need to be ground breaking and utilize this opportunity in our benefit.
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