The purpose of this report is to understand and analyse the current and future strategies of NEXT in terms of its market in the United Kingdom. This report also considers the tactics to reach potential markets and expand into newer market segments.
In order to conduct a comprehensive study of the company, the factors taken into account are an internal and external analysis, the generic strategies used by NEXT and a thorough understanding of the 4 Ps, PLC, BGM and Ansoffs Matrix has been done in correlation with the future and currents strategies.
Next is the second largest clothing retailer in the UK operating through 500 NEXT retail stores within UK and Eire with over two million active customers. Next aims to provide high quality and beautifully designed products to their customers. From the internal and external analysis of the market strategy of Next, results conclude that next has been a mid market retailer for nearly two decades. It has achieved huge amount of success in the internet and online shopping environment and have been able to cope to with the recent recession within UK and globally.
Next has suffered sales in the last year due to the recession in the UK and has been moving from a low price retailer to a design and quality product provider. In achieving this aim of providing high quality and designed products it has suffered loss in the UK in sales and growth. It also needs to be aware of the risks of increasing their shop sizes, as the store space to sales growth ratio is very poor. New out of town stores has not been great success and has only added additional costs.
The only way to attain the successes the company has experienced in the past few years in terms of growth of sales and profits is to see what opportunities lay on the horizon. The Marketing Department of Next Plc has performed a series of internal and external scans throughout the company in order to identify these opportunities.
This report contains an analysis performed on the structure, culture, and the micro and macro environment of NEXT PLC. The outcomes are presented in the form of a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis of the company. A PEST analysis focuses on the environment that the company now is in (Political, Economic, Social and Technological) and a scan based on the Five Forces Model of Michael Porter. Furthermore, there is the presentation of mix map model, which analysis the 4 P’s (Product, Price, Promotion and Place) and product life cycle, Boston Group Matrix, Ansoff’s Matrix of NEXT. An executive summary has been constructed to provide the company vision and a sense of direction with the help of data gathered by the Marketing Department. The above mentioned activities are performed In order to discuss and evaluate the current marketing strategy of NEXT PLC and to recommend an appropriate strategy for the near future to expedite further growth.
NEXT is a retailer of clothing, footwear, accessories and home products. Next clothes are designed by in-house design team to offer consistency of style, quality and value for money with a contemporary fashion edge. The company operates through five reportable business segments namely: Next retail, Next directory, Ventura, Next sourcing and other. NEXT PLC aim to provide “Exciting, Beautifully designed, Excellent quality clothing and home ware that reflects the aspirations and means of our customers” (Nextplc, 2009) and keep providing quality products for their target markets.
In lay-mans terms, a mission statement describes what business the firm is in (Thompson and Martin, 2005). Objectives describe the kind of results the business seeks to achieve while the strategies simplify the way to achieve the desired objectives.
Market can be defined as location where the buying and selling of merchandise takes place and marketing can be defined as the process of identifying a target market and developing appropriate strategies for product development, pricing, promotion and distribution (Burns, 2002). NEXT also aims to respond to the particular needs of their customers through the package of measures, which they believe support all customers including those with additional needs. NEXT PLC operates through 500 NEXT retail stores within UK and Eire, Next directory, a direct catalogue and transactional website with over two million active customers and NEXT franchise which includes around 170 stores worldwide. Online shopping was introduced in 1999 and was first in home shopping in the UK.
Like other retailers, NEXT has also suffered sales decline due to the recession but aim to carefully manage costs, whilst maintaining and retaining the talent and skills to ensure a positive position within market and emerge stronger than before. NEXT PLC also believes in the importance of maintaining healthy relationship with communities in which they operate and also work with charities to ensure their part in public welfare. NEXT is positioned firmly in the middle mainstream fashion market, targeting 25-45 year olds (upper, middle and lower middle class consumers) who are fashion followers. Easey (2009) maintained that fashion marketing is the application of a range of techniques and a business philosophy that centres upon the customer and potential customer clothing and clothing-related products and services in order to meet the long-term goals of the organisation. In recent years NEXT has been criticised about their marketing methods and has not been seen as a retail business with up to date marketing strategy.
The word ‘strategy’ is used frequently and loosely, and is often no more than management jargon. There is obviously a deeper and more practical meaning to it. Strategy is about how an organization sets about getting to where it wants to get – it is about setting, pursuing and achieving its mission and objectives (Thompson and Martin, 2005). Knowles (1996) maintains that applying the concept of strategy to an organization implies that the organizations managers try to allocate resources, establish policies and procedures, assign responsibilities and give direction to the organization. Strategic planning is a precise discipline and a process designed to fully utilize the collective expertise of the decision makers through a facilitated process which results in a strategic plan.
In the following paragraphs, current in depth marketing strategy of NEXT PLC will be thoroughly discussed.
As discussed earlier, success of an organisation in today’s competitive world depends on to a large extent on strategy formulation and implementation. An analysis of the internal and external environments provides a look in towards building and developing current and future strategies. Situational analysis is a planning step which helps us examines the current situation of our organization and its external environment so that we can identify and agree on major issues which affect how we plan for the future. SWOT Analysis is a strategic planning method used to evaluate a firm’s strengths, weaknesses, opportunities and threats involved in a project or business venture. Strengths and weaknesses are considered to be internal factors of the organisation while opportunities and threats are considered to be external factors as opportunities or threats lie in the external environment. This analysis is called as SWOT analysis (Stahl and Grisby, 1997). In order for a firm to carry out SWOT analysis it needs careful and critical examination of these various internal and external factors which are often unique to an organisation depending on the type of business. After a SWOT analysis has been performed the managers are able to formulate a strategic plan which comprises of objectives and subsequent strategies.
Next always seeks to give the price, value and quality products and services, the upper hand when turning towards customers. Next aims to provide an inclusive high level of service to all customers, whether they shop in high street, shopping centre or retail park stores, the Next Directory, or online through our website. This can also be seen in the way the company sees the importance of its personnel in relation to its customers. NEXT PLC needs to look into the future for improving the customer care by streamlining activities. It also wants to continue the same success pathway it has had in the last 5 years which is demonstrated by (Verdict, 2009).
Internal factors are those factors which influence the strengths and weaknesses of an organisation. These strengths are internal to the organisation, its strategies and its position in relation with their competitors (Mercer, 1999). Given below is an internal analysis of Next plc.
In terms of structure, Next plc operate on a centralised system. Their target market is 25-45 year olds (Next, 2009). The company logo ‘next’ in lower case signifies a different approach, more trendy.
There are3 main channels of distribution used by next to ensure their products reach the desired customers:
Jackson and Shaw (2009) define culture as the attitudes, values, standards and behaviours of a group that are often defined by nationality. According to Vignali et al, (2008) culture is made up of both abstract elements such as values and ethics, and material components such as cars and foods, which allow us to describe, evaluate and differentiate cultures.
Approximately 30% of the clothing bought in the UK is from M&S, Arcadia and Next (Jackson and Shaw, 2009). They further state that during 2006 Next lost their market dominance. This means the culture affects consumer behaviour to a great deal.
However Next plc, was one of the first to develop and adopt an internet based shopping branch as a high street retailer (Next plc, 2009). Next operates on a role culture concept with which they have a principal board committee which includes the audit committee, remuneration committee and a nomination committee which work on their own in the company (Next plc, 2009).
Stories: These are the past events and what people talked about inside and outside the company (Mindtool, 2009).
Rituals & Routines: The daily behaviour and actions of people that signal acceptable behaviour (Mindtool, 2009).
Symbols: These are the visual representations of the company (Mindtool, 2009).
Organizational Structure: This includes both the structure defined by the organization chart, and the unwritten lines of power and influence (Mindtool, 2009).
Control Systems: The ways that the organization is controlled (Mindtool, 2009).
Power Structures: The pockets of real power in the company (Mindtool, 2009).
Value chain is a framework for identifying where value is added and costs are incurred within a company. It embraces the key functions and activities within a company or organisation such as NEXT (Thompson and Martin, 2005). Core competencies: NEXT make use of an Internet based home shopping and has also established a good brand posture with individual style, beautiful design, excellent quality and affordable price (Next, 2009). NEXT stores are specious and they also make use of standalone lime stores.
The external factors may be threats to one organisation while offering opportunities to another such as technological change, legislation, socio-cultural changes, etc. It can also include changes in the market place or competitive position (Mercer, 1999).
Porter’s five forces is a model that helps marketers to analyse the competitive environment by identifying five major forces that continually impacts on organisations. These forces are:
All organisations operate in market places that are affected by forces outside their control ( Jackson and Shaw, 2009, pp 300).Factors considered within the macro environment affect not only the company but all the other members of its micro environment, namely its suppliers, consumers, etc ( Easey, 1995). An analysis of the external factors that influence the firm is known as the PEST analysis i.e. Political, Economic, Social and Technological.
Politics will affect both the producer and the consumer in various ways (Bohdanowicz and Clamp, 1994). A stable political surrounding is the basis for long-term decisions. The United Kingdom, as a Member State of the European Union, fulfils this prerequisite. The government has to act within a definite political framework to achieve the conditions of the European Union and this guarantees NEXT PLC a higher scope of economic actions.
Another advantage of the European Union is the open transfer of goods. This makes it easier for NEXT to sell their products in the different European countries. There are no trade barriers that aggravate sales and it also provides as a means of direct form of participation within the foreign markets (Hines and Bruce, 2001).
Vignali et. al, (2008), express that economic trends are extremely important for the business and that they depend to a great extent on the governments’ politics. Investments in Europe for NEXT PLC are very interesting. The British currency nowadays is exceedingly strong (ex., 2009). This is due to the independence of the British pound to the Euro and has several effects. First, foreign investments for NEXT are relatively inexpensive, and second, it is costly for outside firms to establish in the United Kingdom. The effects of exchange rates also need to be monitored closely. The devaluation of the sterling in 1992 led to a rise in the cost of imports to UK while making manufactured items more competitive. However, many countries are reluctant to engage in trade because of these reasons. In the face of a truly difficult trading environment it is a case of survival of the fittest. Being good is not good enough, retailers have to be exceptional and stand out from the crowd. (Verdict 2008). Chief executive of Next states “The outlook for the consumer economy remains challenging and as we have said before, the first half will be particularly tough” (Wilson, 2009)
Changes in lifestyle and opinions influence the demand and the way of selling products (Vignali et. al, 2008, pp. 364). Key Note (2009) estimates that in the year 2036 more than 64.9 million people will be living there. This statement would mean two possibilities. This means a lot of new customers for NEXT PLC but the age of the population is increasing.
On the other hand, the social structure has changed dramatically. The progress in medical service and the self-awareness of living leads to increasing life expectancy. Following development of sex education and rising numbers of career women, the birth rate has dropped. These reasons are responsible for declining figures in the NEXT 20 to 40 year old target group.
Bohdanowicz and Clamp, (1994) analyse that young people no longer feel the pressure to be married or have children, and therefore many are living a single life or are cohabiting.
As in all areas of industry new technology is making great inroads to improve quality of life and increase speed and quality of manufacture (Easey, 1995).The age of Internet and the reception of new media reveal a lot of potential opportunities for NEXT to boost profit. Some companies in the United States already offer online-orders where the customer can exactly define his wishes and measurements, and send it to the place of production. 48 hours later he receives his package. Using this method the companies can react instantly to changes in behaviors. Social networking site facebook also provides as a means of information and education and also helps in advertising for NEXT PLC (Facebook, 2009). Some new entrants in UK market such as Zara use latest technology body scanners and follows fast fashion which is contrasting to NEXT.
Strength:1. Performance in recent years. (Verdict, 2009) 2. Next Directory sales. (Verdict, 2009) 3. Good promotion. 4. Powerful design philosophy. |
Weakness:1. Overpriced. (Verdict, 2009) 2. Profit margin declined than previous years. (Verdict, 2009) 3. No celebrity brand ambassador. (Verdict, 2009) 4. More formal wear than average. Little underwear.(Verdict, 2009) |
Opportunities1. Optimize store space. (Verdict, 2009) 2. Consolidate internet marketing and buying. (Verdict, 2009) 3. Expansion into new markets. (Verdict, 2009) |
Threats:1. Marks and Spencer’s biggest competition. (Verdict, 2009) 2. Arcadia and Primark trying to overtake. (Verdict, 2009) 3. Target market reduced. |
According to Kotler 2004, strategy is the roadmap for achieving the envisaged goals. The strategic decision made by a commercial organisation is concerned with establishing the basis upon which it intends to compete, develop and sustain a competitive advantage and outperform competitors.
Porter defined strategy as creation of a unique and valuable position involving different set of activities.
Strategy can be formulated into 3 generic types –
Here a business aims at delivering its products at the lowest prices in the market and win a large market share. Such businesses require being good at engineering, purchasing, manufacturing and distribution. A disadvantage of this strategy is that some other company will eventually emerge with still lower costs. Brands may be able to achieve cost leadership at category level if they have sufficient market share (Jackson and Shaw, 2009).
Here a firm concentrates on one or more narrow market segments. It first identifies such a segment and then pursues either cost leadership or differentiation in them.
Here a business aims at achieving superior performance in an important customer area valued by a large chunk of the market. It could strive to be the service leader, the quality leader, the style leader or technology leader. Differentiation of one company from another is extremely important due to the ever changing customer demands (Oelkars, 2004).It is also considered as strategy based upon being different from the competition through a range of factors such as design, style, image, trend, product quality etc (Jackson and Shaw, 2009).
NEXT prides in offering consistency of style, quality and value for money with a contemporary fashion edge for their target market. NEXT marketing departments have been taking a differentiation approach which has helped them achieve superiority above their competitors. NEXT has differentiated their products from their competitors on the basis of above qualities such as style, design, quality and value for money. However, in this ever changing fashion industry nothing can be permanent. On the basis of porters five forces discussed above NEXT have all the forces in their favour but there are few issues which they need to consider in keeping these forces on the positive side. NEXT needs to be aware of the risks of changing suppliers in case of conflict as new suppliers may provide good products with change in quality which can easily damage the brand name. Due to global recession, textile firms in Mauritius that supply Europe’s biggest high-street stores are looking forward to tough 2009. With 10% decrease in sales, these stores fight among themselves to achieve better prices, which results in middle market stores to suffer like NEXT (Scribd, 2009). Only a small amount of internet portals threat has emerged for NEXT but their Directory has been a success and continues to do so (Verdict, 2009).
The marketing mix consists of 4 P’s that are product, price, promotion and place. Product and Price are the product related elements where, price can also be consider as an element of its own. The other two are parts of the delivery system which is about delivering the physical product and the sales message (Mercer, 1999).
What business offers customers to satisfy their needs e.g. Quality. According to the mission statement of NEXT, their focus is providing high quality and beautifully designed product for their customers. For this reason maintaining and improving their quality and design of their products is very important for NEXT (nextplc, 2009).
Amount customers are ready to pay for products e.g. discounts. NEXT has been one of the known retailers to provide huge discounts on festive occasions, with discounts upto 70% on many products. It also provides special discounts for taller and plus-size customers (next, 2009). Being a mid-market retailer, in order to maintain its competitiveness it is very important for NEXT to provide special discounts schemes and offers during the festive seasons. NEXT also relies on linked selling, one of the biggest areas of sales. For example, it recommends fashion accessories to customers buying clothing online (next, 2009).
involves getting the product to the customers e.g. warehouse. Location of retail stores and shops has always been considered as the prime method to increase sales and growth. NEXT has always been one of the high street retail stores. It also has many different store types, eg flagship sores, factory outlets (nextplc, 2009). For this reason it is really important to have different location for customers to choose from.
It includes ways that encourage customers to buy a product e.g. magazines (Oelkers, 2004). NEXT hugely promotes a great deal of its products through magazines e.g Vogue and also produce great deal of discounts in store and on online shopping. It recently plans to introduce extra 16 billion pounds in advertising its products and online sales records 530 million pounds (Mintel, 2009).
According to Jackson and Shaw 2009, as with all types of product, fashion follows cycles and products follow the Product Life Cycle. In a broader sense, no product can go on selling forever. Once a product has been introduced into the market and accepted by consumers, it goes through a phase of growth, maturity and decline until it becomes obsolete.
This stage is undertaken ahead of the product launch. Design development costs create negative profitability as the sales at this stage are zero (Jackson and Shaw, 2009).
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more