River Island Strategic Marketing in Russian Federation - Research Paper Example

?River Island Strategic Marketing Report (Russian Federation) Table of Contents Introduction & Overview 3 2. Marketing Audit 4 Macro environment Analysis – PESTLE 4 Microenvironment Analysis - Competitor Analysis 5 River Island Porter's five forces model 6 Internal Analysis - Porters Value Chain model 6 SWOT Matrix 9 3. Marketing Strategy 10 Product strategy 10 Pricing strategy 11 Place strategy 11 Promotion strategy 12 Positioning strategy 12 Product proposition 12 Relational and sustainability strategy 13 4. Objectives and Targets 13 Implementation 13 Monitoring 14 Control 14 5. Conclusions 14 Works cited 15 Name of the student Name of professor Course name Date River Island Strategic Marketing Report (Russian Federation) 1. Introduction & Overview River Island is one of the renowned and popular high street brands that operates internationally and has its stores in different countries. This company is headquartered in London and has its presence in many countries, including, many European countries, Russia and the countries in the Middle East. The company has a strong brand presence in Russia due to several factors; the rising interest of the Russian customers in international brands, the quality of products offered by the company and affordable range of prices (Karadakis, Kaplanidou and Karlis 175). Certain subtle changes are visible in the characteristics of the Russian market for consumer products. In recent years, Russian customers are becoming more interested in consuming products of brands have an international presence. This provides the opportunity to the global brands to increase their operations in Russia (Bacon, “Reaching Russia’s lucrative layer”). River Island is considering certain strategic changes in order to utilize the new developments in customers’ preferences (Riverisland, 2013). One of the most important aspects of River Island is that their products are of high quality and are offered at prices that are affordable by the middle class in Russia (Agarwal, Grassl and Pahl 20). Women and men between the age group of 16 years and 30 years are the target group of customers for the company. Considering all the above factors, River Island has been chosen for conducting a detailed study and making an analysis of its marketing strategies. River Island provides a good opportunity to make a marketing analysis of the company and develop a marketing plan that would help the company to make further progress in its growth path. 2. Marketing Audit Macro environment Analysis – PESTLE PESTEL analysis of Russian Federation would help in understanding the external macroeconomic environment of the country. This would facilitate understanding of the strategies and business policies of the company. Political Economic Social Technological Environmental Legal Internal conflicts Corruption Different political divisions External conflicts with several powerful economies; like the USA and the UK Rich natural reserves Export oriented economy; depends on export of oil and natural gas One of the largest GDPs in the world in terms of size of GDP Volatile exchange rate High price inflation Unequal income distribution Low foreign direct investment Higher proportion of skilled work force than unskilled work force Diversity in work force is high Presence of social unrest due to diversity in workforce as well as political diversities Existence of class divisions and social discrimination Low level of life expectancy Russia has strong industrial background Possess some of the most powerful scientific research frameworks in heavy industries and defence sectors (Carlsen and Andersson 86) However, IT communication processes are not well developed in all regions within the vast expanse of the country (Helms and Nixon 220) Displays low awareness regarding environment and ecology Industrial activities within the country creates various environmental concerns Unfavourable climatic conditions can sometimes act as barriers to trade Wide geographical territory is sometimes unmanageable New legal obligations Laws conflicting with one another Legal co-ordination is a complex process in Russia and often not managed properly Microenvironment Analysis - Competitor Analysis River Island is one of the top most brands in Russia. It has few competitors, among whom there is a strong rivalry for market share. The major competitors of River Island are Topshop, Marks & Spencers and H&M. These companies also offer products of the similar type and variety (Evans, and Lombardo 10). The price range is comparable. However, price of goods offered by River Island is lesser than the product price of the other companies, given a stable product quality. This is one major advantage enjoyed by the company. Local companies do not pose steep competition for the company since they cannot compete at par with the foreign brands in terms of availability of product and price (Novicevic, Harvey and Autry 86). River Island Porter's five forces model Figure: Porter's five forces model (Source: Author’s creation) Internal Analysis - Porters Value Chain model Primary Activities Inbound Logistics Use of raw materials supplied by local suppliers. Reduced cost and complexity of supply chain incurred by the company. Compliance labelling system for raw materials as well as finished goods. Operations Adoption of various measures to reduce cost of production and distribution. Extended network of suppliers and business partners in the Eurasia region and the Middle East. Exploitation of existing technological base in Russia to improve production capabilities and enhancing cost structure. Maintenance of good relationship with retailers and customers. Outbound Logistics Trusted partnership with a number of logistics specialists. Outbound logistic activities smooth flowing, particularly, transportation to and from warehouse and distribution through different distribution channels. Marketing and Sales Use of different sales and marketing techniques to increase the expanse of target customer base. Employment of brand ambassadors from among local celebrities to increase recognition of the brand among target customers. Customer Service Active participation in customer surveys to collect customer feedback. Emphasis on customer service facilities in remote areas. Secondary Activities Firm Infrastructure Strong infrastructure for research into modern preferences of customers. Well developed units for market development and corporate function management. Human Resources Management Possession of high skilled resource base. Stringent recruitment process to check the suitability of the employee with the organization culture and work regime. Technology/R&D Highly advanced research facilities allow adoption of advanced technologies in production process. Decentralised research units allow the company to develop in a synchronised manner with the technological advancement of the society. Procurement Emphasis on reducing lead time required for supply chain management. Highly leveraged buying power by the firm through the implementation of software based management of procurement. SWOT Matrix Strengths The company has a strong financial position. Good market share in Russia. Strong brand image. Low competitive pricing strategy. Good public relations. Weaknesses Lack of coverage across the vast expanse of the country. Lack of diversity in customer service according to diversity in customer base. Problems arising due to lack of communication. Opportunities Opportunity to acquire some of the domestically operating companies in Russia. Make further innovation on the basis of the existing infrastructural framework. Widen customer target base by utilizing change in customer preferences. Threats High competition from rivals. Economic slowdown after financial recession. Lack of aggregate demand. Existence of price wars. 3. Marketing Strategy The marketing strategy is a framework that is developed after detailed study of the company’s operations and its current market performance. On the basis of the marketing audit, several issues have been identified that on the basis of which marketing strategy is developed. Product strategy Product strategy acts as one of the most important part of marketing strategy. A properly developed product strategy occupies a primary position in the market performance of the company (Singh, Gordon and Purchase 35; Cavicchi 311). River Island offers a wide range of products. The company concentrates on providing a large variety of clothes, including, jeans, skirts, dresses, jackets, woollen clothes, shoes, fashion jewelleries and various other fashion accessories (Riverisland, 2013). However, it has to select its product portfolio in such a way that it makes maximum effect on its customers considering their diversity (Moghaddam and Foroughi 20). The product offerings should be improved in such a way that they can adjust with the changing nature of the preferences of the customers (Juwaheer, Pudaruth, and Noyaux 40; Singh, Gordon and Purchase 35). Pricing strategy Product pricing is another important part of marketing strategy developed by any firm. Pricing strategy is crucial for River Island in Russia. This is because the company is operating in a vulnerable market. The Russian market is developing at present and is displaying significant inclination towards foreign goods. Therefore, many companies using this ground to enter the Russian market. In this situation, River Island has to hold on to its market position through implementation of careful marketing strategies. Since, the company offers quality products at a low price it enjoys an advantage over other market players. However, it has to update its pricing strategies so as to ensure that it captures a large market share so as to gain maximum profit from the low per unit price of its products (Richter and Pahl 34; Sharma 204). Place strategy The place at which the stores are located plays a critical role. This is because the position of the shop determines the level of customer traffic. Since Russia is a country with vast geographic expanse, it is important to identify the strategic locations at which the company should be located (Pride, Hughes and Kapoor 23). These locations should be chosen not only in city areas, but also in suburban areas or city outskirts, so as to bring the population living beyond the cities into the target group of customers. Promotion strategy Promotional activities act as drivers of the marketing process. If a company succeeds in promoting its products, it implies that it has been able to reach the target customers effectively. This would turn into good market performance for the company. Therefore, River Island has to adopt aggressive promotional strategies. There are few other players in this industry and there is strong rivalry amongst them. Strong promotion would ensure that the prospective customers would identify themselves with the brand easily and make greater amount of purchases. The brand value rises with promotional activities (Monczka 51). Positioning strategy The position of the company depends on its overall market performance including post sales service relationship with its customers. By developing this strategy effectively, the company can ensure how it can establish itself in the minds of the consumers. The main aim of River Island is to offer ‘value for money’ to the customers. The company offers high quality products at reasonable prices. This helps allows it to satisfy its goal. However, the company has to constantly update its product portfolio along with their prices so as to maintain parity with other factors, such as, technological development and average income of the society. Product proposition An effective and practical product strategy embodies the growth path of a company. If a company offers quality products at reasonable prices, it would be one added advantage for the company that would help in attracting customers. The company might add new products to its existing product line (Croft 38). Entirely new range of products would require fresh marketing activities in order to gain customers’ confidence. Alternatively, River Islands might introduce various modifications in its product line. It might modify its existing products by introducing some new features in its existing products or by improving the existing features. Relational and sustainability strategy Relationship with customers occupies the central position in the marketing process by any firm. As technology is advancing rapidly, business environment is becoming more complex. In this situation, companies face increased necessity to maintain direct relationship with the customers. This is important because the perception of customers is held in high importance by the companies. River Island has implemented CRM (Customer Relationship Management) software in order to increase interaction with customers and enhance the management of customers’ feedback. Developing a sustainable business depends on the social responsibilities fulfilled by the company. In Russia, most companies do not show much social responsibility and awareness towards the society and environment is low (Boone and Kurtz 45). River Island has adopted a socially responsible development path. The company has to make various CSR (corporate social responsibility) activities to improve company image in minds of its customers (West, Ford and Ibrahim 17). 4. Objectives and Targets The company has to adopt various strategies in order to fulfil its business objectives. These business objectives are developed by keeping in mind the short term and long term goals of the company. Implementation The company has to implement its strategies through the following ways: Conducting a pilot study before implementing the actual strategy. Forming a committee that would study the positive and negative impacts of the strategy. Sharing the benefits of the plan with the stakeholders. Monitoring Monitoring the performance of the company is important since it would enable the firm to modify its strategies according to the needs of the market. Monitoring the return on investment and increasing it by 5 percent in the next four quarters. Monitoring to what extent are the objectives fulfilled. Monitoring the market share. Control Develop a plan B for the strategies developed through study of the company situation. In case of a new product development, if the product does not fare well in the market, it has to be withdrawn after monitoring its performance for three months. If after modification of a product, its market share does not improve, new promotional strategies might be adopted for the product. 5. Conclusions River Island is operating in a consumer market that is undergoing radical changes. The Russian market is currently becoming more open to the western world and the major changes are noticed in the world of fashion. In this scenario, River Island has adopted a number of strategic choices that are expected to increase the company’s market share and improve their overall annual turnover. The company might adopt the policy of expanding its product line since it has the potential of attracting more customers and increasing customer base. The price level should be kept low. It would satisfy the objective of offering value for money to customers (Beri 16). However, the strategy of expanding the location of the stores beyond urban areas entails a risk of incurring higher cost in the initial years than revenue (“Party People”). Upbeat promotional strategies might also increase cost to the company significantly. Yet, if these strategies are implemented effusively, it would ensure that the company be able to earn positive profit in a few months time. The promotional activities should be made in such a way that their effect is maximised on the middle income class. This is the class that has a taste for the foreign brands makes maximum purchase from the retail chain shops. Apart from them, the low priced products should be promoted more in the outskirts of the city areas so as to develop a taste for these products among the population that do not have a history of using such products (Boone and Kurtz 40). This would pave the way for future expansion into these areas. Works cited Agarwal, Ravi, Wolfgang Grassl and Joy Pahl. "Meta-SWOT: introducing a new strategic planning tool." Journal of Business Strategy 33.2 (2012): 12 – 21. Print. Bacon, Jonathan. “Reaching Russia’s lucrative layer.” Marketingweek. 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"Exploring SWOT analysis – where are we now: A review of academic research from the last decade." Journal of Strategy and Management 3.3 (2010): 215 – 251. Print. Juwaheer, Thanika Devi, Sharmila Pudaruth, and Marie Monique Emmanuelle Noyaux. "Analysing the impact of green marketing strategies on consumer purchasing patterns in Mauritius." World Journal of Entrepreneurship, Management and Sustainable Development 8.1 (2012): 36 – 59. Print. Karadakis, Kostas, Kiki Kaplanidou and George Karlis. "Event leveraging of mega sport events: a SWOT analysis approach." International Journal of Event and Festival Management 1.3 (2010): 170 – 185. Print. Moghaddam, Farshid Movaghar and Amir Foroughi. “The Influence of Marketing Strategy Elements on Market Share of Firms.” International journal of fundamental psychology and social sciences 2.1 (2012): 19-24. Print. Monczka, Robert M. New Product Development: Strategies for Supplier Integration. Wisconsin: ASQ Quality Press, 2000. Print. Novicevic, Milorad M., Michael Harvey and Chad W. Autry. "Dual-perspective SWOT: a synthesis of marketing intelligence and planning." Marketing Intelligence & Planning 22.1 (2004): 84 – 94. Print. “Party People.” Riverisland. River Island, 2013. Web. 18 Nov. 2006. Pride, William M., Robert J. Hughes and Jack R. Kapoor. Business. Connecticut: Cengage Learning, 2011. Print. Richter, Anne and Nadine Pahl. SWOT Analysis- Idea, Methodology and a Practical Approach. Munich: GRIN Verlag, 2009. Print. Sharma, Amalesh. "Take-off of online marketing: casting the next generation strategies", Business Strategy Series 12.4 (2011): 202 – 208. Print. Singh, Tanuja, Geoffrey Gordon and Sharon Purchase. "B2B E-Marketing Strategies of Multinational Corporations: Empirical Evidence from the United States and Australia." American Journal of Business 22.1 (2007): 31 – 44. Print. West, Douglas, John Ford and Essam Ibrahim. Marketing Strategy: Creating competitive advantage. Oxford: Oxford University Press, 2012. Print. Read More