Marketing Analysis of Matalan in Saudi Arabia - Case Study Example

Institution Logo: Title: Matalan in Saudi Arabia Authors Name: Date: Supervisor’s Name: Program of Study: MATALAN IN SAUDI ARABIA 1.0 Introduction Matalan is a British company that largely specializes in fashion and home ware. The company was founded in 1985 by John Hargreaves. Since then, it has opened numerous stores throughout the United Kingdom. The company has chosen outside the town as the ideal location for its stores. In addition to the UK, Matalan has opened stores overseas, in countries such as UAE, Jordan and Saudi Arabia. For the purpose of this report the focus will be on Matalan as a fashion dealer. The objective of this report is to critically assess the global macro environmental factors that are most likely to influence the company’s operation. The report will also evaluate the development of a marketing information system. 1.1MACRO ENVIRONMENTAL VARIABLES According to Mead (1988:67) Macro environmental factors refer to external forces that cannot be influenced by the operations of the company. These factors have an indirect impact on the company and can affect the company’s operations either positively or negatively. The company has to take these factors into consideration when carrying out ecological scanning. This will aid the company to understand the threats and opportunities presented by these factors and how to modify its premeditated plans in order to secure a competitive benefit. These variables include economic, social cultural, changes in technology, international and political-legal factors. Economic changes Economic factors are the characteristics and directions of the system of economy within which the company operates. They include population income distribution, payment balance and government financial policies. The influence of these factors varies depending on the industry. In a clothing industry these factors can affect its present operations as well as future planning. During periods of economic downturn, the company will suffer low profits, low rates of production, decreased productivity and hiring. Consequently, the company will benefit in various ways, decrease in wastage, more practical perceptions of working environment, exit of some companies and a more proficient arrangement Mead (1988:49). During a thriving economy, people’s income levels increase. The clothing manufacturers will experience increased sales since people will purchase more clothing. The profit levels and the rate of production will also increase. The company may increase the price of the product without losing potential customers Nolan (1999:67). Technological changes Technological changes are inevitable in any society and business companies need to consider them during their strategic planning. These changes may influence the demand for a company’s products, processes involved in production and access to required raw materials. Many companies are able to market their products online through internet due to new computer technologies. This has led to high demand of certain products since the products are accessible to many potential customers. Technology can make a company to get rid of some products from the market. For instance invention of new clothing styles will shift the demand from the outdated one. New products require new methods of production as well as equipment. For instance, if a clothing company installs robots, human workers will be displaced. The company will not only incur installation costs but will have to train its workers on how to operate the complex machinery. Technological changes, therefore, presents both opportunities as well as threats to an organization Theodore (1983:78). Legal and Political Factors Legal and political factors include such issues as the rights of the workers, laws against child labor. These issues have repeatedly affected the clothing industry. Union workers may protest against their employers if their earnings and health benefits are less favorable in comparison to those of workers in other industries. When the worker strike the rate of production is consequently affected. This in turn results in delays in the supply of the fashions currently in demand. Firms that originate from countries that violate child labor laws may suffer when activists picket wholesalers and retailers who purchase cloths from them. The child labor laws may limit the durations the minor are supposed to work. The firm will therefore be forced to hire extra labor to cover up for the time when the minors cannot work. The small business retailers suffer loss of profits and alter business operations. A new medical or protection law will require that the company employs new staff to supervise the purchase of new equipment Theodore (1983:60).Recommendations 1. The company should monitor the environment closely for new changes in technology. It should, however, concentrate on those technological developments in other industries other than clothing as they might affect the clothing industry Theodore (1983:60). 2. The company should limit purchases during periods of economic downturn. This will facilitate repair of the existing equipment and reduce wastage Theodore (1983:56). 2.0 CULTURE Saudi Arabia is an Islamic religion and its government does not support freedom of worship. The Islamic customs has unique clothing which is consistent and pure. Muslim women are not allowed to wear clothes that expose their bodies. For instance it is unlawful for a Muslim woman put on a swim wear. Muslim women should wear clothes that cover the whole body. The most suitable clothing therefore is a huge robe. The women are also not allowed to wear belts. The Islamic region advocates for cleanliness of the body. The man therefore wears chantou and the women wear hijab in order to keep clean. The main aim of this clothing is to block the dust and sand thus keeping the body clean Theodore (1983:67). The Islamic religion therefore will dictate the design of the clothes to be produced by the company. The firm must revise its strategic planning as well as operations in order to meet the needs of the prospective customers. For instance if the company designs clothes that are not in line with the Islamic beliefs it could suffer legal consequences Theodore (1983:49). 2.1Consumer preferences Customer preferences influence organization and their strategic planning. For example, what was fashionable and trendy ten years ago may not be well-liked today or even five years down the road. Various styles preferences can destabilize long victorious products and services. A clothing company should be familiar with the dynamic preferences when planning product introduction or it will swiftly become archaic Theodore (1983:45). 2.2Demographic changes Population changes are a crucial variable in the business environment. Aging population for instance would prefer loosely fitting clothing. On the contrary, young people prefer trendy fashions. Changes in gender, racial, religious ethnic proportions in the society may have a noteworthy effect on the company’s operations. In Saudi Arabia, the majority are Muslim. If Saudi Arabia gives its citizens freedom of worship some may convert into other religions such s Christianity. The clothing manufacturers will, therefore, have to adjust their operations in order to cater for the non Muslims as well Mead (1988:34). 2.3Culture and advertising The prevailing culture in the environment greatly impacts on adverting. Companies and adverting agencies need to keep track of pulsation of the environment and societies in which they carry out their business activities. When advertising, the firm should take into consideration such factors as change in morals and values as well as fashion Mead (1988:23). 2.4 Social organization Social organization varies from one society to another and is determined by culture. In order for the company to succeed it must try to understand the social cultural environment in its immediate environment. It is therefore wrong to assume that the view or opinion held in one’s culture is common. For instance the choosing of employees based on merit is given priority in some countries such as USA and Canada. In Saudi Arabia the same view is not held and it could be wrong to hire a stranger in place of a relative Mead (1988:23). 2.5 Language Language plays a very important role in global business. For a business organization to succeed in Saudi Arabia it is important that they understand the countries national language. The difficulties in understanding the language involve difficulties in distinguishing different languages and cultural variations in speakers of the same language. Language can be barriers to successful global business Nolan (1999:35). . 3.0 DEVELOPMENT OF MARKET INFORMATION SYSTEM 3.1Definition Different scholars have defined Marketing Information System in different ways. A marketing information system involves the collecting, storing and analyzing of marketing data. It also includes the distribution of the marketing data to the management authorities regularly according their informational requirements. The development of an efficient marketing system is very important since the success of businesses relies on understanding the specific needs of the consumers. The information gathered is important in decision making Nolan (1999:45-56). 3.2Structure The main objective of marketing is to plan. Promote as well as sell services and goods so as to meet both the customer’s needs and the aims of the company. Marketing information systems aid in making decisions regarding market mix, product, price, place and promotion. There are different data and information sources for a marketing information system. The sources of information can either be internal or external Mead (1988:34). 3.3Market Research Boundary spanning brings information about the market to the company. It involves market research whose main aim is to gather data from the real customers as well as the prospective customers. It is important for the organization to identify the needs of the customers as this leads to excellent management. The organization can ease data compiling by embracing modern technology such as electronic commerce. Marketing software play a very important role in the analysis of statistical data. This helps the firm to compare the customer’s behavior to other geographic factors Nolan (1999:42). . 3.4Marketing Intelligence The main responsibility of marketing intelligence is to collect, interpret data concerning the organization’s competitors and distribute it to the suitable users. The information regarding competitors mostly comes from, cooperate yearly reports, media and external reports. Currently the internet plays a crucial role as a source of information to the competitive intelligence Nolan (1999:49). 3.5Market mix subsystems It is responsible for making decisions concerning the introduction, promotion, pricing and distribution of the product. Market mix subsystems include product, place, promotion and price subsystems in addition to sale forecasting Nolan (1999:45). 3.6Product subsystem The product subsystem is responsible for planning the introduction of new product in the market. Though introducing new products is risky, it is very important in the current competitive world which is characterized by rapid changes Theodore (1983:30). A Market information system offer great support to process of introducing new products. It plays an important role in helping designers with their knowledge vocation. It is also useful in assessing the planned new products. Place subsystem helps the decision makers to avail the product to the consumer at the appropriate place and time. It is responsible for planning channels of distribution tracking their performance. Information technology has facilitated information availability on mobility of the product in the channel of distribution. Some of these innovations include the bar code reader and point of sale scanning Theodore (1983:29) 3.7Promotion subsystem This is the most is highly developed subsystem because it supports both the private selling and product advertisement. Media assortment parcels assist to choose avenues to convince the prospective buyer. They include mails, electronic and print media. There is continuous monitoring and adjustment of the selected media package for its effectiveness. Database marketing largely depends on wide spread databases segment prospective buyers and reach them with promotional information. Today the use of telephones in product marketing is very common. Information technology supports the management of sales Mead (1988:29). The analysis of consumer profitability identifies high profit buyers and implements strategies so as to retain them. Equipping the sales team with computers that are connected to the corporate information assists the firm to access information and reduces paper work which is rather tedious Theodore (1983:24). 3.8Price Subsystem Access to databases containing clothing industry prices can assist in making product pricing decisions. These decisions must take pricing objectives of the company into consideration. The common strategies vary from maximizing the profit to incurring profit reductions in order to raise the market share Mead (1988:23). 3.9Sales Forecasting Sales forecasting and development of a full marketing plan is based on the designed marketing mix and stupendous orders. The quantitative methods employed in sales forecasting are usually altered with human insight and practice. To a large degree, the actual sales rely on environmental dynamics Nolan (1999:45). 4.0Benefits The company can benefit from the marketing system in different ways. It aids managers to be familiar with the current market trends and make the right decisions. In addition to this, it facilitates efficient market planning. Market planning is useful in terms of product pricing, promotion as well as distribution. Without sufficient information market planning will be impossible. The process of decision in an organization is easily reached when there is fast flow of information. Well designed market information systems ensure availability of applicable and consistent information. This in turn improves the quality of decisions reached by the managers. Therefore, well designed and managed market information systems will enable managers to make right decisions at the right time Theodore (1983:67). Works Cited Mead, R. (1988) International Management: Cross-Cultural Dimensions. Cambridge, MA: Blackwell, Nolan, W. (1999) Communicating and Adapting Across Cultures: Living and Working in the Global Village London: Bergin & Garvey, Theodore, L. (1983) The Globalization of Markets , London: Roydon . . Read More