Task 1: Situation Analysis
Office is a high end market retail chain of shops that deals with shoes. The shop dates back in 1981 when it was founded in London in the shopping Mecca. The retail shop did not take long to establish itself in the market that was no so competitive back then and after just 3 years of trading, it opened its first stand alone Office store. The store was located on Kings Road which is indicated among the top shopping destination in London. This formed the foundation of what would become an international retail chain with several other affiliates key among them being Offspring (sports wear), Poste (men’s footwear boutique) and Poste Mistress (Ladies footwear boutique). The retail chain expanded its operations to Emerald Isle between 2004 and 2010 and has a total of 91 stores in UK and Ireland with concessions in New York City, Chicago and Las Vegas.
Office has made tremendous strides in a quite competitive market and it doesn’t seem to slow down any time soon. The acquisition of the retail chain by Silverfleet Capital which specializes in mid market buyouts opened a third phase for the retail chain. Having been bought by Sir Tom in 2003, the retail shop is expected to grow further under the management of Silverfleet capital. After the buyout one of Silverfleet capital partners Gareth Whiley indicated there will be opening of more stores in UK and overseas (Hall, 2010).
The retail chain stands at a strong financial position especially after the acquisition of Silverfleet. Not only does it give the retailer a bigger financial capacity but it also provides more expertise which essential in the current market. Under porters five forces model the only challenge is competitive rivalry. The model assumes that the competitive power of a business is determined by five main forces which are supplier power, competitive rivalry, buyer power, threat of new entry and threat of substitution (Manktelow, 2012). Though the high end shoe market is a new phenomenon, Office is not rated among the top 10 retail stores in London (Dorran, 2011). The buyers’ power is quite high while the supplier power is able to meet the demand. Being an already established business, Office does not consider new entry as a major threat. The threat of substitution is quite high; however this threat is solved by the creation of a brand name and customer loyalty. It is important to note that the strength of these forces means that Office cannot use prices as a competitive tool (Hill & Jones, 2008).
Task 2: Goals & Objective
The shoe fashion is an emerging trend in the UK and has the potential to grow and become a major trend in the near future. Therefore the main goal of the retail chain is more growth. This is in agreement with Silverfleet capital partner Gareth Whiley who indicated that after the acquisition, Silverfleet would expand the number of stores both in the UK and oversees (Hall, 2010). Silverfleet’s presence in a number of countries poses a great potential which Office can exploit. The success of concessions in USA also indicates a potential opportunity which Office should take advantage of and expands its stores number.
Under the leadership of Sir Tom, the retail chain grew from a simple 23 store retailer chain to a 75 store dominant UK fashion footwear retail chain. The revenues of the retail chain also grew tremendously to the £146m mark indicating tremendous growth. The acquisition by silverfleet which has over £600m of investment money at their disposal forms the next phase of development. The retail chain should take advantage of the emerging trend and open concessions such as the Selfridges concessions. The goal should be to open 50 new stores in UK and Ireland and 5 stores in other European countries where Silverfleet has its operations.
Task 3: Target Market
Market segmentation is long and complex process as it involves various variables which may be a source of segmentation which also have subdivisions. Retail fashion market can be segmented into broad categories which have subdivisions. These segments include; gender related segments, age related segments, geographic segments, behavior related segments and lifestyle segments (Suttle, 2014). Contrary to the pricing theory which was the basis of market segmentation, the inclusion of segmentation among the core principles of marketing has given market segmentation a whole new approach other than just general pricing. The increased efforts to increase the target precision have made market segmentation to be the focus of the buyers that the company has the highest chance of satisfying (Quinn, Hines and Bennison, 2007).
Office retail chain stores are a high end retail chain whose target market is the rich and fashionable. This segmentation is guided by two main features which are the economic status and the behavioral segmentation. The stores are located in the high end shopping streets and offer the latest fashion in the market. Through branding the retail chain is able to create brand loyalty and keep new products on the shelves as new trends of the brands emerge. Office has also categorized some of its affiliates into gender related segments and lifestyle segmentation. The Poste and Poste Mistress are gender segments while the Offspring is a life style segment targeting individuals involved in sports. This is the most profitable target market for a market that has not been attracting a lot of fashion attention in the recent past. However as interest in the market trends increases there is need to focus more on the youthful segment such as individual urban trend which is a more complex female segmentation.
Task 4: Proposed Strategy
The growth of Office is based on its already established brand name and success in the UK. Office intends to build on its attributes as a trusted high end retail chain store offering the best and latest brands in the industry. The effective branding of the retail chain gives it an edge over its competitors as it is the chain’s key selling point in UK. The growth plan which targets the local and the oversee market will follow the business’s strategic location of stores in the cities and towns that it will be located. To fit into the new countries in Europe, Office location is restricted only to posh streets and shopping complexes.
The finances and networks of Silverstreet will be of great use in the establishment of new stores around Europe. The finances will come in handy in the high marketing expenses that the business has to undertake in introducing itself in the new market and pay for operational expenses during the establishment of the business. Other than establishment of new premises in every country, the business is open to partnerships under the condition that the business will be allowed to brand its products. The growth plans in UK and Ireland on the other hand will have promotion and discounts as the major marketing strategy. Being an already established brand in the UK, Office just needs to attract the local clientele through discounts and promotions (Lavinsky, 2013).
The European market is quite competitive and the marketing mix that a company employs at the inception determines both the short term and long term effects. The most common approach is the 4ps approach, however in such a competitive environment advancement of the strategy to a 7p is a better idea. The 7ps represent the product, prices, place, promotion, physical evidence, processes and people (Hanlon, 2013).
Task 5: Place
The fact that the business deals only with high end products limits the location of its enterprises around Europe. For any business to succeed the location of its premises and its advertisement must be strategic ( Bitner & Booms, 1981). Therefore the business will use the networks of Silverstreet to establish connections with individuals or organizations which will be of help in acquiring premises in the high end streets or shopping complexes. The advertisement however should be tailored not only to fit the specific markets cultures but also to fit the timing. The location of the advertisement should be strategic and popular. The management of logistics will be a complex affair due to the use of different currencies. However, since all the Europe stores will be using the Euro, the products will be produced and branded independently in each country but will have the same pricing and promotions. The financial records will be compiled quarterly for all the European stores (Germany and France) and transmitted to the end offices in UK so as to monitor the progress.
Task 6: Product
The fashion industry is a volatile and a fast business to be in; it will always keep an organization on its toes. Therefore the trends will be developed from a joint location involving participants from all the stores. This will enable the collaboration of minds and ideas so as to come up with products that not only identifies with the trend but also has the identity of Office. For a business to succeed the product must be more than keeping up with the trends. The fashionable products should have been a product of consideration of the consumers’ feedback and the market trends. It is also important to note that Office has branding as part of its identity thus forming a crucial part of its products. The branding of the products will be done independently due to the use of different languages and feedback. The branding however will follow a common approach so as to maintain the identity.
Task 7: Price
The expansion of Office operations will be major breakthrough not only in terms of growth but also in terms of finances and operating costs. Office has had quite a hard time in getting a breakthrough in the market share. Though it has gained popularity, the market share is still low and it’s considered to be among the top 10 leading fashion brands in the UK. The main cause of this is the finances and time of existence. Most of the leading businesses have been in existence since the 1980s and early 1900 and therefore have great deal of goodwill and finances. The growth of Office will mean more purchases and hence more discounts from the suppliers. Since prices are not an effective tool in the high end market, the business will use promotions and discounts in the new markets to get an edge over its competitors. This will maintain the consumers’ confidence in the product value but still attract a greater number of customers from whom we will create loyalty.
Task 8: Promotion
Promotion is usually considered the most crucial element of the 4Ps marketing mix which is not the case. Each of the elements will have almost equal importance and effect. If you promote a bad product it will fall as fast as it picks if it picks at all, on the other hand, a good product that is not promoted will not sell (McCarthy, 1964). The role of promotion is to create mutually satisfying exchanges with the target market through informing, educating, and persuading reminding them on the benefits of the product (Lamb, Hair and McDaniel, 2010). Promotion however does not guarantee sales.
Human beings always attach meanings to certain feelings, ideas, emotions and attitudes. Promotion therefore attempts to capture the feelings, ideas and emotions through communication. In this process there is exchange of information and meanings which is the aim of the promotion. The message being transmitted may either be encoded or in plain language depending on the target market (Lamb, Hair and McDaniel, 2010). Office target market being an informed part of the society, encoded messages is more effective. The communication is coupled by loyalty schemes so as to tie down the consumers who visit the shop. This may be in form of shopping cards or merchandise to frequent customers and high spenders.
In establishing a new product, the most effective promotion tools are sales promotion and advertising (Young et al, 2008). For new products a certain minimum level of exposure is required for there to have impact on the sales. Therefore in the European market, advertisement must be included in the promotion. Sales promotion the other hand is the short term campaign to build up the sales of the stores. This will mostly be in form of specific percentage of discount subject to the amount spent and may last for a longer period than theoretically prescribed. Public relations and personal selling are always part of the stores and are applied throughout the year. This is done by the staff advising customers on what the best product for their activity or event and on the latest trends and products.
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