Strategic Marketing Report

This report analyzes the strategic marketing options for Aracadia Group, a UK-based retail company, as it plans to enter the Brazilian market. It examines the external environment using PESTLE analysis, explores various market entry options including exporting, franchising, and joint ventures, and delves into market segmentation strategies. The report also discusses Porter's generic strategies and recommends franchising as the most suitable market entry option for Aracadia Group in Brazil.

Strategic Marketing

EXECUTIVE SUMMARY
Strategic Marketing is a concept of marketing that explores coordinating a company's
competence with the wants and needs of customers. Strategic marketing is used by companies to
create a plan to better reach and satisfy customers while increasing productivity and profitability.
In order to identify the goals and objectives of company, strategic planning is very useful. This
report will make understand the analysis of external environment of Brazil that affects the
company as well as opportunities and threats that company will face is also discuss in this report.
Aracadia Group should have to follow and obey the political conditions of Brazil government, so
that company can overcome the negative impact. Aracadia Group can introduce products with
high innovations and can take advantages of providing highly innovated product to Brazilians. IT
sector of Brazil is on developing stage and it has 53rd rank in the world. Aracadia Group can
resort to franchising its brand name to other personnel who are interested to undertake the name
of the company. This will give benefits to company to create a brand image of their business in
the mind of consumers and capital. Aracadia Group is operating in retail sector in clothing and
shoes. So, it can take opportunity to target he audience in all segments i.e. on behavioural,
demographic, geographic and psycho-graphic segments it is because company is selling clothes
and shoes which is the need of each and every person of all the segments. Aracadia Group can
also target its audience through social media by making pages or webs on Facebook, Instagram
etc.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
PESTLE Analysis ...........................................................................................................................1
MARKET ENTRY OPTION...........................................................................................................3
MARKET SEGMENTATION........................................................................................................6
PORTER'S GENERIC STRATEGY ..............................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Strategic Marketing is a concept of marketing that explores coordinating a company's
competence with the wants and needs of customers. Strategic marketing is used by companies to
create a plan to better reach and satisfy customers while increasing productivity and profitability.
In order to identify the goals and objectives of company, strategic planning is very useful (Tsui,
Warburton and Wang, 2012).
In this context, Aracadia Group has been chosen which is operating in retail industry of
UK. Its headquarters are in London and W1 United Kingdom. The main products of Aracadia
group are clothing, accessories and shoes. It has more than 2500 outlets in United Kingdom.
Aracadia Group is going to expand its business in Brazil as it is the fifth largest company of the
world in terms of population and area. This report will understand and discuss the analysis of
external environment of Brazil that affects the company as well as opportunities and threats that
it will face. Furthermore, various marketing entry options will also consider in this assignment.
Besides this, market segmentation and porter's five forces will also be considered in this report.
PESTLE Analysis
Pestle analysis is a designed framework that is used to analyse the impact of external
factors or micro-environment that has great impact on the functions and operations of business.
This concept is used as tools by Aracadia Group to track the environment where they are
working or planning to introduce or launch its products and services in market (Bowie, Brookes
and Mariussen,2016).
In order to track the environment of Brazil, Aracadia Group is using this tool to analyse
various factors such as political, economical, social, technological, legal and environmental.
Political- Political factors have great impact on the operations and functions of all
companies. It includes imposition of taxes, duties, fiscal policy, and trade tariff by government
bodies. Political factor creates great pressure on company as it reduces the revenues or profits.
The political situations are not stable in Brazil because government is stable and proactive.
Therefore, Aracadia Group should follow and obey political conditions of the Brazilian
government to overcome the negative impact. Excessive taxation by government becomes a
threat for the company as it reduces profits and revenues.
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Economical- Economic factors also lead to great impact on company’s profit as well as
on operations and functions (Bilotkach and et.al, 2015). This factor has long-term effects on
company. Economic factor includes rate of inflation, interest, foreign exchange as well as pattern
of economic growth. Aracadia company is going to establish its business ion Brazil in the period
if inflation; company can take opportunities of inflation period and can charge high prices for
their products and services. Brazil has very large population and the gap in between poor and
rich is declining rapidly. Now, government of Brazil has control the rate if inflation and decrease
the currency risk. Addition to this, in the period of Recession, Company has gone to heavy losses
which in turn reduce the demand of the products as well as profits.
Social- Social factor is a key element in bringing business to success. It includes cultural
trends, population, demographics, living standard of people etc. Aracadia Group can take
opportunities of social factor as the population rises with tremendous growth at Brazil as well the
people are highly demanding for clothes and shoes in Brazil which is a big opportunity for
Aracadia Group. About 75% Brazilians are middle class, which are very demanding and their
living standard is up to date. Company can also sale its products online as Brazilians are also
done shopping from online. Thus, Aracadia Group can expand its business in Brazil.
Technological- In the era of modernisation, technological factors are on peak. These
technological factors have large impact on company's profits and productivity favourably or
unfavourably. In order to overcome the negative effect of technological factor on Aracadia
Group should conduct research and development, as well as automation as they should be aware
of technological advancement to achieve success in the market. In the field of technological
advancement or innovation, Brazil is weaker and slower than other countries like Russia and US,
which become threat for company. Aracadia Group can introduce products with high innovations
and can take advantages of providing highly innovated products to Brazilians. IT sector of Brazil
is on developing stage and it has 53rd rank in the world (Mills, 2017).
Legal- Legal factors affect the business in both inside and external conditions of
company. Company also formulates some legal laws and policies, which affect the company
inside and legal laws and policies formulated by the government can affect entire functions and
operations of business. Legal laws created by the government of country are consumer laws,
labour laws, and health and safety laws; similarly the government of Brazil also has their laws
and policies, which protect corruptions and destruction of the society. Aracadia Group must obey
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all these laws and policies of the Brazilian government and take benefits of increasing
confidence in front of Brazilians.
Environmental- Environmental factor has huge impact on companies profit and its
operations. Environment factors include natural disasters, climatic conditions, global changes,
environmental offsets etc. These political situations have great impact on Aracadia Group as
supply chain of company gets affected; sometimes due to heavy disasters, company faced huge
loss of disasters. These factors cause stoppage of business is the biggest threat for Aracadia
Group (Lawton, 2017).
MARKET ENTRY OPTION
A strategy of market entry is a planned approach of delivering products and services into
a new market. These strategies of market entry is used by companies world-wide. In order to
achieve the goals and objectives of company in international market it is very essential to choose
the best mode of market entry. Following are the modes of entry in international market are-
 Exporting
 Franchising
 Joint Venture
Exporting- Exporting is the best way to enter into the new market. There are two types
of exporting like indirect exporting and direct exporting. In direct exporting, company sales its
goods and services in other country and in indirect exporting company come in contract with
other company and authorised them to sell their goods and services on their own behalf (Daries-
Ramon and Cristobal-Fransi, 2017). In order to enter into the new market through exporting, it is
very essential to decide that whether to supply goods by sales representatives, foreign retailers or
distributors or to sales directly to the customers. In direct exporting, market research plays a vital
role as it is very important to know the needs, wants, preference of people living in other
country. There are some advantages that direct exporting has like control of price and brand is
remain in the hand of company itself, company can understand the needs and wants of customers
directly, customer relationship is also remains in the hand of company. But there are some
disadvantages also like it is very time consuming, it resources lots of energy, staff, money.
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Joint Venture- Joint Venture is creating new business by joining two companies.
Ownership is shared in Joint venture that is the unique feature of Joint Venture (Sheth and
Sisodia, 2015). There are some factors that encourage Joint Venture such as technological,
social, economical and political. In Joint Venture, both parties are responsible for all the loses,
profit, cost, and all other expenses. Joint venture is different from partnership as in partnership
two persons come in contract with each other but In Joint Venture, two companies come in
contract with each other. Come in contract with an already existed organisation may lead the
existing business to gain profits, without considering any market research and development or
marketing strategies on a large scale. When company wants to elaborate its network of
distribution into a new country, Joint Venture is the best way to enter into new market. There are
many advantages of entering into the new market by Joint Venture like it provides enough fund
for big project, there is sharing of risk in between partners, it renders skills, marketing,
technology, expertness to both the parties. There are some disadvantages too such as there are
great chances of battles and conflicts among parties, there is delay in decision making activity as
one party decision affect other party which results in increasing of cost. In Joint Venture, there
are the chances of collapse of the venture as because of entrance of competitors (Pappas and
Apostolakis, 2016).
Franchising: The said association can adjust to diversifying its name to other expert in
the market and accordingly, win benefits (Mason, 2015). Diversifying is a procedure which
incorporates the contribution of franchiser and franchisee in the operational exercises. Franchiser
is the organization that gives its name to the nearby business person or individual to maintain its
business and in this manner acquire benefits, while, franchisee is a man which works with the
brand name given by the franchiser and gives a piece of its salary to him and appreciate the rest
as possess benefits. This kind of business action can be demonstrated as the most gainful for any
association, as this decreases the cost of leading a high yielding examination system for the
concerned firm. This is conceivable, as the franchisor just appreciates the benefits by only giving
its image name to a man. That individual, who is named as franchisee needs to do all the wander
related exercises with regards to the firm. Diversifying would be a few points of interest and a
few drawbacks like that of danger of business getting fizzled is lessened by this method of
passage with having your items and administrations as of now been settled. The association with
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your providers would as of now been on great terms and conditions which won't enable
organization to tumble down. Then again burdens could resemble that cost to the firm is
moderately higher than it was acknowledged and the concurrence with that franchisee is
additionally having numerous limitations (Lusch and Vargo, 2014).
There are different strategies of marketing that can be undertaken in respect of these three
modes of market entry are describes as follows- Aracadia Group can resort to franchising its
brand name to other personnel who are interested to undertake the name of the company. This
will give benefits to company to create a brand image of their business in the mind of consumers
and capital. They can reach to maximum customers in Brazil if company is going to adopt
franchising. Thus, Aracadia Group are planning to enter into the new market of Brazil retail
industry should select the Franchising more of entry which will be very beneficial for company.
These all are the strategies of market entry which is the main methods or techniques for entering
into the new market but there are further methods also which is described below can Arcadia
Group can use are as follows-
Licensing- Licensing means when one company gives permission to another company to
manufacture its goods for specific payment. This is the most profitable way to grow and develop
the business. Listening patent, trademarks, copyrights and other intellectual property are the
element of licensing (White Jr, T.H. et.al 2015). The fee of Licensing is small amount of the
sales price. In licensing, company get a portion of profit from goods or services sold as per the
license. Licensing offers many advantages like it makes company unique in the market. The
manufacture that leases is known as Licensor, and the producer of the nation that receives license
is called as the Licensee. In Licensing there are some advantages like it requires low investment,
low risk of finance, licensor can examine foreign market, the investment in Research and
Development is very low and the most important is it licensee does not bear any risk of product
failure. But there are some disadvantages also like in Licensing offers limited opportunities for
both parties, if one party do any misconduct that it will be beard by other company and there are
chances of leakage of secrets of licensor. In Licensing, the promotion of products and services
are the responsibility of both the parties.
Merger and Acquisition- Joining of two companies is known as Merger and Acquisition.
Merger and Acquisition is when home country merge itself with foreign company in order to
enter into new market. Other than this, when home country buy a foreign country and adopt the
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foreign company control and possession (Graham, 2016). This is also the best way to enter into
the new market. It takes place by buying of assert of company, by buying of common shares, by
exchanging of shares for asserts or shares. There are so many reasons why company go through
M&A, when there are financial synergy for low cost of capital, developing and growth of
organisations performance, considerations of tax and risk diversification. There are some
advantages of M&A like it increase the profit of company, host country takes advantages by
escaping overcapacity level but there are some major disadvantages too like it is a complex
process and it required specialist from both the nations and there are so many government
limitations.
MARKET SEGMENTATION
Market segmentation is the procedure of dividing a market of potential customers into
segments or groups on the basis of different characterise and features like gender, age and class.
It is a complete division of market into smaller subsets consisting of consumers with same taste,
preference and demand (Hjalager, 2010). One segment is totally differ form other segment. In
order to create custom marketing mix, market segmentation is very necessary. These segments
which is divided by company is influenced by various factors like attitudes, values, behaviour,
interest etc. These segments plays a vital role in determining the targeted audience. The targeted
audience are considered as per the taste and preference of various groups which is segmented
according to the market analysis. Segmentation of market provides company to focus and
understand the market in better way. Arcadia Group is targeting the city of Brazil which is Sou
polo. São Paulo, Brazil’s vibrant financial centre, is among the world's most populous cities,
with numerous cultural institutions and a rich architectural tradition. Company can grow more in
Sou Polo city which is the unique factor of this city. People of Sou Polo are very fashionable
which Arcadia can get opportunities and target the audience. In the management of retail
industry there five elements in market segmentation are as follows-
Geographic Segmentation- In this segmentation, market is divided on the basis of
geography like nations, states, regions and cities. It is very important for company to do
segmentation of market as because people belong to different regions have different perceptions,
needs and wants (Ghimire, 2013).
Demographic Segmentation- In this segment, market is divided on the basis of
demographic variables like age, size, gender, marital status, income, race, religion, job,
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nationality etc. For Aracadia Group this is the best way to divide the segment and target the
customers as because it deals in clothing.
Behavioural Segmentation- In this segment, market is divided on the basis of behaviour
of audience such as their attitudes, behaviour, preference, decision making and choice. In this
segment, audience is divided as per their knowledge, attitude, ex-users, potential users etc.
People can be labelled as brand loyal. They can be labelled as per there usage.
Psycho-graphic Segmentation- In this segment, market is divided on the basis of
audience personalities. Living standard and attitude (Garner-Muñoz and Perez-Amoral. 2011).
The behaviour of customers is influenced by their standard of living and their personality. It also
includes, attributes, habits, temperaments and attitude.
World Bank Data from Brazil-
Brazil-Statistics& Facts. With an area of approximately 8.5 million square
kilometres, Brazil is the fifth largest country in the world. ...Brazil's unemployment rate
has decreased considerably over the last ten years; while more than 12 percent of
Brazilians were unemployed in 2003, this rate was halved by 2012.
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Illustration 1: World Bank Data from Brazil
(Source: Annual GDP Growth of Brazil, 2017)

Brazil is currently going through a deep recession. The country's growth rate has
decelerated steadily since the beginning of this decade, from an average annual growth
of 4.5% between 2006 and 2010 to 2.1% between 2011 and 2014. GDP contracted by
3.8% in 2015, and is expected to fall at least 3% more in 2016.
After segmentation, there is next step which is known as target marketing. Breaking of
market into segments and concentrating on marketing efforts on a single or few key segments is
known as target marketing. While targeting the audience, it should always be in mind that
customers needs and expectations should closely match with the products and services which
company is offering. Marketing efforts is the beauty of target marketing as marketing efforts
includes pricing, promotion and distribution of products and services.
Aracadia Group is operating in retail sector in clothing and shoes. So, it can take
opportunity to target he audience in all segments i.e. on behavioural, demographic, geographic
and psycho-graphic segments it is because company is selling clothes and shoes which is the
need of each and every person of all the segments. Aracadia Group can also target its audience
through social media by making pages or webs on Facebook, Instagram etc.
PORTER'S GENERIC STRATEGY
This is the model proposed by Michael Porter. In order to achieve the competitive
advantages as well as growth and development of company (Fernández-Morales, Cisneros-
Martínez, and McCabe, 2016). The strategy is very useful for company to achieve the
organisational goals and objectives of company. This force analysis the direction to company.
There are four strategies that Aracadia Group can choose to beat its competitors are-
 Cost leadership
 Differentiation
 Cost Focus
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 Differentiation Focus
Cost leadership- According to this strategy, Aracadia Group should follow or adopt a
low price strategy at the initial stage. Customers are very price sensitive, they are attracted
towards the low cost products. By adopting low cost leadership in the market, company can
cover large number of customers easily. This will be also give advantages over competitors
prevailing in the market. Even so, this strategy can be applicable only in the initial stages, as at
this time the cost of production is relatively down, as not much is spent on other venture related
activities (Sun and et.al 2017).
Differentiation- As per the strategy, differentiation in the product leads to success in the
market. The uniqueness in the products and services of company attracts many customers or
persons to buy the products. In order to beat competitors in the market, it is very essential to have
differentiation and uniqueness in the style, quality and packing of the product. In order to enter
into the new market Aracadia Group can launch its product which competitors is not offering. By
differentiating in product company earn huge amount of profit as well as grab market share.
Cost Focus- As per this approach of Porters, it is very important for company to
concentrate or focus on particular segment in order to enter into the new market. By this strategy,
company has great focus on cost from targeted market. At the initial stage, company should offer
the lowest possible price to customers.
Differentiation Focus- As per this approach, company should assigned a manager to
concentrate on product differentiation. It is very important in this competitive world to focus on
innovation and creation to win the market. Aracadia Group can build its brand name if they pay
attention on differentiation and uniqueness in their products (Daymon and Holloway, 2010).
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CONCLUSION
It can be concluded that segment is totally differ form other segment. In order to create
custom marketing mix, market segmentation is very necessary. As per the above report is focus
on licensing, company get a portion of profit from goods or services sold as per the license.
Licensing offers many advantages like it makes company unique in the market.
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