International Market Analysis and Strategies for Next plc

This report provides an in-depth analysis of international marketing strategies for Next plc, a clothing, footwear, and home products retailer. It begins with an introduction to international marketing and then proceeds to analyze macro and micro factors affecting the retail market using PESTEL and SWOT analyses, respectively. The report evaluates market potential in countries like Australia, Canada, Brazil, and Italy, recommending Australia and Brazil as suitable markets for expansion. It justifies these recommendations by highlighting the opportunities and challenges within each market. The report then outlines strategies for Next plc to enter these recommended markets, including direct exporting and licensing, and suggests adaptations to the marketing mix to suit the target markets. The conclusion summarizes the key findings and recommendations, emphasizing the importance of considering political, economic, social-cultural, and technological factors for successful international expansion.

International Marketing

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Analyzing macro and micro factors of retail market with market recommendations............1
TASK 2............................................................................................................................................3
Evaluating market potential....................................................................................................3
TASK 3............................................................................................................................................5
Identifying two recommended markets with justification......................................................5
TASK 4............................................................................................................................................6
Strategies for Next plc to enter in a recommended market....................................................6
TASK 5............................................................................................................................................7
Recommended adaptations to marketing mix of Next plc.....................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
International marketing is defined as the application of marketing principles across the
country. It is based on expanding the business in more than one nation (Hill, 2008). This report is
based on a case scenario of Next plc for international growth of clothing, footwear and home
products retailer. This report will analyze the macro and micro factors which would make an
impact on the retail market along with highlighting the market recommendations and evaluating
the market potential for Next plc.
TASK 1
Analyzing macro and micro factors of retail market with market recommendations
Macro and micro factors are analyzed which make an impact on the retail market.
However, macro factors are analyzed by using PESTEL analysis and micro factors are assessed
by the help of SWOT analysis. These can be explained like:
PESTEL analysis of retail market: PESTEL analysis provides an analysis of six macro
factors which affect the business. In this report, relevant factors within PESTEL model have
been applied which are as follows: Political: There are broad ranges of political factors which affect the retail market in
current market environment. An important political decision that affects the retail in
international market is the tax rate charged by government (Olson, Slater and Hult, 2005).
Political factors have ability to affect the bottom line of organization in the form of
corporation tax. Furthermore, political decisions consider interest rates. These interest
rates vary as per the country’s tax policies. This can be notified as a positive factor for the
retail firms if interest rates are low. It is because of the reason that it provides retail
market with an opportunity to borrow large amount of money for capital expansion
purpose at lower interest rate. However, other political issues are related to the foreign
exchange rates in countries. Economic: Economic environment factor is critical to have an impact on the retail
market. An enterprise that uses the value based specialized strategy, which is opposite to
cost leader; it can be observed that the organization would run within economic
environment. It also has the ability to affect the operations of the retail firm majorly
(Vargo and Lusch, 2004). With a strictly statistical perspective, it is observed that
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economy is fluctuating in many countries. On the basis of global financial crisis in world,
countries are facing GDP growth in negative figures with -1% shortening in economy. As
per the contradict economic pattern, it can help the retail market to improve its average
cost per consumer even if the total number of consumers fall (Bergkvist and Rossiter,
2007). Social Culture: However, there are many social and cultural factors that are considered
in the fashion retail market because of increasingly nations with diverse cultures, races
and ethnicity which contributes towards the socio – cultural background to the retail
market. Social culture not only has the external implications like linked product range to
specific cultural segment, the firms also have to make sure that it deals with the conflicts
such as managing diversity. Technological: Technological factors make a huge impact on the retail market. It is
doubtful that technological developments have been transformed in the business
environment, specifically in the retail market (Henseler, Ringle and Sinkovics, 2009).
Major developments in technologies are identified in nature such as internet or
communication based technologies. Technological development such as internet has
provided an opportunity to the retail market to develop their business through online
portal in multiple countries. Other technological factors are identified so as to develop
better relations with customers. By the help of these technological factors, retailers can
communicate with their consumers in an effective way. Environmental: Physical environment is essential for the retail organization for operating
the business in international market. In the basic terms, physical environment factor is
defined in the context of high intensity natural disaster such as earthquakes, tornado and
forest fires (Bradley, 2015). Other than these environment disasters, there are so many
other environment factors which affect the retail market such as floods, poor sales due to
heavy rain fall, snow storms, etc. Legal: Not only for retail but for all businesses, legal factor consideration is essential.
While establishing a new business, company must confirm all the legal standards which
will force the retail organization into jurisdiction. There are various legal regulations
which affect the retail market such as minimum wage legislation and equal opportunity
legislation (Manzella, 2012).
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SWOT analysis of retail market: Retail firms often use SWOT analysis to evaluate their
business practices. SWOT analysis for the retail market possesses detailed analysis of strengths,
weaknesses, opportunities and thoughts. Strengths: The first step of SWOT analysis for retail market starts by identifying its
strengths. Retails markets strength can be decided on retailer’s financial position, capital
and access to bank loans. Other strength of retailer can be its bulk selling or economical
prices (Oviatt and McDougall, 2005). Weaknesses: While observing weaknesses of retail market, the retail firm must do market
research. Through investigation, the firm can discover its weak brand image and can
measure the level of competition. Furthermore, lack in customer service can be also a
weak point of the retail market. Opportunities: Next step after observing weaknesses of retail market is identifying the
opportunities in market. Opportunities can include unfilled customer needs, online
business opportunities etc. For instance, large retail companies can have opportunities to
give franchisee to small retail firms (Terpstra, Foley and Sarathy, 2012). Threats: In the retail market, threats can be like decrease in customer demand, recession,
price wars between competitors, etc. Change in shopping habits of people can also be a
threat for the retailers to expand their business.
Market Recommendation: It is recommended for Next plc to consider all the factors, that
is, political, economic, socio-cultural and technological while entering in an international retail
market. Every country has diverse political and legal regulations and organizations that have to
follow it strictly. Thereby, it is recommended to Next plc to make research on all the shortlisted
countries politically, environmentally, economically as well as on the basis of social cultural,
legal and technological factors before entering in those markets (Luo and Bhattacharya, 2006).
With the help of this consideration, Next plc can expand the business effectively.
TASK 2
Evaluating market potential
Following countries are identified where Next plc can expand as it possesses huge
potential:
Potential Australia Canada Brazil Italy
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Factors
Competition The retail industry in
Australia is facing
several challenges
because competition is
affecting the overall
business revenue of
retail market (Vorhies,
and Morgan, 2005).
Industry competition is
growing as
international players are
opening their ventures
in Australia. However,
Australia possesses
good business
opportunities in fashion
and retail market.
Due to weak
economic growth
and tough
competition and
low margins,
Canada’s retail
market is extreme
difficult. Before
starting the
operations in
market like
Canada, the
organization has
to be very
cautious.
Brazil is
appeared as a
world’s biggest
fashion and
grocery retail
market next to
Australia
because of
aggressive
growth strategy
of foreign and
domestic
market.
Thereby, Brazil
has healthy
competition.
Italy is a major
fashion focused
country and
crowded with
competitors as
there is already a
high extent of
rivalry. However,
Italy does not
have any scope
for new retailers.
Needs and
demands of
buyer
People in Australia are
very much cultured and
follow new trends.
Thereby, people of
Australia have potential
for retail market to
fulfill the demand and
needs of customers.
Canada’s retail
market has
growing in a
haphazard manner
because of which
retail market has
become more
polarized. Luxury
good's selling is
very high.
However, many
people in Canada
Brazil has
become hot
destination for
the retailers to
invest money in
Brazil due to its
domestic
demand and
needs (Turnbull
and Valla,
2013).
People are more
fashion focused in
Italy thereby;
strong needs and
demand of buyers
are there. But still
it possesses fewer
opportunities for
the new ventures
in Italy.
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are trying to save
money in every
corner like low
priced and
discounted
shopping.
Purchasing
power of
customers
Since, Australia has
strong demand and
needs of customers in
fashion sector;
industry’s revenue is
expected to expand
which increases the
purchasing power of
customers.
The weak growth
of Canada
expected to
continue over the
periods and
thereby, the
purchasing power
of customers in
Canada is not
good (Luo and
Tung, 2007)
Brazilian retail
market is
growing day by
day which has
made Brazil's
economy
effective.
However, this
helped in
increasing the
purchasing
power of
customers also.
Due to strong
GDP in Italy, it
has a strong
purchasing power
of customers.
TASK 3
Identifying two recommended markets with justification
For Next plc, it is recommended that Australia and Brazil are suitable for the retail
markets. Australia's retail market is experiencing positive growth in the recent years despite of
many fluctuations in customer’s confidence and spending habits. But after 2014, consumer’s
confidence is coming back as many of the planned activities in budget were delayed and in some
specific cases, they failed in senate that resulted in higher customer spending which made a
positive impact on the retail market also (Cateora, 2008). However, in Australia, retailing is
expected to possess the modest growth over periods which will be largely driven by fashion and
home products retailer.
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Brazil is emerging as one of the growing markets in the world with lots of opportunities
for the retailers. In earlier time, the growth of retail market was slow because of uncertain
economic environment till 2014 because of this high inflation. Unemployment and unfavorable
exchange rate of Brazil made consumers more cautious about their spending. However, now
there is huge growth and success is identified for the retail market in Brazil (Zhou, Yim and Tse,
2005). After 2014, Brazilian economy has once again achieving success at its best with many
opportunities for the new retailers. Brazilian retail market is emerging with supply chain retailers
and financiers for country's economic growth. Thus, it is recommended that there are number of
opportunities for the retail market in Brazil.
TASK 4
Strategies for Next plc to enter in a recommended market
There are various strategies for Next plc to enter in an international market. These are as
follows: Direct Exporting: This strategy allows direct selling in the chosen market. Many
organizations, once they have established a sales program turn their distributors to
represent their business in the market (Palmatier, Dant and et.al., 2006). Distributors
work closely with the organizations and help in representing their business. Licensing: Licensing is relatively a polished arrangement where an organization transfers
the rights and services to another company. It is particularly a beneficial strategy if the
purchaser of license has larger market share. Franchising: Franchising is a typical process for speedy market expansion. Franchising
license is useful for the organizations that have repeatable business models like food and
factory outlets which can be easily transferred to the other markets. Partnering: It is essential for organizations that are entering in the foreign markets. Here,
foreign player can enter into partnership agreement for the purpose of sharing loss and
profit. With this, risk can be divided among two. Partnering can be done from simple
marketing arrangement to a well-informed strategic bond for manufacturing (Craig and
Douglas, 2005). Partnering is particularly useful for the social and business cultured
markets.
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 Joint ventures: Joint ventures are the other form of partnership which involves the
creation of third organization by merging of two. Joint venture includes 1+1=3 processes.
According to this, two companies work together in a market to create a third entity to
undertake the operations. In joint ventures, risk and profits are equally shared.
 Buying a company: In few markets, buying an existing local firm is the most suitable
strategy. Because of this reason, company can gain significant market share and hence,
can decrease the level of competition up to a certain extent. According to government
rules, this is the only option for the firm to enter in a new market.
However, for entering in Australian retail market, it is recommended that Next plc should
apply franchisee strategy as expanding a business of Next plc can be accomplished by opening
an additional firm through franchising (Hill, 2008). Moreover, by giving franchisee in Australian
market, Next plc can be able to take advantage of others assets. This firm can use the money,
time, talents, ideas and resources of other enterprises to expand their business in Australia. For
the purpose of expanding business in Australia, it is beneficial for Next plc because this will
require limited amount of capital and also its overheads will be less.
Moreover, for entering in Brazilian market, it is recommended for Next plc to utilize the
licensing strategy. As people in Brazil are more brand and fashion conscious, thereby, with the
help of licensing, Next plc can generate instant and guaranteed revenue (Czinkota and
Ronkainen, 2012). The license agreement requires several types of payments based on the profits
of licensee business. Other than this, licensing strategy will provide Next plc brand recognition
in Brazil market which will be beneficial in expanding the business in Brazil.
TASK 5
Recommended adaptations to marketing mix of Next plc
Marketing mix has been produced with respect to Next plc:
Marketing Mix Brazil Australia
Product People in Brazil prefer latest market
trends. Thereby, in clothes also,
Brazilian people prefer trendy and
designer clothes (Palmatier and et.al.,
2006). Thereby, Next plc can use it as a
Australia's weather is hot. So, people
in this nation prefer cloths and
accessories accordingly. Thus, Next
plc can bring clothes in this country
that are made of cool fabrics.
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growth tool for expanding the retail
business in Brazil.
Price
Next plc has to be careful for setting
price of the product in Brazilian
market. Because consumers are very
loyal to the brands in Brazil, to attract
more customers, Next plc can use low
price policy. Low prices as compared
to the competitors will help Next plc to
attract more customers.
Australia's people have high standard
living and strong demand for high
value added products. Population in
Australia is attracted by the quality
of products as people over there are
not much concerned about prices
(Zhou, Yim and Tse, 2005).
Thereby, Next plc can set high prices
for the quality products.
Place
Next plc should sell its products at all
the places of Brazil. Brazil' people
prefer purchasing from big shopping
malls. Therefore, Next plc can get
better opportunities by expanding it in
malls (Olson, Slater and Hult, 2005).
Australia is an urban country and
people in this nation are more
shopaholic as they can shop from
anywhere if they liked the products
and quality. Thereby, it is
recommended to Next plc to open a
store anywhere in Australia to
expand the retail marketing.
Promotion In Brazil, products should be promoted
through newspaper advertisements and
with the help of social media. In some
survey made among the people of
Brazil, it is observed that Brazilian
people are connected with the social
media. Thereby, for promotion activity
in Brazil, Next plc can apply online
advertisement policies.
Australia is among the leading
advertisement market of world.
Advertisement on televisions has a
high influence on the Australian
consumer’s behavior (Chetty and
Campbell-Hunt, 2004). Showing
advertisements on TV reach the
maximum numbers of consumers in
Australia. However, as per the
mentioned circumstances, Next plc
can apply TV advertisement as brand
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promotion strategy for expanding the
business in Australia.
CONCLUSION
From the above report, it can be concluded that international marketing is the act of
performing principles of marketing at a global level Along with that, it has also been assessed
that international marketing provides lots of benefits to a business by increasing the customer
base. This report has also given the constructive analysis application of international marketing
strategies to expand the scope of Next plc.
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REFERENCES
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