7BM500-University of Derby: Next PLC's Strategic Operations Analysis

This report provides a detailed analysis of Next PLC's strategic operations, markets, and resources. It evaluates the company's marketing strategies, particularly using the 4Ps model, and assesses its market attractiveness. The report highlights Next PLC's reliance on competitive pricing and standard product quality, while also detailing how the company maintains its competitive edge in the global market. It explores the benefits of using multiple sales channels to expand the customer base and examines the cost-effective marketing plans implemented in the UK and other operating markets. The report also identifies challenges such as customer segmentation ambiguity and limited physical retail presence, offering strategic recommendations to enhance communication channels and better understand demographic trends. This comprehensive analysis aims to provide valuable insights into Next PLC's business operations and strategic improvements.

Running head: GLOBAL STRATEGIC OPERATIONS, MARKETS AND RESOURCES
GLOBAL STRATEGIC OPERATIONS, MARKETS AND RESOURCES
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Executive Summary
This report incorporates the principal marketing strategies of Next PLC which is a retailing
organisation based in UK. The company basically deals in clothing, accessories and in home
décor. The marketing strategies of the company and the responsive market attractiveness
have been evaluated by implementing the 4Ps model in this report. Research reveals that the
company in spite of being a front line brand relies more on competitive pricing and maintains
a standard product quality. In spite of that the way the company have gained in from market
competition with peering companies with global presence have been explained in detail in
this report. In order to expand the customer base, the company relies up on multiple sales
channels which increase the exposure rate of their products. The way these multiple sales
chan nels have expanded the business of the company have been identified in the course of
this report. A competitive and low cost enduring marketing plan have also been implemented
by the company in UK and the other operating markets. The company have introduced
variety in promotions by adapting online marketing and social media marketing as the
principle marketing channels. This has saved cost for them also. The other benefits of this
strategy have also been discussed herein. However, since the company have a large customer
base and follows a neutral pricing strategy, the customer segmentation of the company is
much specified. Hence they are often ambiguous regarding the message they send to their
buyers. Strategic recommendations have also been provided in this report highlighting this
and the other major issue that the company faces sin the course of its business operations in
UK. The less number of physical retail stores is one major issue that the company faces also.
Because of this the amount of customer interactions that they can accomplish is not sufficient
to understand the demographic trends and choices. This is why their designers and marketing
advisors also faces some difficulty during the planning phase of the marketing operations.

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The ways of increasing the communication channels using social media and other alternative
channels have also been specified in its report.

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Table of Contents
1. Introduction............................................................................................................................3
1.1 Business background of the company..............................................................................3
2. Discussion..............................................................................................................................4
2.1 Market Evaluation............................................................................................................4
2.2 Marketing strategic Analysis............................................................................................5
2.2.1 4Ps of Marketing Analysis.........................................................................................6
2.3 Evaluation of Market Sustainability...............................................................................10
3. Strategic Recommendations.................................................................................................10
4. Conclusion............................................................................................................................11
Reference List..........................................................................................................................12

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1. Introduction
In this report, the strategic marketing as well as promotional strategies of the Next
PLC Company have been highlighted. This is a UK based Retail company dealing in clothes
and other essential and decorative home products. A well conducted research have been
carried out in this business report, following which detailed analysis using relevant marketing
mix theories like 4P have been performed and strategic recommendations have been provided
regarding the future improvements have been provided in the concluding section of the
report. The core marketing strategy of the company have been analysed by means of 4Ps
theory of marketing mix. Along with product, price, promotion as well as place the macro
and micro analysis of the company have also been conducted. The major strengths as well as
weaknesses of the implied marketing strategy have been evaluated and appropriate
recommendations have also been provided in the following part of the report.
1.1 Business background of the company
The Next PLC organisation had been set up in the year 1982 and currently operates
more than at least 500 physical stores all over United Kingdom and over 150 stores outside
United Kingdom (Nextplc.co.uk. 2018). Additional channels of sales were configured after
the Next Directory launched in 1988. The company also adapted the policy of online sales in
1999. This implies that at a very early stage after the initial layout of the business, the
organisation had already resorted to multiple channels for their sales. This retail strategy
latter proved to be instrumental for the growth of business and successful implementation of
marketing strategies in the future. Within 2000 to 2010, the company had already established
themselves as one of the leading and most advanced multi sales channel operating
organisation within the domain of retail business in UK and also some other market domains
where the company operates (Nextplc.co.uk. 2018).

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Since the company had started to spread its business in multiple markets, the main
focus of the organisation have been the potential customers of the age group 25 to 45. The
middle class of the UK society have always been the major target market segment for the
brand and their potential customers include both genders and particularly the people who
have good deal of interest over mainstream fashion. However the range of products
pertaining to women are more versatile and comes in variable price ranges as this have been
one of the earliest strategies of sale for Next PLC. However, the current customer market
reveals that the taste and fashion sense of the customers are going through continual change
and such potential retail firms like Next PLC ensures that they implement appropriate sales
and marketing methodologies so as to serve the needs of the current consumer market.
2. Discussion
2.1 Market Evaluation
The market, for any profit making organisations is the location where the deliverables
of the company meets the clientele that it serves. Analogously, marketing is the policy that is
implemented by the company in order to identify the potential customer market and frame
strategies such as product development, market mapping and pricing, business promotion and
also distribution (Thompson and McLarney 2017). Hence, it is evident that on order to make
effective analysis of the marketing strategy of the company, detailed research regarding the
current market atmosphere and the target market where the company wants to project itself
have to be analysed. The market witnessed a rapid downturn during 2008 (Nextplc.co.uk.
2018). After that, the economic position of the organisation have developed and currently it is
in a state of stability. However, the adverse effects of the conservative purchasing trends of
the customers would still persist for at least upcoming five to six years.

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However Lancaster and Massingham (2017), opines that elaborate research on the
purchasing behaviour of the citizens of UK reveals that the despite putting constraint on the
spending of their disposable income, purchasing clothes and wearable have been the
preferred choice for a large section of men who prioritise spending. This brought about a
market growth with a hike in the sales rate by 4.5% annually. As such the consumer spending
on clothes and other accessories by the UK citizens have been £49.8 billion in the year 2014
(Storbacka and Nenonen 2015). Owing to the return of consumer confidence, since 2013, the
economic status of the clothing industry of United Kingdom revived. Alongside that, the
consumer also became more stable economically and their purchasing power began to rise by
6 to 8 % on an average every year since 2013 (Thompson and McLarney 2017) . However, in
spite of the turbulent and flexible market conditions, Next Plc. have emerged as a stable
performer gradually since its advent. The annual report of the company reveals that in 2012,
Next Plc. have been accountable for 7.2% of the total sales volume acquired by the industry
of clothing retail in United Kingdom (Nextplc.co.uk 2018). In the next year, the organisation
surpassed the sales record of their major competitor Marks and Spencer by 1.5% (Hammett
2018). The current pro forma balance sheet of the company for 2020 shows that they would
surpass the estimated sales growth in 2018. The sales strategies that Next PLC have adapted
shows that their healthy position of sales during the Christmas period owing to their
innovative and enthusiastic marketing management.
2.2 Marketing strategic Analysis
The theory of marketing mix can be implemented in this business scenario in order to
evaluate the marketing strategy. The components of this theory are the 4 Ps, namely product,
place, promotion and price. The traits of product as well as price are related to the products or
business genre in which the company operates. However, in the views of Neupane (2015), the

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genres of product as well as price are related to the market operations and the values that the
company delivers to the customers.
2.2.1 4Ps of Marketing Analysis
2.2.1.1 Product
This is the entity that the organisation offers to the customers in order to fulfil their
business interests. As specified early in this report, the product category of NEXT PLC is
mainly mainstream fashion. The products of the company mainly target the middle class men
and women who belong to the age group of 25 to 45 years. The mission statement of the
company refer that one of the main goals of the company is to ensure that the products
offered to the clients are of high quality and the product designs are latest and reflects the
attitude of a generation Y person. The same attitude as the production department is also
retained by the packaging and branding department so that the ultimate packaged products
are elegant and attract the attention of the target customers. According to Blázquez (2014),
this persistent focus on the quality retention has been largely helpful in the establishment of
Next PLC as a major and countrywide brand in UK and in gaining brand equity surpassing
some of the potential and big budget competitors.
2.2.1.2 Price
This aligns to the pricing strategy that have been undertaken by the company and is an
important part of the wholesome strategy that is implemented by the company one of the
most important parameter of pricing is that it should be in congruence to the expectations of
the customers and should be in alignment to the quality and the purchasing power of the
intended customer base of the company. The pricing strategy of Next PLC quite similar to the
middle class target customers, follows a median line. The price of the products of Next PLC
are not market skimming. On the other hand, the company do not follow the policy of

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penetration pricing also. Rather, Verhoef, Kannan and Inman (2015), opines that the
company wants to portray an image of theirs, among the customers that makes them occupy a
neutral space where they offer quality products and latest design and at a suitable price that
would suit the budget of the customers.
Penetration pricing methodologies are being implemented by the new and the start-up
companies who wants gain major customer share quickly after the launch of the company in
the market. As per Ramanathan, Subramanian and Parrott (2017), this is a basic strategy of
undercutting major competitors in the market. After the market launch of the company back
in 1980s, the company had pertained to such strategies. However, gradually as they got
establishment as a major and potential brand, they deviated from such pricing strategy and
adapted a neutral pricing policy. Market skimming price policy is also driven by the same
motif. They however plan to beat the completion by the dint of higher price which is for them
an implication for premium product quality. Next’s policy is of justified pricing (Ennew,
Binks and Chiplin 2015). They offer good product quality and keeps the prices moderate so
that the customer base keeps enlarging.
As a mid-market retailing agency, the organisation enjoys a stable and established
customer base and a continuity of the equal sales rate. They also enjoy a familiarity as a
popular market brand in the UK market as the customers of Next PLC always gets justifiably
priced products and are satisfied with the product quality on an average. The customers of
Next PLC have reported a satisfaction rate of 86.5% in the interim of the UK market (Cho,
Rha and Burt 2015). This strategy also offers the company a chance to be flexible regarding
the prices for seasonal promotions and also helps the organisation to maintain their
competitiveness across all the sales channels through which the company operates, namely
the selected Asian, US and Latin American markets.

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2.2.1.3 Place
This is the part of wholesome implemented by the company that enables the product
to be projected before the customer base and adapt a sales approach that is feasible as well as
conveniently for the company.
The Next PLC Company operates through multiple sales channel whereby the
customers are able to browse their desirable products. At present the sales domain of the
company includes 500 stores all over the UK and Ireland. This is the original and the most
primitive sales adapted by the organisation and hence is one of the most important parts of
their strategic sales campaigns. As per Bae et al. (2014), the company is on a drive to open
more physical stores around the world and mainly in UK so that the brand equity that exists
in sever4al parts of UK where physical stores are not located can be utilised to skim profit
and enlarge the base of their potential customers.
Physical stores also add more human elements with the organisation in the form of
sales advisors, customer assistance experts and so on. This helps the company to offer better
sales experience to the customers. In the opinion of Verhoef, Kannan and Inman (2015),
strong and positive shopping experience have the potential to convert the occasional shoppers
in to regular and loyal customers.
Another sales channel of the company is the sales directory which is catalogue by
means the customer are able to order their desired Next products and accept the ordered
products by postal service. A similar channel of sales is the e-commerce platform. Via this
platform, the customers of Next PLC are able to shop through websites, mobile applications
and various social media platforms that allows the organisation to interact with the customers
as well as execute product sales (Blázquez 2014).

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The above mentioned sales channels offer customers the convenience of shopping.
Alongside, the company gets the opportunity to market their products mores feasibly and
approach the target customer section. The choice of ordering from catalogues or online suits
the customer group who have busy lifestyle and are not able to avail the option of shopping
physically. The development in new technological innovations such as smartphone or internet
have made it mandatory for the company to update their online inventories so as to meet the
demand of the new age customers.
2.2.1.4 Promotion
This certainly throws light on the methods that the company have implemented in
order to provide and share information about the product ranges of Next PLC with the group
of potential buyers. This is to make the customers more aware of the product features and
other advantages that it offers in comparison to the other products of the same genre that it
offers. As per Melis et al. (2015), in the recent years the organisation have released very few
advertisement campaigns. On the contrary, they have focused on launching smaller
campaigns. In comparison to the major clothes retail brands like John Lewis, who focuses on
large and costly advertisement campaigns, Next PLC relies on smaller campaigns like online
promotions. Next PLC conducts its promotions online through social media, paid websites
and through their official websites. The company followed a strategy of posting their
classified discount advertisement on the most searched for websites of UK. This campaign
was not claimed as highly glamorous nor did it incur high costs. However, as informed by
Lemon and Verhoef (2016), the sales conversion rate (online and physical) of the company
was hiked by 8.2% as an impact of the campaign for then financial year 2016. Regular
updates on Facebook, Twitter and other social media websites have helped the organisation to
maintain the popularity as a frontline clothing brand. The organisation have been able to
reach out to the millions of followers on the social platforms for Next PLC. Even if staying

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away from the mainstream television advertisements, the company have flaunted celebrities
and preferably sports personalities sporting their wearable in the online ad postings.
2.3 Porters Five Forces analysis
2.3.1 Threats of new entrants
The new entrants in the market would all want to follow the strategy of competitive
pricing and adapt to multiple channels of sales. They would provide new value propositions
to customers and hence demand market share from the target customer base of Next PLC. In
order to tackle the threat from the new entrants, Next PLC have to develop their economies of
scale so that they can modify the fixed per unit cost.
2.3.2 Supplier’s bargaining power
The majority of the retail organisations of the garment industry procures their raw
materials from various and numerous suppliers (Verhoef, Kannan and Inman 2015).
Suppliers can effectively reduce the power of the company in the retail market by forcing
them to increase pieces to keep their revenue level intact. In turn this would impact the
negotiating power over the other suppliers also.
2.3.3 Bargaining power in the hands of Buyers
Buyers always shows the tendency to purchase the best products in least prices.
Nevertheless, in context of Next PLC, the buyer’s power is not very significant because the
customer base is large and variegated. Increasing discount offers always entices the
customers and because of this the bar gaining trends of the buyers in the case of the products
of Next PLC do not show much turbulence.
2.3.4 Threat of substitute products/services

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The threat of substitutes is not much high in the case of Next PLC as the company
operates through multiple sales channels. Besides the company have made their customer
offerings much service oriented rather than being product oriented. As an outcome, the threat
of substitutes is not a potential challenge for the organisation.
2.3.5 Rivalry within existing market occupants
The customer approach design of the various existing operators of the retail clothing
market of UK is different. The major competitors of Next Plc. follow a high end pricing
strategy and hence the target customer base is different. Whereas this company follows a
neutral pricing strategy.
3. PESTLE analysis
3.1 Political Factors
Political tax rate directly influences the company. The corporate tax rate prevents any
possibility to reduce prices in future and the income tax rate of UK government limits the
purchasing power of the buyers (Lancaster and Massingham 2017). The interest rate in UK is
presently 0.5% which is an enticing factor for the organisation which would facilitate the
company to perform capital expansion at larger rates and make investments in the foreign
product ion units that Next Pc have been planning since 2017.
3.2 Economic Factors
The economic backdrop since 2007 have been affecting the company’s stability since
the negative GDP growth started in 2007. Even after the recovery the economy have been on
a flat line with enormous chances of the happening of a double dip recession. This is
affecting the company as they are unable to release new stocks readily as the purchasing
power of the UK customers is still in uncertainty.

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3.3 Social Factors
One important factor is that the basic target customer base of the company is aged and
the purchasing power is not actually in their hands (Bilgihan, Kandampully and Zhang 2016).
However advantages like home delivery and online services are supposed to entice the
younger generation also.
3.4 Technological Factors
The technological advancement have mainly been achieved in terms of the online
sales expansions whereby the company have developed the strategy of online listing of their
products. Another major technological link up is the alignment to social media marketing
tools like Facebook, Twitter, and YouTube and so on. These services require the retail
organisation to maintain an IT team for the management of the online sales.
3.5 Legal Factors
Fragments of both UK law and EU regulations are applicable on the company. In UK,
the majority of the production teams of the company are located and as an outcome, the
minimum wage regulations have to be followed rigorously by the company.
3.6 Environmental Factors
Inclement weather have imp acted the retail organisations vigorously as they have
faced difficulties in making deliveries to customers and the warehouses also (Ennew, Binks
and Chiplin 2015). The impact on warehouses have actually prevented the company in fluidly
circulating their products to the retail outlets all around UK.
4. Evaluation of marketing strategies
However one weakness of the marketing strategy of the company is the broad
customer base. The target market is quite extensive covering a wide age group. The

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requirements and the demands of such a large customer base keeps on changing with times
and the company have to keep informed and updated with these. As Rapp et al. (2015),
opines, this can mean that the strategic designs that the company frames can be nullified by
the changing customer trends.
The above mentioned weakness can be the root to another issue, which is the lack of a
clear image celebrity ambassador. The company lacks specific data about their customer
segment and hence unaware of the exact message to send to their clientele through their
celebrity ambassador (Themarketingblog.co.uk. 2017).
3. Strategic Recommendations
The advent of online shopping and its growing popularity will create feasible
opportunities for the company. However, this would require optimisation and expansion of
the service of the organisation to comply with the prospects of digital marketing.
In this context the organisation can make use of the data gathered through the online
channels and the social media campaigns. This information can be utilised for the
optimisation of store space. The information gathered would help the organisation to decorate
their physical stores with the most sought after models of their product line. The less popular
products can be shifted to the inventory of the online stores. The online stores incur lower
operating costs.
4. Conclusion
Next PLC occupies a static market position, in a business market that offers steady
growth. The company have followed a stringent market policy since the advent and have
been reflecting consistency with the consumer base, product line and the price range. The
company have always showed positivity towards embracing new sales channels and at

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present that company have been able to establish themselves as an established brand in the
UK market.
However, the company have space for innovation and in spite of the feasible
marketing methods that they have implemented, there is acute need for optimisation of the
digital sales channels so that they remain consistently in the top chart of the retailing
organisations of UK.

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