Primark's International Expansion: A Market Entry Analysis

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International Marketing
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Table of Contents
Introduction...................................................................................................................... 3
LO1 (P1, P2).................................................................................................................... 4
LO2 (P3, P4).................................................................................................................... 7
LO3 (P5, P6).................................................................................................................. 12
LO4 (P7, P8).................................................................................................................. 16
Conclusion..................................................................................................................... 19
Reference list................................................................................................................. 20
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Introduction
Marketing is the core business process of an organization to sustain and survive in this
competitive market place. Due to globalisation and technological advancement,
marketing has covered the area of domestic boundaries. The international marketing
is the application of multiple marketing principles for satisfying the varied demands and
needs of various people residing throughout the domestic territory. International
marketing is the most suitable and effective way of reaching out more numbers of
customers from different locations, especially beyond domestic boundaries. Due to
increased market competition, most of the successful multinational companies are
adopting effective international marketing strategies.
“Primark” is a popular multinational Irish fast fashion clothes retailer in the UK
premises. The company headquartered in Dublin and has already expanded their
existing business to multiple new locations such as Australia, Italy, German, Belgium
and others. Mr. Arthur Ryan founded the company in 1969. The company has more
than 70,000-trained employees. In 2018, “Primark” generated £5.98 billion revenue in
business (primark, 2019).
In this paper, in an international business context, the role and contribution of marketing
to business strategies will be evaluated. Different international entry modes will be
exposed in this paper along with various key success factors for better consideration of
the project. Additionally, elements of marketing plan and their role in international
marketing process will be displayed.
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LO1 (P1, P2)
Demonstrate an understanding of how marketing contributes to business
strategies in an international context
P1 Analyse the scope and key concepts of international marketing.
International marketing investigates and evaluates the marketing atmosphere in the new
international business location for understanding the customer purchasing behaviour as
well as the demands and expectations of the customers (Vellas, 2016). Modern
business market is full of competition, where ventures are competing with each for
greater market sustainability. Business organizations are trying to enlarge their business
emperor and due to this reason, most of the successful companies like “Primark” are
showing their interest in internationalisation of existing business operations. In new
international market, international marketing activities play major role in attracting new
customers and influencing them to purchase products from the company (Cavusgil et
al., 2014). However, the concept and procedures of international marketing is
completely different from domestic marketing principles and procedures. Dissimilarities
are as follows:
Points of difference Local marketing International marketing
Definition Local or domestic
marketing process assists
organizations to enlarge the
business operations
through performing multiple
marketing activities.
International marketing is
different. It assists to
generate higher sales
revenue by expanding and
selling more numbers of
products in international
market place (Morschett et
al., 2015).
Required investment Local marketing procedures
are cheap.
Compared to domestic
marketing procedures,
international marketing
activities are more costly
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and employers need to
invest huge for reaching
wide range of international
customers.
Growth scope In domestic level, the
growth scope is limited.
At international level,
growth scope is not
restricted as well as higher
than local marketing
procedures (Skarmeas et
al., 2016).
Risk Less risk factor can be
observed in local marketing
operations.
Risk factors are higher in
international marketing
activities.
Table 1: Local vs international marketing
(Source: Created by learner)
Business process requires evaluation and consideration of major concepts to be
accomplished successfully.
Global trends
Modern market has multiple advancements of technologies such as internet through
which people are gaining more knowledge. Using internet and online shopping has
become a global trend in market. The world Trade Organization is focusing on
development of business ventures and their different business aspects so that they can
better sustain in market (Samiee et al.,2015). Adopting global trends is necessary for
better marketing and business performance both at domestic and international level.
Internationalisation
In modern business scenario, internationalisation of existing business has become a
trend. Most of the ventures are showing their interest to expand their existing business
operations at new international business location. All the companies are aimed at
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expansion of business internationally for making higher sales revenue and achieving
greater sustainability in market.
International marketing task
The task of international marketing require the consideration of two conceptual areas;
controllable and uncontrollable local factors. The selected business organization must
acknowledge uncontrollable factors such as market competition, changing business
environment, advancement of technology and others along with controllable factors like
product, promotion, distribution, price and others for better functioning in new
international business location (Samaha et al., 2014).
P2 Explain the rationale for it to want to market internationally and describe the
various routes to market the organisation can
Binning one of the most popular and successful fast fashion industries across the UK
premises, “Primark” must focus upon enlarging their business territory and
accelerating the sales performance simultaneously. Business organizations are seeking
for opportunities to increase the market shares and business profitability. Modern
business industry is highly competitive and numerous companies are entering in
business industry on daily basis that is alternatively accelerating the market competition
level effectively (Morschett et al., 2015). Hence, ventures like “Primark” have decided
to expand their existing business internationally to accelerate their profitability and
productivity simultaneously. Additionally, in newer market location, ventures will get a
new customer base so that company will have the opportunity of grabbing attention of
attracting those customers to the company for accelerating the sales performance. The
key of business organizations is generating higher amounts of sales revenue for the
growth and development of the organization. Hence, the decision of internationalisation
of business is justified for ventures like “Primark”
Nowadays, due to advancement of modern technology and globalisation, ventures have
several options to expand their business internationally. Companies like “Primark” can
use joint venture, franchising, licensing, exporting and others for expansion of their
existing business to newer international locations.
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LO2 (P3, P4)
Evaluate entry to a selection of international markets and define the key success
factors
P3 Evaluate the key criteria and selection process to use when considering which
international market to enter
Selection of the appropriate international business destination is another important
consideration in business. Business location provides all the facilities and required
resources to business organizations so that they can continue their business operations
in an effective manner. Before expansion of existing business to newer international
location, ventures like “Primark” conduct market research in order to understand the
business environment and actual business condition in the selected business location.
Market demand
The demands and expectations of customers are changing with time. Before expansion
of existing business, ventures first gather information regarding the market demand and
customers’ expectations of the selected business location (Behrangrad, 2015). By
understanding the market demand and customers’ purchasing behaviour of the selected
business location, companies like “Primark” will be able to meet the demand and
requirements of the market and customer in more effective manner.
Competition intensity
Another important factor is competition intensity. Different market has various level of
market competition. Before expanding business internationally, it is such important for
business organizations such as “Primark” to analyse the market competition level and
competition intensity of the selected new international marketplace. Apart from this, due
to globalisation, market competition level is extremely high and large organizations are
dominating in big ocean (Heath, 2014). Hence, due to proper understanding and
research of competition intensity level of the selected new international location,
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business ventures can face different types of difficulties in sustaining in market and
generating profits for business growth.
Cultural difference
In different nation, there is a different culture. Additionally, it is undeniable that cultural
difference has a deep impact on customer purchasing behaviour. As per the modern
market researchers, difference in culture will make it difficult for the company to cater to
various demands and expectations of the customers (Samaha et al., 2014). Hence,
business ventures like the specified one might face difficulty to meet their organizational
sales target in new international market place. Additionally, during international
expansions, cultural diversity in workplace is common. Ventures require taking effective
marketing plan and strategies to cater the needs and demands of the new customer
base at international level.
Political risk
Political risks are other important consideration. Governments of different countries
implement diverse policies and regulations to regulate their citizens. Not only citizens,
policies impact over the business ventures and their multiple operations as well. For an
instance, countries like Iran, Afghanistan and others are stumbling in current scenario
due to instable political atmosphere. This type of business environment is unhealthy for
business operations. Political risk might bring blunder to business ventures like
“Primark”.
Trade barriers
Multiple international marketplaces such as China, Korea and others are stumbling due
to trading instability. The term trade barriers denote various elements, which will create
barriers to the business operations of ventures at the time of entering in new market
place. Complex tax policies, government legislation and high tariffs are included in
these elements. For sustaining in market and continuing profit generation in business,
companies like “Primark” are required avoiding these trade barriers and following
effective strategies.
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P4 Explain, using examples, the different market entry strategies, including the
advantages and disadvantages of each
This portion of the study will explain various types of market entry strategies along with
their advantages and disadvantages for overall understanding of the project.
Licensing
Licensing is one of the most used international expansion methods, where host nation
provides the business, promotional rights, marketing, paten, intellectual property and
control of another acquisition firm for gaining competitive advantage in market place as
well as can improve product lines in an effective way (Eriksson et al., 2015). Venires will
grow spontaneously. However, the entire process needs presence of licensor and
license.
Licensing is associated with multiple advantages and disadvantages. Firstly, it
influences ventures like “Primark” to generate high sales revenue by conducting
simple business activities. Additionally, the host nation achieves profit, whenever the
other companies take any sort of services. However, the generated income or profit in
licensing is less compared to other methods of internationalization, which might be
considered as a disadvantage of this internationalization method.
Exporting
Exporting is the oldest and reliable process of conducting international business
operations and increasing business profits. Exporting allows companies to reach out
multiple market places as well as selling its services and goods to wide range of global
customers. One of the key advantages of using this exporting method is that companies
can reach out more numbers of customers and increase sales performance by using the
exporting facility without increasing the operational chains (Love and Roper, 2015).
It provides multiple advantages to business ventures like less risk probability, more
number of customers, increased sales performance and others. On the other hand, the
major disadvantage of exporting is high exporting expenses that actually reduce the
profitability of ventures like “Primark”.
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Joint venture
Joint venture is the most used and effective internationalisation method that is being
used by most of the successful business ventures like “Primark”. Joint venture is the
process of pooling resources as well as expertises of two or more than two ventures for
conducting better business operations and increases their profits and market shares
altogether (Klijn et al., 2014).
The key advantage of using joint venture is that it accelerates the production and profit
generation rate by using workforce unit and machineries of both organizations. It assists
business originations like “Primark” to accelerate their sales performance by easily
capturing the customer base of new market location. In joint venture, risk is shared
between two partners equally. However, it is also associated with drawbacks. One of
the major drawbacks of joint venture is cultural diversity in workplace and increased
complexities in business operations.
Franchising
Just like all other international business expansion methods, franchising is also
considered as an effective internationalisation method that directly influences the growth
and prosperity of the organization. It allows a company to vend goods in outer
marketplace by the medium of multiple suppliers as well as dealers, who will distribute
the production line through utilising the logo, name and other identity of the company.
The key benefit of using franchise is that implementation and administration of the entire
process is easy to achieve. However, the franchise process is stagnant business
process that might be considered as a major disadvantage of this method (Hoy and
Stanworth, 2014).
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Figure 1: International marketing
(Source: Behrangrad, 2015)
The organization named, “Primark” can use the joint venture that is more beneficial
and effective to use as an internationalisation method compared to other methods. This
process will assist the company to generate higher amount of revenue and increase the
market position in new business location. Several countries such as Japan, New
Zeland, Norway and others have developed economic condition. “Primark” has not
expanded yet their operations in those locations. Therefore, “Primark” can use joint
venture method to expand on those selected business locations. It will be beneficial for
the company to conduct operations in those locations, which will be resulted in higher
profits in business and extended growth of business simultaneously.
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LO3 (P5, P6)
Investigate how elements of the marketing plan can be adapted or standardised
across international markets
P5 Present an overview of the key arguments in the global versus local debate
The concept of local and international marketing is completely different and both of
these elements consist of several vital facts and key arguments. Firstly, the key
argument of international marketing is that it provides the opportunity of extending the
customer base and numbers of potential customers by increasing the area of promotion
(Morschett et al., 2015). It has allowed business ventures to grab attention off huge
numbers of customers that actually influence the sales and profitability of the
organization. On the other hand, local marketing approaches and strategies are aimed
attracting the local customers, instead of targeting global customers (Shenkar et al.,
2014). Therefore, the growth scope in local marketing activities is limited, where
international marketing approaches provide multiple growth and development
opportunities to business firms. Both of the marketing concepts have their own
effectiveness; but, they way they work completely different.
Apart from this, as per the consideration of modern market researchers, International
marketing operations are costly as it deals with huge customer base at international
market place, where expenses are limited and small in amount at domestic and local
marketing activities. In local marketing approach, the R&D team of an organization only
works to understand the needs of the local customers and modify it in such manner that
it can meet the expectations of those local customers. International approach influences
to extend the research market area to evaluate needs of wide range of global
customers. However, the process of international marketing approach is more complex
compared to local marketing approach as well as it needs taking help of experts (Jean
et al., 2016). Lastly, local marketing approach might adopt or not adopt technologies in
promotional activities, where in international approach of marketing, using multiple
technologies has become necessity. Companies like Primark need to adopt global
marketing approach for enhancing market shares and profitability scale.
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