NEXT plc has established itself over years as a clothing company that sells moderately priced clothing for men, women, and children. The company also deals in house wares and furniture. It has over 530 stores with over 40 stand-alone NEXT Home stores in the United Kingdom and Ireland. The company also contracts more than 165 stores in 30 counties in Europe, Asia, and the Middle East. NEXT has a segmented customer target, with most of its products targeting customers between ages of 20 and 40 who looks for fashionable and stylish and yet affordable clothes.  96% of NEXT sales come from retail stores. The rest is catered by other services and the NEXT Directory catalog and Web site, that serve customers located in over 50 countries. The company also operates other businesses including NEXT Sourcing, which buys NEXT stock from Asia and the UK, in addition to 50 Lipsy stores for teens. The company intends to open a branch in Mongolia. This paper discusses the marketing plan that NEXT is going to use to have a successful business in this new environment.

Objectives

The financial highlight for the company up to year 2012 is shown in the table blow. It clear shows that the company has the potential of meeting its financial objectives including those for Mongolia. The company has, for example, been experiencing increase in its total revenues, profits as well as shareholders funds which all indicate that the company is capable of meeting the highlighted objectives.

FINANCIAL SUMMARY

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

Revenue * (£m)

3,441

3,298

3,406

3,271

3,329

3,284

3,106

2,858

2,516

2,203

Profit before tax * (£m)

570

543

505

429

498

478

449

424

358

301

Taxation * (£m)

(143)

(150)

(141)

(127)

(144)

(147)

(136)

(119)

(108)

(91)

Profit after tax * (£m)

427

393

364

302

354

331

313

305

250

210

Shareholders’ funds (£m)

223

232

133

156

(79)

189

256

276

155

275

Underlying EPS (p)

255.4

221.9

188.5

156.0

168.7

146.1

127.4

120.2

93.9

68.7

Dividends per share (p)

90.0

78.0

66.0

55.0

55.0

49.0

44.0

41.0

35.0

31.0

Shares in issue at year end (m)

169

181

191

197

201

227

246

261

265

287

Shares buybacks (shares, m)

12

10

6

4

26

19

15

4

22

44

Share buybacks (£m)

290

205

120

54

514

316

218

57

209

392

Share price at year end (p)

2639

1994

1966

1097

1375

1946

1698

1592

1292

760

Market cap at year end (£m)

4,453

3,614

3,758

2,162

2,764

4,418

4,179

4,157

3,425

2,179

Source: Next Corporate Website http://www.nextplc.co.uk/financial-information/financial-summary.aspx

To control 30% of clothing retail in Mongolia within 3 years with high quality products

Mongolia clothing market is highly localized. Most of the low cost clothes sold in the country come from China. However, Dahlen, Lange & Smith (2010, p.34) note that the populations in big cities like Ulaanbaatar with 1 million people are turning from the traditional clothing to more stylish and fashionable clothing. To achieve this objective, NEXT Plc in Mongolia will seek to ensure high quality for all its products that will attract middle spenders. Since the company targets middle class earners, it will strive to ensure that the products that will be provided in this new market will match the price that will be attached to them. NEXT Plc will also focus on its employees in Mongolia in order to complete the cycle of better service delivery.

Equally, NEXT Plc seeks to provide best quality products at the best prices. It will achieve this by applying intuitiveness through ensuring that the pricing of their products concurs with their quality (Dahlen, Lange & Smith, 2010, p.34). The company therefore seeks to ensure that the costs of shipping products from its supplier in UK and other parts to Mongolia are not passed down to the customer in the new stores. This will be achieved by locating suppliers in Mongolia whose products matches the quality index of company’s products around the world. The company will also focus on having supervisors in the suppliers’ manufacturing plants to oversee the quality of products that are produced for its stores, in Mongolia. The provision of high quality products at reduced prices will be achieved by having limited number of suppliers to the new stores in the country, which will make negotiation of prices possible and easy.

To make NEXT stores the stores of choice to 50% of customers in Mongolia within 1 year of entry

This objective will be achieved by streamlining sales within the first six months of entry in the new market to a percentage of 5% of the total clothing sales in the country (Masterman & Wood, 2012, p. 22). The company plans to achieve this through the use shopping as an enterprise strategy. NEXT Plc has also identified the issue of personalized services as one of the necessary features in meeting this objective. The objective will also be boosted by the fact that NEXT Plc is also aiming at standing out as a leader in retail clothing through tailor-made services to suit the expectations of the customers. This will also be achieved through value added services that the company seeks to include in its stores. This value added services will include branded shelves, personalized customer care services, make-up studios, consultations services, and childcare facilities located within the stores.

Entry Strategy into Mongolia Market

NEXT Plc is a market-oriented company, which targets customers that belong to a certain age group. In the UK and other countries, in which the company operates stores, this age group is mostly between 20 and 40 years. This segmenting and profiling has made customers identify the company easily. However, with the intent of entering a new market, the company is thinking in terms of launching its products as a general clothing store where everyone can find something to buy. This strategy will be crucial in introducing its products to the entire market in Mongolia. This will done with the knowledge that anyone can buy cloth for his or her relative, and thus, not necessarily for personal use. This will also be helpful in positioning the company as a leader in the future in the Mongolian clothing industry for young people, who will form the bulk of targeted customers, in future (Brady, 2010, p. 9).

However, the company will consider this profile as a short-term strategy of attracting customers, and it should go back to its usual target age group as soon as possible. This will ensure that the costs of running stores in Mongolia do not increase tremendously through a general marketing approach. Marketing will thus narrow down to the usual targeted customers between the age of 20 and 40. This will also allow the company to transfer skills and knowledge from its experienced stores in UK and Europe, to be capable to attract more customers to its stores, in the new market. Segmentation of customers will also allow the company to focus on strategies that will enhance its competitiveness in the clothing industry, rather than focus on a general approach while its competitors are pursuing niche marketing opportunities, which may give them an upper hand in the retail clothing industry.

Competitors

Mongolia has a number of local shops that sell clothes to people. Most Mongols prefer to buy their clothes, mostly traditional outfit, from local markets in Ulaanbaatar where there is a state departmental store. Many people in the capital city have opened tourist shops that sell international outfits that NEXT Plc will be venturing in. Moreover, since the government has subsidized a lot on the imports; the stylish outfits are sold at lower costs, which may in return pose a challenge to the NEXT stores.

In addition, Mongolia’s proximity to China means that most of the goods in the country are imported from China. China is known for producing low cost products, which are most of the time fake goods. As such, Mongolian markets, especially those that are located near China like Choibalsan will continue to receive cheaper clothes from China. Most people are used to these low cost products and therefore NEXT Plc will require to carry out a thorough marketing session to convince customers to buy slightly their expensive clothes and products.

Implementation

NEXT Plc is intending to focus on factors that can contribute to better launching of its products in Mongolia. These factors include the political situation in Mongolia, the economic factors in both UK and Mongolia, social, and technological factors. They are collectively referred to as PEST, and they indicate the probability that a business will thrive in a new environment. Politically, Mongolia can provide a favorable environment for international businesses. Mongolia government provides incentives for international businesses that are attractive to international investors. Therefore, NEXT Plc will focus on the policies that facilitate its operations, such as focusing on environmental preservation.

Economic conditions in Mongolia and UK are encouraging for carrying out cross border business. However, NEXT Plc will seek address the issue of deficit in exchange rates, in which the UK sterling pound is stronger against Mongolia Tugrik. For instance, as of17 Sep 2012, the Pound Mongolian Tugrik exchange rate (GBP MNT) was standing at 1 GBP = 2252.299 MNT (Exchange rates UK).

The reason behind this is that most of the revenue that NEXT Plc registers annually comes from within UK. This means that the company will be using much revenue from home to run activities in Mongolia. The population in Mongolia is also a crucial consideration, catering to the need of a higher population will mean that there is a large market that will justify the investment. However, Mongolia has a population slightly less than 3 million people and, therefore, NEXT Plc will seek to assess the volume of products that can be sold in that country before opening stores.

Furthermore, most Mongols are nomadic people who have not yet adopted new lifestyle that befits the products that NEXT Plc sells. However, the large population in the capital city, about a third of the entire population, is expected to provide a large market. NEXT Plc will also invest in systematic advertisement of its products with the aim of attracting people, who are not yet introduced to products that the company sells.

With widespread use of technological advances, NEXT Plc is expected to take advantage of advanced technology plants in UK to produce high quality clothing products, which will be sold to Mongolian market. Similarly, the availability of the internet will provide a robust platform for the company to advertise its products to the people of Mongolia. However, this may also present a challenge since the expectations of the customers will be high; therefore, NEXT Plc must ensure that it fulfills those expectations.

Promotional activities such as advertising, sales promotion, e-tailing, and personal selling must be enhanced to ensure that the company launches its products with a strong impetus in the market. This will also be beneficial in projecting NEXT Plc as a strong competitor in retail clothing. Public relations will be useful in introducing the company and products to customers. This must be done prior to the actual opening of stores, so that when the company finally opens its stores, customers shall have already been aware of the products that they expect to find in the store.

PESTEL analysis of Mongolian Clothes Market

The 2011 Index of Economic Freedom ranked Mongolia at position 94 with a score of 59.5. The index revealed that Mongolia’s score was above average in the whole of Asia- Pacific region making it a good destination for doing business in the region. With a ranking of 16 out of the region’s 41 countries Mongolia provide good political conditions that are going to important to the activities of NEXT (Euromoney Country Risk, 2012)). However, the Corruption Perceptions Index has a score of 2.7 that means that NEXT entry in Mongolia may be hampered with by bribery cases for which Mongolia is ranked 116th globally.

Like many countries in the world, Mongolian gender balance in 2009 stood at the ration of 97.9 men to 100 women (United Nation Report on Mongolia, 2009). The report further indicate that 26% of the population were young people between 0-14 years while men and women above 60 years formed 6.5% and 5.3% respectively. This is important to NEXT Plc’s entry because 60% of the population fall between 20 and 40 years of age.

Environmentally, Mongolia experiences extreme weather conditions with its capital city Ulaanbaatar recording lowest temperature of 0 degrees making it the coldest city in the world. Most parts of the country experience hot summer and cold winter during different times of the year. This will be useful in determining the kind of clothes that NEXT will be introducing on the Mongolian market (Euromoney Country Risk, 2012).

Equally, the country’s GDP growth rate and GNIP per capita all point to the increasing ability of the Mongolia’s average people to purchase such products as would be presented in the market by NEXT Plc. This is illustrated in the figures below.

GDP Growth Rate

Mongolia’s GDP fluctuated with GDP growth rate falling by 1.3% to 6.1% in 2009 as compared to the previous year. Nevertheless, in 2010, the GDP growth increased to 7.6%.

GNI Per Capita

GNI per capita in Mongolia rose steadily between 2005 and 2008; however, in 2009 it declined marginally to USD 1,630.

Source: Euromoney Country Risk. Retrieved from:http://www.euromoneycountryrisk.com/Wiki/Mongolia

Regulatory Environment

The government of Mongolia has relaxed some of its regulation on tax returns making the business environment to be favourable for international businesses. Except for the high incidences of bribery, NEXT Plc’s entry to Mongolia will not be hampered by regulations since the government is encouraging investors through incentives like tax cuts which the company will enjoy alongside other freedoms as illustrated below.

Source: Euromoney Country Risk. Retrieved from:http://www.euromoneycountryrisk.com/Wiki/Mongolia

Promotional Communication: Push and Pull

NEXT Plc will also have to use all relevant communication techniques to attract customers in Mongolia, especially with the increasing competition from other retailers that already serve in the country. Both push and pull strategies shall be used in communication, besides the profiling approach. Push communication will aim at getting customers to buy products from the stores without necessarily advertising. This will, of course, target people who will not be reached with advertisement. This strategy will include the use of trade shows and fashion shows for customers in places where the NEXT Plc products are less recognized. With many other competitors in Mongolian market, this strategy will also come in handy in introducing NEXT products to customer on a one on one approach (Ashley-Roberts, 2012, p. 6).

On the other hand, the company will also seek to take advantage of the push approach as a strategy to target customers. The company will have to employ the use of tools such as contests, free samples, and coupons to entice and attract customers to visit their stores. This form of communication should go along with the pull approaches to help minimize the costs of marketing the products in the new market. However, push strategy will depend on the demand that potential customers indicate and the level of interest that they show during road shows and trade shows and when customers indicate their loyalty to the NEXT Plc brand. It may take a longer period for the company to determine customer loyalty, even though it is crucial to expect that customers will be embraced with products from this company. NEXT Plc will seek to identify, whether customers are likely to form brand loyalty by seeing whether their targeted customers have the ability to recognize the brand, before they go to stores to buy them. This can be determined in the field during road shows. NEXT Plc will consider using profiling strategy of communication in reaching out to customers, who indicate signs of loyalty in their brands through sending e-mails and making direct calls to them to find out, how they are finding their products. The company may even consider making deliveries to customers that make large purchases, for resale.

NEXT Plc has also realized that adopting a single communication strategy may not work effectively for them and; therefore; there is a plan to combine different approaches to communication. Most importantly, is the balancing of these strategies with the aim of creating a satisfactory marketing mix, which is acceptable, and enticing the customers. This is in recognition of the fact that different customers react differently to a certain advertisement or communication concerning a product. NEXT Plc must also consider best pricing strategies that will attract customers to their stores rather than driving them away to competitors. Strategies, which NEXT Plc is expected to embrace, include price skimming, quantity discounts to customers who buy large quantities, cost-plus pricing, and demand based pricing (Ashley-Roberts, 2012, p. 11). As such, pricing will be one of the important strengths for NEXT Plc, even as the company strives to build a brand name in the new market.

7Ps and 7Cs

NEXT Plc will also need to evaluate its approach as to whether to approach its marketing in Mongolia from an organization point of view or customer point of view. Organizational approach focuses on the 7Ps. This means that the product, price, place, promotion, people, processes, and physical evidence form the center of focus for the organization. On the other hand, 7Cs include the customer, cost, convenience, communication, caring, coordination, and confirmation.

Mongolia is a developing country and this means that NEXT Plc will have to focus on the needs that satisfy the expectations of customers. It is also crucial to recognize the difference in purchasing power from that in the United Kingdom. Consequently, NEXT Plc will prioritize on the creation of awareness of its products by focusing on the 7Cs and; therefore; bring to the attention of the customer the issues of quality and price. As has been the case with new markets, NEXT Plc will adopt the 7Cs in introducing new stores in Mongolia since the company is already established at home, and thus the issue of 7Cs will not be problematic to the implementation of the new market (Ashley-Roberts, 2012, p. 21).

Budgeting and Return on Marketing Investment

NEXT Plc must also consider the costs associated with marketing strategies and the expected benefits that the company estimates it is going to get from this venture. Most clearly, there is going to be short-term benefits like introducing the products to a new market with colorful reception from the customers, establishing itself a reliable and strong company that offers quality and well-priced products (Powell, 2003, p. 20). To be capable to realize a profit in the new market, NEXT Plc must ensure that revenues, which are related to marketing, exceed the expenditure on marketing. Thus, return on investment on marketing alone will be calculated as follows:

Return on Marketing Investment (ROMI) =

Marketing related revenues*percentage contribution margin – expenditure on marketing /marketing spending

The marketing budget for this venture is estimated as follows:

Activity

Cost in £

Television advertisements

50,000

Radio advertisements

45,000

A social media campaign

20,000

Print advertisements in local newspapers and magazines

80,000

Brochures and flyers

15,000

Business cards

5,000

Promotional material such as t-shirts, hats or pens

40,000

Discounts and other price incentives such as referral programs

60,000

Logistical costs

200,000

Management costs

150,000

Total costs

665,000

However, Powell (2003, p. 23) observes that return on investment may also be realized as a long-term benefit where these benefits are revealed after the company launches fully into the new market, and customers start identifying themselves with the products. As such, it is not expected that Return on Marketing Investment will be manifested within the first two years, and the company may wait for four years to realize benefits of intensive marketing.

Conclusion

From the above marketing plan, it is expected that NEXT Plc will be able to launch its products in Mongolia in style, as the marketing plan will help in addressing issues that may have caused problems. NEXT Plc prides itself in niche products that target definite consumers, and this has given it advantage over its competitors, who have problems marketing to customers. Furthermore, NEXT Plc can capitalize on its ability to sell stylish and fashionable products at prices that are reasonable to the customer. The company also has the advantage of the organizational brand, which makes it easier for it to act quickly on the wishes of the customer.

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