ABSTRACT
The people of Scotland will be deciding the future of the country to remain part of the Britain in a referendum on 18 September 2014. There is growing debate on the future of the business in the resulting environment after the referendum. Also, there is debate about the business environment in UK, as a result, when UK votes to separate from the EU with or without Scotland. In the context of Boots, this report is aimed to assess the impact of the either results on the marketing strategy of the Boots.
ABSTRACT 1
INTRODUCTION 3
IMPACT ON BUSINESS CONDITIONS IN YES AND NO RESULTS FROM THE REFERENDUM 4
IMPACT ON MARKETING USING FOUR Ps. 5
DISCUSSION AND RECOMMENDATIONS 6
LIST OF REFERENCES 8
INTRODUCTION
The debate of independence of Scotland is to be held on 18 September 2014 (Gov.UK, n.d.). Businesses have started considering their future in the probable independent or united UK and EU. In the case of any such change, both countries will have to face the impact.
The current state of the Scottish review has developed following trend:
(Handley, 2014)
Furthermore, in case of separation, some debate that UK will be forced to leave EU as UK used this combined status from to negotiate leverages from the EU (Johnson, 2012). The latter referendum is to be held in 2017 (BBC, 2013). The government continues its inclined attention to remain part of the EU; however, the public has otherwise view as evident from the given below survey results (Geary and Lees, 2013):
(Boffey and Helm, 2012)
IMPACT ON BUSINESS CONDITIONS AS a RESULT OF REFERENDUM
For and against campaigns for the independence are both on stages. These campaigns have led the companies to plan their strategies for both scenarios or make a decision in the favour of one state (in case it is separation). In the view of the responses of business, the challenges appear to be much higher for companies that are based in the Scotland. Marketing Week has reported that every third consumer in UK will then be unlikely to deal with the companies that are based in Scotland (Handley, 2014; Hunter, 2014). Armstrong (2013) reported that the Scottish business sell more to UK as compared to the rest of the world. The businesses in UK consider the impact of this event less effective.
In fact, many businesses in UK showed a least concern about the referendum news of Scotland. Only small businesses showed some concern about the impact. According to one of the surveys reported by British Chamber of Commerce, the referendum will not have any impact on business in UK only 5.3% referred about the negative impact and 1.3% claimed it to have a positive impact (BCC, 2013). However, as reports claim, the separation of Scotland will force UK also to EU as added with the people’s pressures; UK will face pressure from this aspect. Further, both countries in independent states would have to incur additional cost for re-joining EU (ESRC, 2014).
Of the two options, many businesses have shifted their business preference in favour of UK. Royal Bank of Scotland and Standard Life moved to England while energy giant SSE and Lloyds held view that independence will not have much independence on the customers (Armitstead, 2014). Scotland’s separation from will cost Scotland families VAT tax rate and standard 15% in contrast to minimum 5% as part of EU. Also, Scottish families will have to bear £900 to the EU in place of the benefit gained from being part of UK’s £300 million contribution in EU treasury (ESRC, 2014).
Some businesses also favour the separation and state that implications for business will have an impact in the short run while the prospects are high for the long run. The Jupiter Fund Management views future growth in the separated Scotland, as well (BBC, 2014). UK, leaving EU, will have to face challenges as the EU members will not allow Britain to enjoy the benefits it likes such as free travelling and low rates. Though, small business considers it beneficial as 90% of the UK business in not involved in trading with the rest of European countries but still have to bear the cost (BBC, 2013). Contrary, statistics report that 52% of the trade that is around £400bn a year is done with EU and so will be affected. Separation will increase the costs in terms of product cost, and taxes, which in turn will affect the cost of living in all (BBC, 2013).
Around 185000 people from UK are associated with the financial sector of Scotland (Armstrong, 2013); while UK has 2.3 million migrants from EU as compared to its 7.1 million citizens living in other countries in EU (BBC, 2013). All these people will have to either return home meet the immigration requirements of respective countries.
IMPACT ON MARKETING (7Ps)
If the referendum results in favour of the continuation with the current status, the operations and things will continue in the similar manner. However, changes are evident in the case of separation. In addition to the overall business and revenue model, the marketing of the Boots will require adjustment. The similar target market will be external factors having direct consequence on the customer segmentation (Kotler & Keller, 2008). The customers, which are the core concerns of the marketing department, are also sceptical in Britain and the Scotland. The well established brands in UK that have Scottish in their name will be considerably under fire as UK customers are less likely to continue buying such products as revealed in the survey results (Handley, 2014). Consumers with high income group have a greater inclination to reject brands with Scotland in their name. British brands are expected to retain their position even without Scotland as part of the New Britain. Therefore, the product offerings from the Boots can be re-assessed only after the results and during the transition period in case of the separation between the two states. This decision is in line with the strategy put forward by the British Airways (Handley, 2014).
The factor of pricing also has greater implications for the Scotland and UK both. It is unclear about the Scotland’s future plan with respect to the monetary and tax regulatory system. Currency is a big question posed by a majority of businesses. Moreover, the continuation of the association with the EU is also in the grey area, which will have an impact on taxation and the trading agreements. In the case of final separation from UK and re-joining EU, Scotland exchequer will have to pay to the treasury of EU. Similar goes for UK. Furthermore, in case of both countries remain separated from EU, the tax advantage mainly along with other benefits will be eliminated having direct and significant impact on prices as well as the exchange rate parity.
Boots has around 300 stores in the Scotland with the majority of them placed in South will have to reconsider its placements (Boots, n.d.). As a result of Scotland and UK’s separation from EU, Boots may have to restructure its offices and services in Scotland, UK and other European countries accordingly; hence will require to incur additional administration cost. Though Boots plan to launch its products in the new markets with increased efficiencies along with innovative services and excellences (Alliance Boots, 2012); such measures will affect its budget under the pressure of country cost.
Businesses have been discussing the need of the new branding strategies for the products. Businesses are all concerned about the changing perception of consumers in case of the referendum results. Big businesses have the realization that complacent towards the results of the referendum is the need of the hour is not workable strategy. As a matter of fact, the brand name of the Boots does not have British or the Scotland name. This brand name has saved the company from the overall re-branding requirement in the new state. People have a clear stance that companies with the logo that is using union flag shall not be used by the retailer in the event of Scotland leaving the UK (Handley, 2014). Boots Company does not require undergoing any such change; however, this stance also reflects the changes to be incorporated in the promotional activities and their transformation into a localized version.
Scotland and UK in case of separation will have to determine a new strategy for the distribution channels. The physical evidence in terms of central stores dealing with headquarters and the rest of the stores in other European countries will have to establish. Processes of the availability of the products are followed as defined in rule for bloc; therefore, separation will require meeting separate requirements for each country. Also, approval and expansion cost will increase in term of meeting country processes. Immigrant’s adjustment will be disturbed which might force Boots to hire staff of the respective countries.
DISCUSSION AND RECOMMENDATIONS
Hence, the result of the referendum will determine the future of the businesses in the states. The impact will be much higher on the business conditions in case of Scotland separates from UK and UK separates from EU. Also re-joining as separate states will impact entire marketing. The overall marketing of the companies may also have to evolve depending upon the reaction of the people and future strategy of the governments of European countries, Scotland and UK. Contrary to UK’s, apparently, predicted less direct impact the overall impact is much higher as entire seven Ps will have to be settled again. Boots has already recently identified to revamp its marketing from fast forward to 2012 to the new objective that aims to inspire its customers with “feel good” effect (Chapman, 2012).
It is advisable for Boots to develop an assessment of the probable factors in either case of the referendum results. This assessment will enable the business to develop a strategy in the future business conditions with adjustable changes as required. The management of the company should adopt proactive approach and take precautionary measure in order to avoid any negative impact.
LIST OF REFERENCES
Alliance Boots. (2012). Group strategy and objectives. Available from http://www.allianceboots.com/AnnualReport2011-12/overview/group-strategy-and-objectives.aspx[Accessed 10 June2014]
Armitstead, L. (2014). Scottish independence: UK companies are voting with their feet. Available from http://www.telegraph.co.uk/finance/economics/10669406/Scottish-independence-UK-companies-are-voting-with-their-feet.html[Accessed 10 June2014]
Armstrong, E. (2013). How Scottish independence would hit UK investors. Available from http://www.iii.co.uk/articles/131773/how-uk-investors-would-suffer-scottish-independence[Accessed 10 June2014]
BBC. (2013). UK and the EU: Better off out or in? Available from http://www.bbc.com/news/uk-politics-20448450 [Accessed 10 June2014]
BBC. (2014). Scottish independence: What have businesses been saying? Available from http://www.bbc.com/news/uk-scotland-scotland-politics-26466362[Accessed 10 June2014]
BCC. (2013). BCC: Scottish Independence debate leaves most UK businesses unfazed. Available from http://www.britishchambers.org.uk/press-office/press-releases/bcc-scottish-independence-debate-leaves-most-uk-businesses-unfazed.html[Accessed 10 June2014]
Boffey, D., and Helm, T. (2012). 56% of Britons would vote to quit EU in referendum, poll finds. Available from http://www.theguardian.com/politics/2012/nov/17/eu-referendum-poll [Accessed 10 June2014]
Boots. (n.d.). Boots Scotland. Available from http://www.boots.com/en/Store-Locator/Boots-Scotland/[Accessed 10 June2014]
Chapman, M. (2012). Boots' Elizabeth Fagan on juggling a change in creative strategy for Christmas. Available from http://www.marketingmagazine.co.uk/article/1162700/boots-elizabeth-fagan-juggling-change-creative-strategy-christmas[Accessed 10 June2014]
ESRC. (2014). The Referendum on Separation for Scotland: Scotland's Membership of the EU. Available from http://www.futureukandscotland.ac.uk/news/referendum-separation-scotland-scotlands-membership-eu [Accessed 10 June2014]
Geary, M., and Lees, K. (2013). Separation or divorce for the UK and the EU? Available from http://esharp.eu/big-debates/the-uk-and-europe/131-separation-or-divorce-for-the-uk-and-the-eu/ [Accessed 10 June2014]
Gov.UK. (n.d.). Scottish independence referendum. Available from https://www.gov.uk/government/topical-events/scottish-independence-referendum[Accessed 10 June2014]
Handley, L. (2014). Scottish brands to suffer if Scotland becomes independent. Available from http://www.marketingweek.co.uk/trends/trending-topics/consumer-behaviour/scottish-brands-to-suffer-if-scotland-becomes-independent/4010169.article [Accessed 10 June2014]
Hunter, T. (2014). The true costs of Scottish independence: How it will affect your money. Available from http://www.telegraph.co.uk/finance/personalfinance/10664563/The-true-costs-of-Scottish-independence-How-it-will-affect-your-money.html [Accessed 10 June2014]
Johnson, S. (2012). Britain forced to leave EU if Scotland separates. Available from http://www.telegraph.co.uk/news/politics/9270749/Britain-forced-to-leave-EU-if-Scotland-separates.html [Accessed 10 June2014]
Kotler, P. & Keller, K. (2008). Marketing Management (13th Edition). Prentice Hall
