Question one4
SWOT analysis for Primark.4
Strength4
Weakness.4
Opportunity..4
Threat5
Question 1b..5
Question two6
Motivation6
Maslow’s Hierarchy of Needs.6
Herzberg’s Two-factor theory..6
Question four6
Marketing.7
Primark Marketing Mix8
Price.8
Product.8
Place.8
Question five9
Demand and price9
Quality..9
Question seven10
How globalization drivers affect Primark..10
Cost Drivers10
Government Drivers..10
Technological Drivers11
Market Drivers11
7b. The most Important Drivers (Technological drivers) .11
References..12
Question One
1. a) SWOT Analysis for Primark
Strength
The primary strength Primark enjoys is a large market. Primark has already concurred most of the European market and is expanding in the United States market. A large market is strength since it provides Primark with a large base of clients. Low prices compared to that of the competitors are the other major strength that makes Primark a choice of many clients. At Primark, the average cost of women clothes is 3.87 Euros as compared to 10.69 Euros at H&M. Apart from low prices and large market, Primark also has attractive stores which are more attractive. Additionally, the sales volume per square meter is very high, an average of 3,400 Euros per meter annually.
Weaknesses
Primark is selling their products at a very low price compared to the competitors which can lead to low returns. Apart from the low pricing of their products, the other weakness of Primark is the poor marketing tactics they are applying. The case study concludes that Primark is not using the social media to advertise their products as effective as its competitors.
Opportunity
Primark has a higher opportunity to conquer other markets apart from those in Europe. The big market in the United States is an opportunity which Primark can venture into. Apart from other markets, online marketing is an opportunity to make more sales. According to the case study, the company is already using the social media to advertise their products. With a large number of social media users, the company stands a better chance to make more sales. Additionally, the bargaining power Primark enjoys from the suppliers can make the company sell its products to even a lower price than the current prices.
Threat
The biggest threat Primark is facing at the moment is the competition from other fashion shops such as GAP and H&M. Apart from the local competitors, Primark will also be faced with competition from Canadian fashion shops in case it sets foot in the United States market. Low price is also a threat to the existence of the company. It is costly to market through the social media and participate in an e-commerce while charging low for the clothes. The other threat comes from the environment. The environment is a concern since the used clothes pollute the environment. With Primark selling their products at a lower price will mean that customers will make more purchases leading to many clothes getting disposed to the environment.
Question 1b
After conducting the SWOT analysis, it is clear that Primark needs to put the focus on its threats to ensure that it remains in the market. Primark is having a lot of threats from both the internal and external factors. One of the major threats that were noted was the competition from other fashion shops. Primark thus needs to come up with measures and strategies to ensure that the competition it faces does not snatch away its market position. Additionally, low prices were noted as both a strength and weakness. Primark needs to make a stand on whether it should continue selling its products at low costs or go by the market pricing.
Question two
Motivation
Primark just like any other organization must ensure that it motivates its employees for a high performance. In the case of Primark, two major theories can be used to explain the relationship between it at the employees.
i. Maslow’s Hierarchy of needs
Abraham Maslow’s theory is relevant to almost all organizations with the aim of motivating its employees Kellerman (2014). At Primark, the company is aimed at ensuring that the needs of the employees are met in the hierarchy as speculated by Maslow. This theory is important in the case of Primark since without the satisfaction of the employee’s needs as per the hierarchy; there will be the conflict of interest. Additionally, Maslow’s theory works for almost all organization despite the cultural diversity of the employees (Poston, 2009). Since Primark looks forward to integrating all the diverse cultures within their human resources, they need Maslow’s theory to understand how to motivate them.
According to the web excerpt, Primark offers an environment full of fun for its employees. Providing an environment full of fun satisfies the psychological need which is primary in this theory. Additionally, Primark promises an environment where one can intermingle with other employees, which can be an opportunity for self-actualization. From the excerpt, Primark ensures security for its employees and promises an environment where staffs are promoted. There are those who have worked with the company for more than 15 years proving that the company appreciates its employees and retain them.
ii. Herzberg’s two-factor theory
This theory tries to define the boundary between the factors that motivate and those that do not motivate employees in an organization. Satisfiers or what Herzberg called motivators makes an employee to work harder to get motivated (House et al. 1967). Additionally, the satisfiers can be used to attract more staff to the organization. There are some factors, however, which can be ‘no satisfaction’ such as a decent salary; they are called the hygiene factors, which still work as motivators.
Most people think that high salaries are the only factors that satisfy the employees as far as motivation is concerned (Pandža, 2015). According to the web excerpt provided, Primark offers other factors to satisfy their employees. These factors include working in an environment with highly qualified staff. Apart from working with other employees who are highly trained, employees can be motivated by giving them an opportunity to progress.
Question four
Marketing
Primark looks to be targeting the youth segment in their marketing strategy. The company does not only use demographic segmentation but also seems to be embracing both geographical and some socio-cultural aspects in how they place and market their goods. Fashion for a long time has been related to the youths. Youths are the common purchasers of clothing and hence, to ensure that the products of Primark sell, they must be integrated within the segmentation strategy.
Primark Marketing Mix
Price
Primark offers its goods at a lower price as compared to the competitors so as to attract both the high-end clients and those who cannot manage to buy from high-end fashion shops. Through offering a cheaper option, Primark is able to get more clients than its competitors and most probably, increase its sales. According to Constantinides (2006) price is an important aspect of marketing mix that must be considered.
Product
Primark’s major target is the youths and most importantly the young women. The products offered by the company are aimed at attracting the young women who will find all the fashion products under one roof. The products are also placed closer to the clients through opening more stores. Additionally, Primark differentiates its products from those of the competitors hence giving the products an identity.
Place
Currently, Primark has dominated the European market. The company is, however, embracing place as the market mix to attract its segmented market through opening its branches in other countries. At the moment, Primark is looking forward to opening its branches in the United States so as to have more clients. Additionally, in the countries where Primark is already available, it has opened stores which many clients say to be more attractive than those of the competitor’s. According to Yoo et al (2009), the placing of products is a core factor to ensuring sales.
Question Five
Demand and Price
Demand has been defined in many ways by the different economist, but the most accepted definition is that it is the state in which a customer is both willing and has a desire to pay for a product at its current cost. Any person who wants to understand demand must underline two words; willingness and price. In case a customer is in a position to pay for a product they have no desire for then the situation changes from a demand.
Demand a price has a strong relationship. Price and demand have an inverse relationship Wolak (2000). With an increase in demand for a product, the price of such product can also rise. However, the case is always not the same where the price of a product falls due to a high demand. The product is a factor that must be considered while defining the relationships between demand and prices. The price of luxurious products, for instance, can remain constant even when there is a drop in demand or rise.
Quality
Apart from the prices Primark’s products, the quality of the products has also affected their demands greatly. According to the case study, Primark has gained a big loyalty from the clients since most of the customers believe that the products are of high quality. Those who have purchased from the company’s stores will take their excitement to the social media such as Instagram to share the feeling with other friends. The loyalty showed by the clients has made Primark to gain a big number of clients and hence a high demand for the products.
Question seven
How Globalization Drivers affect Primark
Cost Drivers
Different products are in the fashion market with different costs. Primark must be worried by the way they price their products or else they will charge very low such that they cannot survive in the market. Cost drivers affect Primark both in positive and negative ways. In a positive way, Primark is capable of winning a larger market since they charge lower prices as compared to other companies.
Government Drivers
The European Union is on the verge of separation. With Britain planning to quit the EU there are chances that stiffer trade policies will be enacted (Traill et al. 2014). At the moment, there are no stiff laws that Primark is facing as far as globalization is concerned. Primark is free to cross boundaries and only abide by some of the trade laws in the new market. Free trade has also opened doors for Primark to get into the United States. What Primark should be concerned about, therefore, are trade laws, tax policies to avoid getting on the wrong side of the law.
Technological Drivers
Technology is changing each day. Industries are changing the way they manufacture their products so as to cut on the production costs Lane et al. (2008). Primark must be worried about what they are doing to ensure they remain at the relevant side of technology to avoid remaining behind. Primark can benefit from technological drivers in case they invest in technology to cut on production cost, increase the number of clothes stitched, promote and advertise their products.
Market drivers
Globalization is driven by market changes and shifts. At the moment, Primark is weighing the chances of getting into the US market. The market as a driver will change the way Primark does its business. The company should not only think of the market that is already flooded, rather it needs to weigh its options before getting into a market or else it will just make losses.
7b) The most important driver (Technological Drivers)
Technology needs to be Primark’s primary concern. The main reason technology has to be Primark’s primary concern is because the society is in an era where technology is highly appreciated. Without putting emphasis on technology, Primark will remain behind and also make losses due to high production costs. One way to put emphasis on technology is through using the social media as a means of promotion where the products are advertised. Additionally, instead of employing many people to stitch their products, Primark can employ technology in their company and reduce the cost of human resources.
References
Constantinides, E., 2006. The marketing mix revisited: towards the 21st century marketing. Journal of marketing management, 22(3-4), pp.407-438.
House, R.J. and Wigdor, L.A., 1967. Herzberg's dual‐factor theory of job satisfaction and motivation: A review of the evidence and a criticism. Personnel psychology, 20(4), pp.369-390.
Kellerman, A 2014, 'The Satisfaction of Human Needs in Physical and Virtual Spaces', Professional Geographer, 66, 4, pp. 538-546, Academic Search Premier, EBSCOhost, viewed 31 May 2016.
Lane, P.R. and Milesi-Ferretti, G.M., 2008. The drivers of financial globalization. The American Economic Review, 98(2), pp.327-332.
Pandža, J, Đeri, L, Galamboš, A, & Galamboš, T 2015, 'Two-factor Analysis of Employee Motivation at "Postal Traffic -- Department in Novi Sad"', European Journal Of Economic Studies, 12, 2, pp. 101-111, Academic Search Premier, EBSCOhost, viewed 31 May 2016.
Poston, B., 2009. Maslow’s hierarchy of needs. surgical technologist, p.348.
Traill, W, Mazzocchi, M, Shankar, B, & Hallam, D 2014, 'Importance of government policies and other influences in transforming global diets', Nutrition Reviews, 72, 9, pp. 591-604, Academic Search Premier, EBSCOhost, viewed 31 May 2016.
Van Waterschoot, W. and Van den Bulte, C., 1992. The 4P classification of the marketing mix revisited. The Journal of Marketing, pp.83-93.
Wolak, F.A. and Kolstad, C.D., 1991. A model of homogeneous input demand under price uncertainty. The American Economic Review, pp.514-538.
Yoo, B., Donthu, N. and Lee, S., 2000. An examination of selected marketing mix elements and brand equity. Journal of the academy of marketing science, 28(2), pp.195-211.
