Effectiveness
Effectiveness
Introduction
Knowing the principles of building an effective marketing strategy is core success factor in development of any kind of business. Broadly speaking, marketing strategy is a combination of marketing purposes and marketing plan that is sometimes determined as Marketing Mix (4 p’s Marketing). Understanding Marketing Mix of the Company helps understand marketing strategy used for gaining competitive advantage (Ferrell and Hartline, 2012).
For the purposes of the current paper Sports Direct International was chosen. The paper will be devoted to the analysis of Marketing Mix used by the Company and analysis of success factors that help increase its profits.
- Background of Sports Direct International
Sports Direct International is a Company that is engaged in retailing of sportswear and leisure clothing, footwear, and sport equipment. The Company is also involved in wholesale distribution. The Company operates in two major segments including retail and brands. It sells its products through the network of retail stores. The brand segment includes acquisition, identification, development, trading and of the brands for cooperation. A distinctive feature of the Company is that it is owned by Mike Ashley - the Newcastle Football Club owner in 1982. The core brands acquired by the Company are Donnay, No Fear, Karrimor, LA Gear, and Golddigger. Currently, Sports Direct International is worth more than £700 million (Reuters, 2013).
1.1 Rationale
The choice of Sports Direct International is not occasional my intention is to open a Company selling sportswear and I have to learn marketing strategy used by the Company to have an idea of how to act in future. It is important to understand the basics of pricing strategy, promotion, and location when starting a business that could give a significant competitive advantage over rivals.
2. Literature Review
The book of Walker, Mullins and Boyd Jr. relates main principles of forming marketing strategy being focused on decision making process. There are several cases used as examples included in this book helping understand the approaches used. The principles of marketing approaches used in the book are based on marketing theories and concepts offering a new insight on marketing and planning processes. Authors of the book paid particular attention to creating and implementing an effective marketing strategy and analysis of cross-functional relationships. This book can be helpful in the current research because it offers useful insights on the marketing processes.
The book by Ferrell and Hartline contributes to change in thinking helping students think like marketing professionals. The book is useful by offering a number of cases to be learned from that help analyze different situations and resolve problems related marketing field. The main focus of the book is analysis of the approaches that help develop customer-oriented approach in marketing based on key concepts and marketing-specific tools.
Vollmer and Premo (2012) concerned the impact of social media on marketing processes. The main focus of the article is transformation of the companies’ strategies using social media. Vollmer and Premo (2012) supported the ideas developed by Nguyen (n.d.) and Thomson (2012).
Nguyen (n.d.) offered a research that concerned the current tendencies in sportswear industry. The author used proper research methods aiming to shed light on advertising approaches and the effect of advertising on consumers. The author rendered sufficient evidence with regard to the current situation in the sportswear industry that included short cycles, price deflation, outsourcing, offshoring, demographics, and product diversification.
Beverland (2009) examined the approaches used forming brand authenticity. The concepts of authenticity of a brand were used for analysis of the Sports Direct International recent advertising campaigns. The ideas of Beverland (2009) have much in common with the ideas highlighted in the work of Misiura (2005) related brand authenticity.
The article represented by De Chernatony and McDonald (2003), concerned creating strong brands. The findings represented by the authors helped analyze Sports Direct International brand history and understand the process of creating powerful brands. Similar questions were raised in the articles of Beverland (2009) and Misiura (2005). However, the book highlighted different aspects of building successful brands: Beverland (2009) emphasized brand authenticity while Misiura (2005) concerned brand heritage.
Haig (2011) focused on building a successful brand on the basement of multiple case studies similar to those offered by De Chernatony and McDonald (2003), and Hall (2004). In addition, Hall (2004) emphasized brand transformation like Vollmer and Premo (2012) did.
The book offered by Oswald (2012) is a valuable source of information for the current research in terms of campaign planning, marketing semiotics, and interpretation of messages sent by advertising professionals to the customers. Oswald (2012) offered multiple examples of practical application of theories of semiotics based on theoretic findings of semiotic science using critical theory paradigm. The author rendered sufficient evidence of how assigned meaning of a brand helps shape customer perception of a brand.
In his work, White (2000) explained objectives of advertising and general principles campaigns. The author offered evidence of how exactly advertising makes powerful effect on brand performance.
3. Research Question and Methodology
The purpose of this paper is to analyse the marketing strategy of Sports Direct International.
Within the scope of the current research, this paper will address the following issues:
- What is the role of marketing strategies in the success of Sports Direct International?
- Which response of marketing strategy is going to be more successful for Sports Direct International?
- What are the marketing tools used in Sports Direct International?
The methodology used for this paper includes both primary and secondary research. Primary research will be based on the data collected from questionnaire. The questionnaire contains 10 questions related marketing strategy of the Company and its effectiveness. The questions were answered by marketing professionals. The sample comprises 30 persons working in the field of marketing and advertising.
Secondary research is made on the basement of analysis of data collected from websites, specialized books and magazines related marketing strategies and its effectiveness. Thus, the research contains both quantitative and qualitative elements.
Another tool used in the current research is SWOT analysis of Sport Direct International. This is a strong marketing tool that helps analyze internal and external factors of operating environment.
5. Analysis and Findings
5.1 Marketing Mix Analysis
The most important aspect of Sports Direct International success is gaining favorable market positioning. The products offered by the company are diversified allows not relying on key products or seasonal demand fluctuations. The Company is currently employing a strategy of supplementary sales: when buying T-shirts customers also are offered shorts. In addition, Sports Direct International is a progressive company offering good quality of products at a low price. There is a variety of sportswear offered by Sports Direct International. The demand is characterized by insignificant influence made by the changes in customers’ preferences. Besides, the products offered by the Company are unique and specific due to their design. Besides, Sports Direct International provides its customers with new products on continuing basis. The Company takes advantage from economies of scale approach. Also, Sports Direct International takes advantage of extensive distribution channels worldwide. Sports Direct International is a socially responsible company that implements high standards of distribution including utilization of recycled package materials.
However, sometimes low prices for sportswear are associated with low quality of the products. Besides, brand awareness is low in comparison to other brands selling sportswear. Strong brand awareness could be used as a significant competitive advantage. Low prices for sportswear manufactured by Sports Direct International lead to obtaining low profit margin if compared to competitors. For example, net profit margin of the Company is 6.94% while Nike has 9.97%. It means that low profit margin may result in low investment in innovative materials and technologies that could hamper future development of competitive advantage of the Company (Sports Direct International, 2012).
Sports Direct International is known by successful marketing and advertising campaigns. The Company allocates significant funds aiming to achieve increase in sales. Thus, Sports Direct International spent $1.8 billion on advertising the last year that resulted in growing market share (Sports Direct International, 2012).
One of the most serious threats is threat of emerging of substitute products. Another threat is intensification of competition in the market of sportswear. Such competitors as Nice, Adidas, and Reebok pose serious challenge to the Company. Besides, profit margin of the company decreases due to high water consumption leading to high costs of raw materials. Legal requirements for clothes in general and for sportswear in particular become tougher in UK (Sports Direct, 2013).
5.2 SWOT` Analysis
SWOT Analysis of Sports Direct International is represented in the Table 1 below
The analysis of findings showed that Sports Direct International is a Company that enjoys competitive advantage based on economies of scale. Besides, the Company succeeded to develop customer loyalty based on proper pricing strategy. As the Company operates in the two segments – retailing and brands – that determines differentiated approach to the pricing strategies. Therefore, 42% of the respondents consider that the Company is using proper approach to pricing. Besides, 53% of the respondents stated that customer loyalty is based on the pricing strategy used by Sports Direct International. Also, 62% of the respondents asserted that success of the Company is based on selling unique products. However, 71% of marketing specialists participated in the survey marked out that Sports Direct International has low brand awareness. Moreover, 32% of the respondents agreed that the Company has damaged reputation that needs to be revived. However, the opinions of marketing specialists were divided. The major part of the respondents – 68% - considered that the Company enjoys excessive customers’ attention based on policy of discounted prices and customers’ habits.
6. Conclusions and Recommendations
The aim of the current paper was to identify the fundamental of brand identity based on Marketing Mix approach used by Sports Direct International. In the course of the current research the drivers of the Company success were revealed. Among them are successful pricing strategy offering affordable sportswear to the customers, unique products offered by the Company, and competitive advantage based on economies of scale (Beverland, 2009). Also, advertising campaigns of Sports Direct International were analyzed. The analysis of secondary sources of information showed that digital advertising provides significant returns to the Company in comparison with traditional promotion means. Therefore, the Company should switch from traditional advertising to promotion of digital marketing campaigns. Besides, the Company should pay more attention to the development of brand awareness because this is the weakest point in the marketing strategy according to the SWOT analysis conducted during this research. Currently, brand identity of Sports Direct International is based on balance between quality and price, promotion of the new products, and the name of the owner of the Company (De Chernatony and McDonald, 2003).
The Company is operating in a highly competitive environment being subject to threat of substitute products. Thus, Sports Direct International should develop marketing strategy that would be based on product uniqueness together with affordable price. There is a need to explain the customers that low price does not mean low quality of the products (Walker, Mullins and Boyd Jr., 2010).
Several experts surveyed emphasized on damaged reputation of the Company. However, the majority of the marketing specialists did not support this opinion. It means that further research must be undertaken in this area because the results of this research regarding damaged reputation are not satisfactory.
References
Beverland, M., 2009. Building brand authenticity: 7 habits of iconic brands. Basingstoke: Palgrave Macmillan.
De Chernatony, L. and McDonald, M., 2003. Creating powerful brands. Oxford: Elsevier/ Butterworth-Heinemann.
Ferrell, O.C. and Hartline, M. ed., 2012. Marketing strategy, text and cases.
Stamford, Connecticut, U.S.: Cengage Learning.
Sports Direct International, 2012. Annual report 2012, London: Sports Direct International.
Reuters, 2013. Sports Direct International PLC (SPD.L). Reuters, [online] 2 September. Available at: http://uk.reuters.com/business/quotes/companyProfile?symbol=SPD.L [Accessed 2 September 2013].
Sports Direct International, 2013. Sports Direct International. [online] Available at: http://www.sportsdirect.com/ [Accessed 2 September 2013].
Walker, O., Mullins, J. and Boyd Jr., H. ed., 2010. Marketing strategy: a decision focused approach. New York: McGraw-Hill/Irwin.
