The ability of an organization to generate and maintain market competitiveness forms one of the most critical elements in supporting its internal and external mechanisms for further growth and expansion. The increasing competition and pressure in the global business arena have largely compelled many businesses to seek opportunities where they can expand their operations on the international scale.
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The prosperity and viability of a firm expanding to another country greatly depend on an organizational ability to organize its communication systems efficiently and effectively (Dunn 2008, p. 193).
Studies indicate that expanding a business to a different location is an initiative that requires proper planning and development of communication strategies with regards to operating in environments which are not familiar (Zhou, Zhuang & Yip 2007, p.309).
This paper analyses John Lewis, a fast growing departmental store in the United Kingdom and its expansion strategy. Besides, the paper examines and explores the United Arab Emirates as a likely location for John Lewis business to expand.
A brief overview of John Lewis: John Lewis is a departmental chain store based in the UK. It operates about thirty two stores in its chain of operation. Additionally, the store stocks diverse range of products that include leisure and beauty goods, electrical, fashion products and home appliances (Zerbini, Golfetto & Gibbert 2007, p. 784).
Its key personnel include Charlie Mayfield who is the chairman, a managing director, a retail director, a brand and buying director, and a commercial director (Kissa, Danis, &Cavusgil, 2011, p. 270). It has over seventy thousand employees in its partnership with other businesses working in its stores and in sister stores like Waitrose supermarkets (Winer 2009, p. 117).
Since its inception, John Lewis and its partners have relied on distinctive positioning and not market leadership to drive customer loyalty and trust (Suh et al 2010, p. 211). Reports from Mintel (Consumer market reports for Europe and UK) indicate that John Lewis core strategy has made it a department store brand that is most trusted after M&S.
The company has been able to nurture customer trust and confidence through delivering of quality services and products at competitive and genuine prices. This has enabled it survive many setbacks which include the 2008 recession. It has developed an online platform never Knowingly Undersold (NKU) where it markets and sells its products online locally and internationally (Suh et al 2010, p. 211).
Financially, its financial year that ended in January 2011 saw its sales at £2,661.9 million, an increase of 10.2% and its operating profits at £201.2 million, an increase of over 21.3%. Its direct sales especially from fashions have increased its sales making total sales to reach a high of £393.5 million (Kissa, Danis, & Cavusgil, 2011, p. 270).
The selected marketplace-United Arab Emirates
Economic status of UAE
The United Arabs Emirates economy over the last two decades has continued to grow and greatly impact the global economic status. Its economy to agree with Suh et al (2010, p. 213) has largely progressed and diversified based on the Human Development Index (HDI), consumption per capita and GDP per capita among other indicators.
The United Arab Emirates with a GDP of $ 270 billion in 2008 was ranked 38th globally, third in the Middle East and second after Saudi Arabia. Statistics indicate that the current GDP growth of the UAE makes it a fastest growing economy. Besides, Al-Obaidi (2003, p. 98) points out that the UAE is an emerging market that is anchored by strong diversification, external trade and investments.
Demographic characteristics of the United Arab Emirates
The UAE has been ranked as one of the many nations in the world with the highest population (Dunn 2008, p. 195). The main contributing factor behind this high population density has been massive immigration over the years.
In 2005, reports from the national Bureau of Statistics indicated that the UAE population was at 4,106,427 and in 2010; it had steadily rose to 8,190,000 with a growth rate of 3.282% (Dell’Orto 2010, p. 649). While it is true that the UK has a high literacy level of 99%, Petrilli (2004, p. 271) indicate that the UAE closely follows it with 77.9% with literacy levels among female population being 81.7% and male 76.1%.
The literacy levels as Zhou, Zhuang and Yip (2007, p. 312) indicate are indeed important tools for developing an effective communication plan and also crucial for implementing marketing communication because they determine the approach to use when expanding to this market. In addition, over one third of the population in the UAE has access to the internet (Anon 2001, p. 87).
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While this may be low compared to the over 75% of the UK population that has access to internet either in their homes or at workplaces, Scotton (2002, p. 277) argues that the access to internet in the UAE is definitely a critical tool because it will make it easy for John Lewis to conduct marketing communication to relay messages and gather feedback easily.
At this point, Shankara et al (2011 p. 32) concurs with Scotton’s view on internet and literacy and adds that a highly literate society is a real asset towards any form of business expansion plans.
Market availability and size of market: One major factor that global media and communication scholars emphasize on is the availability of market for an organization’s products (Winer 2009, p. 108). It is worth noting that the UAE business development environment has been very effective in the sense that products easily get a ready market because of the large population.
Spinks and Wells (1997, p. 290) hold the view that a business expanding to this region stands a chance of enjoying an advantage of a large customer base. However, Cheng (2002, p. 230) partly agrees with Spinks and Wells but warns that with the UAE per capita being lower compared to that of UK, many people are unable to afford various products even those produced locally due to the weak purchasing power.
In the UK, traders have an added advantage of an expanded market (entire EU bloc) where per capita is also higher compared to that of the United Arab Emirates (Ho & Bill 2008, p. 293). However, businesses in the UAE continued to flourish with ease because the local population purchasing power is higher.
Competition, entry threats and industry structure: The United Arab Emirates markets just like the UK markets are highly competitive because of high specificity of consumers and levels of industrialization (Chitakornkijsil 2009, p. 109).
As a result this competitive environment makes marketing communication difficult because new ventures have more potential in asserting their brands (Ashutosh & Suresh 2009, p. 605). Large organizations in the UK have to beat the existing giants in the UAE by using superior marketing communication designs to reach and put across their messages to consumers.
In the UAE, Shankara et al (2011 p. 32) highlights that competition is even more difficult to counter because existing organizations are run by the government which has major interests in them and as such may prove to be a threat as well as a source of competition for John Lewis.
The view by Shankara et al is strengthened by Arnaud and Bolton (2008, p. 155) who are afraid that the near monopolistic nature of the market is indeed less tolerant to emerging competitors and this makes it very difficult to penetrate.
Entry to market
Choosing an effective market entry mode has become one of the most important strategic choices facing many businesses intending to expand to foreign countries and compete favorably in the international market.
Strategic management scholars indicate (Leeflang 2011, p. 76) that different businesses have diverse strategic orientations that reflected in the manner in which they are willing to organize their communication, control mechanisms, prioritize resource allocations and take risks Zerbini, Golfetto and Gibbert (2007, p. 784) point out that the entry mode a business chooses depends on developing an effective communication strategy.
Agreeably, Al-Obaidi (2003, p. 100) points out from a strategic capability theory that a media plan will minimize the chances of John Lewis failing in its new venture by providing it with competencies and capabilities based on intangible and tangible resources.
Segmentation, targeting and positioning
In their publication, Arnaud and Bolton (2008, p. 155) point out that segmentation, targeting and positioning are important components in developing a media plan that when appropriately implemented, a business’ competitive advantage become enhanced, its products gets identified, market segments corrected and market mix applied to maximize profits.
In the case of John Lewis, moving to the United Arab Emirates will mean choosing potential locations such as the city centers where the middle class and upper class people are and can buy its products. Once it has identified city centers as its segments, it will need to an appropriate media to market and carry out promotions of its products.
Gaining more customers and a competitive advantage requires effective communication of products and costs to consumers (Chen, Shen and Chiu 2007, p. 1046). As such, in its positioning, it must set the prices of its products competitively and ensure that it communicates the information efficiently via a media.
Developing effective marketing and brand communication has become a central pillar to most organizations seeking to win greater national and international markets because of its capacity to link consumers and respective organizations as a method of branding, developing loyalty and levering demand for continued market dominance and profitability (Ho & Bill 2008, p. 293).
Marketing communication managers at John Lewis should carefully internalize national cultures and therefore design their brands in a manner that coheres with their orientation. Leeflang (2011, p. 76) posits that in the UAE, the population has come out as one that take a highly collectivist outlook which defines every aspect of the society.
As such, by internalizing the collectivist nature through targeting groups and using symbols that are recognized collectively, John Lewis would easily increase their loyalty by the local population.
Dunn (2008, p. 200) echoes the above argument and notes that incorporating an element of the UAE cultural outlook in market positioning would create a sense of identity by the local population and ultimately develop important support of products and services provided to the market.
The theory of globalization focuses on cultural, political, social scenarios, economic conditions and development influences. It strongly claims that communication is a key component which has international aspects (Arnaud and Bolton 2008, p. 155).
Arnaud and Bolton (2008, p. 155) points out that the current globalization trend facilitated by fluent, economic conditions and active worldwide communication systems has increased mobility in trade and financial resources.
Globalization therefore plays a key role in creating a sphere where John Lewis will be able to establish economic and communication transactions when it expands to the UAE. In addition, Petrilli (2004, p. 192) indicate that globalization creates technological ties which do not only increase flexibility, but also enhances cultural communication.
The international marketing mix John Lewis should pursue
The expansion of John Lewis into the UAE will call upon its management to implement a marketing plan that will aid overcome challenges related to cost, competition and entry into a new market. Leeflang (2011, p. 76) argues that a company expanding to a new region and wishes to enjoy the advantages it had in its home country should devise and launch identical marketing plans.
In its expansion, John Lewis should employ product, price, promotion and placement mix to capture the market in the UAE (See appendix I). In terms of product, John Lewis can have tweak elements but adopt a single fashion product for the market.
The tweak elements will be seen in the manner of packaging and difference in size. In terms of price, the cost of products as well as the media channel to employ varies in different markets and may be affected by different variables cost of development and delivery (Leeflang 2011, p. 76). As such, John Lewis should go for a media which is less costly.
Burt, Johhanson and Thelander (2011, p. 185) argue that distribution of products vary indifferent countries and are influenced by level of competition. As such in terms of placement, John Lewis placement plan must focus on the position of its products in the market place.
On the issue of promotion, Dell’Orto (2010, p. 650) indicates that a proper media plan should be devised to cater for budgets related to advertisements and other marketing activities.
Use of internet platforms
The last two decades have seen information technology emerge as an unbeatable force and platform for communication whereby businesses have used the internet to reach their target consumers with ease (Anon 2001, p. 90).
In the UAE, information technology has greatly developed and this would be the best platform John Lewis should use to post information to potential customers. Preferring to use the Arab times for efficiency and low cost, web banner page on products using banner 780 pages on all pages throughout the year on a monthly basis will cost 1200×12=14400 KD.
Use of newspapers to relay messages
Newspapers are some of the oldest forms of marketing communication that organizations use to relay their products information and reach potential messages (Shankara et al 2011, p. 30).
They are therefore considered formal in most cases and used to relay official information about new products and press releases. In the UAE, printed press is considered to be very central in sending messages to customers and potential clients because it can reach even those far from major towns (Burt, Johhanson & Thelander 2011, p. 190).
Preferring to use the Arab Times for newspaper advertisement, the products will take the first business page, colored and half a page at 1800 thrice a week for a month. The total cost will be 1800×4 weeks × 3 days months= 21600 (See Appendix II).
Reflection- strengths and weaknesses of media and communication strategies
As Globalization progresses to all corners of the globe, it has become very critical to strategically reposition within the marketing realms for growth and development (Spinks and Wells 1997, p.290). Arguably, the ability to progressively articulate a holistic inclusion of consumers and traders as major stakeholders in products design and consumption has become more intense.
Hebert, Roxell and Randy (2011, p. 1438) point out that the use of media and effective communication strategies as links to consumers has therefore employed the notion where consumers are directly engaged and actively involved in determining the quality of products and services.
This notion as Scotton (2002, p. 277) expresses in his publication derives necessary identity from consumers and subsequent loyalty with a company. However, media advertising has increasingly lost this notion due to the high costs involved and long term taken to respond to consumers’ demands.
Communication efficiency. Due to the fast rising competition in the business sector, it has become necessary to employ effective communication methods that guarantee expected objectives of a company.
Indeed, many senior managers and executives of companies understand very well those media and communication strategies for critical tools in a business system. As a result, most businesses demand to get the direct feedback, both positive and negative feedback that tells the actual status of their products in the market (Dell’Orto 2010, p. 650).
Through sales promotion, a direct link between consumers and the businesses is created through a consumer sales promotion where businesses interact with consumers. Besides, a business and other traders can also link via a trade sales promotion.
As such, through the media, sales management teams of John Lewis will get into contact with their customers or respondents, collect their views, and access their perception with reference to the products being offered.
According to Burt, Johhanson and Thelander (2011, p. 185), it is not enough to just have an excellent product with an excellent price in the market. However, tie-backs must be established to effect faster communication of alternatives to the consumers for higher returns.
Time demands and efficiency: Media advertising takes long term consideration mainly because response from consumers nis mostly not immediate. Taking into consideration the fact that media use and application is very costly, Leeflang (2011, p. 76) points out that there are great levels of inefficiency as companies tend to capitalize on major sections in the major newspapers and prime time to capture consumers attention.
Scholars however appear divided over the issue in that most of the producers that have intensively applied sales promotion have indeed been very emphatic in the long term demands (Dell’Orto 2010, p. 650). In addition, media advertisement is a one way communication system where producer relies on the media for communication with target consumers.
As a result, it takes much longer for the producer to get the correct negative feedback after an advert has been released to the traders and consumers in the market. With the advertising media being mainly informative, it therefore lacks the aggressive appeal necessary for the current dynamic market.
According to Zerbini, Golfetto and Gibbert (2007, p. 784), modern consumers have become skeptical about advertising as it has turned out to be a show of might which does not necessarily confer with the quality of products they get in the market.
Most of the products quality difference is very limited for the consumers to determine through media advertising as opposed to practical methods. Chitakornkijsil (2009, p. 107) points out that they are greatly shortened and lack basic explanatory considerations available in sales promotions.
Mintel consumer reports on John Lewis indicated that it was only after John Lewis refocused its long term advertising consideration and assimilated short term promotions based on incremental and cumulative sustenance that it managed to capture the market share of the UK fashion market in 2009 (Shankara et al 2011 p. 32).
Operations and cost incurred
Application of effective communication strategies has been more effective due to its ability to target specific populations in the market. Companies managements’ main considerations that dictate efficiency in media plan application is mainly the ability to reduce operation costs and precisely get the target consumers for their products (Shankara et al 2011 p. 32).
Besides, the management team of acompany ensures that all the operations are carried out with the highest possible positive impacts aimed at achieving organizations’ goals and objectives. Good communication strategies have therefore turned out to fit in these brackets perfectly well. In the UAE, Suh et al (2010, p. 213) argue that it pays to particularly identify the potential consumers for a given product.
Therefore, through undertaking effective communication methods especially in the major supermarkets, it is possible to avoid major wastages as it attracts only the target population. However, media use in communication is usually very costly and general in its targets.
The struggle to get the best slot during prime time hours of the news and capturing sections of the news papers like the front pages makes them very expensive for businesses. It is also very wasteful in that it exposes the advert even to non-targeted population.
Creativity application and appeal
Sales promotion is applied in the field with use of tangible products and services to the consumers or traders. As a result there is greater tendency to carve the necessary rational appeal and conviction of the product to consumers.
Media advertising on the other hand is highly emotional and seeks to create the necessary image and perception for a given brand. However, the discontinuity between the time of the advert and the real tangible products assimilation is highly perilous and may result to shifting of choice by the consumers.
During the prime time periods, in the front pages of the papers, and major bill boards, it is possible for the consumer to get hundreds of adverts on different products like tooth paste brands, car brands, and shoes among others. This is highly confusing to the consumers and the last advert may have greater impact on them than the initial ones.
To sum up, use of appropriate media plan as indicated in the paper forms a strong pillar that will ensure John Lewis expansion plans into the UAE is successful. The UAE is one of the fastest growing economies and provides a good market for John Lewis products.
As noted, some of the media strategies that the company can implement include the use of internet, social networks, newspapers and other forms of media as this are affective in reaching a large group of customers of various social classes. Selecting a media channel which is cost effective is key in ensuring that the business saves its operating costs.
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Appendix I: International marketing mix for John Lewis
Appendix II: Media Plan 2012
|Month||Media and frequency of usage||Daily cost (KD)||Monthly cost (KD)||Total (KD)|
|The Arab times||The internet||The Arab times||The internet||The Arab times||The internet|
|Jan||Thrice a week||Monthly||1800||21600||1200||22800|
|Feb||Thrice a week||Monthly||1800||21600||1200||22800|
|Mar||Thrice a week||Monthly||1800||21600||1200||22800|
|April||Thrice a week||Monthly||1800||21600||1200||22800|
|May||Thrice a week||Monthly||1800||21600||1200||22800|
|June||Thrice a week||Monthly||1800||21600||1200||22800|
|July||Thrice a week||Monthly||1800||21600||1200||22800|
|Aug||Thrice a week||Monthly||1800||21600||1200||22800|
|Sept||Thrice a week||Monthly||1800||21600||1200||22800|
|Oct||Thrice a week||Monthly||1800||21600||1200||22800|
|Nov||Thrice a week||Monthly||1800||21600||1200||22800|
|Dec||Thrice a week||Monthly||1800||21600||1200||22800|