Digital marketing

Coursework 1

Alistair McColm, Grace Rossi, Jonas Mueller, Holly Jarvie

University of the West of Scotland

Table of Contents

Introduction (1)................................................................................................................. 3

1.1 Report Objective.................................................................................................................. 3

1.2 Company Background.................................................................................................3

Situation: Where Are We Now? (2)..............................................................................5

2.1 Marketplace.................................................................................................................... 5

2.2 Macro Environment Analysis: PESTEL..................................................................5

2.3 Microenvironment Analysis......................................................................................7

2.4 Owned Media Analysis................................................................................................7

2.5 Paid Media Analysis..................................................................................................... 8

2.6 Earned Media................................................................................................................. 8

Objectives – Where Do We Want To Be? (3)..........................................................10

3.1 Objective 1 – Implement customer retention policies..................................10

3.2 Objective 2 – Effectively utilise the digital marketing channels................10

Strategy – How Do We Get There? (4)......................................................................12

4.1 Segmentation............................................................................................................ 12

4.2 Targeting...................................................................................................................... 12

Tactics – How Exactly Do We Get There? (5).....................................................13

5.1 How to achieve objective 1 – Customer Retention.....................................13

5.2 How to achieve objective 2 – Effectively using digital marketing channels...................................................................................................................................... 14

Actions – Who Does What and When? (6)...........................................................15

6.1 Action............................................................................................................................. 15

Control – How Do We Monitor Performance? (7)..............................................15

7.1 What are the key performance measurements?..........................................15

7.2 How is performance recorded?.............................................................................16

Conclusion (8)................................................................................................................. 16

References....................................................................................................................... 17

Appendix 1 – Timeline................................................................................................. 20

Apendix 2 - PESTEL Analysis................................................................................... 21

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Appendix 3 - SWOT Analysis....................................................................................22

Introduction (1)

1.1 Report Objective

The purpose of this report is to provide an insight into the current marketing

strategy of Primark Stores Ltd. By doing so, the report will also provide a clear

interpretation of the marketplace which Primark trades in. Mintel reports and

various methods of primary and secondary research are used to demonstrate

the information.

The current online situation of the organisation will be critically analysed

throughout the report and theoretical frameworks will be applied to illustrate a

further understanding of the organisations strengths and weaknesses. An

appropriate digital marketing strategy will then be suggested for Primark to

ensure sustainable and effective growth within their marketplace.

The strategic direction of the company is considered and an appropriate plan

of action is suggested for the organisation going forward, to benefit their

online marketing success. Research evidence, theories and frameworks, such

as SWOT analysis, are used to support the recommendations throughout the

report. In addition, SOSTAC is the framework used to structure the report.

1.2 Company Background

Originally, registered under the name “Pennys”, Primark launched in June

1969 in Dublin, Ireland. Founded originally by Arthur Ryan, who was backed

by Associated British Foods (ABS) after receiving a £50,000 start up

investment, the store began trading.

The organisation then expanded into the UK in 1973. The trading name

‘Primark’ was born due to competition from an American based company, JC

Penney, who owned the rights to the name. At this point the store grew in

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popularity and has now lead to be one of the worlds leading fasion retailers

owning over two hundred ninety stores over the UK, Ireland, Europe and the

USA (see Appendix 1).

Primark’s expansion heavily relies on their ability to offer ‘cheap and cheerful’

products for a varied and diverse marketplace.

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Situation: Where Are We Now? (2)

2.1 Marketplace

Economy of scale, low manufacturing costs and efficient distribution channels

are used by Primark to hold a competitive edge in an ever changing market

place. The strategy of low margin-high profit, has been used by the

organisation to achieve high financial performance despite poor working

ethics allegations. (Hall, 2008)

Primark has established a loyal customer base in a marketplace that depends

heavily on online sales, despite the company not having a transactional

website.

“Despite its success the last couple of years have seen sales growth slow with

like-for-like sales only growing marginally. Without a website to add sales, all

growth is currently being driven by new stores and expansion into new

markets.” (Mintel, 2015) Primark have ruled out the prospect of a transactional

website, the retailer who is owned by parent company Associated British

Foods, is focusing on the growth of its international retail presence.”

The organisation has created a diverse offering in store, which has lead to a

varied target market. According to Mintel (2013), “Primark has the widest

appeal among a broad range of age groups and this is likely to have attributed

to its continuing success.”

2.2 Macro Environment Analysis: PESTEL

The marketplace can be affected by five main factors, commonly known as

the macro environment, the factors are eceonmic conditions, changes to

international trade legislation, technological developments, innovations, social

change and political interventions, (Chaffey and Ellis-Chadwick, 2012 p.57).

The use of a PESTEL (Political, Economic, Social, Technological,

Environmental and Legal) analysis has been used in this report to analyse the

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factors that have affected Primark’s macro environment and marketplace.

(See Appendix 2)

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2.3 Microenvironment Analysis

This report has provided a critical analysis of the company’s online situation,

according to (Chaffey and Ellis-Chadwick, 2012 p.664) a company’s online

situation means “the different forms of online media controlled by a company

including their website, blogs, email list and social media presences. Also known

as ‘owned media’.

The Microenvironment, also known as the trading environment, looks at how

shareholders such as customers, employees, suppliers and competitors

outline the online marketplace. An effective and sustainable digital marketing

strategy should take the needs of the microenvironment into consideration.

In order to develop a strategy, this report must analyse the current situation

that the organisation is in. The use of a SWOT (Strengths, Weaknesses,

Opportunities and Threats) Analysis will provide a clear understanding of the

areas that the organisation should develop. (See appendix 3)

Today, technology touches virtually every element of marketing, from digitally

enhanced advertisements to packaging, re-search, distribution, pricing and

beyond (Wood, M, 2013.p35). This report has identified the main platforms of

social media and compared their following with other online competitors.

2.4 Owned Media Analysis

Company Instagram Facebook Twitter YouTube Website

Primark 2.8M 4, 409, 778 156,000 17,446 Non-

Transactional

River Island 1.4M 2, 143, 681 379,000 9,333 Transactional

H&M 13.4M 26, 632, 681 7.75M 174,174 Transactional

New Look 1M 3, 207, 497 321,000 10,685 Transactional

The table above was created to provide a comparison of the organisation and

it’s competitors. As seen from the table, with the exception of H&M, Primark is

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exceeding most of its competitors in terms of online following. However, one

must analyse the value of followers. For example, Primark has more

subscriptions on YouTube than New Look, however New Look has more

views-per page. Therefore, these results prove that Primark has a good

following but they do not entice their consumers to visit their pages. Thus, the

organisation is not exploiting their vast amount of followers to market

effectively.

In addition, the organisation has a major weakness of not being able to offer

online shopping to its customers. The three major competitors offer a

transactional websites – by Primark not offering this service, they are missing

out on the massive market that has been presented throughout the report.

2.5 Paid Media Analysis

With the exception of a television add in Christmas 2014, Primark rarely uses

paid media. The advert was described as a ‘fast cut product montage’ (CUK,

2014) showcasing a wide variety of products that the store offers.

Currently, Primark doesn’t value paid media hence its absence from the

marketing strategy. The organisation has used social media platforms to

market their products as opposed to paying for expensive distribution

channels such as television adverts.

2.6 Earned Media

The main attribute of earned media is ‘word-of-mouth’ occurring both online

and offline between consumers and businesses. In relation to Primark, the

organisation have established a well grounded, earned media platform.

However, with Mintel’s predicted 86% growth of the online fashion market

from 2011 to 2016, reaching £9.4 billion (Drapers, 2014), it is apparent that

the provision of a multi- channel shopping experience may be crucial to the

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value retailer’s continued development and success in future.

“Primark will use its own shoppers to help sell the brand to fellow fashion

lovers by posting photographs of themselves wearing their latest purchases

on Primania, the company's new social media site. Less than a year old,

Primania now gets 300,000 visitors a week.” (Butler, 2014)

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Objectives – Where Do We Want To Be? (3)

This section of the report is focussing on creating objectives for the digital

marketing strategy. The objectives will be SMART (specific, measurable,

achievable, realistic and timely) and be related to the Five S’s (Sell, Serve,

Sizzle, Speak and Save).

3.1 Objective 1 – Implement customer retention policies

This objective is specific to the individual customers who already have an

invested interest in the company. Although the organisation has an

established loyalty, this objective is focussing on the retention of them. With

increased competition, the organisation must maintain its competitive edge.

The customer retention figures should be accessible and measurable, these

figures can be analysed weekly, monthly or annually. The use of Customer

Retention Rates (CRR) will allow the organisation to gain valuable information

on how the organisation is progressing.

The objective is achievable and realistic as it offers a simple concept that can

be filtered throughout the organisation, from the top line management through

to subordinates (Total Quality Management).

In order to achieve this within a realistic time period, the retention rates should

be constantly monitored and actions should be put into place when needed.

3.2 Objective 2 – Effectively utilise the digital marketing channels

The objective was created to make use of the current marketing materials that

Primark uses. It is evident that they have a large following, however, the

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channels of distribution should be utilised more effectively in order to market

their products. Offering online shopping, applications, offers, etc. is something

that should help retain and entice new customers.

The marketing team can analyse the followers, social media activity and

website visits and this will provide useful information on how best to reach the

customer.

In order to be realistic, it is very clear that social media platforms are

commonly recognised as an effective business tool. Therefore, the

organisation should take note of this and utilise their current following. In

addition, the timescale can be extended over a slightly longer period of time

as it is something which needs constant maintenance and monitoring.

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Strategy – How Do We Get There? (4)

4.1 Segmentation

According to Chaffey and Ellis-Chadwick (2012 p.668) segmentation is an

identification of different groups within a target market in order to develop

different offerings for each group. The four different types of segmentation are

geographical, demographic, psychographic and behavioral. Focusing on

demographical and behavioral segmentation to develop a strategy for the two

previous objectives.

Primark has already established their individual market segmentations based

on demographics e.g. age, gender and social class. This information should

be put into more use by attempting to retain their customers, by offering

different benefits. According to Mintel (2013), “Primark has the widest appeal

among a broad range of age groups and this is likely to have attributed to its

continuing success.”

Behavioral segmentation will allow the organisation to target groups of people

that actively use, or do not use, digital marketing channels. This can then

relate the level of loyalty to the product.

4.2 Targeting

The importance of targeting is to build or retain the relationship between the

supplier and the consumer. Primark needs to target their loyal customers by

diversify their products cautiously without changing their target audience

completely.

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Tactics – How Exactly Do We Get There? (5)

5.1 How to achieve objective 1 – Customer Retention

o Email Offers: By sending out messages to customers with any offers or

promotions will allow the already loyal custom base to revisit the store

to purchase the products. This measure is cost effective and not limited

to a certain amount of emails sent a day (Resnikoff, 2014).

o Customer Loyalty Cards: The use of these cards will allow the

customer to gain perks by visiting the stores, both online and offline. In

addition, according to (Alenski, 2014) it has proven to boost growth.

o Store Cards: Enticing a customer to spend more and the organisation

will gain interest on their purchase repayment. The loyalty will increase

as they can pay for the goods after the initial purchase, other stores

may not offer the same service.

o Customer Service Training: By training staff on dealing with customer

retention methods. The employees should be focussing their efforts to

providing a high quality service e.g. customer service online/telephone.

“more than half (59%) of the 4,000 consumers surveyed have higher

expectations for customer service today than they did a year ago.”

(Morris, 2016)

o Special offers/Promotions: The use of student discount and

promotional offers can be used to entice and retain customers.

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5.2 How to achieve objective 2 – Effectively using digital marketing channels

o Website: To create a transactional website to allow customers to shop

online. “However, with Mintel’s predicted 86% growth of the online

fashion market from 2011 to 2016, reaching £9.4 billion (Drapers,

2014), it is apparent that the provision of a multi- channel shopping

experience may be crucial to the value retailer’s continued

development and success in future”

o Online Competions: Social Media platforms used to host online

competitions in order to win prizes such as money off vouchers, gift

cards, etc.

o Mobile Application: the development of a mobile application will allow

ease of mobile shopping, therefore increasing the profits and ensuring

sustainable growth. Push notifications allow the customer to be

reminded of the offers and new products.

o Social Media Advertisements: The organisation should exploit their

large amount of followers by bringing fresh and new products across

their social media platforms such as Instagram, Snapchat and

Facebook. These should be linked to the mobile application to, again,

ensure customer ease and satisfaction.

o Live chat/Personal shopper: The use of the live chat allows the

customer to be in constant contact with the organisation. This again

improves customer relations and brand loyalty. According to a poll by

Andersen Consulting, almost 62 percent of Internet consumers said

they would purchase more products online if live customer support

were available.” (Anderson, 2014)

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Actions – Who Does What and When? (6)

6.1 Action

Due to the size of the organisation and the fact it is spread across various

countries, the company could not rely on simple methods of achieving goals

and monitoring progress. Senior management will analyse the performance of

individual stores and implement relevant customer retention policies.

In terms of digital media channels being utilised the organisation may expand

their current marketing department, ensuring they have experience in digital

marketing. Alternatively, they could contract external companies to network

across their digital distribution channels.

Control – How Do We Monitor Performance? (7)

7.1 What are the key performance measurements?

Objective 1: o The distribution of customer loyalty cards

o Analysis of CRR

o Analysis of footfall

o Customer Acquisition Rate analysis

o Customer Attrition Rate analysis

Objective 2: o Number of visits per day

o Increase following social media

o Transactions made on the website

o Amount of downloads of the app

o National Performance Score of the live chat employees

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7.2 How is performance recorded?

In terms of tracking the performance of the KPI’s, the organisation should

consider using tools such as Google Analytics. The marketing and Human

Resource department should ensure they are trained in relevant analysis

programs, to allow for accurate performance records. Customer retention

rates should be monitored regularly and training needs should be identified

and made clear to the appropriate members of the team.

Conclusion (8)

To conclude, Primark have established a good following on social media

channels, however, they are not fully utilising them by not focussing their

posts towards customers. The strong brand image attracts consumers to the

website, however it needs to be more interactive in order to ensure customer

satisfaction. As mentioned in the report, the organisation needs to offer the

online shopping service.

The report identified the need for the organisation to ensure higher customer

loyalty rates. The actions and tactics have been identified throughout the final

sections of the report demonstrating the needs and importance of customer

loyalty.

Furthermore, the organisation will need to heavily expand their current

marketing and human resource departments to ensure they company can

monitor and maintain the procedures put in place. Relevant external

organisations might be used, as discussed in the report, to ensure accurate

analysis.

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References

Anderson (2014) 3 key benefits of live chat for customer service -. Available at: http://www.vivocha.com/2014/01/3-key-benefits-of-live-chat-for-customer-service/ (Accessed: 7 April 2016).

Bryan, D. (2014) How Primark achieved 1.7m Facebook likes in just six months. Available at: https://econsultancy.com/blog/64409-how-primark-achieved-1-7m-facebook-likes-in-just-six-months/ (Accessed: 7 April 2016).

Butler, M. (2015) Showrooming: Are retailers ready to embrace it?. Available at: http://www.theguardian.com/media-network/media-network-blog/2013/may/09/showrooming-retail-solution-e-commerce (Accessed: 7 April 2016).

Butler, S. (2014) Love the dress: Sharing websites are the latest must-have for fashion retailers. Available at: http://www.theguardian.com/fashion/2014/jun/29/primania-fashion-retailers-social-sharing-websites (Accessed: 7 April 2016).

CUK (2014) 2014: Primark has their one-minute Christmas advert out, and it’s the return of the fast-cut product montage. Available at: http://www.christmasuk.org/entry_3893 (Accessed: 7 April 2016).

Chaffey, D. and Ellis-Chadwick, F. (2012) Digital marketing: Strategy, implementation and practice. 5th edn. United Kingdom: Financial Times Prentice Hall.

Drapers (2014) Drapers technology homepage: For fashion technology news and features. Available at: http://www.drapersonline.com/business-operations/digital (Accessed: 7 April 2016).

EA (2016) Comment: Technological advancements in the retail industry. Available at: http://www.retailgazette.co.uk/blog/2014/02/04144-comment-technological-advancements-in-the-retail-industry (Accessed: 7 April 2016).

ETI (2010) Report on Primark Inquiry. Available at: http://www.ethicaltrade.org/news-and-events/news/report-primark-inquiry (Accessed: 7 April 2016).

Flanders, S. (2011) VAT rate rises. Available at: http://www.bbc.co.uk/news/business-12099638 (Accessed: 7 April 2016).

Gorin, D. (2016) Rising cost of raw materials. Available at: https://traccsolution.com/resources/raw-material-costs/ (Accessed: 7 April 2016).

Hall, J. (2008) Available at: http://v]http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/2792753/Primark-faces-customer-exodus-after-BBC-child-labour-allegations.html (Accessed: 23 March 2016).

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Jackson, T. and Shaw, D. (2000) Mastering fashion buying and merchandising management - Tim Jackson - paperback. 3rd edn. Basingstoke, Hampshire: Palgrave Macmillan.

MINTEL (2013) Clothing Retailing - UK. Available at: http://academic.mintel.com/display/683744/?highlight#hit1 (Accessed: 6 April 2016).

MINTEL (2015) Clothing Retailing - UK. Available at: http://academic.mintel.com/display/752281/?highlight#hit1 (Accessed: 6 April 2016).

MINTEL (2015) Mintel identifies four key UK consumer trends for 2015. Available at: http://www.mintel.com/press-centre/social-and-lifestyle/mintel-identifies-four-key-uk-consumer-trends-for-2015 (Accessed: 7 April 2016).

Morris, T. (2016) Buy or bye? Why customer service is increasingly key to retail success. Available at: http://www.business2community.com/customer-experience/buy-bye-customer-service-increasingly-key-retail-success-01496604#iITSPP5jj4YyC6Bw.97 (Accessed: 7 April 2016).

Olenski, S. (2013) How retail brands are using technology to provide added value to consumers. Available at: http://www.forbes.com/sites/steveolenski/2013/11/25/how-retail-brands-are-using-technology-to-provide-added-value-to-consumers/#60c423d49f43 (Accessed: 7 April 2016).

Olenski, S. (2014) 8 reasons why loyalty programs are imperative for marketers. Available at: http://marketingland.com/8-reasons-loyalty-programs-imperative-marketers-109077 (Accessed: 7 April 2016).

Resnikoff, P. (2014) 10 reasons why Email is still your best communication tool.. Available at: https://www.digitalmusicnews.com/2014/05/28/10-reasons-email-still-best-communication-tool/ (Accessed: 7 April 2016).

Roanhorse, E. (2016) ‘Factors influencing trends in retailing’, Small Business Chron, .

Shawcross, J. (2014) The rise and rise of Primark. Available at: http://money.aol.co.uk/2014/03/23/the-rise-and-rise-of-primark/ (Accessed: 23 March 2016).Statista (2016) Retail e-commerce sales worldwide from 2014 to 2019 (in billion U.S. Dollars). Available at: http://www.statista.com/statistics/379046/worldwide-retail-e-commerce-sales/ (Accessed: 7 April 2016).

Steiner, R. (2016) Primark founder to step down this summer. Available at: http://www.thisismoney.co.uk/money/markets/article-1678245/Primark-founder-to-step-down-this-summer.html (Accessed: 23 March 2016).

Wood, M. (2013) Essential Guide To Marketing Planning. 3rd ed edn. Harlow: Pearson.

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Wood, Z. (2016) Primark’s chief executive Arthur Ryan steps down after 40 years. Available at: http://www.theguardian.com/business/2009/sep/11/primark-founder-arthur-ryan-resigns (Accessed: 23 March 2016).

E.-B. (2013) Is Primark mad to ignore ecommerce?. Available at: https://econsultancy.com/blog/62640-is-primark-mad-to-ignore-ecommerce/ (Accessed: 7 April 2016).

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Appendix 1 – Timeline

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Apendix 2 - PESTEL Analysis

Political and legal regulations

o In terms of Primark dealing with employees, they have to ensure the correct working conditions are in place following government outlines and make any improvements necessary due to being part of the Ethical Trading Initiative (ETI). However, if political parties change Primark will have to adjust their strategy to comply with any new laws or regulations (ETI, 2010).

o In 2011, the rise in VAT impacted Primark’s low price strategy as the percentage rose to 20% making it more difficult for the organisation to keep their prices low (Flanders, 2011)

Economic o The online sales have grown massively in recent years within the retail sector. (Statista, 2016)

o The cost of raw materials and energy supplies has affected the manufacturing and the importing and exporting costs within the retail sector. (Gorin, 2016)

Social o The trend of consumers shopping in-store to have the ‘showroom experience’ and then purchasing online has grown massively in recent years. (Burkwood, 2013)

o Consumer behaviour studies suggest that over a third of the UK population have used click and collect as a method for purchasing in the retail sector. (Mintel, 2015)

Technological o Improved use of digital channels to ensure a better customer experience allows the organisation to benefit from increased customer loyalty (Olenski, 2013)

o The use of mobile netowkring and marketing has allowed organisation to become more personal with their consumers and offer to a far wider audience. (EA, 2016)

Environmental o Retailers are being more concerned about their carbon footprint, which has affected their methods of distribution. (Roanhorse, 2016)

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Appendix 3 - SWOT Analysis

Strengthso On trend, fast fashion at low

priceso Wide and shallow range of

products (Jackson and Shaw, 2009)

o Use of social media (Facebook, Twitter, Snapchat, etc.)

o Corporate Social Responsibility (supporting charities such as Solidaridad, Cotton Connect, new life and ethical trading initiative)

o Prestigious address of flagship store.

o Adaptive to customer needs e.g. health and fitness trends.

o Use of ‘Primania’

Weaknesseso Lack of customer satisfaction

in storeso Poor point of sale designo Poorly organised and non-

customer friendly lay out of stores

o Inconsistent quality of outlets across various locations

o “low prices appears to have negative associations with regards to style and quality.” (Jobber, 2007)

o No online shopping availabilityo Unethical working conditions

(slave labour) allegations.o Certain producst seem poor in

quality

Opportunities

o Demand for online shoppingo In addition, the click and

collect service is becoming more popular.

o Develop an Application for mobile devices

o Better communication with customers such as emails and the use of the app

o Market penetration e.g. plus size market, grey market, imerging markets.

o Increase the offering by providing a food and beverage outlet.

o Offering a store card

Threats

o Similar brands offering equally low prices but increased quality.

o Tainted reputation due to past reports based on unethical workings

o Poor street presence compared to competitors such as New Look

o Brands with higher budgets offer increased customer service e.g. personal shopper

o Celebrity endorsements from more upmarket brands

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