Marketing Plan-Master Thesis

Masaryk University Faculty of Economics and Administration

MASTER THESIS

B.Sc. Duan Mladenovi

Brno, 2013

Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o.

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Masaryk University

Faculty of Economics and Administration

Marketing plan

Master thesis

Student: Advisor:

401140 Mladenovi Duan PhD Alena Klapalov

Brno, 2013


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Masaryk University

Faculty of Economics and Administration

Department of Corporate Economy

Academic year 2012/2013

ASSIGNMENT OF DIPLOMA THESIS

For: Mladenovi Duan

Field: Business Management

Title: Marketing plan

P r i n c i p l e s o f t h e s i s w r i t i n g:

Objective of the thesis:

The main objectives of the thesis are to analyse present market situation of the chosen

company concerning its marketing management problem, to analyse the market and to

develop marketing plan according the results of analyses.

Approach and methods used:

1. Literature search on all relevant topics (marketing strategy, marketing plan, market analyses etc.),

2. current situation and market analyses, 3. proposals of marketing plan.

Methods:

All relevant methods of market and marketing analysis and market research, e.g. SWOT

analysis, survey, interview.


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The extent of graphical works: according to the supervisor's guidelines the

assumption is about 10 charts and graphs

The thesis length without appendices: 60 70 pages

List of specialist literature:

LEE, K. a S. CARTER. Global marketing management. 3rd ed. New York: Oxford

University Press, 2012. 592 s. ISBN 978-0-19-960970-3.

CATEORA, P. R. a J. L. GRAHAM. International marketing. 13th ed. Boston:

McGraw-Hill, 2007. 702 s. ISBN 0-07-308006-3.

ONKVISIT, S. a J.J. SHAW. International marketing: strategy and theory. 5th ed. London: Routledge, 2008. 710 s. ISBN 978-0-415-77262-4.

MULLINS, J. W. a O.C. WALKER. Marketing management: a strategic decision-

making approach. 6th ed. New York: McGraw-Hill, 2008. 533 s. ISBN 978-0-07-

338116-9.

FARRIS, P.W. a N.T. BENDLE. Marketing Metrics: The Definitive Guide to

Measuring Marketing Performance. 2nd ed. Upper Saddle River: Pearson Prentice

Hall, 2010. 432 s. ISBN 0-13-705829-2.

HOOLEY, G. J. a J.A. SAUNDERS. Marketing strategy and competitive positioning.

3rd ed. New York: Prentice Hall, 2004. 622 s. ISBN 0-273-65516-7.

CRAVENS, D. W. Strategic marketing. 9th ed. Boston: McGraw-Hill, 2009. 784 s.

Diploma thesis supervisor: Ing. Alena Klapalov, Ph.D.

Date of diploma thesis assignment: 1/11/2012

Submission deadline for Diploma thesis and its entry in the IS MU is provided in the

valid Academic Calendar.

Department Head Dean

In Brno on 1/11/2012


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Abstract

This thesis aims to develop a marketing plan for Yugomar d.o.o. a Serbian company that

intends to get into Bulgarian market. The thesis consists of theoretical part which gives

overview of the main categories connected with marketing plan and analysis that needs to be

done. Practical part is continuation of the theoretical one and furthermore it gets profound

into details about Bulgarian market as such, detailed inquiry and analysis done and moreover

proposed marketing plan for Yugomar d.o.o. which is based on the findings. Considering all

data gathered while conducting the market analysis Bulgaria proved to be promising

market with much of potential growth to expect in the following years. However Yugomar

d.o.o. has to perform necessary marketing action with utmost care in order to launch its

business operations as smooth as possible.

Key words

Marketing plan, market analysis, SWOT, PESTEL, marketing mix, Yugomar d.o.o., Bulgaria,

Serbia, Master thesis


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Author's statement

I hereby declare that this thesis I submit for assessment is entirely my own work and

has not been taken from the work of others save to the extent that such work has been cited

and acknowledged within the text of my work.

In Brno_________________ _____________________

Duan Mladenovi


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Acknowledgements

Hereby, I would like to express my deepest appreciation to the people who sacrifice their own

time helping me to make this work done. First of all, PhD Alena Klapalov, for mentoring,

and all-time long supports with abundance of invaluable advices. Moreover, I would like to

mention people from the management of the Yugomar d.o.o., who provided me with

sufficient amount of data to base my work on. Furthermore, I would like to thank to my

parents for supporting me and my decisions all time long during my studies. Moreover the

person without who this thesis would be endangered - Maja Ahmi, and all others that have

contributed in any respect.


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Table of contents Chapter I Introductory part ............................................................................................................ 22

1.1. Preface ......................................................................................................................................... 23

1.2. Problem definition ...................................................................................................................... 24

1.3. Research questions and goal ...................................................................................................... 25

1.4. Methodology employed .............................................................................................................. 26

1.4.1.Primary quantitative research ................................................................................................ 26

1.4.2.Secondary research .................................................................................................................. 27

1.5. Brief introduction to the Company history ............................................................................. 28

Chapter II Theoretical background ................................................................................................ 29

2.1. Definition of marketing strategy ............................................................................................... 29

2.2. Definition of marketing plan ..................................................................................................... 30

2.3. Marketing plan structure .......................................................................................................... 30

2.4. PEST/PESTEL/PESTLE analysis ............................................................................................. 32

2.5. SWOT analysis historical overview and definition ............................................................... 34

2.6. The five forces model of competition ........................................................................................ 36

Chapter III Analytical part ............................................................................................................. 39

3.1. Situation analysis ........................................................................................................................ 39

3.2. Textile production history in Bulgaria ..................................................................................... 39

3.3.PEST/PESTEL/PESTLE analysis .............................................................................................. 40

3.3.1. Political factors ........................................................................................................................ 40

3.3.2. Economic factors ..................................................................................................................... 42

3.3.3. Socio-cultural factors .............................................................................................................. 44

3.3.4. Technological factors .............................................................................................................. 46

3.3.5. Environmental factors ............................................................................................................ 47

3.3.6. Legal factors ............................................................................................................................ 47

3.4. Competition ................................................................................................................................ 48

3.4.1. Domestic competition .............................................................................................................. 48

3.4.2. International competition ....................................................................................................... 49

3.5. The five forces model ................................................................................................................. 51

3.5.1. Rivalry among competitors .................................................................................................... 51

3.5.2. Possibility of new entrants ...................................................................................................... 52

3.5.3. Threats of substitutes .............................................................................................................. 52

3.5.4. Bargaining power of suppliers................................................................................................ 52


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3.5.5. Bargaining power of buyers ....................................................................................................52

3.6. SWOT analysis............................................................................................................................53

3.6.1. Strengths...................................................................................................................................54

3.6.2. Weaknesses ...............................................................................................................................54

3.6.3. Opportunities & Threats .........................................................................................................55

3.7. Market segmentation ..................................................................................................................55

3.8. Target market .............................................................................................................................59

Chapter IV - Marketing Objectives ....................................................................................................62

4.1. Theoretical overview ..................................................................................................................62

4.2. SMART goals Yugomar d.o.o. ................................................................................................63

Chapter V Tactics ...........................................................................................................................66

5.1. Marketing mix ............................................................................................................................66

5.1.1. Product strategy .......................................................................................................................66

5.1.2. Place/distribution strategy ......................................................................................................67

5.1.3. Pricing strategy ........................................................................................................................71

5.1.4. Promotional strategy ................................................................................................................73

5.2. Marketing risks ...........................................................................................................................76

Chapter VI Budget ..........................................................................................................................79

6.1. Financial issues ...........................................................................................................................79

6.2. Sales forecast ...............................................................................................................................80

6.2.1. Market build-up method .........................................................................................................80

6.2.2. Chain ratios model ...................................................................................................................81

6.3. Expenses forecast ........................................................................................................................82

6.4. Expenses and marketing plan ....................................................................................................83

Chapter VII Control........................................................................................................................85

7.1. Theoretical overview and importance of control ......................................................................85

7.2. Variables affecting control system .............................................................................................86

7.3. DMAIC six sigma improvement process ...................................................................................87

7.3.1. Define ........................................................................................................................................88

7.3.2. Measure ....................................................................................................................................88

7.3.3. Analyze .....................................................................................................................................89

7.3.4. Improve ....................................................................................................................................90

7.3.5. Control ......................................................................................................................................90

Chapter VIII Conclusion ................................................................................................................91

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8.1. Summary ..................................................................................................................................... 91

8.2. Contributions of the thesis ......................................................................................................... 93

8.3. Limitations and suggestions....................................................................................................... 93

8.4. Self-evaluation ............................................................................................................................ 94

Chapter IX Appendices ................................................................................................................. 101

Appendix A: Estimated expenses for each proposed event .............................................................. 102

Appendix B: Questionnaire Yugomar d.o.o. ................................................................................ 106

Appendix C: Interview with Mr. Zoran Mitrovi (owner of Yugomar d.o.o.)................................... 120

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List of tables

Table 1: Average spending on clothing and footwear 40.

Table 2: Salary trend comparison 40.

Table 3: Clothing and footwear spending in the average 41.

Table 4: Demographics of the population 42.

Table 5: Urbanization degree 42.

Table 6: Population in aspect of age and employment 43.

Table 7: Main international competitors of Yugomar d.o.o. at Bulgarian market 48.

Table 8: SWOT Matrix scheme for the Yugomar d.o.o. (Bulgarian market) 50.

Table 9: Market share of the biggest competitors in the Bulgarian market 58.

Table 10: Typical Bulgarian customer in Yugomar stores 58.

Table 11: SMART goal Market Share 62.

Table 12: SMART goal Sales income increase 63.

Table 13: SMART goal Retention rate 63.

Table 14: Expenses forecast in EUROS 84.

Table 15: Expenses and marketing plan linkage in EUROS 84.

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List of figures

Figure 1: Yugomar logotype 23.

Figure 2: SWOT matrix 31.

Figure 3: Made in Bulgaria sticker 37.

Figure 4: Monthly wages in Bulgaria 39.

Figure 5: Inflation rate in Bulgaria 72.

Figure 6: Expenses and marketing plan linkage in euros 85.

Figure 7: DMAIC improvement process 89.

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Chapter I Introductory part

1.1. Preface

The recent crisis has highlighted many failures in traditional economics attempt to explain the

way how market behaves and more important how to approach targeted market in a unique,

effective and cost-effective way. Hereby I am going to try to uncover and state some of the

information which concerns textile retail industry both within Serbian and Bulgarian market,

particularly having in mind Yugomar d.o.o.. This company from South-eastern Serbia is

one of the minor Serbian companies striving to get on the neighboring markets.

Primarily based on primary and secondary researches that have been done previously, a huge

amount of relevant information about Bulgarian market could be found; saying specifically

Bulgarian market, taking into consideration the Companys1 intention to launch its own

business on that specific market. But of course on the other side more profound analysis is

required for constituting a firm base for delivering a marketing strategy which will be suitable

and consistent with ongoing and current trends on the market.

Within this thesis some of the minor improvements could be found primarily in order to

overcome consequences of recent economic crisis which however affected textile industry

severely. Negative foretokens in the annual P/L2 statements of the textile retailer firms

generally, is something that could be seen and found very often these days. And this is

definitely not the cause of satisfaction to the management. Of course, textile retailer industry

is not the only one influenced in this case. Furthermore, the post-socialistic context of both

Serbian and Bulgarian economy makes this research even more complex bearing in mind

limited availability of relevant and actual data and overall transparency of the institutions.

Adding the fact that entrepreneurships awareness of the locals in Serbia is on the level which

is not even worth mentioning all this combined presented the huge challenge for me while

working on this thesis.

1 Here referring to Yugomar d.o.o. 2 Annual Profit and Loos statement hereafter P/L statement.

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Another fact that should definitely be taken into consideration is that Bulgaria is EU member

while Serbia is still candidate state on the other side. This is important because of the

differences in general legislation, tax legislation, custom legislation among EU and Non-EU

states. So once again, this imposes a necessity of huge adjustments in terms of the business

operating to the valid EU standards and laws. Moreover, the Companys actual business locus

is being analyzed in order to find the exact room available for improvements, in order for

Company to be unique and creative in launching its marketing activities.

1.2. Problem definition

As a matter of time and consistency of doing a business with increasing profitability over

time, the logical step forward is to expand and to strive to get as much benefits from the

market as possible. One of the possibilities is to go abroad, in order to compete

internationally. Maybe at the first sight this alternative seems to be easy achievable and

manageable but it brings up to the surface enormous amount of barriers and obstacles that

have to be overcome in a specific period of time with limited resources. This step of going

abroad is a critical point in firms existence, in both positive and negative terms. On one side

it could skyrocket the revenues and profits, but contrary it could push the Company to the

edge of existence and every day activities. The list of negative examples of poor-prepared

international performances of Serbian enterprises is quite long unfortunately.

All in all, when going abroad sometimes even shocking amount of elements have to be

taken in consideration. Starting from Company long-run strategy goals over

political/economic/social situation in the given country to the statistical data that would have

to be gathered conducting on-field researches. Anyway, in several past years Yugomar d.o.o.

has tried to get abroad (unsuccessfully). This is due to the lack of effective marketing strategy

and profound research of the targeted markets.

The following aspects are considered when defining research questions:

1. The objective is to develop marketing strategy for Yugomar d.o.o. and to describe

how the Company should organize its appearance on the local Bulgarian market;

2. This research focuses on Bulgaria, based on actual data;

3. Due to the time frame, certain information were unavailable, therefore they are

estimated.

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Considering the aforementioned facts few of the main goals I am going to strive to fulfill are:

1. Determine the focus group;

2. Determine the data in terms of average shopping, monthly income etc.;

3. Detection of marketing risks;

4. Introducing the implementation plan;

5. Introduction of modern strategies and tools;

6. Determining the costs of the proposed marketing activities.

1.3. Research questions and goal

Each research demands certain questions that should be answered in a certain time frame in

order to get sufficient amount of solid and relevant information to base marketing plan and

strategy on. This is for sure really delicate and demanding stage when Company decides to

get abroad. Moreover management should approach to this point with most of its attention as

a prevention of distorted data that might easily be gathered and collected. These questions

should accommodate decision makers to shape their own strategy and plan how to conquer

the targeted market or segment.

Listed down below are the crucial research questions that should direct me throughout the

work.

1. What are the biggest challenges of the given Company?

2. What are the expected benefits Company might get if perform internationally?

3. What combination of marketing mix Company should implement on a given

market?

4. Should company standardize or localize offer?

5. Who are the main competitors (both domestic and international)?

6. What kind and amount of initial costs Company might expect?

Furthermore, I would strive to deliver affordable, creative and relevant marketing plan which

should help Company to have a smooth start on a foreign market (in this case Bulgarian). Of

course, underlining the fact this should be achieved bearing in mind limited resources and

previously predetermined time frame. The questions I listed previously should help me and

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direct me toward the main aim of this paper to come across with a remarkable marketing

plan which is easy to put into practice and which will target certain niche of the market.

1.4. Methodology employed

For the purpose of this thesis I employed and used both quantitative and qualitative methods.

Quantitative research refers to the systematic empirical investigation of social phenomena via

statistical, mathematical or computational techniques (Given, Lisa M; 2008). Using

quantitative methods numerous data could be collected, processed and interpreted for a

variety of purposes. This type of researches implies on-field activities in order to gain as

much relevant data as possible. The relevancy of the information gathered is an enormous

advantage, although rigorous research practices are required so as to render the research

successful and of normative relevance.

Qualitative research is a method of inquiry employed in many different academic disciplines,

traditionally in the social sciences, but also in market research and further contexts (Denzin,

Norman K. & Lincoln, Yvonna; 2005). Qualitative researchers aim to gather an in-depth

understanding of human behavior and the reasons that govern such behavior. When I got to

the segmentation part of my paper I realized instantly that proper segmentation and certain

conclusions would not be possible without using some of the qualitative methods in the

respect of the human behavior, psychological variables etc. Worth emphasizing is the

important fact that both quantitative and qualitative methods could be used within both

primary and secondary researches.

1.4.1.Primary quantitative research

Primary researches are experiments, investigations, or tests carried out to acquire data first-

hand, rather than being gathered from published sources (www.businessdictionary.com).

For the purpose of this paper and having in mind that customers perception of the given

company is of the most importance, I have launched an online survey/questionnaire in order

to gather valuable data which could be further used and evaluated. The survey consists of 20

carefully prepared questions. Aforementioned questionnaire includes both open-ended and

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closed-ended (in form of multiple choice) questions. The process of gathering data through

online-survey has been processed from 10.08.2012 to 29.08.2012 (twenty days).

Furthermore, the volume and quality of the responses are extraordinary and of high

importance for the relevance of this paper. In terms of the respondents, by the end of

collection period 1127 questionnaires have been successfully completed and submitted, a

great number of which included constructive comments. Primarily considering the most

frequently visited virtual places of Yugomars customers, survey has been posted in

Facebook, Twitter, LinkedIN, online portals, as well in the form of circular mail in order to

gather as relevant as possible. As is self-evident, the survey results feature heavily throughout

the proposal itself. For further reference, please find full questionnaire in the Appendix.

1.4.2.Secondary research

Secondary research (also known as desk research) involves the collection and/or synthesis

of existing research papers and articles which are previously being published (Sunny Crouch,

Matthew Housden; 2003). Examples of secondary information include reports and studies by

government agencies, trade associations or other businesses within specific industry.

In terms of resources and organizational issues, secondary researches techniques are much

less demanding. Such research implies taking information that has already been collected and

processed by other individual, institution, company or authors. I incorporated an array of

reliable data during my research and test period. Most frequently used keywords while

searching were: marketing plan, marketing strategy, marketing analysis etc. Indeed, it must

be said that without the possibility of acquiring and using data of this nature, the existence of

this paper would have been endangered and its successful would be under huge question

mark. Hereby I would like to emphasize the fact of using numerous data from different

authors, publishers, freelancers and management of a given Company.

Furhermore, secondary sources are being used constantly through all the analysis stages that

have been conducted. Mainly referring to the Companys internal documentation, official

data of Statistical office of Republic of Serbia, information gathered from National Statistical

Institute of Bulgaria, numerous web-sites and portals, as well as book based references.

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1.5. Brief introduction to the Company history

Yugomar doo is privately owned company which was established in December 1994 in

Ni, Serbia. The owner and general manager is Zoran Mitrovi. The main business activities

of the firm are designing, producing, distribution and selling of

the man-women clothes and accessories. Established in very

harsh time for the Serbian economy, it has survived most of

what other firms could not even dream about. At the beginning,

in autumn of 1994 it had exactly five employees. Now, in 2013

nineteen years later it has in total 250 employees. The

progress is apparent, on-going and significant.

The very first store in Serbia was opened in the city of Ni

(where actually is Yugomars headquarter and production lines are based), in the southern

province of Niki okrug, in 1994, and the most recent in Kruevac 2010, Central Serbia

region. Today, Yugomar stores can be found in 17 cities overall.

A majority would agree that the Companys growing market share is primarily due to the

extraordinary locations of the stores themselves. Nevertheless, any meaningful research in

this area must go beyond a single cause if it is to fully convey the reasons for the companys

success in Serbia. As a results of managers open-mindedness and long-term strategies,

Company plan to extend its operations (mainly retail sector) to the neighboring country

(Bulgaria and FYR Macedonia are first on the list3). In order for these ambitious goals to be

fulfilled in a decent time frame specific and carefully prepared actions have to be introduced.

Unfortunately Company already has experienced the consequences of poor preparation and

research stage. Namely, there was fiasco when Company tried to get to the market of Bosnia

and Herzegovina in 2008. Unsuccessfully - is the polite word considering the financial

tsunami that happened after that adventure.

3 Internal documentation of the Company.

Figure 1: Yugomar logotype

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Chapter II Theoretical background

Marketing is about letting people know about the product or service you offer, and

persuading them to buy or use it. And for effective marketing one has to let people know

about the products or services repeatedly and in unique way. Pretty simply one-sentence

proverb by Benjamin Franklin could easily bring up the exact meaning of marketing

planning, regardless that it was not stated in context of economics and marketing:

If you fail to plan, you are planning to fail4

- Benjamin Franklin (USA scientist and state official)

This practically means that if someone fails to set a proper plan on time, the probability of

failure is increasing proportionally. As I noted before this proverb has not been stated in any

context of marketing, but definitely it has a lot to do with marketing strategy and plan.

Logical questions arise than: What is marketing strategy and further marketing plan? Are they

interrelated and interdependent?

2.1. Definition of marketing strategy

Various definitions of marketing strategy can be found. One that I found appropriate for the

purpose of this thesis, states that marketing strategy is a process that could enable an

organization to focus its resources and funds on the optimal opportunities with the aims of

increasing sales and managing a sustainable competitive advantage (Baker, Michael; 2008)5.

The marketing strategy is framed by Companys overall business goals. It includes a

definition of business, a description of products/services offered, a profile of target users and

clients, and further defines company's role in relationship to the competition. It is essentially

a document that management uses to judge the appropriateness and effectiveness of specific

marketing plans.

4Source: www.goodreads.com/quotes/460142-if-you-fail-to-plan-you-are-planning-to-fail accessed: 04.04.2013.

5 Baker, Michael; The Strategic Marketing Plan Audit; 2008.; p.3

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To put it another way, marketing strategy is a summary of company's products and position in

relation to the competition; your sales and marketing plans are the specific actions you are

going to undertake to achieve the goals of your marketing strategy.

Since the aim of this paper is not to work on marketing strategy, but instead to focus on the

marketing plans, more attention will be attributed to marketing plan itself.

2.2. Definition of marketing plan

Customers cant always tell you what they want, but they can always tell you whats

wrong

- Carly Fiona (Entrepreneurial Thought Leaders)

Having a look at the statement above, one could easily draw a conclusion that nothing but

ambiguity could be seen. But when thinking more profound, this statement has sense. One of

the purposes of creating a marketing plan is to avoid business actions that are going to show

us what is wrong. Primarily on basis on previously conducted researches company should

have in mind how to act in order to get positive feedback from the customers.

Definition of the marketing plan by which Susan Ward (2010) says that a marketing

plan defines the particular actions one plans to carry out to interest potential customers and

clients in ones product and/or service and make them to buy the product and/or services one

offers, in my opinion is the most appropriate one 6 Years of researching worldwide in this

area put into use a great variety of different definitions that considers marketing plan.

2.3. Marketing plan structure

If a company with a serious vision and straight forward marketing strategy seeks to conquer a

particular customer group, firstly it needs a vision. Vision itself causes to make actions.

Action itself demands a high profile strategy which furthermore seeks for a well-organized

6 J. Susan Ward; Development International Marketing Strategy; 2009; p 101;

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plan and action. It is a never ending circle of few main elements to perform a good quality

marketing strategy.

Marketing plan should be detailed and exact. Innovation is one of crucial factors of well

performed marketing plan. It is not a simple, but rather a complex process for each

individual, therefore for entire company.

As Phillip Kotler said (in Cruch and Housde, 2003), marketing plan in general should

consists of situational analysis as a first step, defining the objectives as a second, shaping the

strategy, defining tactics, estimating the budget and establishing the system of controls 7:

1. Situational analysis. By situational analysis company examines the macro forces

(economic, political-legal, social-cultural, technological) employing different tools

and considering different individuals in its environment (company, competitors,

distributors, and suppliers). The company carries out a SWOT analysis (strengths,

weaknesses, opportunities, and threats). PESTEL analysis is one more useful tool

which implementation is strongly recommended.

2. Objectives. Based on identifying its best opportunities from its situational analysis,

the company ranks objectives and sets goals. The company could also set sub-

objectives in respect to its stakeholders, image/reputation, technology etc.

3. Strategy. Every goal could be achieved in a variety of different ways. It is of the

greatest importance for the strategy to pick to most effective course of action.

4. Tactics. The strategy must be spelled out in great detail regarding the 4Ps and the

actions that will be taken in calendar time by specific individuals who are about to

carry out the plan.

5. Budget. The companys planned actions and activities involve costs that add up to the

budget that it needs to achieve its objectives.

6. Controls. The company must set review periods and measures that will reveal

whether it is making progress toward the goal. When performance lags, the company

must revise its objectives, strategies, or actions to correct the situation.

One of the most critical stages is definitely situational analysis which provides a solid base

for the further steps. If the current situation (internal and external environment) is being

analyzed wrongly all the further stages are going to present the distorted picture of reality. In

7 Sunny Crouch, Matthew Housden; Marketing research for managers; The Marketing Series ; Chartered Institute of

Marketing. Butterworth-Heinemann; 2003; p. 19

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case of Yugomar d.o.o. that would mean that if any important fact would be neglected during

one of the situational analysis it is going to affect the marketing plan as an outcome severely.

As Dwight Eisenhower once said: In preparing for battle I have always found that plans are

useless but planning is indispensable8 On basis of this the benefit of planning might lie less

in the plan as itself than in the process of planning. It might sound ambiguous, but the point is

that during the process of planning information that we get are going to be included in the

plan at the very end of the process.

A marketing plan should not be a just a pure letter on the paper. It must be put into practice.

Without detailed and well organized implementation in particular territory and with particular

target group, plan is more or less doomed to fail. To sum up the marketing plan is completely

useless unless it is not putted into practice. According to the Professor Quinn (in Cherington,

1980): Marketing plans will not produce a dollar of profit if you dont implement them9

And this perfectly makes sense, every plan is being made in order to be implemented so as

marketing plans.

2.4. PEST/PESTEL/PESTLE analysis

For the purpose of effective creation of marketing plan I employed PEST analysis. Together

with usage of internal micro-environmental factors and internal drivers it creates so-called

SWOT matrix. According to the Oxford University press PESTEL shapes the framework of

macro-environmental factors such as political, economic/social and technological variables)

used in the macro/ external environment scanning (Oxford University Press Oxford digital

journal; 2012). On the other side according to the some authors10 Legal component should be

added and further acronym should look like to SLEPT (Oxford University Press - Oxford

digital journal; 2012). Basing on the same source what is much more popular in the United

Kingdom is PESTEL or PESTLE concept. However this extended variation of original PEST

model includes both environmental and legal categories. This way PESTEL analysis is more

complex on one side, but provides much more information about the certain market.

8 http://www.brainyquote.com/quotes/quotes/d/dwightdei164720.html accessed: 01.04.2013. 9 Paul T. Cherington; The Elements of Marketing ; The Macmillan Co. N. Y.; 1980; p 75

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In the 1980s, several other authors (Fahey, Narayanan, Morrison, Renfro, Boucher, Porter)

included variations of the taxonomy classifications in a variety of orders: PEST, PESTLE,

STEEPLE etc.11. As far as I found out, there is no implied order or priority in any of the

formats given.

From my research, the earliest known reference referring to tools and techniques for

Scanning the Business Environment appears to be by Francis J. Aguilar (1967) who

discusses ETPS acronym for the four sectors of his taxonomy of the environment:

Economic, Technical, Political, and Social. On the other hand, Arnold Brown for the Institute

of Life Insurance (USA) reorganized it as STEP (Strategic Trend Evaluation Process) as a

way to organize the results of his environmental scanning12.

It is a useful strategic tool for understanding market growth or decline, business position,

potential and direction for operations. So as already mentioned PESTEL acronym includes

specific categories and variables that are being considered and analyzed. Hereby quick

theoretical overview of the factors13 that are connected with PESTEL concept can be

observed.

Political factors represent to what degree the government intervenes in the economy.

Furthermore this category includes areas such as tax policy, labor

legislation, environmental law, trade restrictions, tariffs and overall political

stability/instability. Under political factors I assume goods and services that are

subsidized by the local government.

Economic factors are of great importance for the given analyses, since they consider

variables and categories like economic growth, interest rates, exchange rates, inflation

rate etc. Getting familiar with this kind of information is imposed as a necessity for one

company, regardless if it wants to get abroad. Moreover this indicator represents the

overall economic situation in the country.

11 Lewis K. S. Lim; Development of Archetypes of International Marketing Strategy ; Journal of International Business

Studies, Vol. 37, No. 4; Jul 2006; 12 Lewis K. S. Lim; Development of Archetypes of International Marketing Strategy ; Journal of International Business Studies, Vol. 37, No. 4; Jul 2006; 13

Lewis K. S. Lim; Development of Archetypes of International Marketing Strategy ; Journal of International Business Studies, Vol. 37, No. 4; Jul 2006;

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Social factors on the other side include the cultural/religious/language context of the

given country. Nowadays factors like population growth rate, age distribution, career

attitudes, emphasizes on quality shape a companys operating in a huge extent.

Technological factors include technological aspects such as research and development

investments, technology incentives, rate of technological change etc. These factors could

determine and shape barriers for entry, efficient production level and further

influence outsourcing decisions.

Environmental factors include ecological and environmental aspects such as weather,

climate, and climate change, which may especially affect industries such as tourism,

farming, and insurance. Furthermore, growing awareness of the potential impacts of

climate change is affecting how companies operate and the products they offer, both

creating new markets and diminishing or destroying existing ones. Nowadays it became

the necessity to operate in an environmental-friendly way.

Legal factors include discrimination law, consumer law, antitrust law, employment law,

and health and safety law. These factors can affect how a company operates, its costs, and

the demand for its products.

2.5. SWOT analysis historical overview and definition

SWOT analysis came from the research conducted at Stanford Research Institute during the

1960s. The research was funded by the fortune 500 companies to find out what could be

done in order to prevent corporate planning failure.

It all began with the corporate planning trend, which seemed to appear first at Du Pont in

1949. By 1960 every Fortune 500 company had a corporate planning manager14.

However a unanimous opinion developed in all of these companies that corporate planning in

the shape of long range planning was not working, did not pay off, and was an expensive

investment in futility.

14 Committee on the Next Decade in Operations Research; Operations Research: The Next Decade; Vol. 36, No. 4; July. -

Aug 1988;

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The fact remained, despite the corporate and long range planners, that the one and only

missing link was how to get the management team agreed and committed to a comprehensive

set of action programs.

To create this link, Robert F Stewart at SRI in Menlo Park California lead a research team to

discover what was going wrong with corporate planning, and then to find some sort of

solution, or to create a system for enabling management teams agreed and committed to

development work, which today we call managing change.

The research carried on from 1960 through 1969. One thousand and four hundred companies

and organizations were interviewed and a 250-item questionnaire was designed and

completed by over 5,000 executives. Seven key findings lead to the conclusion that in

corporations chief executive should be the chief planner and that his immediate functional

directors should be the planning team.

They further discovered that they could not change the values of the team nor set the

objectives for the team so we started as the first step by asking the appraisal question like

What is good? and What is bad about operations? Further they began by asking what is

good and bad about the present and

the future. What is good in the

present should be Satisfactory,

good in the future is an

Opportunity; bad today is a Fault

and bad in the future is a Threat.

This was called the SOFT analysis.

Later on in 1964, Urick and Orr

changed the F to a W and called it

SWOT Analysis. SWOT was then

promoted in Britain by Urick and

Orr as an exercise. What was

necessary was the sorting of the

issues into the programed planning categories of:

1. Product - what are we selling?

Figure 2: SWOT matrix

Source:

www.it.toolbox.com/ accessed: 04.04.2013.

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2. Process - how are we selling it?

3. Customer - to whom are we selling it?

4. Distribution -how does it reach them?

5. Finance - what are the prices, costs and investments?

6. Administration - and how do we manage all this?

The second step then becomes what shall the team do about the issues in each of these

categories. The planning process was then designed through trial and error and resulted

finally in a 17 step process beginning with SOFT/SWOT with each issue recorded separately

on a single page called a planning issue.

According to the Albert Humphrey SWOT analysis/matrix is a structured planning method

used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in

a project or in a business venture. A SWOT analysis can be carried out for a product, place,

industry or person (SRI alumni newsletter; 2005).

Setting the objective should be done after the SWOT analysis has been performed. This

would allow manageable goals or objectives to be set for the organization. On the figure

presented: SWOT (Information Security in the Enterprise magazine New Paradigm 8pt. ;

2010).

Without using the PESTEL and SWOT analysis combined or separated it is very difficult to

have relevant insight and clear picture of the whole situation. That is one of the reasons why

majority of authors recommend usage of these tools in order to get most proper outcome.

2.6. The five forces model of competition

Porters five forces analysis has been made up in 1979. As Porter suggested five main forces

shape and distinct competition at the level of strategic units and that a detailed analysis of

each in turn could assist managers to find out the keys to competitiveness in their particular

area of industry (Hooley, Saunders, Piercy; 1993).

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This model is widely used, not only for profit oriented organizations, as well organizations

like public institutions and non-profit sectors organizations are using five forces model in

order better to understand their customers, suppliers and other organizations (Terpstra,

Sarathy;1999).

As Porter originally determined five categories15

after which this model got its name are:

1. Rivalry among existing companies. The rivalry is likely to be more intense in

case some of the following characteristics appear: period of low market growth, where exit

barriers are high and products differentiation is low etc.

2. The threat of market entry. Entry barriers could be low where some of the

following applies: entry costs are low, differentiation is low and there are gaps in the market

in terms of uncovered market segments etc.

3. The threat of substitutes. Substitutes might come either from new entrants or

from existing companies.

4. Bargaining power of suppliers. Suppliers tend to have more power in the

following cases: suppliers are more concentrated than buyers, cost of changing suppliers are

high etc.

5. Bargaining power of buyers. Customers tend to be more powerful in the supply

chain if: they are more concentrated than sellers, there are alternative sources of supply or

buying switching costs are low.

To sum up, Porter's five forces include - three forces from 'horizontal' competition: the threat

of substitutes, the rivalry among existing companies and the threat of new market entrants; on

the other side two forces from 'vertical' competition: the bargaining power of suppliers and

the bargaining power of customers.However, Porter's framework has been challenged by

other academics and strategists such as Stewart Neill16

and Kevin P. Coyne17

They stated that

three dubious assumptions underlie the five forces:

15 Robert M. Grant; Porter's 'Competitive Advantage of Nations': An Assessment; Strategic Management Journal, Vol. 12, No. 7; Oct 1991; 16 Ungemach C., Chater N. & Stewart N.; Are probabilities overweighted or underweighted, when rare outcomes are experienced (rarely)? Psychological Science; 2009; p 473-479. 17 Kevin P. Coyne and Shawn T. Coyne; A Better Approach To Breakthrough Ideas, HarperCollins Publishers; 2011;

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1. That buyers, competitors, and suppliers are unrelated and do not interact and collude;

2. That the source of value is structural advantage (creating barriers to entry);

3. That uncertainty is low, allowing participants in a market to plan for and respond to

competitive behavior.

The relevance of this model for the importance of research conducted is very significant since

it provides the insights of the market in terms of competition that are already present. Going

through all five categories of the model should get the reader much closer to the appropriate

conclusion.

And at the end, why is Porters model so important for us? Why so much attention is

dedicated to explanation of the whole point of Porters five forces?

In my opinion, this analysis (referring to Porters five forces model) is of great importance for

every single company regardless which industry it operates in. It provides the wide spectra of

information which considers some of the main influential factor of companys business. In

case of Yugomar it is, again, very relevant tool. On basis of findings Company gets from this

analysis it can much better anticipate its starting point on the given market, in this case

Bulgaria.

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Chapter III Analytical part

3.1. Situation analysis

A situational analysis is required for establishing a starting point in delivering a marketing

strategy and plan that is effective and suited to the companys needs. The companys present

business situation is fully derived from local market data, which will pinpoint areas for

further improvements in both the goods that Yugomar d.o.o. offers and the means by which

these goods are going to be presented to the customers. The purpose here is to create a clear

picture of the dos and dontss within a broader marketing plan that should deliver more

value to the customer and more profit to the company.

3.2. Textile production history in Bulgaria

Bulgaria is one of the countries that have relatively long and success tradition in textile

industry. The capacities are located in western and southern parts of the country, with cities

of Sofia, Plovdiv, Dragoman and Blagoevgrad as its strongholds. Several firms are big

players in Balkan markets. The industry became in the recent years one of the most

competitive branches in Bulgaria with a considerable investment and exports potential of

Bulgaria textile industry is among the sectors defining its export profile. Over the last ten

years exports of textile materials and products marked the highest growth (over 4.5 times)

compared with other sectors and reached a volume of 2.1 billion dollars. In 2003 the export

share reached a maximum level of 23.6%, which is 15 points above the 1995. In the coming

years value of export should have been continuing increasing but at a slower pace due to the

presence of the industry declined and reached the size of the end of last century - 17.7

percent. This is undoubtedly affecting its position in the export sectors. It took second place

as the first went up on the black and non-ferrous metals with share of 22 per cent.

Analyzing the dynamics of exports by commodity sections in the first years of the new

century (up to 2010) found with advanced rates increased sales of machinery and transport

equipment, household goods, products of vegetable origin and metals. Supply of textiles to

foreign markets is constantly growing, but at a slower pace. In 2012 foreign exchange

receipts from 2.1 billion dollars slightly exceed their levels from the previous year (2011).

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This year the level of activity in export flows is

approximately the same. For the first three months

(2013) the volume was about 2 percent higher than that

for the same period of previous year (2012)18

.

This quick view over the textile production expansion

(and export) in Bulgaria is worth piece of information

for Yugomar d.o.o. to be familiar with because of the

current situation on the market. Beside this reason, this fact provides the management of the

company with the information how severe competition it might expect and what are the

overall trends on the market. Furthermore, according to the posts19

all the products that are

made and sold in Bulgaria are market with the sticker I enclosed above. In terms of Yugomar

this is not the piece of information that could help. On the other side, this kind of campaign

sponsored by the government is directly against EU trade law principles20

. Since Company

comes from abroad it is in a way discriminated.

3.3.PEST/PESTEL/PESTLE analysis

As already stated the PESTEL21

framework is a method to analyze the macro environment of

a company. As defined six such types of factors exists: political, economic, socio-cultural,

technological, environmental and legal. Moreover, these factors are not mutually exclusive

and can affect a company from more than just one angle (Lynch; 2006). In the respect of a

given Company understanding of the external variables that might influence its operations is

necessity. Yugomar d.o.o. cannot expect to achieve any success if PESTEL analysis of the

surroundings is neglected and not done properly.

3.3.1. Political factors

Political issues are very relevant for any industry and can influence the profitability of a

given company considerably. This is especially true for countries that have a government

18 National Statistical Institute of Bulgaria; Structural Business Statistics - Press Release; November 2012; 19 Taken from the portal context with a dose of reserve: www.textil-bg.com 20 Lando Ole, Beale Hugh: Principles of European Contract Law, Parts I and II; The Commission on European Contract Law; 2000; 21 Referring to PEST/PESTEL/PESTLE analysis since the different acronyms exist in practice.

Figure 3: Made in Bulgaria sticker

Source: http://www.textil-bg.com

accessed: 15.02.2013.

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which efficiency is something that is not on the proper level. Currently paying most of the

attention to the Yugomars interest, some of actual trends are as following:

1. Political instability during the time of writing this thesis Bulgaria however have got

two governments one after another in just a couple of months. This just shows the

negative picture to the Yugomar d.o.o. since the state as an institution is obviously

inefficient. In case of any legal disputes with the locals22

or any problems that might

occur, Yugomar d.o.o. might experience huge amount of problems.

2. Influence of government policies that control the business hereby worth mentioning

is that government as a biggest employer23

in the Bulgaria has its own interest for

protecting certain areas and industries like cement industry, fragrance industry etc.

Luckily to the Company neither textile nor retail industry are the areas with big state

owned companies. Therefore they are not under the governmental protection and in so-

called support mode24.

3. Government directions regarding consumer protection in the respect of protection

of consumer, Bulgarian institutions are introducing laws and legislation in line with those

in other EU countries. This is especially practiced since 2007. On one hand this might be

a problem for a Company since such a practice does not exist in Serbia. But on the other

side it is a challenge which if accomplished successfully might present Yugomar d.o.o. as

a customer-friendly firm which really cares about their needs.

4. Overall government economic policy once again political instability caused the huge

variations among the economic policies over the years. From one government to another,

starting from 1990 economic priorities have been constantly changing and therefore

economic policies which support them as well. Worth mentioning is the fact that neither

textile industry nor retail/trade industry have not been on the top priority agenda of the

Bulgarian governments any time in past 20 years of post-socialistic period25

.

22 Including companies, individuals and institutions. 23 National Statistical Institute of Bulgaria; Labor Market Statistics; Labor Market Statistics Department; 2011; 24 Referring to the local expression in Balkan states in case some industry or company receives abundant support from the state. Own translation by D.Mladenovi 25 Based on several different sources. Most important:

Harry Schwartz: Recent Activities of post-Soviet Economics; The American Economic Review, Vol. 36, No. 4; Sep 1996;

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3.3.2. Economic factors

Economic factors also play an important role that affects a textile Company such as Yugomar

d.o.o. and many others from other industries.

1. Average salaries and wages26 - the graphic below shows that with an average of 402

euros per month, the highest salary holders are to be found in the Central (Sofia)

region. Behind is Northern-eastern region, averaging 331 euros, and the lowest still is

the South-western region, at 291 euros. In aggregate terms, annual Bulgarian GDP per

capita is 341 euros per month. Thus, owing to the inclusion of Bulgarias capital city,

the Central (Sofia) region has both the highest average salary and largest urban area in

the country.

This parameter is of really huge importance for the company as it gives insight of the

income available monthly. On basis on this statistical information Company should

strive to reach those regions with the highest incomes.

2. Average spending on clothing and footwear (C&F) in Bulgaria - in the table 1 data

about household incomes in Bulgaria per major regions can be found. On the other

side, average amount spent of household budget on Clothing and Footwear (hereafter

C&F) is calculated. Also, there is summed value of money spent on C&F per major

region and Bulgaria in whole. Figures presented are based on the statistical

information available at National Statistical Institute of Bulgaria.

26 National Statistical Institute of Bulgaria; Household income, expenditure and consumption during the 2011/2012;

December 2012;

Figure 4: Monthly wages

Source: D.Mladenovic based on Household Income, Expenditure and

consumption during the 2011/2012.

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Category Bulgaria Central(Sofia) North-eastern South-western

Available monthly income 439 488 456 407

Personal monthly consumption costs in household

417 486 468 355

% spending on C&F 5.00% 3.50% 6.2% 3.92%

Monthly spending on C&F per household

20.96 17.18 28.86 18.24

Number of households 2,536,714 575,107 704,232 1,257,375

Total yearly spending on C&F in euros

638,095,957 118,573,960 243,896,045 275,285,544

3. Salary trend comparison - the table below concerns both nominal and actual salary

changes in Bulgaria for the period 2012 2016.

Year 2012 2013 2014 2015 2016

Relative nominal

change

100% 108.00% 116.64% 125.97% 136.05%

Nominal

monthly salary

BGN 834 BGN 900 BGN 967 BGN 1024 BGN 1136

Actual monthly

salary

439 452 465 478 496

Relative actual

salary change

100% 103.00% 106.09% 109.27% 112.55%

Table 2 above shows that over the next five years, the average nominal salary should increase

by about 36%. On the other hand, actual salary is expected to increase by cca 12.5%27

. Again,

this is important for the Yugomar d.o.o. since it is directly interested in purchasing power of

the local population. Information in previous table is subject to the constant changes and they

are dependent on many different variables. Due to this reason Yugomar d.o.o. should closely

observe development of the trend over the years.

4. Clothing and footwear spending in the average Bulgarian household

Table 3 presents expected clothing and footwear spending in the next 5 years.

Year 2012 2013 2014 2015 2016

Average monthly percentage of

household budget spent on C&F 5% 6.0% 6% 6.50% 7%

Monthly C&F spending Bulgarian Levs BGN 39.8 BGN 41 BGN 43 BGN 48.5 BGN 55

Monthly C&F spending -Euros 20.96 21.47 22.51 25.57 28.88

27 This is authors conclusion based on the extrapolation of economics trend.

Table 1: Average spending on clothing and footwear

Source: D.Mladenovic based on Household Income, Expenditure and consumption during the 2011/2012.

Table 2: Salary trend comparison

Source: D.Mladenovic based on Household Income, Expenditure and consumption during the 2011/2012.

Table 3: Clothing and footwear spending in the average

Source: D. Mladenovic based on Household Income, Expenditure and consumption during the 2011/2012 and questionnaire

results.

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The predicted increase is a rise from 20.9628

euros to 28.88 euros. Taking into

consideration prices increases in the clothing and footwear market itself, conclusion

can be drawn that there are proportionally increasing chances gathering profit and it

goes without saying that a predicted market growth of this figure is a very desirable,

and one which promises high profit margins if pursued with the right strategy.

Definitely market potential exists but on the other side considering political issues it is

huge uncertainty how the situation is going to develop on the market. That is why

close and constant monitoring of this indicator is imposed as a necessity for the

Company.

3.3.3. Socio-cultural factors

1. Attitude towards foreign goods and services based on the information

gathered from the National Statistical Institute of Bulgaria about the preferences

and affinities29

, conclusion could be drawn that Bulgarian locals do not have

problems with purchasing foreign goods. This is again confirmed with launching

the survey in which useful comments are being putted exactly on this topic. This is

definitely extraordinary news for the Yugomar d.o.o. since this attitude directly

affects it and its future activities on the market.

2. Demographics of the population total number of citizens.

Presented in both figures and percentage points, the table 4 is based on expected

population changes during the next five years. This table is of quite a big

importance for the Company if observed in the context of the target group. It

provides the broader view of the demographic on-going trend. One more fact that

negatively might influence the Company in the long term is the ageing

population30

.

Year 2012 2013 2014 2015 2016

Nominal numbers 7,441,295 7,407,261 7,363,387 7,329,672 7,286,115

Percentile change 100.00% 99.53% 99.06% 98.60% 98.13%

28 Exchange rate among BGN and EUM is approximately 1 EUM = 1.9 BGN; 29 National Statistical Institute of Bulgaria; Bulgarian trade with third countries; January 2013;

30 National Statistical Institute of Bulgaria; Demographic processes; October 2011;

Table 4: Demographics of the population

Source: D.Mladenovic based on National Statistical Institute of Bulgaria; Demographic processes; October 2011.

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3. Urbanization degree in Bulgaria - table 5 reflects the degree of urbanization in

Bulgaria as of 2012. The urban/rural divide is roughly equal, with just under half

of the population residing in urban areas. This fact is of great significance, given

the fact that Yugomar d.o.o. stores are going to be located in urban areas, which in

turn reduces and the size of the focus population by around 50%. The age of the

average rural inhabitant is 3931

, meaning the circumstances are somewhat simpler

for the company both statistically and geographically. Therefore, it can be said

that with a mostly urban focus population aged 12 39, and with all stores located

in these urban areas, Yugomar theoretically has exposure to around 70% 80% of

the population between 12 and 39 years of age. These figures are based on official

data at National Statistical Service of Bulgaria.

Population Percentage

Urban 52%

Rural 48%

4. Population in aspect of age and employment - in the table 6 information

considering population in Bulgaria between age of 12 and 39 could be found, and

moreover divided into categories of Employed, Unemployed and Not active. This

information is of great importance for the Company in order to follow the target

group. As its obvious 12-3932 segment is pretty wide and in the table below sub-

segments could be observed.

Age interval Total: Employed* Unemployed** Not active***

12 - 14 233,884 0 0 233,884

15 - 19 389,808 16,741 21,156 351,911

20 - 24 422,072 99,219 99,150 223,702

25 - 29 398,959 192,660 114,321 91,978

30 - 34 369,358 218,180 90,113 61,066

35 - 39 419,609 277,333 86,233 56,042

Total: 2,233,690 804,133 410,973 1,018,583

Total yearly spending in

Euros:

464,710,524 230,526,813 67,323,828 166,859,883

* Employed category considers population that finished school and has employment. This population spends 7%

of average salary on C&F

** Unemployed category considers population that finished school, but is still unemployed. This population

spends 4% of average income on C&F

31 National Statistical Institute of Bulgaria; Demographic processes; October 2011; 32 According to the internal documentation of Yugomar d.o.o. this age group is targeted in Serbia.

Table 5: Urbanization degree

Source: D.Mladenovic based on National Statistical Institute of Bulgaria; Demographic processes; October 2011.

Table 6: Population in aspect of age and employment

Source: D.Mladenovic based on National Statistical Institute of Bulgaria; Demographic processes; October 2011 and

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***Not active category considers population that is unable to work due to other obligations or incapability,

example: pupils, students or handicapped people. This population spends 4% of average salary on C&F

In the table presented above we can see that focus population of Yugomar in Bulgaria

is about 2.2 million people. That is nominal number, but the real number of focus

population (taking into account degree of urbanization) is between 1.5 and 1.8 million

people. Population between 19 and 29 experiences rapid decrease of Not active

population and increase in employed category. Unemployed population increases

also but in a lower degree. After the age of 29 the trend changes again. Unemployed

population starts to drop, Employed population continues to grow and Not active still

drops down. This is just overall conclusion in order to comment the findings from the

table.

Once again table above shows that employed population spends more than 230

million euros on C&F annually, than comes not active population with almost 167

million euros and in the end Unemployed population with 67 million euros of money

spent on C&F. Unemployed and Not active population is funded by their family

(parents, grandparents, relatives abroad etc.). Population between age 12 and 39

spends about 464.7 million on C&F which is about 72 % of total market value. Based

on the personal experience and research done by author in the previous years on other

projects could be said that this percentage goes above 90 %.

3.3.4. Technological factors

Technological progress is important for textile/retail companies, especially for those like

Yugomar that strive to be innovative all time long. Technological progress has been

astonishing in any aspect in the last 20 to 30 years and will keep advancing in the future.

1. Modern communication channels communication channels with the customers

are present to the sufficient extent without any limitations. Yugomar d.o.o. would

not have any problems to communicate with the customer and potential customers.

2. Overall technology of doing a business once again most of the technique

equipment necessary for the purpose of operating in Bulgaria is possible to

purchase on the local market without any limitation or restrictions. Worth

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mentioning is that company does not plan to have its own production lines in

Bulgaria, therefore just equipment for retail industry have been taken into

consideration.

3.3.5. Environmental factors

Environmental factors are important external aspects that cannot be ignored by companies.

Increased environmental awareness among customers, consumers and people in general,

combined with global warming and other environmental hazards have forced companies to

make adjustments. Increasingly consumers do not only request high quality at affordable

price but also environmental friendly production procedures and plans to reduce energy and

resource consumption as much as possible. Failure to follow this trend could have serious

consequences on the Companys image leading people to belief that the company is polluting

the environment and ruthlessly exploiting the resources of the planet.

As a result Yugomar d.o.o. has early included environmental issues in his code of ethical

business conduct in which it commits itself to the conservation of energy and other resources

as much as technology and situation aloud to do so. The situation about environmental issues

is more or less the same both in Serbia and Bulgaria. It is of increasing importance for

Yugomar d.o.o. to act as an environmental-friendly company which cares about the future.

3.3.6. Legal factors

This group of factors is pretty wide but definitely very important for this analysis. The fact

that Yugomar would have to align its operations with new Bulgarian legislations could be

challenging. For the purpose of thesis I found out that two out of many laws that are of

significant importance for the Yugomar d.o.o.

Firstly, there is Consumer law33

which is different comparing to those in Serbia (in terms of

consumers right and obligations). On the other hand Health and safety law is again quite

different which imposes the necessity of adjusting internal procedures and regulations.

33 http://europa.eu/legislation_summaries/consumers/index_en.htm accessed: 03.12.2012

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However there are not a lot of adjustments to be done and it should not be a big issue for the

Company in the following period.

3.4. Competition

George Stigler said that competition is the contest among sellers striving to achieve such

goals as booming profits, increasing market share and sales volume by adjusting the elements

of the marketing mix: price, product, distribution, and promotion (George J. Stigler, 2008). In

order the marketing plan to be introduced properly profound analysis of competition is a

necessity and one of the starting points in creating marketing plan.

Namely analysis of competition requires categorization which would make possible planned

and strategic approach to it. Therefore, Yugomars competition present in Bulgaria is divided

into domestic and international categories for the purpose of this thesis and for the better

understanding.

3.4.1. Domestic competition

It might sound strange, but the fact there are no significant big domestic players34

in textile

retailer business should be life line for a Companys future existence and operations on

Bulgarian market. There are certainly a couple of huge textile producers, but they are mainly

operating for export, completely neglecting domestic market which is by the way offering

extraordinary chances for success. Only one company with Bulgarian origin is AGI-

GEORGE which is worth mentioning. Since it is not striving to reach the same target

population as Yugomar d.o.o. it is out of the interest for this thesis. Furthermore they do not

have widely established retailer systems within Bulgaria. Throughout the thesis the

phenomena of fleas markets and Chinese shops are going to be introduced.

There are dozens of small shops (including Chinese shops)35

. These shops sell the clothes to

all aged individuals. Main advantage are the prices, which are incredibly low. Of course, as

price goes down the quality becomes poorer and poorer. But this fact is widely neglected in

34 National Statistical Institute of Bulgaria; Structural Business Statistics - Press Release; November 2012; 35 National Statistical Institute of Bulgaria; Structural Business Statistics - Press Release; November 2012;

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Bulgaria, since the most of the individuals put the price on the first place when shopping.

Typical shop has just one object, and the outdoor and indoor design is definitely not the

subject of architects design and work. They mainly focus their businesses on clothes

imported from Turkey and China. If we consider their assumed daily and annual individual

sales, it is definitely minor comparing to main Yugomars international competitors but the

simple fact that crowd of them exist, could be very serious problem to the Company.

3.4.2. International competition

On the other side, based on the official report36

and on the information gathered via internet37

it can be said that there are not that much of international big players in the form of textile

retailer, except NewYorker and Terranova, in Bulgaria.

Since opening its first branch in the northern German town of Flensburg in 1971, New

Yorker38

has never looked back. By targeted investment in the future, it has not only created

new jobs but has also developed into an international clothing company. A staff of 16.000

full-time and part-time serves over 4 million paying customers each month. In contrast to

the general trend, New Yorker has seen strong growth and continuously increased its profits

in the last few years. This success can be attributed to effective market positioning and strong

expansion in Europe.

The mainstay of the range is Young Fashion, jeans, sportswear and street wear fashions for a

young, trend-conscious target group supplemented by a wide range of accessories and

underwear. All in all the New Yorker collection makes a clear fashion statement and is

entirely made up of the companys own labels. The collections reflect the individual seasons

as well as the very latest fashion trends and all workmanship is of high quality. The

companys international purchasing activities enable the stores to always have the very latest

in stock.

Everything from design and manufacturing to channeling to the individual stores and

marketing is managed centrally from the companys headquarters in the German city of

Braunschweig. Central logistics, an efficient distribution network and flat hierarchies are

36 National Statistical Institute of Bulgaria; Structural Business Statistics - Press Release; November 2012; 37 http://www.textil-bg.com accessed: 07.12.2012. 38 https://www.newyorker.de/company/ accessed: 07.12.2012.

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factors that enable New Yorker to position its products on the market successfully and react

to changes flexibly.

Its flat hierarchies enable New Yorker to be efficient and profitable in all sectors and realise

the network principle in the company, providing the foundation for its stable and forward-

looking development.

Terranova39

is Italian textile brand. It operates under TEDDY S.p.A. Company, established

in Rimini / Italy in 1961. It has already launched 10 stores in Bulgaria, covering the biggest

towns and cities. Beside that this company is widely presented around the Globe, operating in

36 countries. Why do we have to pay attention to this Italian textile retailer? Simply, because

the clothes they sell is directed to quite the same target population. Besides that, their

previous experience in Bulgaria definitely is one of the big threats that might endanger

Yugomars fragile and sensitive position on local market. In the questionnaire40, many of the

respondents wrote down, that in case they are not able to find some attractive product for

them in Yugomars store, they would go straight to Terranova or NewYorker store because

for some reason they are assured they are going to be able to find some particular piece of

cloth for them there. This fact should definitely draw attention to the Company top

management since this trend is definitely one

Marketing Plan-Master Thesis

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