Unit 14 Assignment 1: Brand Development and the Promotional Mix

Unit 14: Assignment 1: Brand Development and Promotion.

Part 1

In this assignment, I will explain why a promotional mix is appropriate for a product or service, I will explain ways in which a business can develop its brand image and explain ways a business can benefit by using the promotional mix for brand development, I will then evaluate the promotional campaign for business making justified recommendations for improvements. I will complete this assignment by completing two reports, the first will be a breakdown of the promotional mix, explaining each part of the promotional mix individually, in this report I will also include an example and justify why this is a justified and appropriate example for each element. In the next section I will choose three brands and explain how they have developed their brand over time and how this has positively impacted them. In the final section of the first report, I will choose one of the businesses from the previous section and explain how the promotional mix can help to develop the brand by explaining what the benefits of the brand and the promotional mix are. Finally, I will compile a second report where I will select an existing promotional campaign and evaluate all key aspects of the promotional mix whilst making justified recommendations on how each element could be improved.

We will remember from our previous assignments that the promotion is part of the Marketing Mix (the seven P’s) but there are five distinct points to the promotion element of the marketing mix, these elements are commonly referred to collectively as the promotional mix. These elements are;

• Advertising: Used to raise awareness, promote products and business and reinforce your existence by keeping your brand in front of customers (especially through channels that allow targeted advertising such as Google Adwords or Facebook Advertising). Studies have shown that adverts are more effective the more a person sees them with seven exposures to one advert before it takes effect, according to Chartered Institute of Marketing, it is also important to retain a uniform advertising style that is recognisable for your brand. There are five elements of advertising in the promotional mix, these are;

• Moving Image: Moving Image Advertising is that which is displayed on a television.

• Print: Newspaper

• Ambient: This type of advertising appeals to a person’s subconscious. Ambient advertising doesn’t fit traditional advertising channels such as posters or radio, in fact, ambient advertising works best when the person doesn’t consciously realise they’re looking at an advert. For example, Pepsi launched an ambient advertising campaign called “Unbelievable” which featured a digital screen mounted onto the wall of a bus shelter, the other side of the screen was a camera providing a live stream onto the display giving the appearance of it being a window. They then used special effects to display motion images on the display as an be seen below;

This advert also demonstrates digital media advertising and moving image advertising.

• Digital: Digital advertising is internet based advertising. This can be pop-up adverts on a web page or the banner advert at the bottom of most free apps. It can also be an advert within a digital newspaper such as the electronic edition of the Metro newspaper, the free newspaper you can find on busses and in train stations or handed out early in the mornings. Direct Line have an ongoing digital advertising campaign with the Metro as you can see below;

Metro Evening Edition 09/05/2017

• Audio: Audio advertising is any advertising campaign that involves only sound and voice; no visuals. Tesco, in 2012, launched a radio advertising campaign which can be listened to by using the link provided in Sources/Reference at the end of this report.

• Virtual Advertising: Using digital technology to superimpose advertising images into live broadcasts or pre-recorded shows, such as the channel logo on Sony Entertainment Asia’s television channel, I personally do not watch the channel myself so I am unsure if they are advertising The Kapil Sharma Show or if they are informing viewers that this is what they are watching, either way, this is also a use of virtual advertising;

• Product Placement: This is where a brand will advertise to a television or film viewers by paying a production company to place their product on set with the label facing forward. The BBC do not show any labels of products, you will notice the front label is always facing away from the camera.

• Brand Sponsorships: This is where a brand will partner with another company to mutually benefit both brands, the sponsoring brand will be benefitted in publicity and the company taking on the sponsorship will be benefitted financially. Some companies may refuse a brand sponsorship deal if the sponsorship comes from a brand that doesn’t align with their own business.

• Public Relations: Public Relations (PR) is a tool businesses use to improve (or negatively impact, not deliberately) their reputation. Public relations are used to deal with publicity which can be either good or bad but what’s more important is how the company handles it. Companies can give themselves publicity by sending press releases to the media to provide information about things the company may feel are important for the community (or nation, in national newspapers) to know. In 2013, Tesco were at the helm of a huge scandal which included nearly every single major food retailer in the UK and further afield. This scandal has been dubbed “The Horsemeat Scandal” and as the name suggests, Tesco were mis-selling meat products which were actually horsemeat when in fact they were sold as beef or pork or other red meats. As a result of their solid public relations management and strategies, they won an award for how they handled the scandal from CorpComms,

• Sales Promotion: This is best described as a short-term strategy to boost sales, this could be offering pre-order purchase, buy one get one free offers or price cuts. On their own, they’re ineffective at building brand loyalty. Evidence of this can be seen in Amazon’s daily deals. The only brand I can think of as a result of a constant sales promotions is RavPower (they sell branded portable chargers on Amazon and often have sales promotions ongoing, outside of portable chargers, I have no idea what else they sell, further cementing how sales promotions may not be the most effective tool in the box used singularly).

• Direct Marketing: Direct Marketing is becoming increasingly popular, it is the tool we can use to target specific customer groups based on their demographics. It is often very flexible, such as in the case of leaflet distribution, leaflet distribution campaigns can be a mix of door to door distribution, local business distribution (where local businesses host the leaflets for their customers to take one if they’d wish) and hand to hand distribution (distribution to potential customers in the street). An example of direct marketing can be when you receive a cold call from a telesales operative. They have used contact details that very few people if not only yourself have access to (in terms of returning correspondence) in order to try and sell you something.

• Personal Selling: This is arguably one of the most effective tools available to an entrepreneur, it allows them to tailor their approach to individual customers. Personal selling is a form of direct marketing when it comes to those working in door to door sales. Personal selling also comes into play in social media marketing also, Forever Living and Herbalife (and other brands) sell well when their distributors build rapport and relationships with their customers whereas companies like Tesco do not need to have such a personal relationship with their customers. Costs can be high if you’re using employed staff to personally sell on your behalf or companies can keep costs low by using self-employed distributors, like Avon and Kleeneze do, who earn a commission on what they earn.

Now, I will go on to discuss three different companies and how they have developed their brands over time. The companies we will be looking at are Boohoo, an online fashion retailer, Aldi and Tesco, both of whom are supermarkets.

Boohoo

Boohoo were founded in Manchester and claim to have been their best kept secret, since then they have become a global fashion leader, according to their website. Boohoo were founded by Carol Kane and Mahmud Kamani in 2006 with a single employee, a photographer. Nine years later, they had over 900 employees including a team in New York. In 2014, they went public and were valued at £560 million. As of 2016, they release over 300 new products for sale per day. They did this threw a solid brand development strategy.

Their brand development strategy begins with their core values, PACT; “To be Passionate, Agile, Creative and above all, a Team” – Carol Kane.

Their first international move was to New York, they got their foot in the door by acquiring Nasty Gal and their customer base for $20 million and from there, they began to position their brand in front of the American market. They did this through trying to remain inspirational in their advertising strategies by developing a lifestyle brand, as opposed to just being a traditional fashion retailer like their mainstream competitors. This would eventually include a fashion blog (called Stylefix) which added to the personal sales element of the promotional mix, though there was no face to face interaction, they were able to become more relatable towards their target market by using images that resemble that of their target market.

In their motion picture advertising campaign in 2014, however, they didn’t make a very good impression. Boohoo launched a marketing campaign called #ExperienceEverything which featured a new line of products for that season, their television advert however was criticised for being extremely similar to a television advertising campaign made earlier by another fashion retailer, Misguided, whose campaign was called Young Hearts Run Free. It was similar in layout and the product image cut scene effect was near-identical, in my opinion, right down to the same fiery attitude of the lady featured within the television advert. The fashion range was also similar. Boohoo were seen as imitators.

They were forced to adapt and in 2015, they released their We Are Now motion picture campaign which featured inner-city sky rise locations in the UK and New York as their setting with a more modest of attitude actress, reaching a wider demographic with an entirely different style set. At this point, it was clear that Boohoo really had begun to define their own brand however, if we look at some parts of their website, such as the “Inspire Me” section, it seems they are still imitating other companies, such as Pinterest (a social media/blog platform), as we can see below, it is set out in the same, cluttered, linear format with the noticeable difference being that boohoo.com is slightly less cluttered:

Tesco

Tesco saw their sales rocked in early 2013 in nine of their eleven global markets as a result of the Horsemeat Scandal. It was evident that Tesco, as a brand, were hurt really bad. I know many people who refused to buy meat from their for a long time after the incident and in fact, they struggled as a result. In fact, so did every supermarket who stocked meat that came from overseas farmers.

It was through good public relations management that they were slowly but surely able to overcome this scandal which had caused so much noise that they were talking about it in the media two years later. This scandal impacted customer confidence across the entire retail industry. Nobody, not even the supermarkets, could trust their suppliers. The main culprits of the horsemeat scandal were mostly the overseas farmers, according to Tesco and although they were already Britain’s largest agricultural customer themselves, they pledged that by July 2013, all of the fresh meat they sold would come from British farmers, this included fish, beef and chicken. This is important because, according to Mintel, a much respected market research company, 36% of customers believe the manufacturers of their food know where their ingredients come from and that the use of British sources ingredients is the number one factor most likely to regain consumer trust in supermarket product.

In 2013, Tesco reported a 6.9% fall in profits and to help them to restore trust, they hired Farmer’s voice.

In April 2017, Tesco announced £1.28 billion in profits and their first full year of growth which is as a result of several other endeavours, mostly surrounding good PR, responsible agricultural and supply chain management practices as well as being mostly open and honest with their stakeholders, including customers, albeit a couple of dodgy accounts here and there, Tesco managed to overcome the scandal and by Christmas of the following year, frozen meat purchases were making a come-back and ultimately, Tesco were rebuilding consumer confidence.

I do believe the horsemeat scandal has had a lasting impact on the supermarket retail industry and as a result, we have seen more and more consumers year on year turn to smaller and independent retailers, this is very positive for them and in my opinion, the economy in general as Tesco and many other retailers since have chosen to buy the majority of their fresh produce and other products from UK suppliers. Tesco’s profits were hit by the scandal which is evident in their profits for 2012 and 2013 (as the new tax year starts in April) were impacted, the scandal happened late 2012 and their end of year sales for 2012 were dramatically lower than other years comparatively (see Tesco financial performance in Sources/Reference), early 2013’s sales were lower too but by late 2013, they had begun to recover.

Good public relations was key for Tesco to overcome the scandal which, if handled poorly, could have cost them (and potentially, the entire British supermarket industry) their market share of meat sales over the long term.

Aldi

As a result of rising inflation, poor lifestyle and financial choices and social factors, many consumers have turned to budget food retailers like Aldi, now a hefty competitor to the likes of the typical British brands we all know like Tesco, Morrison’s and Sainsbury, not Asda. Never Asda, they’re just pretending to be British when in fact, they’re owned by the Walmart Group who aren’t British, and nonetheless, Aldi is a contender for Asda too! In April 2017, Aldi and Lidl accounted for 11.9% of the UK market share in food retail and they’re German brands, they do say they make the best of everything and seemingly, it is true for Aldi also with even their Christmas pudding making it on to our Queen’s Christmas dinner table!

Aldi arrived in the UK in 1990, three years before I was born, growing up I wouldn’t have even know it existed, I think I visited the store twice whilst I was living with my parents and both times I remember it being very dismal, depressing and the colour scheme was chocolate brown and cigarette tar stained walls yellow. It is only in the past four years that I have seen Aldi’s visual advertising more prominently.

Aldi have taken over twenty-five years to get to where they are today but in the last five years especially, I have been able to watch their television adverts with great awe. You see, Aldi is one of those who are known for imitating popular household brands but at a far lower cost and often, at much better taste quality. Yet, their imitating is what makes them who they are and is acceptable to consumers, it is what their brand is. They imitate expensive brands at a lower price to consumer and without the negative feedback that Boohoo received in their 2014 television advertising campaign. This is very positive as not only does it combat the rising cost of inflation, it keeps prices low for those who cannot afford to shop at more expensive supermarkets like Waitrose or Sainsbury. The drawback, however, is that the majority of their suppliers are overseas and may not be as trusted as the suppliers that supply the likes of Tesco.

They are also very active with print based advertising and direct marketing, they produce offer booklets which they then distribute via companies like Leicester Leaflet Distribution Ltd, this is especially positive as they are using local, independent businesses instead of large corporations like Royal Mail or TNT, this benefits local economy. These booklets are also available to be picked up on the way in and out of store.

Alongside this, they advertise their stores at roadside using print based advertising on 48 sheet billboards (which benefits larger marketing companies like JC Decaux and Primesight who own a large amount of the billboards they advertise on) and on vinyl banners. All of this has given them the ability to earn a huge amount of awards and as a result of their out-dated, depressing stores (which over time have become slightly more welcoming in its colour scheme) has allowed it to focus on provided higher quality, cheaper foods. Can you imagine how much it costs Waitrose to maintain their stores compared to Aldi? The cost of store maintenance for Aldi would be considerably lower and that allows them to purchase higher quality, higher cost goods and sell at a lower price to consumers whilst still retaining a profit.

I shall now revisit Boohoo and explain how the promotional mix can be used to help further develop their brand and what the benefits of the relationship between the promotional mix and Boohoo are. We will do this by segmenting the promotional mix into its individual components and below each heading, I’ll explain how they can help Boohoo to develop their brand or have helped Boohoo to develop their brand over time and the positives of doing this.

Advertising

Boohoo have a strong advertising strategy in their way of visuals and I don’t think using audio as a medium for advertising (such as radio) would be effective for them, on the other hand they could use descriptive language for those who are deaf to describe their product or even drivers, listening to the radio. As a fashion brand, however, I do not think radio advertising would have a great impact. I do, however, think that digital advertising is the way forward for them with the rise of popularity of online video and internet based entertainment, alongside the increased use of smartphones now competing with desktop usage, I think online video advertising, as well as social media advertising will prove highly beneficial for the company, especially because online advertising on platforms like YouTube, Facebook, Instagram and Twitter allow you to target your demographic down to their location, age, sex, religion and a multitude of other factors. They also allow for real time campaign management which would allow Boohoo to tweak their campaigns as they go along.

Public Relations (PR)

Boohoo already have a great public relations strategy, however, it could be improved by Boohoo (and other newer fashion retailers) addressing the concerns consumers have regarding their sweatshop style overseas production practices. This has to stop, in my opinion, even if it does cost them the ability to add up to a whopping 300 new products for sale to their website every day. This would improve public opinion and could even convince many customers to purchase from them.

Sales Promotion

Boohoo have started using Asos as a sales platform for their brand, which is strange given they are competitors but Asos is much larger than Boohoo (however, if you look closely, you can see Boohoo and Asos have a huge amount in common), which is boosting Boohoo’s brand image because Asos is a well-known and somewhat respected brand. They should also expand their retail channels to Amazon and eBay and other international marketplaces to boost sales.

They are also catering for plus-sized individuals which is a good thing, however they do not use plus-sized models to models this range of clothes which will negatively impact their relatability amongst plus-sized customers.

Direct Marketing

Boohoo have a relatively niche target demographic but it looks as though this is expanding, with their introduction of male fashion ranges and children’s fashion ranges, it is becoming apparent that they are also targeting families and men, it is clear that they are targeting plus sized women and men as it is part of their customer acquisition strategy available on their website. As a result of their target market expanding, I think they should implement a range of direct marketing strategies outside of email newsletters, I think they could attract an older audience if they wanted to by implanting a mail order marketing strategy in areas that are dense with bungalows and residential care homes.

Public Selling

Because of Boohoo’s strong performance over the past couple of years alone, I think it is time that Boohoo opened their first brick and mortar store and really lay claim to the fashion industry like Levis and Lacoste with their own, dedicated Boohoo branded store.

There are several different ways a business can benefit by using the promotional mix for brand development. I will go on to explain ways in which brands have used the promotional mix to benefit them in terms of sales and brand development. The foremost important benefit of the promotional mix is that, if implemented correctly, it will stimulate your customer’s senses in a way which compels them to buy more of your products and not your competitors’ products which may be a lower price or even better quality. Speaking of stimulating senses, Wrigley’s brought out 5 gum in 2010 which was discontinued in 2016; a lot of people were experiencing a laxative effect if you ate too many. That aside, they had to break into the already diluted (mostly by themselves) market. They did this by using a diverse range of the promotional mix, their most prominent campaign was their “How it feels to chew 5 Gum” advertising campaign which was broadcast widely on television.

5 Gum also used print media to their advantage, as you can see below, they used seductive imagery that appeals to men in a print edition of a London magazine, the page appears to be targeting men, given the portrait images of men used and the content being political which is a sector that has a readership base mostly of men. For Wrigley’s, advertising was definitely the most beneficial tool they used for building their 5 Gum brand.

PR and Communications were used effectively by the tech company TalkTalk when they launched their microsite, Test Your EmojIQ, the site was an extremely clever market research ploy that was created in early 2015 by TalkTalk Mobile and a linguistics expert to find out how many people and which demographics actually understood the emoticons (which is what they are actually called, as a matter of fact) they were increasingly using in day to day text. TalkTalk opted for a PR stunt, which you can see an image of to the right, to raise awareness for their microsite;

The study, carried out by surveying users of their microsite, found that emoticons are being adopted faster than any other language and that 72% of 18 – 25 year olds use emoji whereas over 40’s just really didn’t understand it.

Missguided, an upcoming fashion brand, have a rather attractive sales promotion that targets their target demographic of 16-24 on their website, it is on a pink ribbon with black writing, extremely visible, as can be seen below. Most 16-20 year olds are students in the UK and given the student discount advertised is for a limited time only, they will be more compelled to spend their student loan on clothes instead of those textbooks they need for their course.

Alongside this, they target women, evident by the colour scheme and the fact the coupon code for their footwear sales promotion is “heelyeah”, I don’t know that many men who wear heels so it may be an indication of the gender they are targeting here.

They also entice customers to spend in excess of what the typical customer spends with their free next day delivery on orders over £60. A sales promotion is decided by looking at what customers are willing to spend on a trip to their website and comparing this to the average spend and trying to find a comfortable spot between the two which many customers are willing to pay with the small incentive of next day delivery. All of the above sales promotions are designed, with success, to make shoppers spend more than they initially would. Let’s look at my personal example, local Pizza Hut offers 50% off of orders over £40, to me that means £40 worth of food for 20 quid! I only intended to spend £20 in the first place so that’s a bonus but do you realise that by not rounding off the prices (I’ll come on to this in a moment) so the price is £x.99, it is intensely difficult to make that £40 without going over by an entire extra item which costs minimum £5, after all, who would pay 50p for a dip? So, instead of spending around £20 or less, to hit the thresh hold, I had to order more than £40 worth of food which would undoubtedly come to more than £20. My order came to a total of nearly £30. My point is, a discount usually compels a shopper to spend more, especially when there is a minimum payment threshold. Sales promotions benefits businesses by increasing their overall profits, especially if they buffer their losses, if any, for any sales promotion with steady inflation of their prices over time.

Direct Marketing has been used by Nestlé’s KitKat to attract customers to purchase their KitKat Chunky bar in 2012 in London, customers targeted by their Chunky Mail campaign would receive the promotional material, as you can see to the left, directing them to pick up their KitKat Chunky from their local newsagents. I can only imagine they got the addresses from the electoral role or an opt-in service, I know I didn’t get one.

The marketing company behind the direct marketing campaign launched by the producers of the film Sausage Party sent T-shirts inviting recipients to see the film. I didn’t get one of those either. These kinds of direct marketing are memorable to the customer and mutually beneficial for smaller, independent retailers who would undoubtedly be able to exchange the promotional material for monetary value unless Nestlé supplied the local independent retailers with plenty of KitKats to give away (or sell, as those which went unclaimed would be).

Going back to TalkTalk, they also use public selling to bolster their sales by using local event marketing firms like Face2Face Marketing in Nottingham who set up tables adorned with TalkTalk branded material and salespersons would canvass members of the public to switch their broadband provider by offering better deals than they’d be able to get by going direct to the website, which was true if you didn’t include the installation fee which wasn’t waivered in the public selling campaign but is in all other deal packages, as far as I am aware.

Businesses can use the promotional mix to benefit them in terms of brand development, to summarise the above points on how brands have used the promotional mix to benefit them in terms of brand development and sales, and to evaluate how the promotional mix can benefit businesses when they use the promotional mix will be listed below:

• Advertising:

• Provides a significant role in introducing new products/promotions to the market, it is almost an essential staple in any promotional campaign. It gives awareness to the customers you want to attract and with a compelling advertising campaign and strategy, a business can position themselves in front of other people by word of mouth by compelling people to discuss the advert in conversation.

• Increases sales by providing customers an insight into what the company offers when done in a way which is attractive to customers.

• It can absolutely destroy those who aren’t willing to embark on creative advertising strategies, of which, as a result of falling digital advertising costs, is enabling even the smallest businesses to promote themselves and their products via advertising that only a few years ago was out of reach due to costs for many SMEs.

• PR:

• Public relations provides a foundation of credibility, a business’ public relations will be the making or breaking of them if their caught up in a scandal or their promotional campaign turns sour; it was only recently a nightclub was criticised for hosting an individually organised event called “No Eye Dear” after several club-goers were blinded in an acid attack not long before.

• Really good (or ever-so-slightly bad) public relations will place you in the media for quite a long time, even bad publicity often has a positive impact once the initial impact is over with; Starbucks found a slight drop in sales in the month where it was released that they’d not paid any tax in the UK because they hadn’t made a profit, apparently. Their sales soon recovered and over time improved even though it’s common knowledge that, even now, they pay an absolute minimum amount of tax to the United Kingdom.

• Direct Marketing:

• Direct Marketing helps you to build a relationship with customers and interact with them in ways a business usually couldn’t. You can also use a more personal touch with those registered on open electoral roles and land registries, like Virgin Media who address people they target in their postal marketing by name.

• Direct Marketing allows a business to test the appeal of their business, services/products or promotions in a local area or to customers they already have a relationship with.

• Good ROI for arguably lower costs.

• Public Selling:

• Allows customers to potentially sample products before they buy, otherwise gives a business the opportunity to provide the information the customers want by enabling them to quickly receive a response to any questions they may have.

• Allows a business to collect immediate feedback from customers and other crucial market research data without worrying about huge market research fees that some companies charge to gather a general opinion of a business from the public.

• Gains publicity and credibility, if you’re publicly selling your products or services, it is very similar to George Foreman using his name on his Lean Mean Grilling Machines, it shows you, as a business, are confident in your products/services.

• Sales Promotion:

• Fantastic at acquiring new customers or tempting existing customers to spend more.

• Customers will be more compelled to act on a sales promotion that indicates scarcity, such as “limited time” or “whilst stocks last” discounts and offer promotions.

• Creates word of mouth opportunities amongst friends as a result of the urgency often created in such limited promotions.

• Sales promotions also allows staff to test their sales technique at point of sale (POS) or whilst on the shop floor, this will allow businesses to better manage their staff in the way of positioning the better sales people to where they need to be to either sell products on shelves by positioning them on the shop floor or compel customers to act on impulse to purchase products at POS.

In conclusion, the successful implementation of the promotional mix will cement a brand into their customer’s minds, they’ll do this with a range of memorable advertising strategies, sales promotions and other marketing and selling campaigns and if it is a disaster, it shouldn’t be too bad because that’s what your Public Relations are for. Unless you’re Volkswagen’s Public Relations manager during their emissions scandal, in which case, just rewrite any allegations made against you.

Sources/Reference:

https://www.youtube.com/watch?v=Go9rf9GmYpM – Pepsi bus shelter ad

https://www.youtube.com/watch?v=RLvBRCyNHJs – Tesco Radio ad

http://m.thegrocer.co.uk/352991.article?mobilesite=enabled – Tesco award for horsemeat scandal

http://www.boohoo.com/restofworld/pcat/aboutus – Boohoo About Us

http://www.mirror.co.uk/money/personal-finance/christmas-pudding-taste-test-aldi-2652344

https://www.marketingweek.com/2017/04/04/inflation-own-label/

https://www.tescoplc.com/investors/reports-results-and-presentations/financial-performance/five-year-record/ – Tesco Five Year Financial Performance

http://www.cim.co.uk/files/promotionalmix.pdf

http://www.newsworks.org.uk/Creative/51060 – 5 Gum Print Media

http://news.bbc.co.uk/1/hi/health/7180800.stm – Dangers of Sorbitol

http://fortune.com/2015/11/03/volkswagen-pr-disaster/

https://www.thesun.co.uk/news/3429674/club-acid-attack-slammed-party-night-no-eye-dear-ferne-mccann-boyfriend-court/ – “No Eye Dear” Nightclub blasted for inconsiderate event

Part 2.

Unit 14 Assignment 1 Part 2

In this report, I will look at NEXT PLC’s, another fashion retailer, 2016 promotional campaign covering their Summer and Autumn fashion collection and how they apply (or should apply) the promotional mix in other business areas in general. I will give a brief insight into who NEXT PLC are and then I shall go on to evaluate how they have used the promotional mix in their campaigns and provide recommendations based on facts and opinions on how they can improve their promotional campaign in line with the promotional mix.

The NEXT retail chain was launched in 1982 with their first store exclusively stocking female fashion, something they have primarily focussed on throughout their history and as a result of such stringent adherence to their initial product strategy, seems to have damaged their ability to adapt to changing shopping trends and spending habits but, more on this later. NEXT did bring in collections for men, children and home quite shortly after. Today, they have over seven hundred stores worldwide and of which, 500 stores are in the UK.

In 1988, NEXT Directory (their non-brick and mortar sales channel) launched their ground-breaking mail order operation and created the foundations of catalogue retailing. When online shopping was introduced in 1999, they directed their focus towards e-commerce, as opposed to mail order catalogues, as their entire catalogue (and more products not displayed in their now 700 or so page catalogue) was available to view online. This has had a massive impact on their mail order catalogue sales which doesn’t impact too many customers in the digital age but did, as a consequence, impact older customers who are less technology literate as some of NEXT’s younger customers.

Other NEXT PLC group businesses include NEXT Sourcing, which provides slightly shy of half of all of NEXT brand stock which is sourced from global suppliers in 18 different countries, many of whom can be likened to sweatshops in how they treat their staff by British standards. They also own www.labelonline.co.uk which provides non-competing third party brands, they also provide these products in a quarterly printed catalogue.

NEXT also have a relatively robust corporate responsibility policy where they address key socio-political, ethical and environmental business related issues, albeit their sweatshop practices and the fact it was only last year that Syrian refugee children were found to be working in the factories NEXT PLC own… For the purposes of this report, we will focus on NEXT PLC’s own fashion retail. To being evaluating their promotional campaign, we should remind ourselves what the key points of the promotional mix are;

• Advertising

• Public Relations

• Direct Marketing

• Public Selling, and;

• Sales Promotion.

Advertising

NEXT mostly target women in their advertising but according to Mintel, female fashion sales have dropped year on year as they fail to attract a younger female market to those whose tastes have changed to suit those of Marks and Spencer’s style of fashion and instead, more and more men are purchasing goods for themselves whereas previously, women would shop for themselves and think to get their husband something nice whilst they’re there. Women used to be responsible for the majority of clothes purchases in the household but over time men have begun purchasing for themselves, in fact, men’s fashion sales have increased 7% year on year. Therefore, NEXT should advertise in a way that is more inclusive of men’s fashion to account for this change in consumer spending habits, it is difficult to use sex appeal in a way which is seductive in men’s fashion when you are targeting men, Marks & Spencer’s can’t use the same television advertising strategy for a men’s T-shirt as they would their potato’s and likewise, NEXT can’t use attractive females to model their men’s clothing… I mean, typically speaking at least.

To begin our evaluation, if we look at the example to the right, we can see that NEXT’s advertising is primarily dominated by women, this is true of the majority of their advertising. Whereas H&M, one of NEXT’s bigger competitors, tends to mix the genders in nearly all of their advertising, as you can see below;

It has to be said that H&M haven’t issued a profit warning due to the decline in sales but with that being said, as soon as you walk through their door it is clear where the men’s section is because it is immediately visible when you enter their stores, for the most part.

Even Boohoo, whose target market is mostly women, are accounting for the change in consumer spending habits by launching their own, independent website for their male customers, BoohooMan, whilst still including the men’s section on their original website too.

With the demise of BHS and the underperformance of M&S, Sports Direct and other brick and mortar retail outlets, specialist clothing retailers have seen a continued decline of the size of their share of the total clothing market with primarily grocery retailers like Wal-Mart owned ASDA and Tesco (who have their own fashion retail brands, George and Frieda & Frieda respectively) and other similar retailers, alongside department stores have largely picked up the slack, according to Mintel, with online-only retailers suh as ASOS, Amazon and the glorious little beauty, Boohoo seeing exponential growth in their share of customer spending on clothing. The point is, the way consumers are shopping for clothes is changing; there’s a buy-now, wear-now mentality whereas, previously, it would be a case of our parents purchasing a garment to wear on that currently, completely unplanned special occasion. Retailers like NEXT PLC have failed to adapt fast enough, especially with the growing momentum for locally made clothes.

I think what NEXT should focus on is diversifying their use of gender specific advertising to include more male models, indicating that it is an inclusive brand and not a brand who stocks men’s clothes because it’s the status quo of the high street retailer. They should also make it clear to customers the different range of sales channels available to them, this will especially benefit customers who may be less mobile or less technology literate, we will cover this more in depth later.

Public Relations

Now, we will discuss NEXT’s public relations which could be far better than it has been in the past few years; what with their use of sweatshop-like factories overseas to their stagnated position within the dynamic retail market, all of which has collectively damaged the public’s opinion of them as a company, especially when consumers find mass-produced, unethically sourced clothing less and less appealing over time; their corporate responsibility statement (CRS) focuses on their suppliers and improving relationships with them, it doesn’t even mention the customers and doesn’t consider their customer’s needs in this statement either, customers want to buy from companies they trust and using sweatshop-like factories, no matter how many times you meet with their owners, is not going to win the public over. Their CRM also doesn’t address changes in consumer spending habits. It feels to me that NEXT PLC’s vision is directed the wrong way completely. They have also issued profit warnings have not publicly addressed yet how they intend to turn the business around.

Their CRS explains that they hold a supplier meeting every month and a half, give or take a week or so. This is great for business to business relations but perhaps customer relations are far more important at this stage given the fall in sales meaning there’d be a surplus of stock anyway, maybe even look for new suppliers? Maybe their products just aren’t what their customers want; NEXT need to look at industry research and examine their competitor’s sales trends to find out what works and to place themselves back in the prime position of the fashion retail market by using inspiration from their competitors and market research to better align themselves with the newer generations of customer before they sink into obscurity like M&S nearly did before they focussed more on younger customers rather than their older customers who, frankly, Marks & Spencer’s were running out of quickly over time. Not only this, their supplier meetings are with those suppliers who have been criticised for operating sweatshop-like conditions within their factories, this is outside of ethical practices and should be addressed to better improve public relations. Mintel have released statistics that show consumers really do care about where their clothes are made, how they are made and more importantly, more and more customers are preferring to purchase locally sourced clothes at the sacrifice of the lower cost for the higher quality of clothes and fair-treatment of workers who make the clothes.

My recommendations would be for NEXT PLC to either scrap these policies unless they are willing to adhere to them, this will improve the customer opinions of those who care about the source of their clothing, and as Mintel’s research suggests, more and more consumers are placing their credibility with brands who ethically and locally source their products. Mintel include a quote on the store for one of their products regarding ethical sourcing of products, the quote goes like this; “For today’s consumers there is a sense that companies are inherently immoral, unless they can demonstrate that’s not the case. The most effective way of asserting CSR (Corporate Social Responsibility) credentials is not via annual company reports, but via product packaging and television, which will have the most direct impact on people’s purchasing decisions.”, the quote is from a Consumer Lifestyle Analyst, Jack Duckett, and it tells us that in today’s world, consumers feel companies are out to make profit and profit alone unless they are shown otherwise; NEXT PLC are partway there with their policies but with their sweatshop practices, as we have referred to, it is clear they are not adhered to.

The Guardian, the third most popular company for consumers of online news) published an article headlined “Shoppers stick to ethical principles despite financial pressures” in 2013, just five years in to the worldwide financial crisis, the article explains that the sale of Fair Trade products increased by 18% compared to 2016, just one year prior. It is my opinion that Fair Trade aren’t quite so ethical themselves but we can discuss that another time, there’s a link which gives more information in the sources in regards to Fair Trade being not quite so fair, in fact that Guardian article explains that in 2008, the year we found ourselves in a recession, Fair Trade sales boomed by 43%, further evidence of the need for ethically sourced products. In the first article we discussed, it goes on to say that the then Group director of Sainsbury’s said “A significant proportion of customers are not willing to compromise. People are shopping little and often, wasting less, using leftovers, and they care about provenance and sourcing” after reports from Mintel that suggested that despite the recession and rising costs of living, UK shoppers hadn’t lost any regard for ethical sourcing or sustainability. Mintel’s theory is that consumer values have changed permanently, especially in regards to food; shoppers are becoming increasingly savvy about how they spend their money [especially true in light of the economic climate at the time]. More of us are planning ahead and looking to cut down on waste. The evidence suggests that the demand for high quality products which have been sourced ethically and sustainably remains high (the full report from Mintel for Sainsbury’s can be found in the Sources/reference section at the bottom of this page).

Direct Marketing

NEXT should start direct marketing in the way of door to door distribution of their previously extremely successful mail order catalogues, which currently and have been, as far as I am aware, only available via request (it used to be in-store or by phone, now it is online which hinders those less technologically literate), this will benefit local businesses who deliver the catalogues and increase sales from those who are housebound without internet connection or smartphone.

Because of their cessation of offering the instore request of a mail order catalogue, it hinders those who are, particularly, older or do not have regular or easy access to an internet connected computer. They will not navigate the NEXT website to find the request form and will simply switch off and go elsewhere, such as M&M who do offer an affordable fashion range in their own mail order catalogue which you can still request very easily, though to my understanding does not have a brick and mortar store so does not provide instore requests for mail order catalogues.

Of course, a catalogue with more than 700 pages would be costly to distribute door to door, however, the products which would appeal to the older customers and non-internet users (of which there will be few but of those, they will not be influenced by trends they see online so will not need to be exposed to such a vast array of products). This means, NEXT can condense their catalogue into a 40 page, A5 catalogue (using 20 A4 pages, further saving on costs) which they can then distribute to the less privileged areas (lower income, higher unemployment with a lot of social housing) and areas with a large amount of bungalows and elderly care services as these homes will likely be occupied by the elderly and less able individuals who may find an easy to read and navigate catalogue far more beneficial to them than their quite-hefty website which even I find somewhat non-user friendly. To the right is an example of the style of catalogue I would suggest NEXT PLC to use in their direct marketing campaign; the Golden Directory (as pictured) is a catalogue of adverts for local businesses, mostly along the Melton Road/Belgrave Road area of Leicester (also known by locals as The Golden Mile which is why the catalogue is called what it is – the name was given as a result of the large amount of Indian gold jewellers).

Currently, their only visible advertising is in print, digital and via television. I think increasing their sales channels is a way to position themselves in front of audiences they otherwise aren’t targeting through their usual channels; I do not watch television and catch-up is becoming more and more popular (I do watch television programmes on demand but not on an actual television, on demand services tend to show a far fewer range of adverts even though digital advertising is becoming increasingly common) and if they’re not targeting me via digital advertising methods then the only other option they have is direct marketing. Reviewing their website, you can opt-in to direct marketing via an email newsletter subscription however, aside from this, I cannot see any other direct marketing methods being used by NEXT PLC.

Public Selling

When we walk into NEXT stores, it is immediately apparent as to why they have issued profit warnings recently (with end of year reports showing less than £100million in profits compared to the previous year though revenue remained constant), there stores are a near baron wasteland with plenty of space but lots of products haphazardly crammed onto shelves in a reverse Super Dry store style (Super Group, who own the Super Dry brand, are notorious for squeezing in shelf space into their stores leaving very little room to freely navigate, they’re not the only company to do this, the same is true in IKEA stores, only they’re more subtle and don’t outright force a customer to navigate their entire store before being able to leave like some companies do, Poundworld in Leicester Haymarket Shopping Centre is guilty of this exact practice) in a way which suggests that NEXT PLC are panicking and trying to sell as many clothes as possible to drag their profits up. Unfortunately, this is off-putting to customers, especially the male customers who walk into NEXT and can only see women’s fashion everywhere, in fact, we will just wait outside whereas, in their competitors’ store, such as New Look, we can clearly see where their men’s fashion section is and in which case, we will have a browse ourselves.

NEXT typically hide their men’s fashion away, like they begrudge selling it. Typically, it’s upstairs with two or three, tops, sales assistants on the floor. It is often messy and clearly, the least looked after part of NEXT’s business (arguably, not so much when we look at their sweatshops overseas, I mean, factories). Alongside this, they also target the majority of their homewares towards women, the only homeware ranges that appeal to men would be their neutral ranges which are typically targeted at both genders.

I think NEXT could create a more welcoming environment for male customers by bringing their men’s sections to the front of the store or at least making directions to the men’s section more visible, below is an image of Birmingham store to highlight the fact that the men’s section seems to be very well hidden away;

The same is true in every single store I have visited, including Leicester, Nottingham and Derby, the image is a panorama shot I took shortly after the news of the 14% sudden fall in share price late last year before more recently, in March 2017, issuing a profit warning. As previously mentioned, men’s fashion sales are increasing 7% year on year across the board so it is only a matter of time before men’s fashion sales overtake that over women’s fashion sales. Moving the men’s section forward is the logical decision, as per the saying “The early bird gets the worm”.

Sales Promotion

Finally, we will look at NEXT PLC’s Sales Promotion. To be frank, I have very few recommendations in how NEXT advertise their offers and discounts other than using methods we have already covered, currently they use a range of channels to promote their offers and discounts, including most prevalently via email marketing and on their website.

My recommendation is for NEXT to use more digital advertising to further the reach of their sales promotions; they should include social media marketing and Google advertising, WordPress users alone read 23.6 billion pages worth of content each month from their 409 million users, most pages displaying 3 or more adverts, with NEXT’s basic need to use imagery in their advertising, side-column adverts displaying single items would be the way forward, especially for those on a lower income who would appreciate a buy one, get one free or free delivery on their purchase by clicking through the advert and, as we know, digital marketing allows the marketer to target a specific demographic very precisely which will be perfect for targeting those most likely to take advantage of NEXT’s sales promotions.

They would also benefit from using the freestanding digital advertising boards, like the example to the left which is showcasing fashion in a shopping centre, NEXT are a high street brand, they’re often found in many shopping centres and would be able to use the digital advertising boards to not only showcase their latest sales promotions but also to direct them to the store.

In conclusion, I do not feel NEXT are operating at their maximum capacity in the sense that they are missing key opportunities to grow revenues but with the correct promotional campaigns in place, there is no reason why NEXT PLC cannot regain their market share and bring their profits back up in line with their previous almost year on year success.

Sources/Reference

http://www.bbc.co.uk/news/business-39367139

http://m.leicestermercury.co.uk/NEXT-plc-in-store-sales-drop-after-another-challenging-year/story-30223117-detail/story.html

http://www.mintel.com/category/blog/retail-market-news

http://store.mintel.com/clothing-retailing-uk-october-2016

http://www.mintel.com/press-centre/retail-press-centre/mintels-15-menswear-fashion-facts – Mintel Fashion Facts

http://www.mintel.com/category/press-centre/fashion – Mintel Press Centre; Fashion

https://fabacus.com/overture-scm-plm/uk-fashion-industry-stats/ – Fashion industry stats

http://www.heraldscotland.com/news/14126955.Retail_giant_NEXT_suspends_government_funded_apprenticeship_scheme_after_a_damning_Ofsted_report/ – NEXT apprenticeships scandal

https://www.youtube.com/watch?v=rkqehuUTQ_4 H&M summer 2016

https://www.youtube.com/watch?v=x2Rgat0crEY NEXT Summer 2016

http://www.NEXTplc.co.uk/corporate-responsibility/focus-updates Next Corporate Responsibility