This is a report following Primark, a value level market brand and discussing their marketing strategies that make them one of the most popular high street brand in the UK. The marketing strategies I shall be looking at will be The Marketing Mix (4P’s – Product, Price, Place, Promotion), The Environment Mix (PESTLE Analysis – Political, Environmental, Social, Technological, Legal and Economical) and The Services Marketing ( 3P’s – People, Process and Physical Evidence).
Introduction
With a over 350 stores in eleven countries, Primark is a store that is designed to keep up with the latest looks without a large price tag on their items – meaning that everything is of good quality for a cheaper price, making it a brilliant for Britain’s demographic. Primark offer a wide range of products, stocking everything from womenswear, menswear, baby clothes and kids wear, accessories, beauty products, shoes, home ware and confectionary.
In 1969, Primark opened their first store in Dublin under the name of Penneys. By 1973, they had opened their first store in Derby, UK. The UK now has 174 stores and this number is still gradually climbing.
In 2015, Primark had the highest operating profit out of selected players in the high street and value market level. (The Rockbury, 2017) In 2017, Primark’s operating profit was 735 million British pounds, in comparison to 2007 where they had an operating profit of £233 million. (Statistia, 2017)
Adjusted operating profit of Primark worldwide from financial year 2007 to 2017* (in million GBP)
(Statistia, 2017)
The Marketing Mix – The 4 P’s
Product
Primark’s current recorded demographic shows a middle aged woman who has approximately £125 to £499 spare a month. I do slightly disagree with this as my primary research shows that the demographics for Primark are teens coming out of school with part time jobs and uni students who go into Primark to collect their basics in their wardrobe.
Primark provide consumers with a wide range of your every day items. For example, if you don’t want to spend £10 on a pair of socks in New Look, River Island or TopShop, Primark is the perfect store to go to when you’re in need of something affordable, enabling you to potentially spend more money but getting more from it.
Boston Matrix: Stars Problem Child Cash Cow Dogs
- Stars – Every couple of months, Primark bring out a range of themed items such as Disney and Harry Potter. They produce items for most of the store, depending on how relevant it may be. For example, Disney home ware, kids wear and pyjamas. This is a star because every new range they bring out, the ‘Primania’ following on Instagram goes crazy, everyone wants to get a new themed set of candles or pillows or even lights.
- Problem Child – As we’re very much stuck in a materialistic driven world, you are looked down on if you’re wearing a pair or primark shoes; especially trainers. Everyone needs to be wearing, Nike, Adidas, Puma, Vans, etc. So for Primark to be selling cheap trainers, they’re essentially taking a gamble on what profits they could be taking out of them.
- Cash Cow – Jeans make a lot of money for Primark as they’re good quality jeans for a price consumers can afford to spend i.e. £10-£15 a pair. These jeans last a reasonable amount of time as well as keeping up to trend. They make the perfect cash cow for the company. On the other hand, basic items such as handbags, plain T-shirts and jackets are also cash cows, this is due to the same reason as jeans – they’re good quality everyday items at a very low price.
- Dogs – Recently, Primark has come up with a beauty range that is taking social media by storm. For example, there was a thread where people we’re questioning if Estee Launder foundation was exactly the same as the Primark PS beauty range with a £30 difference. More people are watching reviews on the internet and finding it to be just as good as ‘drugstore’ makeup and even high end makeup brands like Estee Launder.
Top Priced
Premium Priced Product
Mid-Priced Product Low Priced product
Faux Fur Coat – £35 Jumper – £25
Jeans – £15 Heels – £18
Wool leggings – £7 Clutch bag – £9
False Lashes – £1 Face Wipes – £1
Price
Primark has strategically chosen a method to receive the best possible profits within the value level high street market. They’ve use a method called ‘Penetration Pricing’. This is when they set their prices lower the competing brands to produce more sales and penetrate the market. Primark has also decided not to jump onto e-commerce selling because if high volumes of clothes we’re being ordered, shipping costs would cut their profits dramatically. So, what they have decided to do is post pictures of their main items online for consumers to view and they can go into their nearest store to purchase them. (Economist, 2015)
Conversely, high end luxury brands such as Louis Vuitton use a pricing strategy that they not only believe their items are worth, but they also price them at a high price to encourage high end consumers to purchase them for social status or to make them feel better about themselves for owning expensive items. This is known as premium pricing or skim pricing. (Mbaskool, 2016)
Place
(ConceptDraw, 2015)
‘The online channel would allow Primark to widen its global reach, boosting both brand awareness and sales – far beyond its stores’ ability’
(Verdict. 2013)
Primark Product Journey
Inspiration
Trend forecasters and a research team find inspiration by looking at future trends and attending catwalks to come up with ideas as to what they could release into Primark stores.
Development & Planning
After ideas have been developed, the designs are put together into a pack and sent to a sampler where the items of clothing will be sampled and approved by a Primark Buyer.
Production
Once approved, the samples are then sent into production and are then tested for quality and manufacturing purposes.
Shipping & Delivery
Products are then shipped to stores across the world which can take up to 6 weeks so they need to ensure they ship in time for next season.
In-Store
Items are then displayed in Primark stores and key products will be displayed in the windows of the stores and would tend to be strategically placed for consumers to see and pick up.
Promotion
Primark understand that social media is a big influencer in todays society and what consumers want. So what they did was create an Instagram hashtag which is very popular today and it is called ‘Primania’. You can find it in the bio of Primark’s instagram account that has a following of 5.5 million. This is strengthened by WGSN’s Aria Hughes (2014) who states; ‘seeing real people or their friends using a product in a realistic or inspiring way is more potent than content from brands. On top of this, the brand also utilises Facebook, Twitter, Google Plus and Pinterest to gather attention and get people to talk about their latest fashion.
On top of this, Primark has a website that is only used for promotional purposes. For example, say a consumer saw a pair of jeans they really liked in Primark a few days before, they’re now able to go onto their website a check the price and details about the item. In 2005, Primark dealt with youtube videos of people confronting the brand about their unethical ways; this was following the Rana Plaza factory collapse and was voted the most unethical retailer of the year (Ethical consumer magazine, 2006). Primark now have a tab on their website where consumers can see their ethics by clicking on ‘Our Ethics’ tab to resolve any dispute people may have regarding this issue.
PESTEL Analysis
Political/ Legal
Primark has presence in 11 countries worldwide so it is crucial for them to keep an eye on political factors going on surrounding them countries such as foreign exchange rates which could take a toll on their overall profits. For example: In 2016, the UK decided to leave the EU, which resulted in the Pound to Euro currency rate to drop dramatically. So large companies like Primark had to undergo some changes so they don’t appear to weaken due to this issue (123writing, 2017).
After the collapse of the Rana Plaza Factory, it is now required of Primark and all other retailers to ensure there are sufficient funds to fix any safety deficiencies so all working conditions are ethical and safe. It has also now been introduced that companies now have to contribute 3% to their employees working mention which will be automatically added to all employees that are eligible.
Economical
As inflation rates in the UK keep rising, it is somewhat beneficial for Primark to raise their prices with them as it does not cost any more for their stock to be made in Asia. However, the cost of shipping to the UK may have gone up but with profit margins rising and Primark’s 2017 operating profits at £735 Million, this is no problem for then as long as their marketing strategy stays constant. Conversely, a large portion of Primark’s demographic are typically students and with the rate of unemployment going up and the price of student loans are rising, Students cannot afford to spend as much as they could before resulting in them choosing to save their money than spending it with the value brand (Mintel, 2013).
Social
Although Primark is very successful at the moment, is is predicted that its current typical demographic of 16-24 year olds is going to decrease by 6% in the next 5 years, which will decrease sales and potentially hold a threat (Miller.L, 2014). Although there will be opportunities/ threats arising from active greys (60+). But in order to appeal to this older consumer group, Primark will need to adjust their marketing mix and ensure clothing is of better quality. Looking at the brands current performance, it is evident they’re already seeing this as an opportunity.
According to Mintel Reports, 75% of women are more inclined to shop via e-commerce. However, their has been a rise in men following this method of shopping with ASOS being it’s leading source within men. As the years go by and with the brands rising profits, can we see Primark using e-commerce as a way of selling their products or will it completely destroy their Value level, high street front?
Technological
Technology today is rapidly changing and stores across the world are already using ‘Magic Mirrors’, VR headsets and digital mannequins. The guardian newspaper brought together a group of senior retailers, marketers and ad executives to discuss if these technological advances will really be a good thing for the future.
This next piece is taken from the Article The Guardian wrote on this topic:
“Participants were mostly positive that retail will change for the better over the next five years, but some were concerned about the scope for installing hi-tech gadgets for their own sake. “Technology is not your source of innovation,” said Runar Reistrup, chief executive of Depop, a marketplace mobile app for independent retailers. “Your source of innovation is the changing needs of customers. You need to innovate on value. Technology can help you find that value and scale it.” (The Guardian, 2015).
Retailers today seem to be gripping onto technology to outbid their competitors to make the shopping experience easier and more efficient for their customers and potentially make the shopping experience a lot more fun than it already is. There is still some doubt that technology will be good for the future and as Primark is still exceeding their competitors that use technology, it the price and quality of a product is more important to the customer than the customer experience with technology.
Environmental
It is vital all brands stay environmentally friendly as anything unethical or unsustainable can damage their reputation resulting in consumers not wanting to shop with them. After a rising rate of 47% of consumers saying they do care about how ethical and sustainable their clothes are, it is important Primark ensure they don’t get their reputation of being unethical again.
After the Rana Plaza catastrophe Primark set up a short-term and long-term strategy to aid workers within the factory and help build their brand on a more ethical platform: Unionisation/ right to collective bargaining for garment workers, Living wage/Asia floor wage and Compensation strategy for garment workers and families in the event that you are involved in an ‘incident’ such as Rana Plaza/spectrum/Tazreen (Siegle, 2013) In fact, Primark has a sustainable cotton programme that ensures that the farming of their cotton has changed to become more sustainable.
Services Marketing – (3 P’s)
Physical Evidence
This is the typical look of a Primark store. It is very messy and the environment is very rushed making it not a very calm place to shop in. Understandably, Primark consumers spend typically 1 hour searching through the mess of bundles to find their size or colour they want. However, they don’t want to be spending hours in Primark doing this. Employees are too focused on trying to keep the store as organised as possible, they struggle to find time to help their customers with questions they may have about where an item is. Unlike luxury high end stores such as Gucci in Harrods, London where everything is so neatly placed, as soon as someone walks through the doors, they’re able to help immediately – this is exactly what this demographic expects and wishes to receive. The overall look of a store is very important as it says a lot about a brand and typically helps a potential consumer to decide wether they want to send their time and money in that particular place.
Process
Primark follow a very old-fashioned process which involves queuing up until they’re ready to serve you. As Primark has a high volume of consumers in and out of the shop on a daily basis, customers do not want to be spending all of their time queuing up. This is where Primark lack technology, they do not have a online shop to make things easier for the consumer – they simply have to go to the shop. This way does benefit the store but it does not benefit their customers. Effective training given to employees should speed up the process and serving time at the tills to ensure people aren’t waiting too long. Although after personal experience, employees do not seem happy to be there, therefore the process is slower. As long as the employees are happy, customers are happy.
People
As previously mentioned, the key to keeping customers happy, is ensuring the employees are happy. Good working conditions create a great atmosphere to be in wether you’re working or not. After reading an article about a young girl who worked at a city centre store in Liverpool, it is evident the working conditions aren’t the best and she was not entirely happy to be working there. She often mentioned people were rude and expected you to be their personal assistant. There are however some similarities to the working environment to luxury stores. As soon as a celebrity were to walk into a high end luxury store, they expect the employees to act as personal assistants to help them find exactly what they want and need. Although I believe employees that work in high end fashion rather than value level high street brands would be treated with more respect as they are working for a high end company so their employers ensure they’re treated with as much respect as possible.
Conclusion
Having identified the Marketing Mix (4 P’s), the Marketing Environment and services marketing, I feel I have shown an understanding of both value and high end brands. Evaluating and comparing the differences between them has helped me further my knowledge into different types of marketing and why it is such a great influencer in the overall progress of companies all across the globe.