Primark is a subsidiary company of the ABF (Associated British Foods) Group. The company launched in 1969 in Ireland trading as Penny’s. By 2000, there were over 100 Primark stores across Britain and Ireland. By 2012 Primark had 238 branches across the UK, Ireland and Europe. In June 1969, the first Penneys store opened in Mary Street, Dublin. Within a year, four more stores were added – all in the Greater Dublin area. In 1971, the first large store outside Dublin was opened in Cork and by the end of that year there were 11 more stores in Ireland and one in Northern Ireland. By 1973, the number of stores had reached 18 in Ireland and Primark began trading in Great Britain with four out-of-town stores.
The following year saw the opening of the first UK High Street stores in Derby and Bristol. In the next ten years, 18 stores were added in the UK and nine in Ireland, bringing the number of stores in the UK and Ireland to 22 each. Also in 1984, the first multiple acquisition took place with the purchase in Ireland of five Woolworth stores. From 1984 to 1994 a further 13 stores were added in the UK and 12 in Ireland, bringing the total to 66 stores – 32 in the UK and 34 in Ireland. A major flagship store was purchased in 1992 – a 50,000 sq. ft. unit in O’Connell Street, Dublin, as BHS exited Ireland.
In 2011, Primark further expanded with store openings in the UK, Spain, The Netherlands, Portugal, and Germany. New stores include Edinburgh and Stratford City (UK); La Coruña and Malaga (Spain); Zaandam (The Netherlands); Braga and Portimao (Portugal) and Dortmund, Essen, Hannover and Saarbrucken(Germany).
According to Primark Handbook, (2006/2007), Primark is clothing retailer, which was founded by Arthur Ryan in Dublin, Republic of Ireland in June 1969, today Paul marchant is the CEO of Primark. Primark operates as Pennys in Ireland and it currently has 38 stores in the Republic of Ireland. Additional success in Ireland dictated the move to the United Kingdom; in 1971 it opened a big store in Belfast City Centre followed by four stores which were opened in Derby and Bristol. Today Primark has 223 stores operating in Ireland, UK, Spain, Germany, Portugal, Netherlands and Belgium.
Primark SWOT analysis
• The company has over 161 stores.
• Primark offers job opportunities and employs over 27,000 people. • It offers high street quality clothes for cheap prices and quality services to attract its customers.
• The company is part of the ETI (Ethical Trading Initiative) which focuses on worker’s rights, their production of goods and bringing businesses together to work on labour rights issues.
• Although Primark is a member of the ETI (Ethical Trading Initiative) there have been numerous negative reports concerning its business operations in the way they produce their goods. A study was shown to have found Primark used child labour to produce their goods. • Other issues were with poor working conditions and disvaluing workers rights.
• Primark does not advertise and this gives their competitors the advantage over them.
• With its already expanding ventures such as opening 47 new stores in the UK, Primark has now opened 7 new stores in Spain to battle along its competition like Zara.
• Primark’s threats are the competition with other companies such as Zara and H&M. • Problems in the area of advertising as they do not have any advertising whilst their competitors do.
Like any other business, Primark is also facing tough competition from George at ASDA, Tesco, Marks & Spencer, TK Max, Costco, Next, Zara, New Look, Peacock and Matalan. Analysis for each major competitor determines that Primark has better business strength and high market share. It has good financial strengths and high profitability but relatively poor quality of management and low standards of technology position. In relation to competition, several external forces and environmental changes are faced by Primark that need to be considered to formulate its marketing strategy.
Currently, Primark is facing high competition with quality competitors like Peacock, Matalan etc. They are offering cheap products as well and growing at tremendous speed, threatening position of Primark. Most of Primark customers are switching to rivals because of their quality products and good marketing strategies which Primark lacks. Marks and Spencer, the biggest rival of Primark has very extensive marketing strategies with strong brand portfolio.
They do advertisement on almost every media available; while Primark do not use even single media for advertisement On other hand Primark is not spending much on marketing, advertisement or promotional activities which is a big setback in their management. From competitors analysis it is clear that even though there are potential threats and certain weaknesses for Primark, but strengths and opportunities can outperform weaknesses and
threats. Competitive rivalry can be effectively overcome through deployment of cross-selling, pricing and co-branding and marketing strategies.
Brand portfolio usually refers to company’s set of brands and/or products. The logic behind having a portfolio of brands rather than a single brand is possible diversification and risk minimization. Hence brand portfolio is a treasure trove. Next step is to determine our brands objectives, Primark’s branding objectives include: Delivers message clearly
First step in developing brand strategy is defining brands. By defining brand, it’s easy to create foundation for all other components to build on. Brand definition serves as measuring stick in evaluating marketing strategies. Primark has an extensive brand portfolio;
Target market for Primark is people up to age of 35 who are fashion conscious. Next step in developing Primark’s brand strategy is to perform a careful analysis to determine principal barriers that it may face. These barriers are also known as market conditions that can keep your product or service from achieving success. The potential barriers in deploying Primark’s brand strategy can competition, timing, financing, location, lack of demand, suppliers not meeting demands and targets. In order to face these obstacles it’s important to spend time doing a careful analysis of products or service to assist in developing brand, and positioning products in the market.
Last step in brand strategy is branding company’s identity in marketplace where image is all about appearance of packaging. It’s important to realize that packaging always either has a negative or positive influence on purchaser. A negative impression can detour a potential customer, just asm a positive reaction can influence a customer to buy. A time to pay special attention to packaging is when going to launch a new brand. If you’ve already built a strong brand that others recognize often people may not pay as close attention to packaging. Packaging is judged and represented by business cards and stationery, web site, answering system, presentation of finished products.
Primark is respected for quality of its products and cheap prices. If we briefly review business environment and other factors identified in this report for Primark then we may realize that consumer behaviour is changing and business environment evolving across retail industry. Concern is rise in supplier’s demands regarding price and costs. If it continues to rise steeply it will damage profits that it is currently enjoying. Reviewing forces and factors faced by Primark and their impact on organisation, it is obvious that Primark is facing many challenges and standing at verge of it survival in long term.
At first stage of segmentation, overall market is divided into distinct groups of buyers who are likely to respond favourably to different products, services or marketing mix. Company needs to determine most appropriate basis for segmentation, identify characteristics for each segment and develop criteria to evaluate their commercial attractiveness and viability.
As Primark is tagged a value clothing retailer, clothing is most important and leading item in its product portfolio follower by footwear. Its marketing segments are evaluated on basis of clothing and footwear. Although all above determined segmentations bases and variables are important but demographic factors are the most straight forward base for segmenting Primark’s consumer market, as they are most meaningful. Main demographic variables for Primark consumer market are identified as in charts below. All demographic factors are identified according to their percentage relative attractiveness for targeting them depending upon their market share for Primark. highlighted segments in diagrams are identified as most meaningful for Primark and they must be targeted to gain marketing objectives.
The PEST analysis stands for political, social, economical and technological analysis that provides a framework for external environment factors influencing the organization’s strategies. Political
The Liberal democratic party and the coalition of conservative party under the leadership of David Cameron came into power in 2010 In order to stay market eliminating recession several steps has undertaken by the government that included massive job cuts in public sectors and cuts in funds to different parts of economy. European Union as a par is trying to discuss about free trade agreement with India. Several policies like increase in tuition fees o f students and proposals to cut down the immigration of students from non Europe countries will impact the consumption pattern of young customers segment. Now days economies of both India and China are in good position and had less affected with the recession.
It is said that UK suffered its most terrible recession in 2009 in over 60 years. It is estimated that expenditure of consumer is decrease by 4.4 percent in 2009. Increasing the prices of fuel and food are compressing the disposable income of people. The unemployment especially of youth employment of age from 18 to 24 years old has risen about 17.2 percent is 2009 compared to 12.5 percent in the same period of 2008. Exporters gained a competitive edge as a result of devaluation of UK sterling in 2008-2009. In time July 2008 and January the pound loss 32 percent of its value against theUS dollar and 19 percent of its own value against the Euro. Regarding the export o f goods the economy of UK is least dependent amongst others in Europe indicating that they are less vulnerable to the risk of shocks from decreasing international demands.
UK contains people of various mixtures of cultures, races ethnics and religions and groups Among the most popular countries for immigration UK is considered a suitable one. From the statistics it has been found that about 1.5 million people were added to the UK population between 1998 and 2008 and most of the people about two third are from Asia and Africa. People’s attitudes are now changing and they like to prefer cheaper clothing as their income sources are decreasing. Recession has caused decreasing the expenses of adults particularly the case is true for expenditures in clothing.
With the intensive use of increasing internet retailing methods are getting more popular and people are becoming more dependent on online shopping instead of shopping going to the outlet. Marketing online for fashion is really dynamic and now a day’s companies are setting up online shops for eg, Tesco (clothingattesco.com), Asda (George). There are various options available through which Payments can be made that may include: online banking, direct debit cards, credit cards, paypal etc. In case of distant location the company focuses on the proper management and services of IT systems that are secured.
Ansoff `s Matrix
The Ansoff Matrix is a tool that helps business decide their product and market growth strategy. Ansoff Matrix suggest that a business ` attempts to grow depend on whether it markets new or existing products in new or existing markets.
The output of Ansoff tools are Market Penetration and Market Development in existing products and Product development and Diversification in new products but Market Development and Diversification is New Market, market penetration and product development is existing market. Market penetration occurs when a company penetrates a market with it`s current products. It is important to note that the market penetration strategy begins with the existing customers of the organization . This strategy is used by companies in order to increase sales without drifting from the original product-market strategy (Ansoff, 1957) . Primark give cheaper things to customer so it gaining competitor`s customers.