ASSIGNMENT ONE

Exploration as to why the French Retailer Pimkie should be internationalised into the UK market.

INTERNATIONAL MARKETING STRATEGY - Assignment 01WORD COUNT: 2303

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BUSMK – International Marketing StrategyUser I.D - 618667

ContentsIntroduction.......................................................3Justification......................................................3The Nine Strategic Windows.........................................5EPRG Framework.....................................................5Value Chain........................................................6Uppsala............................................................7Porters Diamond....................................................8BERI Index.........................................................9Conclusion........................................................10Bibliography......................................................11

Figure 1: The nine strategic windows...............................5Figure 2: Rise in Pimkies Sales through Primary research (Statista Dossier, 2013).....................................................6Figure 3: Uppsala Model, Forsgren and Johanson (1975)..............7Figure 4: Porters Diamond..........................................8Figure 5: Top 10 Traders and Export (Gov.uk, 2012).................9Figure 1: Pimkie Performance Trend (Fashionbi, 2014)..............10


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Introduction

International marketing focuses on increasing a company’s products and services globally by examining why they would fitinto a new market; preparing them for any adaptation that may need to be made to suit the positioning. (Gherasim & Gherasim,2014)

Careful exploration will be carried out throughout this report, providing evidence to support why the reputable Frenchretail brand Pimkie, is suitable for further internationalisation in the UK, following research of where tobegin and the potential opportunities that could arise from the outcome.

Pimkie offers casual clothing for young women in the 15-25 agedemographic with over 690 shops in 28 countries (FashionSeek, 2014). Since its creation in 1971, the brand has had a drive for fashion and focused faithfully on consumer needs. (Pimkie,2014) Evidence will be provided throughout this report to support why the expansion of the brand entering the UK will beboth tactical and profitable as well as a justification to whyBritain was the chosen location for expansion. (Chetty and Campbell-Hunt 2004)


“The key notion behind marketing capabilities is a firm's ability to learn about its market environment and use this knowledge to guide its actions toward external market changes efficiently and rapidly” (Zhou, et al., 2012)

The above statement establishes and highlights how market researchers need to identify global customers with a self-referential mind set, in order to attain opportunities and avoid poor choices that could damage the current reputation ofthe brand. With Pimkie entering an English market for the first time, cultural research will be attained as provision tosupport why the move is realistic. (Gherasim & Gherasim, 2014)

Justification

Improvement and expenditure in the fashion market is driven by an increasing demand from consumers, particularly the younger demographic aged between 13 to 24 years, subsequent to the age range targeted by Pimkie. With fashion significantly accounting for the majority of young consumers spending; research suggests that the market will show an obvious UK sale growth within the next 5 years as being an ideal time for a new market entrant.(Keynote, 2014)

Statistics showing the UK publics favourable shopping locations ranked from 1-100, placed many northern cities within the top 20as dependable shopping scenes. This justifies that trail market choice for Pimkie being in Liverpool, the in North West of England, ranked at 13 in the most popular places to shop table.(RetailWeek, 2015) The cities student demographic is strong with70,000 accounting as major market fundamentals. 20,600 of these components alone being aged 20; the medium demographic of for Pimkie. (Principal International, 2012)

British products are presently being seen as relatively cheap in comparison to French and American competitors holding a confident indication that French products are perceived as luxurious and exclusive in comparison. France are major competitors representing a large sector of the European outerwear sector currently. (Faulkner, 2011) It is uncommon BUSMK – International Marketing StrategyUser I.D - 618667

for French brands to be heavily advertised, indicating the trust their target consumers already have towards their quality. Expanding into the UK is practical the essence of attracting consumers without heavy marketing, ideal for a below the line company like Pimkie. (Niffenegger, et al., 2007)

Clothes shopping is a major factor to the disposal of consumers income and with France being renowned for its fashion, particularly Paris the fashion capital of the Western world fromthe seventeenth century to the twenty-first century, their cultural class increases their products desirability and likelihood of selling. (Steele & S. Major, 2014) Current French labels placed on the high-street, such as Kookai, The Kookles & Maje are identified as overpriced in comparison with other popular high street options like the UK choice, Topshop or the popular EU Spanish shop, Zara. (The Guardian, 2013) With a hugestudent scene in Liverpool, there is a high demand for affordable clothes and Pimkie pursues to be both that and of a high quality also, differentiating itself away from other Frenchcompetitors situated in the UK. (TheGuardian, 2014)

The market size for value of sales in outerwear in the UK is 54%, slightly ahead of France sitting at 51.3%. The importanceof garments for women in contrast to the importance of men’s and children’s wear is apparent, prior to these statistics. With these figures not too dissimilar for all major European companies, all ranging between 51-57%, there is an obvious pattern in the market opportunity for women’s outerwear in theWest. (Van Der Pols, 2012)

Employment in the North West of the UK is increasing with approximately 97,000 individuals currently employed. (Gov.uk, 2014) In cognition to the UK’s economy improvement, now is an ideal time to test the water with a new brand entry to lay ground work for further investment. From addressing the world’s economy it is shown that the UK and France are both placed as well developed countries, which subsequent for a large portion of new emerging markets achieving high growth rates year after year. (Gherasim & Gherasim, 2014) In terms of scalewith the UK population currently sitting at 64.01 million and BUSMK – International Marketing StrategyUser I.D - 618667

Frances at 66.03 – establishment of the market will not be unreasonably intimidating when later exploring new markets.(Officefornationalstatistics, 2014) In terms of business labour and financial freedom, the UK is ranked ‘mostly free’ sitting at number 5 in Europe’s Regional Rankings with France at 33 out of 43 being ‘moderately free’. (The Heritage Foundation, 2014)

The Nine Strategic Windows

Figure 1: The nine strategic windows

(Solberg, 1997)


Following Pimkies extortionate growth since 1971, the company originally situated in the North of France in Lille has developed dramatically with its expansion of 690 shops over 28countries, with offices in Germany, Spain and Italy. (Pimkie, 2014) In conjunction to ‘The nine strategic windows’ model, Pimkie would be placed as a mature market that is potentially global and preparing for full globalisation. The reason being that the company has sought huge growth across Europe, however has not yet internationalisated passed these borders, as well as the company resisting taking itself to undeveloped countries. Trailing Pimkie in the UK would provide opportunity for the company to practice to internationalise further; with fashion and culture in locations such as America and Australia believed to be similar to those of the UK. (Fernie, et al., 1992) Pimkie is a proactive brand willing to exceed its performance globally. Providing the evidence given, the opportunities it has along with advantages in regards to competitors; there is an entry in the market for a young innovative French niche company such as Pimkie. Prior to further expansion, the mature market has the potential to be globally positioned ready to compete against mass market competitors.

EPRG Framework

Adaptations will be necessary for Pimkie when entering differentmarkets. For the brand to enter the UK, the language dissimilarity and currency control would need to be adapted to the local market, making the company ‘Glocal’. Undergoing a geocentric approach will benefit Pimkie providing the company with good practice for going global, understanding the implementations of other countries with different taste, preferences and marketing standards. As a transnational corporation, this approach suits the market. Tourists who have shopped at Pimkie when abroad, will be familiar with the brand appearance and as the market alternates globally it will be easier for people to adapt, as well as an increase in demand fornew product placement. (Drachal, 2014)


Value ChainPimkies international move excels in two of the four aspects of the Value Chain. These being the beginning the process of the Research and Development and later, the execution of the Sales and Service. Research must be carefully explored with regards to how best to approach the UK target consumers, and with the North of France’s seasons/climate, culture and fashion being similar to that of the UK, the market already has an international advantage in what approach to take to aidits product placement. As an already competent player in the retail industry, Pimkie has the overhead of being an already established brand knowing which products are most successful in their range. Managing risks early is vital so they can be acted upon, for example, Pimkies supplies a large ‘basics’ section within its store with major low priced companies such as major price competitors, Primark, Forever 21 and H&M also providing these assets in UK stores. Pimkie is located in France (EU), so you do not need to pay custom duties or Value Added Tax (VAT) so pricing in this respect will also need alteration. When entering the British market, research against major competitors and adjustment of certain pricing strategies will be carried out to avoid the contradiction of being a fairly priced brand. The UK economy is surprisingly robust presently, but consumers are still as committed to a cheap price tag as ever before; Pimkies significant key to entry. (BBCNEWS, 2014)

Sales and service could be addressed as an issue when public relations are trying to decentralise information to new spokespeople and sale assistants in the teaching of Pimkies history and future prospects. Information is impaired when passed between countries and the reliability and validity is damaged. The sales and service procedure itself is a minor problem for Pimkie as the sale persona’s expectations are thatof a UK representative, to reflect image quality with a high level of professionalism. (ActiveAge, 2012)

There is opportunity for Pimkie to gather


and synthesize in the workplace, and provide innovative new glocal ideas. As done in Paris and Milan. (See figure 2) Smaller businesses have increasing opportunity and practice inthe workplace would prove effective for the company when establishing the British market. (Statista Dossier, 2013)

U ppsala

Following the Forsgren and Johanson (1977) Uppsala Model approach, fundamentally a good model to be used when exploringBUSMK – International Marketing StrategyUser I.D - 618667

Figure 2: Rise in Pimkies Sales through Primary research (Statista Dossier, 2013)

Figure 3: Uppsala Model, Forsgren and Johanson (1975)

incrementing internationalism in retail, Pimkie will be trailed in Liverpool to begin with, and in addition to the experience, its potential success will be generated further across the country. The approach is known for being time consuming but the business opportunities provided drives the process to be carried out slowly and controlled with a linear in fashion approach. (Copignatti, 2009) The physical distance between France and the UK is small with the countries being similar in regards to culture, economy and scale. France is the closest EU country to the UK with only 421.9 miles betweenthem. (GoMapper, 2015) This would place the move in ‘Market B’on the Uppsala model. The insignificant distance is ideal for maintaining the same manufactures as the rest of Pimkies Europeans shops the main importers warehouse being in Bulgaria. (Pimkie, 2014) Following this model it is distinct that Pimkie has enough global customer and positioning potential to expand as well as the advantage of being a new entry before similar cultural competitors who could also expand. Entering the new market slowly will increase chances of the correlation between the market knowledge and commitmentdecisions. With the home market being strong, increased knowledge will drive for increased growth and with so much potential in the English region, capital investment would be worthwhile for Pimkie and practise for investment in countrieswith smaller physic distance.

Entering Pimkie into the UK market will benefit both the demanding customers and the profit of the company also. Not only is the expansion practical, but realistic too in regards to the market complying with the Blue Ocean strategy. The French low priced market is unserved and there is a real gateway for the company. Competition will still be a factor within the internationalisation – as would be the case with any retail expansion. (Brooks, 2013)


Porters Diamond

Factor conditions – With 5 purchasing offices in Morocco, Tunisia, Turkey, in Shanghai and Hong Kong, A turnover of € 563 million, 47 million items sold in 2013 and offerings of over 280 varied types of jobs, Pimkies labour has the infrastructure to innovate further. (Pimkie, 2014) Labour markets in the UK are generally recognised as being more flexible than in other major European economies (Pimkie, 2014)

Demand conditions – With fashion becoming increasingly diversethere is a cultural demand for new innovative markets. (Keynote, 2014) The French fashion title is venerated by consumers over other major EU countries such as Germany, Spainand Italy, with more consumers getting involved in the hype and increasing pressure for outcome. (Pimkie, 2014)

Related and Supporting Industries – Competition in Pimkies firstlocation, Lille, pioneered the company to strategise how to compete in a competitive industry, surrounded by brands such as Auchan, Leroy Merlin and Boulanger. These coping mechanisms support thebrand and provide evidence that expansion in new, unestablished markets is worth the risk. Competition provides structure when alternating ones product, price and purpose which has developed incredibly since 1971. (Zentes, et al., 2011)


Figure 4: Porters Diamond

Strategy structure and rivalry – Key large country competitorshave a higher proportion of goods in their total exports. France and the UK are very resilient in this respect creating competitive structure, enhancing professionalism, innovation and development. (Gov.uk, 2012)

BERI Index Australia America UK

Political Stability (4)

4 3 3

Infrastructure (4)

3 4 4

Financial Attractiveness (7)

2 4 3

Market Maturity (5)

2 4 4


Figure 5: Top 10 Traders and Export (Gov.uk, 2012)

Lifestyle (5) 3 3 4

Overall: 67 Overall: 91 Overall: 89

The Beri chart is effective to analysis and assess which English market the EU store Pimkie should first be tested in. Weighing important factors with Final Attractiveness placed asthe core competence as the company is used to addressing developed countries a turnover of € 563 million.

Pimkies Performance Trend has seen a decline over 2014 in sales, so exporting the brand into new markets would provide opportunity and word of mouth. (Fashionbi, 2014) America and the UK were particularly strong competitors in both the financial aspect of the judgement and the lifestyle similaritythat Pimkie would compel to. The financial performance on the international GDP performance scales did place America at a higher point throughout. However, it is to be taken into BUSMK – International Marketing StrategyUser I.D - 618667

Figure 6: Pimkie Performance Trend (Fashionbi, 2014)

context that it is much large than the UK with a vast population. (Knoema, 2014) There are also the geographical andphysiological distance circumstances to be considered between the two countries. American. Labour costs would need to be further developed entering the US as well as a wide variety ofchoice deciding where to locate. Pimkie has the opportunity toenter an English market in the EU instead of throwing itself into a red ocean market for the first time. Being conscious ofthe marketing strategies needed for foreign development is vital when increasing enterprise connections. (Douglas & Craig, 1989) Regarding the expansion to the UK proved successful, this diagram again would be highly effective when weighing out which UK/US areas are best to invest in next.(EconomyPoint, 2011)

ConclusionA well developed and positivity perceived brand like Pimkie must learn about its market environment and use this knowledgeto guide its actions towards external market changes efficiently and rapidly in the vast and demanding fashion industry. (Zhou, et al., 2012) With cost and culture on the brands side, it is recommended that further improvement regarding innovation would have the potential to globally internalisation Pimkie against its more successful competitors, like Zara and Topshop. (The Guardian, 2013)

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