Primark: Company Analysis

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Primark: Company Analysis

Executive summary

Primark is one of the largest retail outlets in Ireland. With approximately over 187 stores it also has branches in United Kingdom, Spain and Holland. The company employs more than 27,000 people. it has the largest market share in Ireland and United Kingdom in the growth retail sector. It sells high value clothes targeting middle and upper class income earners. Being a subsidiary of a British food company that operates in more than 45 countries Primark has a good chance of expanding to very many places. The companys main objectives include;

  • Provision of highly competitive prices through the use of technology, efficient distribution and due to supply and volume buying from suppliers.
  • It also targets the right market and focuses on the market with the right products.
  • It also offers the main stream market with quality products which can be found in the high streets of the cities.
  • They strive to have superior outfit for all their customers.

Mission statement and business overview

The companys mission statement is to provide services that satisfied the customers needs through the use of modern technology and this mission statement has ensured that the company uses the right distribution channels and models in conducting their business to reduce negative impact on their future performance(Easy M., 2002)

Market summary

Retail shop has many competitors which affect the demographic market needs, trends and growth.

Market demographics

The main target for the retail consists of all people regardless of their age, education, gender, and levels of income. They target people with extra disposable income who have high regard for fashion and best products. They also have outdoor activities which makes them a success in the market. The company has managed to blend the market from the ages of 5 to the ages of 80 because their products cut across. The market armed with annual earnings of between £ 45, 0000 to £100,000. They can afford to do shopping in the high streets. To be able to serve this market with enjoyment is one of the challenges that have faced Primark over the years. in order to be able to serve this market well market segmenting has been made possible by the company(Easy M., 2002).

Most of the population of the countries under which this company operates have disposable income as compared to other parts of the world. The company has taken this population and grouped them into different groups for the purpose of distributing. The market has been segmented into the following demographics that are easily measurable (Kraft Manfred and Mantrala Murali K ,2006).

Celebrities: celebrities is one of the main segment for the retail shop this group is fashion conscious and once the patronize the business many people will do the same because they act as role models in the country. This group forms a small part of the target market although it is the best segment because of the influence they will have on the population, they are people of the ages between 18 to 50. They range from well known footballers, actors, musicians and other artists. They like buying luxury clothes most of them designer clothes. They use these products for a few times before doing away with them (Easy M., 2002).

Budget conscious: this is the majority of the population and they range from the age of 20 to 50, they earn between 50k to 100k P.A. This segment mostly has families therefore they provide all the basic needs of the family thus being budget conscious. However, some in the group may have extra disposable income and will go for fancy and luxury clothes which they use for a short while. This segment has made the company sustain its profitability because of their loyalty. They are the long term clients and they continue patronizing the company products for a long time(Easy M., 2002).

Young generation: this is the main target for this company especially people under the age of 35 because this people they do not have many commitments and they are fashion conscious majority of whom are women. Men and children only contribute to 25% of the revenue of the company. they also in the same category have sportsmen who contribute some percentage to the revenue through the high quality products they offer and the promise of the service, that is above the competitors the company has managed to grow up faster(Easy M., 2002).

Market needs

The market under which the company is operating has various needs for the products that they market. There is a gap in the market that needs to be filled by aggressive marketing especially lower class and upper class. The needs of the market are changing regularly though not drastic of late and the market has responded very well to this changes by providing assorted products to the markets (Doyle, P and Stem, P 2006). The need for highly competitive products with quick service through the use of technology has made the company to be on their toes in analyzing and distributing the products accordingly. Currently, customers patronize businesses which comply with corporate social responsibility and primary has not been left behind since they have complied with this requirement (Kraft Manfred and Mantrala Murali K., 2006).

Market trends

In the recent past, the market trend has changed and a need for products that takes into consideration, the price, quality and service of a company. Customers are patronizing businesses that consider these qualities. Most customers wish to patronize businesses that have assorted products under one roof and this has made Primark; differentiate their products by having various diversified products under the same roof. They have responded this challenge by coming up with distribution centres which have a large capacity such as Leicestershire and Naas where a number of products are available in the market. For them to move forward and serve the market better they need to venture into other products such as personal finance and convenience clinics in their stores (Kraft Manfred and Mantrala Murali K ,2006).

Market growth

The market is growing at the same time there is easy entry and exit of companies into this market. The growth of this market although hampered by various factors such as economic crisis that has engulfed the whole world. The company commands 187 outlets in a country with revenue of 233 million pounds. It is the second largest fashion business in the Great Britain because they offer high quality fashion products which in their own words give young generation a value for their money. Armed with the motto of Look Good, Pay less they have managed to grow in the market (Easy M., 2002).

Pest analysis

Pest analysis involves analyzing the political, economic, social and technological factors that affects the business. This helps the company to indentify opportunities and threats represented by the market.

Political:- This company operates in countries with stable political environment unlike Third world countries such as Madagascar and Zimbabwe. The company has updated themselves on the rules and regulations relating to taxation, competition regulation, registration regulation and other rules affecting the business (Easy M., 2002).

Economic:-The current financial crisis has also had an impact on the performance of the company in terms of profitability because being a multinational the company is being affected by interests and exchange rates as they affect the consumer. The consumer is currently cautioning themselves against possible economic crush therefore high profile fashions are being given a back sit in family budget (Doyle, P and Stem, P., 2006).

Social:-The changing lifestyles that are taking in the world today are affecting advertising and marketing products. The internet is playing an important role in shaping up marketing of products. The company has impressed the social changes in order to keep in touch the customers (Kraft Manfred and Mantrala Murali K ,2006).

Technology:- The company has stated up with technology by coming up with modern technological marketing tools that has ensured that there is make growth in the business. They have embraced the use of credit cards my customers in order to make the company have loyal customers. They have also brought in internet as a way of assessing their products. Their stock is maintained online and all the branches are connected with internet and this has made management easier(Easy M., 2002).

SWOT analysis

Strengths:-The Company being the largest in Ireland, and well diversified to other markets they have managed to create customer confidence especially in the streets. The company has increased market share acquisitions and alliances with various stakeholders to the Company. They have a variety of products that they promote under one roof this becomes strength as customers under one roof get various products. They have a high profitability due to high profitability margins and less risk. Lastly the company has highly experienced management and staff who are willing to put extra effort for them to succeed (Kraft Manfred and Mantrala Murali K., 2006).

Weaknesses:  The Company has seen their return on capital employed and revenue declined due to financial crisis. They will also find it difficult to enter into foreign markets due to barriers in those markets or because the parent company is operating in those countries. They also operate in highly operating companies and with companies with huge financial outlay in the same market. The company has raised money from its banks rather than shareholders (Easy M., 2002).

Opportunities:  The Company has been increasing their market share through strategic positioning of outlay. They have also been monitoring the changing lifestyles of people in the market. The company has incorporated new technologies in order to stay ahead and combat competition which arises from the market. They have entered international markets such as Holland, Spain; they should also enter into markets such as china, India and Africa (Easy M., 2002).

Threats:-The main threats for the company are the current economic crisis which has made competition very difficult because it is hard to borrow the money. There are a number of rules and regulations affecting the number of goods and regulations wallet (Easy M., 2002).

Competition

There are various competitors for this company among them supermarkets such as TESCO, Marks and Spencer and other fashion companies. Competition is very stiff for the company and the company should focus on the weaknesses and threats and try to minimize them and try to remain competitive in the market (Kraft Manfred and Mantrala Murali K., 2006).

Product offering

The company offers clothing and other fashion related products to the target market. This makes the company to be in a sector. They have control over the products they sell as they planned the products as well as they decide what should be offered to the outlets. They have differentiated their product and this has enhanced their growth and making them a great competitor in the market. They have a strong stock management theme which manages stock for the success of the company Kraft Manfred and Mantrala Murali K., 2006).

Key to success

The key success factor for the company has been its reputation because people prefer the brand name. Another success factor has been diversification and product diversification that the company has. They have a good customer service which targets all age groups without discrimination. They have also brought in new ideas to the market that has made them to be beyond the market (Easy M., 2002).

Key strategic issues

The company being in a highly competitive environment they have outperformed their rivals by diversifying their products as well reducing the costs by outsourcing some of their services, investing in new technologies and bringing in new key stars marketers (Kraft Manfred and Mantrala Murali K. ,2006).

Financial objectives

The company financial objectives have been to maintain high price ratio and keep revenue growing at a considering rate although this objective has been hampered by the current financial crisis and increasing competition. From the companys financial statements it can be noted that we have been growing at a reasonable rate(Easy M., 2002).

Societal objectives

Social objectives have been to remain socially responsible in our dealings to ensure we command respect in our society. The company has participated in environmental clean up and has joined among the few with an objective of packing the customers shopping with packing material that is re-usable (Easy M., 2002).

Strategy Pyramid

Primark has been outperforming its rivals and their strategic position is well stabilized. Their debts level has started to fall and their revenue and profits are going up. The key reasons for success is that they are focusing on their weaknesses and threats and trying to minimize them however threats related to economy and competition still remains major factor in Primark. Therefore it is continuing to offers products and services to consumer at competitive prices and also focusing on new customer through MasterCard customer to gain market share. Horizontal integration between department and mangers such as moving experts to its under performing operations to turn it in to profitable business unit.

Primark strong brand reduces the barriers of entry and helps them to enter foreign markets to achieve organizations international strategic objectives. They are diversifying its range of products to meet the consumers need across the target market using their key success factors (Easy M, 2002).

References

Chisnail P (2001) marketing research 6th ed. London McGraw Hill

Doyle, P and Stem, P (2006) marketing management & strategy, 4th ed England prentice

Easy M (2002) Fashion marketing 2nd edition, London Blackwell publishing.

Kraft Manfred and Mantrala Murali K (2006) Retailing in the 21st century current and future trends, Springer publication, 2006, XI, 413 p. 79

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