Introduction
The success of any organisation solemnly depends on how effective or ineffective their strategic marketing is. Strategic marketing can be defined as the analysis, actions and decisions made by an organisation aimed at creating and sustaining itself an acquire competitive advantage. An organisations strategic marketing encompasses the company visons, missions and strategic objectives. In addition, the environment in which an organization operates- the internal and external environment is crucial for an organization’s strategic management. Often strategic management asks questions that answer questions depending on the analysis done and depending on the decisions needed in terms of which industries to compete in and how they should maintain their competition levels from immediate competitors. The company, together with the management leaders should allocate resources that include finances, time and labour while developing an effective strategy. The development of an effective strategy will create room for the implementation of effective strategies and has been identified as an ongoing, evolving process by strategic managers. Advancement in technology has attracted investors and customers to diversify their businesses and organizations into international markets. Working with consultancy firms essential for companies that wish t branch into unknown global markets and conduct primary research before entry. The Ashanti Marketing Solutions (AMS) Limited is a marketing consultancy firm based in Europe. Gregg remains to be the finest bakers in Europe and recently wishes to diverse into Romania. This paper is a strategic marketing report of Greggs Inc. that aims to evaluate their sustainable market capabilities through the use of business marketing tools that include PESTLE and Porters Five Forces analysis. Also effective recommendations that can improve the organisations competitive advantage in Romania.
Company Background
Gregg’s inception occurred in the 1930s where the Company focused on delivering eggs and years on a bike to families in New Castle upon Tyne. Jon Gregg, the company founder, opened a small bakery shop in New Castle on Gosforth high street in 1951, following positive feedback from his immediate customers. Through this single shop, Jon Gregg’s popularity grew from baking high quality bread from finely milled wheat which gave his products a distinctive sense of taste and texture. The Company’s expansion began in 1984 after John Gregg’s death, and Ian Gregg took over the business. The Company expanded to up to 5 shops within the nearby regions. Ian oversaw the Company through to the 21st century (Greggs, 2021). In the 1970s, Ian further expanded the business beyond northern England, and by 1974, Gregg had acquired properties across different regions (About Gregg, 2012). The management switch hands in 1984 with Mike Darington as the managing director. Mike shared the company mission and visions and further expanded the business by opening 260 within two decades. Gregg was listed on the stock exchange and has continued to depict immense expansion in the midlands. And in North London (Greggs, 2021). Today the Company has over 1600 stores globally and aims at launching 600 more stores within the next few years. Notably, the Company achieved revenues of 734.5 million in 2012 (Greggs, 2021). The Company’s operating profit also increased to 51.8 million in 2012. The Company has tried to enter into new foreign markets such as Belgium, which closed down following their considerable concentrations in the UK market. Recently, the Company seeks to enter Romania, and this report will provide a strategic external analysis using Porter Five Analysis and the Pestle analysis business tools.
Objectives of the Report
This report aims at understanding the external and internal factors that go into launching a business in a foreign country. It also explores the various decision that is of primary concern that the business should consider before making this decision. A marketing segmentation research will be conducted to determine the appropriate marketing mix for Gregg’s entry into Romania.
Entry into new markets
Over the past years, Gregg has tried severally to entrant foreign markets. Some of these entrants have proven successful, while others have been deemed disappointing. The first time Gregg expanded into international markets was when they opened a market in Belgium. However, the stores were closed down following high competition levels and lack of a strategic management strategy. Gregg aims to look back at their failures and venture into a new market, Romania, Europe. Greggs Inc. There are various reasons why a company chooses to branch into other markets locally and internationally, thereby increasing their increasing company growth, increasing their customer base, reducing labor costs, and gaining a competitive advantage are some of the key concerns. According to Greggs Chief Executive Ken McMeikan, “Over the past two years particularly, I’ve been travelling to different parts of the world and trying to look at the countries where I believe there is demand from a customer base in terms of their tastes, and also maybe where there is a competitive opportunity for us to go into those countries.”. Therefore, depending on the market, these factors should be of primary concern before the Company decides to venture into European markets by conducting business analysis tools to determine whether or not Greggs can venture into the country.
Business analysis
Pestle analysis
Organizations need to identify external factors within which the Company operates because it provides and forms a context in which events such as procurement, production, and marketing are based. According to Al-Turki, (2011), a pestle analysis evaluates a companys impact over a range of six external factors which include the Political, Economic, Social, Technological, Environmental, and Legal Issues. However, it is unfortunate that organisations have no control over these factors, yet it affects a business’s operations. The pestle analysis is a fundamental requirement during marketing and entry into the foreign market because it exposes the opportunities that the company might take advantage of as well as identify possible threats that the company needs to be on the lookout. Moreover, a detailed pestle analysis will assist the organisation to develop and set clear goals and objectives that will simplify ensure efficiency when tracking and monitoring a firm.
Political factors
These are the political factors that an organization needs to consider before setting up a business in another country. These include factors such as government policy, trade policy, and politics. Generally, Romani has been recognized as a peaceful country free from terrorism threats and political instability (OECD, 2002). This environment will offer Gregg Inc an environment to set up and conduct business in a foreign land. In addition, the peaceful nature of the Company will create a space where customers can freely purchase their bakery goods and services from the store. The government also supports and encourages new entrants into the market because it positively supports the country’s economy. Therefore, the political analysis promotes easy entry into Romania.
Economic factors
These are the factors that define how profitable an organisation will be in international markets. These include factors such as inflation, growth of the domestic product, inflation, among others. For Gregg Inc., Foreign direct investments will pose a huge challenge especially if Romania’s policies are strict. The existing European laws favour direct investments since they are free from business regulations which could potentially discourage potential investors into the country (ITA, 2020). Europeans’ Foreign direct investments are protected by legal frameworks which permits transactions through Foreign Trade and Payment Acts. The policies chaperon all businesses, including industries in the bakery and produce industry. However, Romania’s economy has been on a surge over the past few years. In 2017, the country recorded a 7% growth rate in their GDP (ITA, 2020). This will favor Greggs Inc because the Company will be established in a country whereby growth is expected.
Social factors
These are the day-to-day factors that promote the development of an organization. The social factors comprise religion, education, culture, population, among others. Most Romanians are Christians, which means that there are no religious factors that could affect business. The country’s population growth rate has continued to grow over the years, meaning that the region provides a great customer base for their products and services (Chief’s pencil, 2020). According to (Gregg, 2020), Roman’s cuisine includes starters, main course, and dessert. It is widely known that people from Romain consume food depending on their social status, although they majorly have three meals a day. The tenaculum, the prandium, and Cena taken in the morning, midmorning, and afternoon. However, it is true that Romanians do not prefer sausages; hence should not be added to the Greggs. Inc menu rather focuses on incorporating the foods and snacks that individuals from Romania will enjoy, such as Sandwiches and soups (Chief’s pencil, 2020). Additionally, the products’ affordability will be another factor that will play a huge role in attracting and retaining customers in Germany. Although the nature and scope of the market competition are high, the Company should remain adept at providing goods and services that will attract and retain more customers, which will gain the Company a competitive advantage.
Technology factors
These are the factors that affect how innovation will affect a company. Gregg Inc should incorporate innovation strategies that will gain them a competitive advantage. These include developments such as company drive-throughs. These have ensured that individuals can get their meals, snacks, and drinks without necessarily getting into the store. In addition, there are delivery services that have industrialized this sector over the past years, which has increased sales for various companies within the country. Gregg should attract customers through the use of various social media platforms, Facebook, Instagram, and Twitter, to gain more customers. The Company could also develop customization strategies for major events such as Halloween and Christmas packages to attract more customers to their Company.
Legal Factors
These are the external factors that affect how a business operates and how customers behave. Some of the legal factors that Greggs. Inc should consider include adherence to consumer law, employment law, health and safety laws, clean neighbourhood and environment law and food safety laws in accordance to the Romanian Government.
Environmental factors.
These factors adhere to the policies that adhere to the set principle and regulations within a certain country. Greggs should ensure that their Company adheres to the Romanian government laws and regulations to prevent potential problems for the Company. Also, opening stores at equally and busy places and providing affordable and tasty meals will increase the Company’s competitive advantage.
Justification of Entry in the International Market
The success of any organisation across foreign markets depends on their preferred mode of entry. Focusing on Greggs Inc main line of business, the products and services they will venture with include, but not limited to Sandwiches, cakes and pastries, sweet snacks and the newly launched vegan products. These are the main products that the company seeks to launch in the country following their pre-determined possibility of gaining competitive advantage in the country. Although high competition is expected, the company will penetrate through the industry successfully, guided by the unique taste of their products and their outstanding services.
When an organisation has made the decision to venture into foreign markets, there are a variety of options that the company can use. The options vary on costs, risks and the locus of control that can be exercised over them. Simple forms of foreign market entry include exporting products using either direct or indirect means as such as an agent and countertrading. According to (NAME) these market strategies best work with companies dealing with non-perishable products. Thus, Greggs Inc. should not consider this because they produce perishable bakery products. Besides exporting, other market entry strategies include licencing, joint ventures, partnerships and alliances, mergers and acquisitions. These are some of the strategies that Gregg Inc. that may incorporate when venturing into Romania; a foreign market.
. For Greggs Inc, forming partnerships and alliances will ensure successful penetration into foreign markets. This will in turn promote competitive advantage for the company over other businesses in the sector. Greggs Inc. will target a local bakery that is well versatile and understands the needs of their consumers promptly. Also, strategic alliances will ensure that all contractual agreements between Greggs Inc and a Romanian based company are well understood prior to making and agreements. Understanding partnerships is also important for companies because they will determine the future growth or the company (Maekelburger et al., 2012, 458). Also, the local partner should be aware of the market trends and population that will help the business. Therefore, getting a local partner will yield more advantages for Gregg Inc.
According to Eurostat (2019), Romania is expected to record a 2% increase in total sales in the food and beverage sector by 2021. The national institute of statistics of data for 2018 explained that the total number of foodstuffs accounted for € 1794 million in terms of exports and € 3377 million in terms of imports having a trade balance of € 1583 million (Eurostat 2019). In the bakery sector, Romania recorded a turnover of € 422 million, which increased compared to 2017 reports (southeast European Industrial Market 2020). The number has increased ever since, with more advancement in technology. Besides, allying with another brand means increased consumer numbers since attracting customers will not be a challenge (E-commerce news, 2018). Contractual agreements are therefore important across major company departments, notwithstanding company rules and policies which are crucial for smooth company operations.
Another mode of entry into foreign markets are Mergers and acquisitions. This is an expensive mode of entry, yet appealing since the company gets to be in control and can easily access new markets promptly. The acquiring organization gets exposed to the market but may face challenges in case they change the method of operation. Although European laws favour company acquisition, it could be disadvantageous following the value of its currency.
Conclusively, based on the various modes of entry discussed, it is best that Greggs. Inc settles with forming strategic alliances and partnerships with another bakery company in Romania for the following reasons, First, Romania is expected to record a 2% increase in total sales in the food and beverage sector by 2021. This means that Gregg is speculated to benefit largely using another pre-exist company. Additionally, the home company is aware of local partner is aware of the market trends and population, meaning that Greggs Inc. will not start from scratch at understanding the market and the needs of their consumers. It will therefore be more appropriate for Greggs Inc to identify a company in Romania to form strategic alliances.
Standardization
Standardization is a vital element and vital when making new investments across foreign markets. The standardization process calls for prompt understanding of the 4Ps in marketing. These are Price, place, product and promotion. The 4Ps in marketing will assist organisations to understand more about their consumers interests and the amount they are willing to spend on purchasing bakery products such as a sandwich. Global standardization helps the organization understand how the customers perceive the products and services they offer. From the perception, the organization can improve the quality of the goods and the type of services they offer. For example, in e-commerce, global standardization has helped the business use similar marketing strategies over different countries with different beliefs and cultures.
Market Segmentation and Targeting
Market segmentation can be defined as the segregation of potential buyers into groups or segments based on their daily needs and how they tend to react to a marketing action. Marketing segregation allows customers to attract different consumers who have different expectations of goods and services. It was agreed that since Romania nears the UK, their taste habits should be similar. Europe is one of the highest consumers of bread globally, making in approximately 80kg per person per year. Therefore, having a concentration strategy will provide operational focus on a single familiar market, giving Gregg Inc. a competitive advantage (Dolnicar, Grun & Leisch, 2018). The Company’s target market is for all individuals across all ages, especially those between 9years to 40 eras respectively. According to (Gregg 2020), the Company strives to offer and adjust according to its customers’ demands and behaviours. Greggs Inc. can segment the Company demographically, behaviourally, geographically, or psychologically (McDonald and Dunbar, 2012). Effective market segmentation will allow a company to increase its overall efficiency by focusing on efforts that produce the highest return rate.
Porter’s Generic Strategy
Organizations operate in challenging and highly competitive business atmospheres where uncertainty about what will happen in the future. Therefore, companies must understand their strategic environment to identify their competitive environment. Gregg’s Inc. should adopt the Porters’ Generic Strategy to achieve their competitive advantage over other Romania bakeries. Porter’s generic strategy is an essential framework used by organizations when identifying potential markets; they can gain a competitive advantage. These strategies include cost leadership, Differentiation, cost focus, and differentiation focus. To effectively implement these strategies, commitment and supporting organizational arrangement are essential for an organization to achieve a complete profitability index. These strategies will be discussed in detail. (Appendix 1)
Differentiation
This strategy involves the uniqueness of a product that will allow a price premium for target consumers (Moraes, 2017). According to Peng (2014), a product’s uniqueness depends on factors such as quality, sophistication, and prestige. These factors are essential when attracting consumers willing to pay premiums, thus achieving a competitive advantage. Therefore, Greggs Inc. should consider providing target consumers with unique products that will attract consumers in Romania. However, to accomplish this, Greggs should balance both product costs and benefits relative to underlying competitors.
Cost Leadership
This is a strategy involving achieving the lowest costs in an industry to gain a competitive advantage. According to Li & Li (2008), cost leadership strategy strives to supply a standard, no-frills, high volume product at the most competitive price to customers”. For Gregg Inc, this means that the company should out from its competitors by getting cost-efficient product suppliers. This, in turn, reduces the production costs, which increases the product’s potential success that was lowly priced. There are four major cost drivers that Greggs Inc can adopt when delivering cost leadership; these include reduced input costs, economies of scale, experience, and product design. Greggs Inc. should therefore determine their most efficient cost drivers to gain significant market share and competitive advantage.
Focused Strategy
This is a strategy that revolves around creating a specific target exemplary well. Essentially, this strategy ensures that companies narrow down their target market specifically to keep up with competitors competing in broader ways (Porter, 1980). Gregg Inc should adopt this strategy by offering products and services to a particular niche at reduced prices or higher values than competitors. This is an effective strategy when implemented when the correct propositions are adopted.
Hybrid Strategy
According to Acquaah & Ardekani, (2008), a hybrid strategy is where the company can simultaneously involve cost leadership and differentiation strategies. Thus, Gregg Inc should adopt the hybrid strategy to gain and take advantage of both cost leadership and differentiation strategies.
Conclusion
Greggs is among the top bakery producers in the United Kingdom. Investing in a different country calls for stringent analysis and research concerning the people’s culture most especially when dealing with foreign markets. Departments that should be involved during this process include human resources and market departments. Human resource and marketing departments will ensure that customer satisfaction is attained, and there is maximization of profits. Besides, organisations need to ensure that their modes of entry into an international market are clear especially when dealing with a country with currency stability. Germany and Europe are some of the countries that have adopted the use of technology, therefore making the industry attractive globally. The practices and culture of the citizens in Germany have facilitated the growth of this industry. Therefore, it is evident that Investing Greggs Inc. into Romania will largely benefit the organisation.
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