|S||Situation analysis – where are we now?|
|O||Objectives – where do we want to go?|
|S||Strategy – how are we going to get there?|
|T||Tactics – which are the details of strategy?|
|A||Action – implementation i.e. putting the plan to work|
|C||Control – measurement, monitoring, reviewing, updating and modifying|
Figure 1 Interpretation of SOSTAC framework Source: Smith (2003)
The manner in which SOSTAC framework is going to be implemented by John Lewis is explained in great detail in following sections.
A range of key issues emerge from John Lewis SWOT analysis conducted in previous article. Specifically, international market expansion has been found to be an attractive business opportunity not currently utilised by the company. Engaging in international market expansion would be an effective response to the issue of market saturation in UK. Moreover, it has been found that forming strategic partnerships in global marketplace with multinational businesses can have an immense positive impact on John Lewis long-term growth.
Global Marketing Objectives for John Lewis
The following global marketing objectives for John Lewis are formulated according to SMART principle, the abbreviation standing for specific, measurable, achievable, realistic and time-bound:
- To obtain minimum 15% of department store market in Beijing and Shanghai by the end of 2015
- To achieve an annual growth rate of minimum 18% for international markets
- To ensure that revenues from international markets account for at least 45% of total revenues for John Lewis by 2018
- To be forming strategic partnerships with at least one major local company in each new market John Lewis enters in
- To achieve John Lewis to become among top 3 global department stores by the level of revenues by 2020
John Lewis Global Marketing Strategy
John Lewis is recommended to rely on its traditional business strategy that ensured its success in UK marketplace when entering Chinese market. This strategy involves targeting high earners and offering them high quality products and services for premium prices.
Accordingly, target customer segment for John Lewis in Chinese market can be specified as males and females aged 25 – 45 who have increased their income significantly during the last several years using increasing amount of business opportunities evolving in the country.
John Lewis branding in Chinese market is going to be developed in a way that the brand is going to be associated with prestige, achievement and social status. The choice of this approach to branding in Chinese market is most likely to be successful taking into account cultural characteristics of Chinese consumers that value social status and preservation of face, as well as, increasing levels of households’ income in Chine due to rapid economic development of the country.
Marketing communication mix elements to be adopted by John Lewis in China is going to include various methods of advertising and public relations and publicity. Specifically, John Lewis advertising is going to be done through broadcast ads with attracting celebrities and successful business persons in China as the face of the brand.
Engagement in public relations and publicity by John Lewis in China is going to be facilitated through periodical release of press kits and publications, as well as, organising speeches, seminars and community relations.
Moreover, explained as “a marketing campaign that is so compelling that people share it, so it spreads, like a virus” (Tobin and Braziel, 2008, p.28), viral marketing is going to be used extensively to promote John Lewis brand in China. Specifically, John Lewis viral marketing is going to be facilitated with the use of local popular social networking websites such as Renren, Penyou, and Weibo.
Chinese Market Entry Strategy for John Lewis
Several market entry strategies are available to John Lewis for entering Chinese market. The most popular new market entry strategies include exporting, wholly owned subsidiaries, turkey contracts, forming joint ventures, licensing and franchising (Hill, 2010).
Among these foreign market entry methods, forming wholly owned subsidiaries can be specified as the most suitable for John Lewis to enter China. Wholly owned subsidiaries method of foreign market entry offers John Lewis a range of substantial advantages that include freedom for selection of strategy, protection of technology, ability to engage in global strategic coordination, and the ability to realise location and experience economies (Hill, 2004).
While implementing wholly owned subsidiaries method in entering Chinese market John Lewis should explore the possibilities of forming strategic partnerships with major businesses in China in a mutually beneficial way, and in a manner which does not compromise competitive edge and freedom of operations for John Lewis.
However, it has to be acknowledged that the choice of wholly owned subsidiaries method of foreign market entry is also associated with a range of risks and disadvantages that include high costs and risks.
Although alternative new market entry methods such as forming joint ventures, licensing and franchising may seem suitable options, their choice is associated with the lack of control over the quality of operations, and compromising freedom in terms of formulation and implementation of strategies.
“A business firm controls four important elements of marketing that it combines in a way that reaches the firm’s target market. These are the product itself, the price of the product, the means chosen for its distribution, and the promotion of the product” (Pride et al., 2011). John Lewis strategy in relation to individual marketing mix ingredients in entering Chinese market is formulated in the following sections.
The product range of John Lewis department stores in China is going to differ substantially from the product range currently offered in UK stores. However, focus would be made on product positioning. “Product positioning is defined as the customer’s perception of a product in comparison with the competition” (Hutchinson et al., 2009, p.4) and investments are going to be made in order to position John Lewis products to be associated with the notions of success, achievement, prestige, and social class.
Price can be explained as “the actual amount a customer pays for a product or service” (Greene, 2011, p.137) and John Lewis products and services in China are going to be priced in a premium level, above average market level. This is because coupled with products and services customers would be sold the perception of success, achievement, prestige, and social class associated with John Lewis brand.
Place is where John Lewis products would be offered and the importance of this specific element of marketing mix is greater for retail business compared to many other businesses. Accordingly, substantial financial investments are going to be made by the company in order to set up John Lewis department stores in busy and modern shopping centres and other places visited by the company target customer segment.
Promotion element of the marketing mix is “communication by marketers that informs, persuades, and reminds potential buyers of a product in order to influence an opinion or elicit a response” (Lamb et al., 2010, p.576). Promotional strategy to be adopted by John Lewis in China would include optimal use of various promotional mix elements: advertising, public relations, personal selling, and sales promotion.
However, greater focus would be made on advertising through broadcast ads with attracting celebrities and successful business persons in China as the face of the brand. Moreover, viral marketing is going to be used extensively to promote John Lewis brand in China with using popular local and global social networking websites.
Potential Issues and Challenges for John Lewis in Chinese Market
It is important to understand that although entering Chinese market is an attractive business opportunity for John Lewis its implementation is associated with a set of risks, issues and challenges. These can be summarised into the following three points:
First, John Lewis may fail to address cultural differences associated with Chinese consumers in an effective manner. Specific aspects of cultural characteristics of Chinese consumers associated with importance of social status and preservation of face are considered as positive factors to contribute to John Lewis success in Chinese market. However, there are many other aspects of Chinese culture that may prove to be a source of challenge or misunderstanding for John Lewis in China.
Particularly, marketing communication messages to be devised by John Lewis in China and the manner in which they are delivered might be misunderstood by Chinese consumers due to their cultural differences.
Second, Chinese consumers may not appreciate the brand value proposition offered by John Lewis. The marketing plan is build on the premise that John Lewis brand value proposition associated with success, achievement, and social status would attract local consumers in China because the level of their income is increasing, and the brand value proposition relates to identity of Chinese culture.
However, the brand value proposition offered by John Lewis may not be appreciated by Chinese consumers for the reasons that this marketing plan may have failed to identify.
Third, stronger local competitors may arise to challenge John Lewis. As it has been stressed several times in this report John Lewis bases its competitive edge on quality its products and services, as well as, their association with sense of success, achievement, and social status.
Local competitors may arise within China that would base their competitive advantages on the same principles to present John Lewis with a significant challenge. Such competitors would have a range of advantages over John Lewis associated with in-depth knowledge of the local market, and reduced level of operating costs, therefore they would be difficult to deal with by John Lewis.
- Greene, C.L. (2011) “Entrepreneurship: Ideas in Action” Cengage Learning
- Hill, C.W. (2010) “International Business” McGraw-Hill
- Hutchinson, T.W., Macy, A. & Allen, P. (2009) “Record Label Marketing”
- Lamb, C.W., Hair, J.F. & McDaniel, C. (2010) “Marketing”, 10th edition, Cengage Learning
- Pride, W.M, Hughes, R.J & Kapoor, J.R. (2011) “Business”, 11th edition, Cengage Learning
- Smith, P.R. (2003) “Great Answers to Tough Marketing Questions” Kogan Page
- Tobin, J. & Braziel, L. (2008) “Social Media is a Cocktail Party” Blackwell Publishing