Marketing Management Analysis at SportsDirect UK

For this case study, SportsDirect, the leading sports retailer in the UK, is chosen. The role played by the marketers in achieving the business objectives is critically reviewed. The market planning process of SportsDirect and their significance are also addressed. In specific, the external and internal factors influencing the decision making of management are also presented. Also, the various marketing concepts used by the SportsDirect are evaluated.

SportsDirect started their business in 1982, and they are the leading sports retailer in the UK whose revenue and profits are higher than the competitors. Currently, they have more than 470 stores and still expanding in the UK. SportsDirect does all the sports kits, foot ware, clothes and sports accessories. Nike, Adidas, Umbro, Dunlop, Reebok, etc. are some of the brands sold by Sports Direct. SportsDirect also went online for their customers for buying online and convenient delivery. Sixteen thousand employees work for them, and they have expanded to seven different countries (SportsDirect, 2013). They are showing interest in places like France, Holland, Belgium, etc. to grow at present. They differentiate their products with quality and cost, which is so far unbeatable by their competitors. Their group revenue is £1807 million in 2012, which is 13% higher than the previous year (SportsDirect, Annual Report, 2012). The business strategy of SportsDirect is a) to invest and provide excellent rewards to the employees; b) to promote the global brands; c) to explore opportunities like merging and acquiring; d) to promote online business opportunities and e) to invest in store to improve their portfolio.

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According to Kotler and Armstrong (2010), the market environment is divided into the micro and macro environment. The macro-environment consists of the political regulations, legal requirements, economy and technology, which would influence the marketing decisions. The microenvironment is closely associated with the company since it involves the threat from competitors, the threat from new competitors, entry of new products, bargaining power of customers, and the bargaining power of the suppliers. The micro and macro environmental factors not only influence the marketing activities but also impacts on the future direction of the company.

The marketing decisions of any retailer could be affected by the changes made by government (Kotler and Armstrong, 2010). This could be associated directly with pricing, competition, and products. Considering the case study of SportsDirect, they are trying to sell the value-added product at a compatible price to their customers. However, change in tax policies from the government would undoubtedly impact on their marketing strategy. Also, they are trying to expand globally into different markets; their strategy could be affected by the legal requirements made by the government in the places where they are trying to expand. Saaty and Vargas (2012) from their research on decision making, also found that political factors are uncontrollable and will influence the marketing decisions of the organisation.

The economic factors like inflation, spending, income, tax, cost rate and living expenses influence the market decision made by the organisation (Kotler and Armstrong, 2010). SportsDirect are expanding globally, in the expanding marketplace if the currency rate decreases, then the profit margins will be affected and also consumer buying ability will affect their sales. Saaty and Vargas (2012) also found that economic factors influence the decision making of the consumers as well as the retailers; thus, before entering the market SportsDirect should access for the stability of the market.

Technology is used by the organisation to improve its business performance effectively. The product development, price, packing, distributing, etc. are associated with technology. Most of the companies failed to accept the technological changes has lost their mark position (Pride and Ferrell, 2011). Technological changes occur regularly, and hence organisations must keep them upgraded. The technology change could assist the SportsDirect to keep their price lower for the valued products. On the other hand, if they failed to accept the technological evolution, then the competitors like JJB would grab the opportunity and increase their market share.

Social factors like culture, heritage, lifestyle, values, beliefs, and customers influence the marketing environment of the business. Customer needs and demands are changing dramatically. The markets researcher must be able to find the customer needs and prioritise them. Some consumers prefer a lower price, and some prefer quality, change in preference would affect the sale figures of SportsDirect. Cultural factors like language, religion, education, appearances, the material culture will also influence the marketing decisions of the company (Doole and Lowe, 2008). Since the case company is planning to expand to the other countries, their market plans will be affected if they don’t consider the social and cultural factors of the marketplace which they are stepping in. The social and cultural factors also impact even the brand selections of the customers (Chernatony and McDonald, 2012).

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The macro-environment factors discussed above not only influences the marketing activities of the company but also the marketing decisions. In the next sections, the factors influencing the market internally and decision making will be presented.

Hill and Jones (2012) argue that the competitive forces like potential customers, the intensity from rivalries, bargaining power of supplier, bargaining power of customers and product substitutes influences the marketing decisions. By finding the five forces, the ability of the organisation to compete with the environment could be determined.

Hsieh (2013) found from his studies that competitors imitate marketing decisions and also influence marketing activities. SportsDirect is leading the sports industry in the UK; however, there is still healthy competition exists in the sports sector. Foot Looker, JJB, Snow and Rock Sports are their competitors. The performance, decisions, and strategies made by the competitors must be monitored by the SportsDirect. The decision made by the competitors will influence the marketing decisions and hence should be monitored continuously.

SportsDirect selling the different branded products like Nike, Puma, Adidas, Umbro, Reebok, Dunlop, Slazenger, etc.; they rely on the supplier more since they do not have their own branded products. If the bargaining power of the supplier is high, then SportsDirect is forced to pay high and hence the marketing strategy to sell at a lower price could be affected directly.

Customer needs are changing frequently based on social and cultural factors. SportsDirect must research on the customer needs and satisfy them to avoid switching. If the product demand is more, the consumer bargaining power will be less, and hence the marketing decisions will not be affected. However, on the other hand, if the product demand is less, consumers will not able to pay a high price and pricing strategy should be changed. Consumer buying behaviour will influence the marketing decisions of the organisation (Sokolowski, 2011). The entry of new products to replace the existing one and the entry of new competitors must also be continuously monitored. These products can influence the marketing decision-making process.

The current business analysis is done using the SWOT analysis and Ansoff matrix. The internal strength and weakness of the SportsDirect are identified, and the present position is determined next. Analysing the current performance and situation will assist the market in assessing the ability of the organisation to achieve its business objectives. According to Kotler and Keller (2012), the marketing activities start off with the SwOT analysis. The internal and external analysis will enable the marketers to find out the organisation potential in achieving the organisation vision.

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The pricing strategy of SportsDirect is highly compatible with their competitors like JD. The management is well structured and strong, which contributes to leading the market. The financial leverage (revenue and profit-making) of the SportsDirect is high. The global presence and size advantages allow them to gain the upper hand against their rivals. The products are better quality (value-added) in comparison to the competitors. The economy of scale provides the advantage of selling the products at lower prices. The stronger brand attracts more customers.

The factors that SportsDirect needs to improve are a) their customer services; b) staff turnover; c) weak online presence, and d) tarnished reputation. Even though they are leading the market, customer service in comparison to the other retailers needs improvement. Employees must be given opportunities, and retention rate must be improved. Needs to spend on improving online shopping facilities.

There are vast opportunities for online shopping; SportsDirect can invest in improving online shopping facilities. The markets are wide open to expand in the UK and as well internationally, and there are always chances of launching new products.

The competition among SportsDirect and JJB, JD, Footware and Locker are highly intense. The political, economic, technological and social factors are a threat to the case company since they are expanding to global markets. The substitute products which are cheaper in price is a significant threat to the case company since they rely on quality products at a lower price.

SportsDirect must exploit the opportunities present in the market and should make to strategies to improve their weakness and reduce their business threats.

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The primary tool for launching new products into an existing market or bringing in new products to the current markets or penetrating into existing markets or diversifying to different markets could be done using the Ansoff matrix (Zimmerman and Blythe, 2013).

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The group revenue of SportsDirect Plc in 2012 is £1807 million, and the revenue has increased by 13% in comparison to the past year 2011. The sales online also have increased also increased by 81% and sales figures up to £174 million. The international retail sale is £154.2 million, and overall the business revenue and profits are getting bigger (SportsDirect, Annual Reports, 2012). They are positioned like stars in the business, which is having a higher market share and yielding higher profits.

Based on the weakness and the threats, the marketers of SportsDirect have planned to do the following activities. To invest and provide excellent rewards to the employees; b) to promote the global brands; c) to explore opportunities like merging and acquiring; d) to promote online business opportunities and e) to invest in store to improve their portfolio. For achieving the marketing objectives, the organisation should have all the needful resources (Neild and Carysforth, 2004). The case company is financially strong and positioned as the stars in the business and also one of the leading revenue and profit makers in the market. Hence they are economically strong enough to achieve their plans.

SportsDirect has already expanded in seven countries, and they also have joint ventures in Northern Ireland and the Republic of Ireland. The marketers have analysed the markets they stepped, and strategies are developed to overcome the barriers and improve the customer satisfaction level. They are planned to enter the markets of France, Belgium, Holland, etc. The marketers do the primary research on the marketplace, and appropriate business strategies are developed, hence the financial risk or the potential risk factors. Singla (2011) argues that the vital stage in the business is to expand and grow the existing market. The financial resources are also available hence soon as per the plan, they will expand globally with fewer business risks.

Ostertag et al. (2007) suggested that in the competitive industrial environment it is essential to find ways to increase the opportunities. SportsDirect not only planning to improve customer service in the stores but also provide excellent rewards to staffs to improve staff turnover. SportsDirect are trying to invest in an online shopping service which is now highly profitable. The focus groups do get customer opinions, needs, and feedback for improving their services in existing markets.

SportsDirect organises in-depth interviews with consumers to understand their needs. The reactions to the existing products from the customers are obtained. Regular surveys are done by the focus groups for improving the products and services offered; they are also planning to expand the international brands. The Owner of SportsDirect has started to think about bringing fashionable products to the stores and the internet. The marketers are also planning to bring more globalised brands slowly to markets which would be of good quality and better price.

Ostertag et al. (2007) argue that product development and market diversification are any organisation to survive. SportsDirect is a well-established retailer in the UK, they are trying to penetrate into the global markets through merging, acquiring and even joint ventures. The marketers play a vital role in making the negotiations and contracts. They have already entered seven countries and still trying to penetrate and expand globally.

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SportsDirect’s long term goal is to expand globally by merging, acquiring and through joint ventures. They have sufficient resources to do it, and they have already grown into seven countries and still planning to go further. The SWOT analysis showed that they need further improvement in customer service and online shopping. They announced a budget to improve the online shopping facilities, reward staff to perform better and improve customer service in stores. The current activities of the business and their potential to implement are discussed in the above sections. In the next section, the role of markets in achieving the objectives of SportsDirect is discussed critically.

The marketing department plays an important role in achieving the goals of the company. Financial, human resources, and all the other departments are associated with the marketing department. Based on the needs and products, financial budgets are allocated, and human resource required for reaching the customer is planned (Jobber, 2009). The role of marketing staff is critically reviewed in the below section:

1. The marketing staff does research on the market needs of the target segments, the best and suitable way to bring out the product to the customer is planned, and finally discussed with the all the other departments of the company to reach the target segments (Asadi, 2013). Considering the case study of SportsDirect, the marketing staff who are the closest to the customers can get their feedback and send to the product department of the suppliers to satisfy the customers.
2. The marketing staff works closely with the research and development teams and all the other teams to work out their plans (Asadi, 2013). The marketing staffs of SportsDirect does conduct in-depth interviews with the customers and feed the data to the production team and as well with the research and development to investigate further.
3. The marketing staff must also monitor their competitors. They should monitor the strategies of various competitors and all the moves they make (Asadi, 2013). In the case of SportsDirect, the marketing staffs do track the movements from JJB, JD, Footlocker and create reports to the marketing head. The marketing head plans with development teams to compete with their competitors (pricing, value and even brands) and make competitive strategies to continue leading the market.
4. The marketing staff should set the strategies, execute their plans and continuously monitor them (Jobber, 2009). The marketing staff not only reports to the other departments but also continuously monitor that their plans are executed well. Especially in delivery, the right kind of products at the right time. Otherwise, the customer will switch and will look for alternatives.
5. The marketing staffs also play a vital role in customer retention because they do get customer feedbacks and reports to the respective department for developments (Asadi, 2013). The primary functions of the marketing staff in SportsDirect are retaining a good relationship with the customers and retain them for the long term to avoid switching and looking for alternatives.
6. The marketing staff play a vital role in profitability and revenue of the company (Waters and McDonald, 2011). In the case of SportsDirect, the marketing staffs do all the promotional activities for taking to the products to the customers. The marketing staffs of SportsDirect is contributing immensely; hence the profit margin in inline and online stores have comparatively improved over the period.
7. The marketing staffs must not only involve in making market plans and getting feedback from the customers, but they must also engage in developing new products or product diversification and also contribute in expansion to other markets (Asadi, 2013). The marketers of SportsDirect are very cautious about the change happening in the external and internal markets. The changes happening in the micro and macro level are reported to avoid loss or plan failures.
8. The marketing staffs started to play a vital role in the operational efficiency of the organisation, and they even began to act as cost and profit centres (Becker, 2009). The marketing staff of SportsDirect have their own sales targets, and also they suggest on controlling the cost of production. Hence it can be stated that there is a transition happening in the marketing department. They started to control the expenses, and thus they are acting as a cost centre, and also they look after the sales targets. Hence they act as a profit centre as well. By delivering the products on time to the marketplace, they are also contributing to improving the operational efficiency of the leading retailer.
9. The marketing staffs acts as an interface between the suppliers and distributors. The role and responsibilities of the marketing staff are higher than any other departments (Asadi, 2013). Considering the case study, they act as an interface between the customers and researcher and developments teams; also between the production and human resources; and even between the suppliers and distributions teams. The marketing staffs working in teams to organise all the activities for giving the right product at the right price to the rights segments at the right time.
10. Marketing department even contributes to promoting better customer service and also assist in even during the recruitment of young talents (Asadi, 2013). The feedback on the customer service given on inline and online stores of SportsDirect are obtained only by the marketing staffs. They do suggest the managers on the improving the customer service in inline stores and also advise the human resources team to hire the people with the right kind of skill sets needed for the business units to perform well.
11. The marketing staffs also contribute to promoting the products through promotional offers and discount to the customers. They do also assist in advertising the products. They do assist the stores in merchandising the promotion stocks at easier reach to the customers. The marketing team even makes marketing campaigns to promote sales, and they work as a suitable interface between all the teams.
12. Conclusion SportsDirect has enough financial resources and human resources to achieve its strategies. They have already started their business in seven different countries and trying to step into various global markets. However, they are waiting to make suitable ventures, merge or acquiring to step into the other markets. The market researchers of SportsDirect guide the management in the right direction to achieve their business objectives. The marketing staff play a vital role in getting the feedback from the customers reporting it to the product team, interfacing between the suppliers and distribution teams, understanding the customer needs, looking after the competitors, analysing the changes happening in the external environment, and also they contribute in improving profitability and operational efficiency.

References

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Originally published at https://theoriesofmanagement.com on August 26, 2020.