Market Analysis And Marketing Strategies Of Sports Direct In Nigeria

Situation Analysis

In today’s competitive environment, a country’s image and reputation are a critical success factor that determines perception of people towards it, and that makes it difficult to build and sustain the reputation. With increase in competition and an increase in the number of consumers, investors, tourists, and immigrants, they all start depending on the reputation of the country to sustain. This gives an understanding of the significance of country branding.

This paper study’s the market of Nigeria for an international marketing strategy of a sports retailer named Sports Direct. Nigeria is looked at as a viable location for expanding the company’s business as it is home to approximately 184 million people and the number is expected to rise to around 216 million in five years (Sports Direct International plc, 2018).

Sports Direct is the largest sports retailer in the United Kingdom by revenue and its operating profits. The retailer also owns a number of brands of sports, fashion, fitness, and lifestyle fascias across the UK and European retail markets. The group operates with around 757 stores through its strategic business segments of UK sports retail, international sports retail, and various brands and through premium lifestyle, in the United Kingdom and other international locations. The strategy applied by the company is to identify improvement opportunities through in-store acquisitions, through the development of opportunities online. The company has an exceptional quality and an unbeatable value of selling off its core products to wholesale customers along with licensing arrangements across the world. It also has a benefit of operating in multi-currency and multi-language online platform.

This paper conducts country level analysis using SOSTAC model and the PESTLE analysis tool, and then provides insights on the company’s marketing strategies in relation to the 4P’s.

SOSTAC model is applied in this paper to conduct the micro analysis of the environment and plan the strategy for Sports direct for the Nigerian market.

Situation Analysis: The situation analysis of Nigerian market would cover the competitor, market and customer insight analysis of Sports Direct. The retail sector in Nigeria is presently experiencing a boom with the growth in retail activities apart from the open market and store operations. Studies also show growth in the middle class group in Nigeria. At present also, the country has a good number of local and foreign retail store operations. A few Nigerian cities also have international retail store operations. The people in Nigeria are gradually moving towards a better lifestyle and have started accepting various international brands and products. A reason for the shift could be the increase in their buying power along with the impact of employment, taxes and other chain effect factors. These factors appear to be positively impacted the government and society (Bushu, 2015).

Objective

Objective – The company’s objective is to become the leading sports and lifestyle retailer across all international locations along with delivering sustainable growth to the shareholders at all times by offering a range of high quality leading brand products to the customers.

Strategy – Sports direct has focused to gain a leading role in the athletic market and has been successful in increasing its market share as well, the company has continuously operated with a value of providing high quality and innovative products to its target consumers. The company’s strategy is always in terms of factors like, Pricing: Value based price leadership strategy. Market expansion: The Company expanded its operations to various destinations of Europe and now has strategy to expand to other international locations (Effiong, 2017).

Tactics – The website and online presence of Sports Direct can easily aid the company with its growing profits as it operates in Multilanguage and multi-currencies.

Action –   The Company should do the advertising in order to achieve the highest possible impact on the large volume of the target audience. The store can even have personalized sales efforts by offering staff’s help to the customers for gaining better understanding of the products and accordingly make a purchase decision. Direct marketing will help the retailer to establish strong relationship with the target customers and will also help in motivating the customers to purchase their products. Sales promotions are another strategy that will help the company in attracting the target customers. The retailer needs to establish a better perception of their brand for which it can sponsor charity events and public relations activities. Social media is another medium that helps in creating a buzz and get in line with the customers (Olaito, 2014).

Control – The correct marketing plan can be ensured through controlling procedures of the leadership and by providing a proper and appropriate guidance at all levels in the organization. It is crucial to have a proper check and balance of the company’s profits, sales, budget, market share, etc., along with a continuous analysis of each department for proper implementation of the marketing plan (Fiorini, et al., 2013). For timely implementation of the plan, the milestones should be set properly with budgets, communication channels, etc.

PESTLE analysis is used to conduct the macro analysis of the marketing strategy of Sports Direct in Nigeria. This analysis will help to assess the political, economic, socio-cultural, technological, legal and environmental factors.

Strategy

Political – Nigeria has three tiers of government, namely, federal, state and local, all these governments have autonomous, but some overlapping fiscal policy jurisdictions that some way or the other impact the millennium development goals. These political factors hinder or at times accelerate the progress.

Economy – Nigeria is helped by the World Bank Group (WBG) with expertise and finances to address the major developmental issues and is laying the foundation for its inclusive growth. The economy of Nigeria is rising and as per the World Bank the GDP of Nigeria at the purchasing power parity has tripled from the year 2000 to 2012 with GDP growth of around 6.3% annually. There is a huge availability of labour force. For stimulation and management of public finances and for the feasibility of the business regulations, there are several economic reforms pursued in Nigeria. The real GDP of Nigeria is also seen to have witnessed around 6.1% growth because of exponential changes and implementations in the service sectors and various industries (Commission, 2016).

Socio-cultural – Politics in Nigeria largely influences the social and cultural systems. The diverse culture presence in Nigeria provides a sense of collective identity to the people who belong to distinct subculture. The World Bank also reports about presence of young and active working class population in Nigeria.

Technology – The key driver of an economy is the technology. With the presence of fastest growing mobile technology industry in the world, the country can become a technology hub of Africa. With a rise in level of technology, the level of socioeconomic development will also grow and hence will directly influence the standard of living. The increased interest of Nigeria in technology has led to Nigeria being targeted by a lot of American, European and Chinese companies for global growth (Lucintel, 2014).

Legal – Company and the Allied Matters Act (CAMA) is the main law that governs businesses in Nigeria. This act governs the issues related to the structure of the company, registration, eligibility, and the operational aspects of any business.

Environmental – Nigeria being a country that faces various environmental challenges resulting in increased degradation, these issues are deforestation, air, water and noise pollution, drainage problem, industrial waste, excessive mineral exploitation and mining, damage to biodiversity. Hence, any organization that plans to expand its base in Nigeria needs to show its responsibility towards protecting the environment and take necessary measure to eliminate the agents that harm the environment (Daramola, 2012).

Tactics

In today’s time, Nigeria is the largest economy in the Africa and the twenty sixth in the whole world. The country’s GDP is approximately $510 billion, where around 14% of the GDP is contributed by the retail and wholesale trade resources. The country has around forty million people under the consuming class household (Chakravarty, 2018)

The country has the potential to achieve annual GDP growth of 7.1% and thus can come under the top-20 economy by the year 2030. With that, it can achieve the GDP of more than $1.6 trillion. All this will get the country around 160 million people in the consuming-class households. This number will give the country, more consumers than the present combined population of France and Germany. The country even has the potential to move more than hundred million Nigerians above the empowerment line and a significant number of people above the poverty line. The International monetary fund (IMF) shows that the nominal GDP of Nigeria is expected to grow at a CAGR of approximately 16% and will reach NGN 269790 billion by the year 2022.

The tactics and strategies of marketing are primarily about decision making on the basis of factors that influence mutually satisfying transactions and relationships. This is done by marketers by making use of tools like mega marketing and the traditional four P’s of marketing. A significant driving force that determines the success of an organization is the company’s marketing strategy. The success doesn’t just depend on a well-developed marketing strategy, but also largely depends on the schedule, timelines, process, and the company’s ability to implement the marketing strategy effectively.

A critical factor of a marketing strategy is its marketing objective which should clearly define the company’s key objective and priorities, appropriately translates it into the organization’s vision into the marketing goal, and finally define the levels of achievement on each goal. This could be a complex process as many goal levels can be incompatible with the performance of the company. For example, growth, revenue of a company and the margin growth cannot be achieved simultaneously. Hence, it is important to prioritize conflicting objectives. Apart from the appropriate decision about the goal selection, another important factor of marketing strategy is the market selection. Selecting an appropriate market involves dealing with the segmentation, target and positioning. This selection process determines the competing place of the firm that will help the company to meet its stipulated strategic marketing objectives.

Control

The Ansoff matrix is the most suitable tool to assess the suitability of sports direct penetrating into the Nigerian market. This tool will help to outline the open options for the business in terms of increasing revenue and profitability. The available options will help in assessing the management of developing the product range basis the products and the market and accordingly determine the strategy. This tool also helps in assessing if the marketing strategy has rightly targeting the existing and new customers, if new products need to be introduced or existing products can help in achieving desired results (WJEC, 2016). The below matrix demonstrates the four strategies that the business can use as per its products.

A number of studies focus on factors that influence the choice of strategy and recognizing the forces that stimulate standardization or adaptation. The effectiveness of the selection is determined by the strategy’s potential to bring improvement in the performance of the company, the benefit it brings in the economic and strategic terms, and the performance achieved with the implementation of the selected strategy.

Adaptation occurs when organization’s do adjustment in their marketing strategies while entering a foreign market. Such decisions of adaptation penetrate into the adaptation strategy and influence the company’s competitiveness and performance in the new geographic location in terms of revenue, sales, financial performance and customer performance. The strategies of adaptation include changes in the pricing methodology, changes in the promotional mix, changes in the product packaging, changes in the product as per the customer requirements and preferences. In short, it is about adaptation or modification in an element of marketing strategy in order to achieve competitive advantage when entering a new foreign market. The marketing objectives with adaptation strategy can even be achieved by just simply changing the colour and the logo of the packaging, or by just developing new product as per the customer preference and needs in the new foreign market. Adjusting the marketing mix and marketing strategy as per the needs and preferences of the new target customers of the new market is crucial for marketers (Min, et al., 2014).

Product – The product is the primary impact about a brand or an organization. Hence, it is prerequisite to design and deliver a product or service completely as per the needs and preference of the customer to achieve successful marketing strategy implementation. It is important to at least meet the customer expectation with the product experience and create brand loyalty. And work towards exceeding the customer expectation to achieve customer satisfaction.

PESTLE Analysis

Pricing – Price is an important determinant in any sale being made. The marketers should examine and re-examine the value perception of the product by the customers and sell the product accordingly to ensure that the prices match the reality of the new foreign market.

Place – Sports Direct has its retail presence across the United Kingdom and in various European countries. It is even planning to expand to other Asian countries as well. Operating in developed nations and penetrating into developing countries is very different. But, with effective marketing research and strategies will help the company successfully establish its foot in the foreign growing nation and ultimately achieve its objective of being the leading retailer internationally (ChintuwaEnyioko, 2017).

Promotion – Organizations promote leisure and non-formal education by advertising and sponsoring various programmes like, media education, sports programs, dramas, etc. This indirect marketing helps the company to successfully operate and establish its brand in the foreign destination.

It is known that there is a high linkage between customer retention and customer satisfaction and also, customer satisfaction helps in retaining the customer as well as leads to a huge positive impact on the revenue, earnings and stock price. Cognitive dissonance is highly beneficial in understanding the customer decision making process and hence, being able to provide to the customer what he desires for.

Cognitive dissonance refers to a psychological phenomenon in terms of discomfort due to differences between the new information or interpretation an individual gathers and what the individual already knows or believes. This generally takes place when new ideas need to be accommodated, and it is important to develop a dissonance for the individual to become open to new information and belief (Group, 2014).

The people in Nigeria also have certain information and beliefs that lead to a certain kind of buying behaviour. The presence of so many other foreign and international retailers shows that the country accepts new and foreign products and hence, it will be easier for the company to work around the cognitive dissonance of the consumers and lead them towards purchasing their products.

The three key strategies that can help in reducing the cognitive dissonance of the consumers are:

• Sports direct should primarily focus on supportive beliefs that dominate the dissonant behaviour.
• Make efforts towards reducing the importance of the beliefs that cause conflicts
• Bring changes in the conflicting beliefs in order to make them consistent with other beliefs and behaviours (Kumar & Sharma, 2017).

Sports direct should make their relationship with the customers stronger and work towards building trust, post purchase this can help in discouraging cognitive dissonance and hence can result in customer satisfaction along with behavioural loyalty. The pre purchases and post purchase stages are easily influenced by brand loyalty. This can also help in increasing the dissonance for substitutes and offerings by competitors and also in increasing the dissonance for the company’s preposition to the customers. This can be done through celebrity endorsements, appropriate placement of the product, integrated marketing campaigns. Sports Direct can even make the young athletes its future target market as it can easily influence the consumers with the help of young athletes on the digital platform to get the consumers join and engage with the store. This will help the store in establishing a better relationship with the consumers. The realization by target customers about the similarities between themselves and the brand, it helps positively in reducing the dissonance (Martin, 2014).

Conclusion

Conclusion 

Sports Direct is the leading retailer in the United Kingdom and European countries. People now have started getting more health conscious and hence the demand for athletic equipment’s is going to increase exponentially. This is leading to growth in the sports goods market. A huge variety of sports related products are purchased by consumers such as athletic footwear, athletic apparels, equipment for exercise, etc. Now these goods are even sold online over the internet and have experienced a huge rise in the distribution channel of market share. But still there are a large number of people who prefer to go to the stores to buy sports goods instead of buying them through online channels.

With too many options available in the market, the consumer now wants to buy products that are comfortable, high quality shoes that also protects their feet from any kind of injury, at a minimum cost. Hence, to establish the store in a new location and the retailer should keep its prices at a level that suits the pocket of a maximum of their target customers. The retailer being a well-established international brand should do a lot of advertising and promotions to establish its brand in a new geography and influence the consumers by three perspectives that is social, cultural and personal factors.

References

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