New Look and Matalan (to name only a few), operate in highly competitive retail environments and seek to utilise broad differentiation strategies to create an effective market position in the minds of desired target consumers. The difficulty that many competitors face in this differentiation strategy is that many marketing tactics under this strategy are easy to replicate, with product quality and pricing no longer being viable methods of differentiation (Bennet and Rundle-Thiele 2004; Nandan 2005). However, many of these competitors cater to broader and more diverse target markets, thus positioning under quality and pricing are the selected methodologies to gain target market attention. With no method of creating barriers for competition to utilise these differentiation practices, it is difficult for Next’s competitors to establish long-term brand loyalty with all of their target consumers.This is why Next has selected the focused low-cost strategy, one of the five Generic Strategies proposed by Michael Porter that explain corporate strategy. This strategy works best when there is considerable price competition between rivals (Murray 1988), where differentiation methods generally have little value to price-sensitive buyers (Wright 1987), and where products and services offered are largely identical in the market (Thompson 2008). Next recognises that pricing and quality positioning are easily achievable by its main competitors and has decided, instead, to focus on a niche market of consumers (which in this case is quite large) in order to build brand loyalty and thus long-run brand equity that can be translated into a variety of product extensions or new business opportunities under the Next brand name.The focused low-cost strategy is achievable for Next because the business is able to procure products at a lower cost than competitors, which translates into more perceived value by the youth target markets. Next sources from many different countries where labour payments are lesser than in developed countries (such as China) which, in turn, provides the ability for the firm to offer lower prices than other higher end competition offering similar merchandise offerings. This is critical in the contemporary economic environment in the United Kingdom that is still attempting a national recovery from the lingering impacts of the 2008/2009 recession and a variety of austerity packages that are being implemented across Europe and domestically.
Bhasin, H. (2011). Ansoff Matrix. [online] Available at: http://www.marketing91.com/ansoff-matrix/ (accessed 3 March 2013).
Bennet, R. and Rundle-Thiele, S. (2004). Customer satisfaction should not be the only goal, Journal of Service Marketing, 18(7), pp.514-523.
Cheung, F., Cheung, S., Zhang, J., Leung, K., Leong, F. and Yeh, K. (2008). Relevance for openness as a personality dimension in Chinese culture, Journal of Cross-Cultural Psychology, 39(1), pp.81-108.
Dooley, F. (2005). Logistics, inventory control and supply chain management, Choices, 20(4).
Finch, J. (2008). Next splashes £17 million on youth brand Lipsy, The Guardian. [online] Available at: http://www.guardian.co.uk/business/2008/oct/03/next.retail (accessed 4 March 2013).
Heizer, J. and Render, B. (2004). Operations Management Flexible Version Package, 7th ed. Prentice Hall.
Muniz, A. and O’Guinn, T. (2001). Brand community, Journal of Consumer Research, 27(4), pp.412-431.
Murray, A.I. (1988). A contingency view of Porter’s Generic Strategies, Academy of Management Review, 13(3), pp.390-400.
Nandan, S. (2005). An exploration of the brand identity-brand image linkage: a communications perspective, Brand Management, 12(4), pp.264-278.
Next. (2013). Request your directory. [online] Available at: https://www.next.co.uk/dir-mail.asp (accessed 5 March 2013).
Next Plc. (2012). Results for the year ending January 2012 – Chairman’s Statement. [online] Available at: http://www.nextplc.co.uk/~/media/Files/N/Next-PLC/pdfs/reports-and-results/2011/full-year-results-jan-2012.pdf (accessed 3 March 2013).
Next Plc. (2006). Next Plc: Initial Submission. [online] Available at: http://www.competition-commission.org.uk/assets/competitioncommission/docs/pdf/inquiry/completed/2006/storecard/pdf/initial_subs_retailers_next (accessed 2 March 2013).
Pornpitakpan, C. (2003). Validation of the celebrity endorsers’ credibility scale: evidence from Asians, Journal of Marketing Management, 19(2), pp.179-194.
Porter, M. (2011). Ansoff Matrix, Internet Centre for Management and Business Administration. [online] Available at: http://www.quickmba.com/strategy/matrix/ansoff/ (accessed 4 March 2013).
Shannon, S. (2012). M&S Loses Britain’s Largest Clothing Retailer Title to Next, Bloomberg. [online] Available at: http://www.bloomberg.com/news/2012-06-29/m-s-loses-britain-s-largest-clothing-retailer-title-to-next-1-.html (accessed 4 March 2013).
Thompson, A. (2008). The Five Generic Competitive Strategies: Which one to employ?. [online] Available at: http://www.scribd.com/doc/92580197/Five-Generic-Business-Level-Strategies-Thompson-Et-Al-Chap5 (accessed 1 March 2013).
Wright, P. (1987). A refinement of Porter’s strategies, Strategic Management Journal, 8(1), pp.93-100.
Please type your essay title, choose your document type, enter your email and we send you essay samples