Sample Marketing Paper on International Marketing Plan for Puma

1.      Executive Summary

Puma is one of the global leaders in athletic wear based in Germany. It has a renowned brand and an effective competitive advantage. However, despite its renowned brand name, the company has struggled to remain relevant and appealing to its target customers because of ever-changing market trends. Looking at the available opportunities especially in England, it is arguable that Puma can still turn around things and remain strong in the turbulent fashion market.  This marketing plan describes Puma’s business strategy and its [potential to remain a global leader in footwear and sports accessories.

1.1.            Introduction

England is one of the countries that make up the United Kingdom. To the west, it borders Wales and to the north, it borders Scotland. To the West of England lies the Irish Sea while to the Southwest there is the Celtic sea. The country is separated from continental Europe by the English Channel to the south and North Sea to the east. The total population estimate of England as of 2015 was 55 million people. Of all the four countries that make the UK, England is the largest in terms of population. It houses approximately 84 percent of the UK population. The biggest city in England is London which is also its capital city. Other larger cities include Liverpool, Birmingham, Leeds, and Manchester.  England is known globally as the home of football and this has made it attractive to MNC that specializes in football attires such Puma. The British government is a supportive MNC that supports sporting activities; as a result, PUMA’s activity in the UK is widespread in major cities including London, Manchester, Bartley, and Dublin among others. PUMA’s England’s headquarters is located in London, in the heart of South Bank on the River Thames. With its high population in the capital city and investment in sporting activities, England remains an exception host country for MNCs that specializes in sports wares.

1.2.            PUMA Company Background

Puma is a Germany-based company that was incorporated in 1948 by Rudolf Dassler after splitting from the original company into ADIDAS and PUMA.  Headquartered in Germany, it has expanded its branches globally within a span of 70 years and is currently an employer to more than 12000 employees in 45 nations. Puma is recognized as the leading global sports brand. It develops and designs footwear, market and sells them in more than 130 countries globally (Grainger and Andrews, 2003). The company offers performance and sports-inspired lifestyle products in different categories including football, running, golf, motorsports, and running, and general training. In 2013, the company’s CEO introduced the company’s new mission statement which reads; “To be the Fastest Sports Brand in the World.” Puma’s objective is to remain innovative in the market and to be fast in decision-making and fast in problem-solving for its partners. Puma has been growing in terms of revenue generation and in 2018, it generated global revenue of approximately 4.65 billion Euros ranking it as the best performing Sportswear Company in the world (Arndt, 2019).

2.      Global Macro Environment

Puma started its operation in Germany and grew very fast.  Within ten years of its incorporation, its products’ volume increased and the company considered expanding into other European markets including England. England became the first market destination because it offered a good market environment since it embraces various sporting events including football and golf. London, in particular, became an area of growth potential due to its favorable demographics and sports population. Since it sets its foot into England, the company has been recognized as a top employer for dedication to providing the best working environment both for domestic and international workers. With its operation in over 45 countries in the world with a divergent taste of products, the company should consider reinventing and reestablishing itself in a region with marketing opportunities like England. It would be important for Puma to familiarize itself with the needs of its customers in England and the needs of the nation at large to enable it to remain competitive in the region.

PEST Analysis of Puma

A PEST analysis is a methodological analysis of the organizational macro-environment (external market environment).

Political Economics
1.      Generally, the political stability of a country has a significant effect on the business. Puma thus tries to reinvent in a politically stable country (England) to continue with its international success in marketing.

2.      Puma must comply with any restrictions imposed by the British government to avoid uncertainties such as –Boycott Puma

1.      Puma’s business in England is not influenced by fluctuation in the exchange rate because they trade in Euros which is a common currency.

2.      There is a high possibility for the economic slowdown in England and this is likely to affect the consumer purchasing power leading to a decrease in the company’s sales.

Social Technological
1.      A majority of consumers of Puma products are health conscious and value participating in sports. This leads to an increase in the demand for sports products.

2.      There are a changing perception and preferences about sports products

1.      Increase in innovation and superior products that are attractive to consumers due to advance technology.

2.      Technological advancements increase the company’s visibility among its potential customers leading to an increase in sales.

 

2.1.Politics, Rules, And Regulations

There is political risk in business for companies trading in England. The political issue that will affect the existence of Puma in England is Brexit. This is a political strategy by the UK has put in place to harmonize business standards, integrate markets as well as creating cross-border supply chains. The new set of regulations is likely to send some business off the UK market if they fail to play by the new rules. Puma with its strong existence in England especially in London is likely to face the uncertainty brought about by Brexit unless it re-strategizes in line with the new rules and regulations imposed by the UK.

2.2.COS Economy

According to the 2019 Index of Economic Freedom, the economic freedom score of the UK is 78.9. England being the leading country among the UK nations in terms of GDP enjoys the greatest share of this score. This score makes the UK’s economy the 7th freest in the 2019 index. It denotes an improvement in the overall score by 0.9 points. England is ranked 3rd among 44 countries in Europe. Its overall score is relatively above the regional and world average.  According to Jackson (2019) in an article in the Financial Times, 2020 promises to be turbulent with the UK due to official Brexit although there are still no clear details that surround its departure. With a high level of financial crisis and rising pay than inflation, the economy of England is not promising anymore for MNCs like Puma who have heavily invested in its economy.

2.3.COS society and Culture

England has a lively society with diverse cultural life. Its social and cultural characteristics pursuits are unique and of a popular kind. In England, leisure exploitation is increasingly becoming a concern of commerce.  In England, the weekend is the occasion for countryside trips and outdoor activities such as hiking. England has given the world various sports including football, cricket, golf, and rugby among others. The most popular sports and recreational activities that are considered as characteristics of England include basketball, angling, snooker, and swimming (Walker & Braddick, 2006). Therefore, English culture supports sports as an economic activity and this creates markets for sports products. It, therefore, offers the best market for Puma.

2.4.COS Technology

England is one of the countries that embrace the use of technology in various sectors including sports.  In particular, recent developments in sporting technologies have led to the development of varieties of products that improve and increase athletic performance. Puma is not left behind in its technological innovation to fit into the current English market that has become tech-savvy. The company is using technology to enhance athletic performance. In particular, its footwear is user-friendly and are characterized by toughness, flexibility, resistance to moisture, and injury avoidance. These are what the current English sports market is looking for. The advances of technology in advertisement makes it one of the countries to invest because it makes it easy for the company to be visible not only in the English market but also in the global market.

3.       Global Competition Analysis

The global competitive environment for sportswear has grown because sports are not an emerging activity. Puma has proliferated in various world markets where it continues to dominate as the leading manufacturer of sportswear. Although there are several other strong global competitors, Puma has continued dominating the marketing making it difficult for widespread of its competitors in the global market.

3.1.Porter Model of Five Competitive Forces in England

Bargaining power of suppliers: Puma has low bargaining power of suppliers. Its individual suppliers in England are large in number. The company has the ability for forward integration and this reduces chances for stiff competition from other suppliers. It has various suppliers scattered throughout the world making individual suppliers exert more on Puma.

Bargaining power of buyers: Puma’s bargaining power of buyers is low to moderate. Puma has several competitors. However, the switching costs for customers are low. Puma’s bargaining power is enhanced by its product quality and marketing. Its focus is on design and performance enabling us to build good customer loyalty. This leads to a reduction in the power of bargaining of individual buyers which currently is low to moderate.

Threats of substitutes: This is also low to moderate. Its competitors’ products are similar or matching to its products. There are other competitors with low-priced footwear thereby offering a substitute to Puma. However, Puma moderates this threat by the quality and design of its products.

Threats of new entrants:  This is low to moderate because new entrants must begin from the local level. Marketing and disturbing at the international level require a heavy investment that new entrants cannot easily afford.

Level of competitive rivalry: This is strong because the industry has grown saturated and the players on the ground are engaged in stiff competition to snatch market share from one another. Puma has strong competitors that make competition intense.

3.2.Primary Competitor in England

Company Strength Weakness
Puma High product innovation, global supply chain, strong global distribution and sales network, and strong sporting good brand product immutability
Nike (primary competitor) Strong global brand, strong research and development, and low cost of manufacturing High prices

 

3.3.Secondary Competitors in England

Puma’s secondary competitors in England include Adidas and Reebok among others. Reebok’s strength includes; Cool image, celebrity endorsement and, feature-rich products. Its weaknesses include poor awareness. Adidas’ strength includes; powerful brand and distribution network while its weaknesses include a narrow product line.

4.      Target Market Analysis and Segmentation

4.1.Target Market Analysis

Puma uses a mix of segmentation strategies to understand the changing needs of its customers in England.  The current and potential segments of customers for Puma in England include demographics, physiographic and behavioral segments. The strength of the current market segment lies in their lifestyle and purchasing power. Their weaknesses lie in their preference to quantity than quality, and preference to switch between products.

4.2.Target Market Segmentation

Demographic segmentation; Puma’s demographics bases in England include; gender; male and female, income; high and upper-middle, age; kids, and young middle age, and occupation; mainly sportsperson.  Physiographic segmentation buyers in England, on the other hand, are divided into groups based on values, personality, and lifestyle. Lifestyle is sports-oriented and outdoor-oriented. The personality base of Puma includes energetic and ambitious buyers.

4.3.Recommended Target Market Analysis

In England, Puma should target football teams including football academies which have the potential to buy puma products in bulk and repeatedly. The focus of Puma in England has been on football but there is a new group of consumers that it should target also. These are the cyclists because the majority of English people prefer cycling than driving to work.

5.      Entry Strategies Discussion and Evaluation

Puma can use acquisition, direct foreign investment, and merger as the strategy to enter and continue existing in England. The company has the opportunity to form a joint venture with similar companies operating in England. This is a moderately attractive strategy to increase sales volume. It can be a good strategy for risk-sharing but also come with a shared reward. Puma can also consider the direct foreign investment as a strategy that can enable it to acquire business rights necessary to duplicate its German operations in England. Puma may also consider acquiring an established company in England although currently, no company hinted to want to be acquired.

5.1.Entry Strategy Selection and Evaluation

The best entry strategy that should be adopted by Puma in England is the direct investment strategy. Puma is a well-established company with resources to undertake the investment. This strategy will ensure that Puma largely benefits from the profitable success in the new venture.

6.      Global Market Mix Strategies

Global market mix strategies involve the use of various marketing instruments to achieve positive financial results through existence in the global market. Such marketing instruments include price, product, distribution, and promotion (Moulay, 2019).

6.1.Product Strategy

6.1.1.      Current product strategy with examples

Puma uses product differentiation to have a wider market share in England.  For example, the company deals with product categories such as footwear, eyewear, personal care, clothing, watches, and sports accessories. This enables the company to get a high share of the market and increase the basket size of its customers.  The strengths of product differentiation include:

  • Provision of a variety of choices thereby giving customers a wider variety of goods to choose from.
  • Enhanced supplier creativity.

Weaknesses of product differentiation include:

  • Requires a lot of resources to conduct market research.
  • It may result in changing the perception of the customer by viewing differentiated products as similar to others offered in the market at a relatively lower cost.

6.1.2. Recommended product strategy

Product differentiation still remains the recommended product strategy due to its ability to allow the company to effectively communicate the unique feature of its product. It gives room for the creation of a niche for the product.

6.2.Price Strategy

These are approaches undertaken by the organizations to correctly price their products and services in line with the prevailing market demand (Moulay, 2019).

6.2.1.      Current price strategy

Currently, Puma is using premium pricing because its products are top-notch quality. The strength of this strategy is that it gives the organization the potential to achieve a high-profit margin. Secondly, it helps the company to enhance its brand identity. Its weaknesses include being difficult to imitate and maintain. Secondly, there are significant risks associated with under or over-producing premiums.

6.2.2.      Recommended pricing strategy

The company should adopt penetrating pricing strategy to penetrate the market and capture the most shares. In particular, it should set initial prices relatively lower than its competitors then increase it slowly as the demand rises.

6.3.Promotion Strategy

Promotional strategies are important in helping to position a company in a favorable position. It helps the company to open the door for its future communication (Moulay, 2019).

6.3.1.      Current promotion strategy

Currently, Puma is using various promotion strategies with an emphasis on social media promotion. It uses Google+ and Websites to promote its products and services in a relatively relaxed environment. The strength of this promotional strategy is that it has an excellent user experience. Secondly, it has a feedback mechanism that makes it easy for the company to understand the needs and wants of its users. The weaknesses include weak protection of user’s information and attitude towards certain social media platforms.

6.3.2.      Recommended promotion strategy

The recommended promotion strategy that Puma should use is the customer referral incentive program. This strategy will encourage current customers to refer new customers to Puma can consider using incentives such as big discounts and cash rewards. This promotional strategy will leverage Puma’s customer base as a sales force.

6.4.Place Strategy

This is a strategy that outlines where can best place its products and services purposely to gain market share and consumer purchases.

6.4.1.      The current strategy in place

Currently, Puma uses physical stores to offer a full range of products and services to its customers throughout England. The strength of place stores lies in its ability to have a common location where all customers can access. It also gives the opportunity for the customer to walk in and choose a variety of products that fits his/her needs. The weakness of the physical store in that customer from a far distance may not know about the product or the actual location to find the product.

6.4.2.      Recommended place strategy

Puma should consider appearing in popular television shows and movies. This is a globalized marketing effort to reach a wide audience. They should consider selecting a brand ambassador with a large following to make its products appealing not only in England but also in the global marketplace.

7.      Conclusion

Since its incorporation in 1941, Puma has become one of the most favored brands globally. The company has redefined its structure leading to a new image. Currently, Puma remains the most competitive brand in the market and competes effectively with other market leaders such as Nike and Reebok among others.

 

References

Arndt, F. (2019). Equity valuation of PUMA SE. Retrieved from https://repositorio.ucp.pt/bitstream/10400.14/29289/1/152417041%20Fabian%20Arndt%20W.pdf

Grainger, A., & Andrews, D. (2003). Postmodern Puma. M/C: A Journal of Media and Culture6(3), 1-10. Retrieved from http://journal.media-culture.org.au/0306/08-postmodernpuma.php

Jackson, G. (2019, January 2). Economists predict the UK economy’s trajectory in 2019. Retrieved from https://www.ft.com/content/4b566c36-0521-11e9-9d01-cd4d49afbbe3

Moulay, I. (2019). Marketing Communication Plan for Hedgehog foods and beverages. Retrieved from https://www.theseus.fi/bitstream/handle/10024/260761/Ismail%20Final%20Bachelor-Thesis-Marketing-Communication-Plan-for-Hedgehog-OY-converted.pdf?sequence=2

Walker, S., & Braddick, M. J. (2006). Political culture in later medieval England. Manchester: Manchester University Press.