Masaryk University Faculty of Economics and Administration MASTER THESIS B.Sc. Dušan Mladenović Brno, 2013 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Page 8 of 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Masaryk University Faculty of Economics and Administration Marketing plan Master thesis Student: Advisor: 401140 Mladenović Dušan PhD Alena Klapalová Brno, 2013 Page 9 of 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Page 10 of 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Masaryk University Faculty of Economics and Administration Department of Corporate Economy Academic year 2012/2013 ASSIGNMENT OF DIPLOMA THESIS For: Mladenović Dušan Field: Business Management Title: Marketing plan Principles of t h e s i s w r i t i n g: Objective of the thesis: The main objectives of the thesis are to analyse present market situation of the chosen company concerning its marketing management problem, to analyse the market and to develop marketing plan according the results of analyses. Approach and methods used: 1. Literature search on all relevant topics (marketing strategy, marketing plan, market analyses etc.), 2. current situation and market analyses, 3. proposals of marketing plan. Methods: All relevant methods of market and marketing analysis and market research, e.g. SWOT analysis, survey, interview. Page 11 of 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. The extent of graphical works: according to the supervisor's guidelines the assumption is about 10 charts and graphs The thesis length without appendices: 60 – 70 pages List of specialist literature: LEE, K. a S. CARTER. Global marketing management. 3rd ed. New York: Oxford University Press, 2012. 592 s. ISBN 978-0-19-960970-3. CATEORA, P. R. a J. L. GRAHAM. International marketing. 13th ed. Boston: McGraw-Hill, 2007. 702 s. ISBN 0-07-308006-3. ONKVISIT, S. a J.J. SHAW. International marketing: strategy and theory. 5th ed. London: Routledge, 2008. 710 s. ISBN 978-0-415-77262-4. MULLINS, J. W. a O.C. WALKER. Marketing management: a strategic decisionmaking approach. 6th ed. New York: McGraw-Hill, 2008. 533 s. ISBN 978-0-07338116-9. FARRIS, P.W. a N.T. BENDLE. Marketing Metrics: The Definitive Guide to Measuring Marketing Performance. 2nd ed. Upper Saddle River: Pearson Prentice Hall, 2010. 432 s. ISBN 0-13-705829-2. HOOLEY, G. J. a J.A. SAUNDERS. Marketing strategy and competitive positioning. 3rd ed. New York: Prentice Hall, 2004. 622 s. ISBN 0-273-65516-7. CRAVENS, D. W. Strategic marketing. 9th ed. Boston: McGraw-Hill, 2009. 784 s. Diploma thesis supervisor: Ing. Alena Klapalová, Ph.D. Date of diploma thesis assignment: 1/11/2012 Submission deadline for Diploma thesis and its entry in the IS MU is provided in the valid Academic Calendar. Department Head Dean In Brno on 1/11/2012 Page 12 of 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Abstract This thesis aims to develop a marketing plan for Yugomar d.o.o. – a Serbian company that intends to get into Bulgarian market. The thesis consists of theoretical part which gives overview of the main categories connected with marketing plan and analysis that needs to be done. Practical part is continuation of the theoretical one and furthermore it gets profound into details about Bulgarian market as such, detailed inquiry and analysis done and moreover proposed marketing plan for Yugomar d.o.o. which is based on the findings. Considering all data gathered while conducting the market analysis Bulgaria proved to be “promising” market with much of potential growth to expect in the following years. However Yugomar d.o.o. has to perform necessary marketing action with utmost care in order to launch its business operations as smooth as possible. Key words Marketing plan, market analysis, SWOT, PESTEL, marketing mix, Yugomar d.o.o., Bulgaria, Serbia, Master thesis Page 13 of 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Author's statement I hereby declare that this thesis I submit for assessment is entirely my own work and has not been taken from the work of others save to the extent that such work has been cited and acknowledged within the text of my work. In Brno_________________ _____________________ Dušan Mladenović Page 14 of 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Acknowledgements Hereby, I would like to express my deepest appreciation to the people who sacrifice their own time helping me to make this work done. First of all, PhD Alena Klapalová, for mentoring, and all-time long supports with abundance of invaluable advices. Moreover, I would like to mention people from the management of the “Yugomar d.o.o.”, who provided me with sufficient amount of data to base my work on. Furthermore, I would like to thank to my parents for supporting me and my decisions all time long during my studies. Moreover the person without who this thesis would be endangered - Maja Ahmić, and all others that have contributed in any respect. Page 15 of 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Page 16 of 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Table of contents Chapter I – Introductory part............................................................................................................ 22 1.1. Preface......................................................................................................................................... 23 1.2. Problem definition ...................................................................................................................... 24 1.3. Research questions and goal ...................................................................................................... 25 1.4. Methodology employed .............................................................................................................. 26 1.4.1.Primary quantitative research ................................................................................................ 26 1.4.2.Secondary research .................................................................................................................. 27 1.5. Brief introduction to the Company’ history ............................................................................. 28 Chapter II – Theoretical background ................................................................................................ 29 2.1. Definition of marketing strategy ............................................................................................... 29 2.2. Definition of marketing plan ..................................................................................................... 30 2.3. Marketing plan structure .......................................................................................................... 30 2.4. PEST/PESTEL/PESTLE analysis ............................................................................................. 32 2.5. SWOT analysis – historical overview and definition ............................................................... 34 2.6. The five forces model of competition ........................................................................................ 36 Chapter III – Analytical part ............................................................................................................. 39 3.1. Situation analysis ........................................................................................................................ 39 3.2. Textile production history in Bulgaria ..................................................................................... 39 3.3.PEST/PESTEL/PESTLE analysis .............................................................................................. 40 3.3.1. Political factors ........................................................................................................................ 40 3.3.2. Economic factors ..................................................................................................................... 42 3.3.3. Socio-cultural factors .............................................................................................................. 44 3.3.4. Technological factors .............................................................................................................. 46 3.3.5. Environmental factors ............................................................................................................ 47 3.3.6. Legal factors ............................................................................................................................ 47 3.4. Competition ................................................................................................................................ 48 3.4.1. Domestic competition .............................................................................................................. 48 3.4.2. International competition ....................................................................................................... 49 3.5. The five forces model ................................................................................................................. 51 3.5.1. Rivalry among competitors .................................................................................................... 51 3.5.2. Possibility of new entrants ...................................................................................................... 52 3.5.3. Threats of substitutes .............................................................................................................. 52 3.5.4. Bargaining power of suppliers................................................................................................ 52 Page 17 of 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 3.5.5. Bargaining power of buyers ....................................................................................................52 3.6. SWOT analysis............................................................................................................................53 3.6.1. Strengths...................................................................................................................................54 3.6.2. Weaknesses ...............................................................................................................................54 3.6.3. Opportunities & Threats .........................................................................................................55 3.7. Market segmentation ..................................................................................................................55 3.8. Target market .............................................................................................................................59 Chapter IV - Marketing Objectives ....................................................................................................62 4.1. Theoretical overview ..................................................................................................................62 4.2. SMART goals – Yugomar d.o.o. ................................................................................................63 Chapter V – Tactics ...........................................................................................................................66 5.1. Marketing mix ............................................................................................................................66 5.1.1. Product strategy .......................................................................................................................66 5.1.2. Place/distribution strategy ......................................................................................................67 5.1.3. Pricing strategy ........................................................................................................................71 5.1.4. Promotional strategy ................................................................................................................73 5.2. Marketing risks ...........................................................................................................................76 Chapter VI – Budget ..........................................................................................................................79 6.1. Financial issues ...........................................................................................................................79 6.2. Sales forecast ...............................................................................................................................80 6.2.1. Market build-up method .........................................................................................................80 6.2.2. Chain ratios model...................................................................................................................81 6.3. Expenses forecast ........................................................................................................................82 6.4. Expenses and marketing plan ....................................................................................................83 Chapter VII – Control........................................................................................................................85 7.1. Theoretical overview and importance of control ......................................................................85 7.2. Variables affecting control system .............................................................................................86 7.3. DMAIC six sigma improvement process ...................................................................................87 7.3.1. Define ........................................................................................................................................88 7.3.2. Measure ....................................................................................................................................88 7.3.3. Analyze .....................................................................................................................................89 7.3.4. Improve ....................................................................................................................................90 7.3.5. Control......................................................................................................................................90 Chapter VIII – Conclusion................................................................................................................91 Page 18 18 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 8.1. Summary..................................................................................................................................... 91 8.2. Contributions of the thesis ......................................................................................................... 93 8.3. Limitations and suggestions....................................................................................................... 93 8.4. Self-evaluation ............................................................................................................................ 94 Chapter IX – Appendices ................................................................................................................. 101 Appendix A: Estimated expenses for each proposed event .............................................................. 102 Appendix B: Questionnaire “Yugomar d.o.o.” ................................................................................ 106 Appendix C: Interview with Mr. Zoran Mitrović (owner of Yugomar d.o.o.)................................... 120 Page Page19 19of of107 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. List of tables Table 1: Average spending on clothing and footwear 40. Table 2: Salary trend comparison 40. Table 3: Clothing and footwear spending in the average 41. Table 4: Demographics of the population 42. Table 5: Urbanization degree 42. Table 6: Population in aspect of age and employment 43. Table 7: Main international competitors of Yugomar d.o.o. at Bulgarian market 48. Table 8: SWOT Matrix scheme for the Yugomar d.o.o. (Bulgarian market) 50. Table 9: Market share of the biggest competitors in the Bulgarian market 58. Table 10: Typical Bulgarian customer in Yugomar stores 58. Table 11: SMART goal – Market Share 62. Table 12: SMART goal – Sales income increase 63. Table 13: SMART goal – Retention rate 63. Table 14: Expenses forecast in EUROS 84. Table 15: Expenses and marketing plan linkage in EUROS 84. Page 20 20 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. List of figures Figure 1: Yugomar logotype 23. Figure 2: SWOT matrix 31. Figure 3: Made in Bulgaria sticker 37. Figure 4: Monthly wages in Bulgaria 39. Figure 5: Inflation rate in Bulgaria 72. Figure 6: Expenses and marketing plan linkage in euros 85. Figure 7: DMAIC improvement process 89. Page 21 21 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Intentionally left blank. Page 22 of 117 Page 22 of 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Chapter I – Introductory part 1.1. Preface The recent crisis has highlighted many failures in traditional economics attempt to explain the way how market behaves and more important how to approach targeted market in a unique, effective and cost-effective way. Hereby I am going to try to uncover and state some of the information which concerns textile retail industry both within Serbian and Bulgarian market, particularly having in mind “Yugomar d.o.o.”. This company from South-eastern Serbia is one of the minor Serbian companies striving to get on the neighboring markets. Primarily based on primary and secondary researches that have been done previously, a huge amount of relevant information about Bulgarian market could be found; saying specifically Bulgarian market, taking into consideration the Company’s 1 intention to launch its own business on that specific market. But of course on the other side more profound analysis is required for constituting a firm base for delivering a marketing strategy which will be suitable and consistent with ongoing and current trends on the market. Within this thesis some of the minor improvements could be found primarily in order to overcome consequences of recent economic crisis which however affected textile industry severely. Negative foretokens in the annual P/L2 statements of the textile retailer firms generally, is something that could be seen and found very often these days. And this is definitely not the cause of satisfaction to the management. Of course, textile retailer industry is not the only one influenced in this case. Furthermore, the post-socialistic context of both Serbian and Bulgarian economy makes this research even more complex bearing in mind limited availability of relevant and actual data and overall transparency of the institutions. Adding the fact that entrepreneurships awareness of the locals in Serbia is on the level which is not even worth mentioning – all this combined presented the huge challenge for me while working on this thesis. 1 2 Here referring to “Yugomar d.o.o.” Annual Profit and Loos statement hereafter P/L statement. Page23 23ofof107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Another fact that should definitely be taken into consideration is that Bulgaria is EU member while Serbia is still candidate state on the other side. This is important because of the differences in general legislation, tax legislation, custom legislation among EU and Non-EU states. So once again, this imposes a necessity of huge adjustments in terms of the business operating to the valid EU standards and laws. Moreover, the Company’s actual business locus is being analyzed in order to find the exact room available for improvements, in order for Company to be unique and creative in launching its marketing activities. 1.2. Problem definition As a matter of time and consistency of doing a business with increasing profitability over time, the logical step forward is to expand and to strive to get as much benefits from the market as possible. One of the possibilities is to go abroad, in order to compete internationally. Maybe at the first sight this alternative seems to be easy achievable and manageable but it brings up to the surface enormous amount of barriers and obstacles that have to be overcome in a specific period of time with limited resources. This step of going abroad is a critical point in firm’s existence, in both positive and negative terms. On one side it could skyrocket the revenues and profits, but contrary it could push the Company to the edge of existence and every day activities. The list of negative examples of poor-prepared international performances of Serbian enterprises is quite long unfortunately. All in all, when going abroad sometimes even “shocking” amount of elements have to be taken in consideration. Starting from Company’ long-run strategy goals over political/economic/social situation in the given country to the statistical data that would have to be gathered conducting on-field researches. Anyway, in several past years Yugomar d.o.o. has tried to get abroad (unsuccessfully). This is due to the lack of effective marketing strategy and profound research of the targeted markets. The following aspects are considered when defining research questions: 1. The objective is to develop marketing strategy for Yugomar d.o.o. and to describe how the Company should organize its appearance on the local Bulgarian market; 2. This research focuses on Bulgaria, based on actual data; 3. Due to the time frame, certain information were unavailable, therefore they are estimated. Page24 24of of107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Considering the aforementioned facts few of the main goals I am going to strive to fulfill are: 1. Determine the focus group; 2. Determine the data in terms of average shopping, monthly income etc.; 3. Detection of marketing risks; 4. Introducing the implementation plan; 5. Introduction of modern strategies and tools; 6. Determining the costs of the proposed marketing activities. 1.3. Research questions and goal Each research demands certain questions that should be answered in a certain time frame in order to get sufficient amount of solid and relevant information to base marketing plan and strategy on. This is for sure really delicate and demanding stage when Company decides to get abroad. Moreover management should approach to this point with most of its attention as a prevention of distorted data that might easily be gathered and collected. These questions should accommodate decision makers to shape their own strategy and plan how to “conquer” the targeted market or segment. Listed down below are the crucial research questions that should direct me throughout the work. 1. What are the biggest challenges of the given Company? 2. What are the expected benefits Company might get if perform internationally? 3. What combination of marketing mix Company should implement on a given market? 4. Should company standardize or localize offer? 5. Who are the main competitors (both domestic and international)? 6. What kind and amount of initial costs Company might expect? Furthermore, I would strive to deliver affordable, creative and relevant marketing plan which should help Company to have a smooth start on a foreign market (in this case Bulgarian). Of course, underlining the fact this should be achieved bearing in mind limited resources and previously predetermined time frame. The questions I listed previously should help me and Page Page 25 25 of of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. direct me toward the main aim of this paper – to come across with a remarkable marketing plan which is easy to put into practice and which will target certain niche of the market. 1.4. Methodology employed For the purpose of this thesis I employed and used both quantitative and qualitative methods. Quantitative research refers to the systematic empirical investigation of social phenomena via statistical, mathematical or computational techniques (Given, Lisa M; 2008). Using quantitative methods numerous data could be collected, processed and interpreted for a variety of purposes. This type of researches implies ‘on-field’ activities in order to gain as much relevant data as possible. The relevancy of the information gathered is an enormous advantage, although rigorous research practices are required so as to render the research successful and of normative relevance. Qualitative research is a method of inquiry employed in many different academic disciplines, traditionally in the social sciences, but also in market research and further contexts (Denzin, Norman K. & Lincoln, Yvonna; 2005). Qualitative researchers aim to gather an in-depth understanding of human behavior and the reasons that govern such behavior. When I got to the segmentation part of my paper I realized instantly that proper segmentation and certain conclusions would not be possible without using some of the qualitative methods in the respect of the human behavior, psychological variables etc. Worth emphasizing is the important fact that both quantitative and qualitative methods could be used within both primary and secondary researches. 1.4.1.Primary quantitative research Primary researches are experiments, investigations, or tests carried out to acquire data firsthand, rather than being gathered from published sources (www.businessdictionary.com). For the purpose of this paper and having in mind that customer’s perception of the given company is of the most importance, I have launched an online survey/questionnaire in order to gather valuable data which could be further used and evaluated. The survey consists of 20 carefully prepared questions. Aforementioned questionnaire includes both open-ended and Page 26 of 107 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. closed-ended (in form of multiple choice) questions. The process of gathering data through online-survey has been processed from 10.08.2012 to 29.08.2012 (twenty days). Furthermore, the volume and quality of the responses are extraordinary and of high importance for the relevance of this paper. In terms of the respondents, by the end of collection period 1127 questionnaires have been successfully completed and submitted, a great number of which included constructive comments. Primarily considering the most frequently visited virtual places of Yugomar’s customers, survey has been posted in Facebook, Twitter, LinkedIN, online portals, as well in the form of circular mail in order to gather as relevant as possible. As is self-evident, the survey results feature heavily throughout the proposal itself. For further reference, please find full questionnaire in the Appendix. 1.4.2.Secondary research Secondary research (also known as desk research) involves the collection and/or synthesis of existing research papers and articles which are previously being published (Sunny Crouch, Matthew Housden; 2003). Examples of secondary information include reports and studies by government agencies, trade associations or other businesses within specific industry. In terms of resources and organizational issues, secondary researches techniques are much less demanding. Such research implies taking information that has already been collected and processed by other individual, institution, company or authors. I incorporated an array of reliable data during my research and test period. Most frequently used keywords while searching were: marketing plan, marketing strategy, marketing analysis etc. Indeed, it must be said that without the possibility of acquiring and using data of this nature, the existence of this paper would have been endangered and its successful would be under huge question mark. Hereby I would like to emphasize the fact of using numerous data from different authors, publishers, freelancers and management of a given Company. Furhermore, secondary sources are being used constantly through all the analysis stages that have been conducted. Mainly referring to the Company’s internal documentation, official data of Statistical office of Republic of Serbia, information gathered from National Statistical Institute of Bulgaria, numerous web-sites and portals, as well as book based references. Page 27 of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 1.5. Brief introduction to the Company’ history “Yugomar” doo is privately owned company which was established in December 1994 in Niš, Serbia. The owner and general manager is Zoran Mitrović. The main business activities of the firm are designing, producing, distribution and selling of Figure 1: Yugomar logotype the man-women clothes and accessories. Established in very harsh time for the Serbian economy, it has survived most of what other firms could not even dream about. At the beginning, in autumn of 1994 it had exactly five employees. Now, in 2013 – nineteen years later it has in total 250 employees. The progress is apparent, on-going and significant. The very first store in Serbia was opened in the city of Niš (where actually is Yugomar’s headquarter and production lines are based), in the southern province of Niški okrug, in 1994, and the most recent in Kruševac 2010, Central Serbia region. Today, Yugomar stores can be found in 17 cities overall. A majority would agree that the Company’s growing market share is primarily due to the extraordinary locations of the stores themselves. Nevertheless, any meaningful research in this area must go beyond a single cause if it is to fully convey the reasons for the company’s success in Serbia. As a results of managers open-mindedness and long-term strategies, Company plan to extend its operations (mainly retail sector) to the neighboring country (Bulgaria and FYR Macedonia are first on the list3). In order for these ambitious goals to be fulfilled in a decent time frame specific and carefully prepared actions have to be introduced. Unfortunately Company already has experienced the consequences of poor preparation and research stage. Namely, there was fiasco when Company tried to get to the market of Bosnia and Herzegovina in 2008. “Unsuccessfully” - is the polite word considering the financial tsunami that happened after that adventure. 3 Internal documentation of the Company. Page 28 of 117 Page 28 of 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Chapter II – Theoretical background Marketing is about letting people know about the product or service you offer, and persuading them to buy or use it. And for effective marketing one has to let people know about the products or services repeatedly and in unique way. Pretty simply one-sentence proverb by Benjamin Franklin could easily bring up the exact meaning of marketing planning, regardless that it was not stated in context of economics and marketing: “If you fail to plan, you are planning to fail4” - Benjamin Franklin (USA scientist and state official) This practically means that if someone fails to set a proper plan on time, the probability of failure is increasing proportionally. As I noted before this proverb has not been stated in any context of marketing, but definitely it has a lot to do with marketing strategy and plan. Logical questions arise than: What is marketing strategy and further marketing plan? Are they interrelated and interdependent? 2.1. Definition of marketing strategy Various definitions of marketing strategy can be found. One that I found appropriate for the purpose of this thesis, states that marketing strategy is a process that could enable an organization to focus its resources and funds on the optimal opportunities with the aims of increasing sales and managing a sustainable competitive advantage (Baker, Michael; 2008)5. The marketing strategy is framed by Company’s overall business goals. It includes a definition of business, a description of products/services offered, a profile of target users and clients, and further defines company's role in relationship to the competition. It is essentially a document that management uses to judge the appropriateness and effectiveness of specific marketing plans. 4 5 Source: www.goodreads.com/quotes/460142-if-you-fail-to-plan-you-are-planning-to-fail accessed: 04.04.2013. Baker, Michael; The Strategic Marketing Plan Audit; 2008.; p.3 Page 29 of 107 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. To put it another way, marketing strategy is a summary of company's products and position in relation to the competition; your sales and marketing plans are the specific actions you are going to undertake to achieve the goals of your marketing strategy. Since the aim of this paper is not to work on marketing strategy, but instead to focus on the marketing plans, more attention will be attributed to marketing plan itself. 2.2. Definition of marketing plan “Customers can’t always tell you what they want, but they can always tell you what’s wrong” - Carly Fiona (Entrepreneurial Thought Leaders) Having a look at the statement above, one could easily draw a conclusion that nothing but ambiguity could be seen. But when thinking more profound, this statement has sense. One of the purposes of creating a marketing plan is to avoid business actions that are going to show us “what is wrong”. Primarily on basis on previously conducted researches company should have in mind how to act in order to get positive feedback from the customers. Definition of the marketing plan by which Susan Ward (2010) says that a marketing plan defines the particular actions one plans to carry out to interest potential customers and clients in one’s product and/or service and make them to buy the product and/or services one offers, in my opinion is the most appropriate one 6 Years of researching worldwide in this area put into use a great variety of different definitions that considers marketing plan. 2.3. Marketing plan structure If a company with a serious vision and straight forward marketing strategy seeks to conquer a particular customer group, firstly it needs a vision. Vision itself causes to make actions. Action itself demands a high profile strategy which furthermore seeks for a well-organized 6 J. Susan Ward; Development International Marketing Strategy; 2009; p 101; Page 30 30 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. plan and action. It is a never ending circle of few main elements to perform a good quality marketing strategy. Marketing plan should be detailed and exact. Innovation is one of crucial factors of well performed marketing plan. It is not a simple, but rather a complex process for each individual, therefore for entire company. As Phillip Kotler said (in Cruch and Housde, 2003), marketing plan in general should consists of situational analysis as a first step, defining the objectives as a second, shaping the strategy, defining tactics, estimating the budget and establishing the system of controls 7: 1. Situational analysis. By situational analysis company examines the macro forces (economic, political-legal, social-cultural, technological) employing different tools and considering different individuals in its environment (company, competitors, distributors, and suppliers). The company carries out a SWOT analysis (strengths, weaknesses, opportunities, and threats). PESTEL analysis is one more useful tool which implementation is strongly recommended. 2. Objectives. Based on identifying its best opportunities from its situational analysis, the company ranks objectives and sets goals. The company could also set subobjectives in respect to its stakeholders, image/reputation, technology etc. 3. Strategy. Every goal could be achieved in a variety of different ways. It is of the greatest importance for the strategy to pick to most effective course of action. 4. Tactics. The strategy must be spelled out in great detail regarding the 4Ps and the actions that will be taken in calendar time by specific individuals who are about to carry out the plan. 5. Budget. The company’s planned actions and activities involve costs that add up to the budget that it needs to achieve its objectives. 6. Controls. The company must set review periods and measures that will reveal whether it is making progress toward the goal. When performance lags, the company must revise its objectives, strategies, or actions to correct the situation. One of the most critical stages is definitely situational analysis which provides a solid base for the further steps. If the current situation (internal and external environment) is being analyzed wrongly all the further stages are going to present the distorted picture of reality. In 7 Sunny Crouch, Matthew Housden; Marketing research for managers; The Marketing Series ; Chartered Institute of Marketing. Butterworth-Heinemann; 2003; p. 19 Page 31 31 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. case of Yugomar d.o.o. that would mean that if any important fact would be neglected during one of the situational analysis it is going to affect the marketing plan as an outcome severely. As Dwight Eisenhower once said: “In preparing for battle I have always found that plans are useless but planning is indispensable8” On basis of this the benefit of planning might lie less in the plan as itself than in the process of planning. It might sound ambiguous, but the point is that during the process of planning information that we get are going to be included in the plan at the very end of the process. A marketing plan should not be a just a pure letter on the paper. It must be put into practice. Without detailed and well organized implementation in particular territory and with particular target group, plan is more or less doomed to fail. To sum up the marketing plan is completely useless unless it is not putted into practice. According to the Professor Quinn (in Cherington, 1980): “Marketing plans will not produce a dollar of profit if you don’t implement them”9 And this perfectly makes sense, every plan is being made in order to be implemented so as marketing plans. 2.4. PEST/PESTEL/PESTLE analysis For the purpose of effective creation of marketing plan I employed PEST analysis. Together with usage of internal micro-environmental factors and internal drivers it creates so-called SWOT matrix. According to the Oxford University press PESTEL shapes the framework of macro-environmental factors such as political, economic/social and technological variables) used in the macro/ external environment scanning (Oxford University Press – Oxford digital journal; 2012). On the other side according to the some authors10 Legal component should be added and further acronym should look like to SLEPT (Oxford University Press - Oxford digital journal; 2012). Basing on the same source what is much more popular in the United Kingdom is PESTEL or PESTLE concept. However this extended variation of original PEST model includes both environmental and legal categories. This way PESTEL analysis is more complex on one side, but provides much more information about the certain market. 8 9 http://www.brainyquote.com/quotes/quotes/d/dwightdei164720.html accessed: 01.04.2013. Paul T. Cherington; The Elements of Marketing ; The Macmillan Co. N. Y.; 1980; p 75 Page Page 32 32 of of 107 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. In the 1980s, several other authors (Fahey, Narayanan, Morrison, Renfro, Boucher, Porter) included variations of the taxonomy classifications in a variety of orders: PEST, PESTLE, STEEPLE etc.11. As far as I found out, there is no implied order or priority in any of the formats given. From my research, the earliest known reference referring to tools and techniques for ‘Scanning the Business Environment’ appears to be by Francis J. Aguilar (1967) who discusses ‘ETPS’ – acronym for the four sectors of his taxonomy of the environment: Economic, Technical, Political, and Social. On the other hand, Arnold Brown for the Institute of Life Insurance (USA) reorganized it as ‘STEP’ (Strategic Trend Evaluation Process) as a way to organize the results of his environmental scanning12. It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. So as already mentioned PESTEL acronym includes specific categories and variables that are being considered and analyzed. Hereby quick theoretical overview of the factors13 that are connected with PESTEL concept can be observed. Political factors represent to what degree the government intervenes in the economy. Furthermore this category legislation, environmental includes law, trade areas such restrictions, tariffs as tax and policy, labor overall political stability/instability. Under political factors I assume goods and services that are subsidized by the local government. Economic factors are of great importance for the given analyses, since they consider variables and categories like economic growth, interest rates, exchange rates, inflation rate etc. Getting familiar with this kind of information is imposed as a necessity for one company, regardless if it wants to get abroad. Moreover this indicator represents the overall economic situation in the country. 11 Lewis K. S. Lim; Development of Archetypes of International Marketing Strategy ; Journal of International Business Studies, Vol. 37, No. 4; Jul 2006; 12 Lewis K. S. Lim; Development of Archetypes of International Marketing Strategy ; Journal of International Business Studies, Vol. 37, No. 4; Jul 2006; 13 Lewis K. S. Lim; Development of Archetypes of International Marketing Strategy ; Journal of International Business Studies, Vol. 37, No. 4; Jul 2006; Page Page33 33ofof107 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Social factors on the other side include the cultural/religious/language context of the given country. Nowadays factors like population growth rate, age distribution, career attitudes, emphasizes on quality shape a company’s operating in a huge extent. Technological factors include technological aspects such as research and development investments, technology incentives, rate of technological change etc. These factors could determine and shape barriers for entry, efficient production level and further influence outsourcing decisions. Environmental factors include ecological and environmental aspects such as weather, climate, and climate change, which may especially affect industries such as tourism, farming, and insurance. Furthermore, growing awareness of the potential impacts of climate change is affecting how companies operate and the products they offer, both creating new markets and diminishing or destroying existing ones. Nowadays it became the necessity to operate in an “environmental-friendly” way. Legal factors include discrimination law, consumer law, antitrust law, employment law, and health and safety law. These factors can affect how a company operates, its costs, and the demand for its products. 2.5. SWOT analysis – historical overview and definition SWOT analysis came from the research conducted at Stanford Research Institute during the 1960‘s. The research was funded by the fortune 500 companies to find out what could be done in order to prevent corporate planning failure. It all began with the corporate planning trend, which seemed to appear first at Du Pont in 1949. By 1960 every Fortune 500 company had a ‘corporate planning manager’14. However a unanimous opinion developed in all of these companies that corporate planning in the shape of long range planning was not working, did not pay off, and was an expensive investment in futility. 14 Committee on the Next Decade in Operations Research; Operations Research: The Next Decade; Vol. 36, No. 4; July. Aug 1988; Page Page 34 34 of of 107 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. The fact remained, despite the corporate and long range planners, that the one and only missing link was how to get the management team agreed and committed to a comprehensive set of action programs. To create this link, Robert F Stewart at SRI in Menlo Park California lead a research team to discover what was going wrong with corporate planning, and then to find some sort of solution, or to create a system for enabling management teams agreed and committed to development work, which today we call ‘managing change’. The research carried on from 1960 through 1969. One thousand and four hundred companies and organizations were interviewed and a 250-item questionnaire was designed and completed by over 5,000 executives. Seven key findings lead to the conclusion that in corporations chief executive should be the chief planner and that his immediate functional directors should be the planning team. They further discovered that they could not change the values of the team nor set the objectives for the team so we started as the first step by asking the appraisal question like “What is good?” and “What is bad about operations?” Further they began by asking what is good and bad about the present and the future. What is good in the present good should be in the Satisfactory, future is an Opportunity; bad today is a Fault and bad in the future is a Threat. This was called the SOFT analysis. Later on in 1964, Urick and Orr changed the F to a W and called it SWOT Analysis. SWOT was then promoted in Britain by Urick and Orr as an exercise. What was necessary was the sorting of the issues into the programed planning categories of: Figure 2: SWOT matrix Source: www.it.toolbox.com/ accessed: 04.04.2013. 1. Product - what are we selling? Page 35 35 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 2. Process - how are we selling it? 3. Customer - to whom are we selling it? 4. Distribution -how does it reach them? 5. Finance - what are the prices, costs and investments? 6. Administration - and how do we manage all this? The second step then becomes ‘what shall the team do’ about the issues in each of these categories. The planning process was then designed through trial and error and resulted finally in a 17 step process beginning with SOFT/SWOT with each issue recorded separately on a single page called a planning issue. According to the Albert Humphrey SWOT analysis/matrix is a structured planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. A SWOT analysis can be carried out for a product, place, industry or person (SRI alumni newsletter; 2005). Setting the objective should be done after the SWOT analysis has been performed. This would allow manageable goals or objectives to be set for the organization. On the figure presented: SWOT (Information Security in the Enterprise magazine – New Paradigm 8pt. ; 2010). Without using the PESTEL and SWOT analysis combined or separated it is very difficult to have relevant insight and clear picture of the whole situation. That is one of the reasons why majority of authors recommend usage of these tools in order to get most proper outcome. 2.6. The five forces model of competition Porter’s five forces analysis has been made up in 1979. As Porter suggested five main forces shape and distinct competition at the level of strategic units and that a detailed analysis of each in turn could assist managers to find out the keys to competitiveness in their particular area of industry (Hooley, Saunders, Piercy; 1993). Page Page 36 36 of of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. This model is widely used, not only for profit oriented organizations, as well organizations like public institutions and non-profit sectors organizations are using five forces model in order better to understand their customers, suppliers and other organizations (Terpstra, Sarathy;1999). As Porter originally determined five categories15 after which this model got its name are: 1. Rivalry among existing companies. The rivalry is likely to be more intense in case some of the following characteristics appear: period of low market growth, where exit barriers are high and product’s differentiation is low etc. 2. The threat of market entry. Entry barriers could be low where some of the following applies: entry costs are low, differentiation is low and there are gaps in the market in terms of uncovered market segments etc. 3. The threat of substitutes. Substitutes might come either from new entrants or from existing companies. 4. Bargaining power of suppliers. Suppliers tend to have more power in the following cases: suppliers are more concentrated than buyers, cost of changing suppliers are high etc. 5. Bargaining power of buyers. Customers tend to be more powerful in the supply chain if: they are more concentrated than sellers, there are alternative sources of supply or buying switching costs are low. To sum up, Porter's five forces include - three forces from 'horizontal' competition: the threat of substitutes, the rivalry among existing companies and the threat of new market entrants; on the other side two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers.However, Porter's framework has been challenged by other academics and strategists such as Stewart Neill16 and Kevin P. Coyne17 They stated that three dubious assumptions underlie the five forces: 15 Robert M. Grant; Porter's 'Competitive Advantage of Nations': An Assessment; Strategic Management Journal, Vol. 12, No. 7; Oct 1991; 16 Ungemach C., Chater N. & Stewart N.; Are probabilities overweighted or underweighted, when rare outcomes are experienced (rarely)? Psychological Science; 2009; p 473-479. 17 Kevin P. Coyne and Shawn T. Coyne; A Better Approach To Breakthrough Ideas, HarperCollins Publishers; 2011; Page of 107 117 Page 37 37of Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 1. That buyers, competitors, and suppliers are unrelated and do not interact and collude; 2. That the source of value is structural advantage (creating barriers to entry); 3. That uncertainty is low, allowing participants in a market to plan for and respond to competitive behavior. The relevance of this model for the importance of research conducted is very significant since it provides the insights of the market in terms of competition that are already present. Going through all five categories of the model should get the reader much closer to the appropriate conclusion. And at the end, why is Porter’s model so important for us? Why so much attention is dedicated to explanation of the whole point of Porter’s five forces? In my opinion, this analysis (referring to Porter’s five forces model) is of great importance for every single company regardless which industry it operates in. It provides the wide spectra of information which considers some of the main influential factor of company’s business. In case of Yugomar it is, again, very relevant tool. On basis of findings Company gets from this analysis it can much better anticipate its starting point on the given market, in this case Bulgaria. Page 38 of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Chapter III – Analytical part 3.1. Situation analysis A situational analysis is required for establishing a starting point in delivering a marketing strategy and plan that is effective and suited to the company’s needs. The company’s present business situation is fully derived from local market data, which will pinpoint areas for further improvements in both the goods that Yugomar d.o.o. offers and the means by which these goods are going to be presented to the customers. The purpose here is to create a clear picture of the ‘do’s’ and ‘don’ts’s’ within a broader marketing plan that should deliver more value to the customer and more profit to the company. 3.2. Textile production history in Bulgaria Bulgaria is one of the countries that have relatively long and success tradition in textile industry. The capacities are located in western and southern parts of the country, with cities of Sofia, Plovdiv, Dragoman and Blagoevgrad as its strongholds. Several firms are big players in Balkan markets. The industry became in the recent years one of the most competitive branches in Bulgaria with a considerable investment and exports potential of Bulgaria textile industry is among the sectors defining its export profile. Over the last ten years exports of textile materials and products marked the highest growth (over 4.5 times) compared with other sectors and reached a volume of 2.1 billion dollars. In 2003 the export share reached a maximum level of 23.6%, which is 15 points above the 1995. In the coming years value of export should have been continuing increasing but at a slower pace due to the presence of the industry declined and reached the size of the end of last century - 17.7 percent. This is undoubtedly affecting its position in the export sectors. It took second place as the first went up on the black and non-ferrous metals with share of 22 per cent. Analyzing the dynamics of exports by commodity sections in the first years of the new century (up to 2010) found with advanced rates increased sales of machinery and transport equipment, household goods, products of vegetable origin and metals. Supply of textiles to foreign markets is constantly growing, but at a slower pace. In 2012 foreign exchange receipts from 2.1 billion dollars slightly exceed their levels from the previous year (2011). 117 Page 39 of 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. This year the level of activity in export flows is approximately the same. For the first three months (2013) the volume was about 2 percent higher than that for the same period of previous year (2012)18. This quick view over the textile production expansion (and export) in Bulgaria is worth piece of information for Yugomar d.o.o. to be familiar with because of the Figure 3: Made in Bulgaria sticker Source: http://www.textil-bg.com accessed: 15.02.2013. current situation on the market. Beside this reason, this fact provides the management of the company with the information how severe competition it might expect and what are the overall trends on the market. Furthermore, according to the posts19 all the products that are made and sold in Bulgaria are market with the sticker I enclosed above. In terms of Yugomar this is not the piece of information that could help. On the other side, this kind of campaign sponsored by the government is directly against EU trade law principles20. Since Company comes from abroad it is in a way discriminated. 3.3.PEST/PESTEL/PESTLE analysis As already stated the PESTEL21 framework is a method to analyze the macro environment of a company. As defined six such types of factors exists: political, economic, socio-cultural, technological, environmental and legal. Moreover, these factors are not mutually exclusive and can affect a company from more than just one angle (Lynch; 2006). In the respect of a given Company understanding of the external variables that might influence its operations is necessity. Yugomar d.o.o. cannot expect to achieve any success if PESTEL analysis of the surroundings is neglected and not done properly. 3.3.1. Political factors Political issues are very relevant for any industry and can influence the profitability of a given company considerably. This is especially true for countries that have a government 18 National Statistical Institute of Bulgaria; Structural Business Statistics - Press Release; November 2012; Taken from the portal context with a dose of reserve: www.textil-bg.com 20 Lando Ole, Beale Hugh: Principles of European Contract Law, Parts I and II; The Commission on European Contract Law; 2000; 21 Referring to PEST/PESTEL/PESTLE analysis – since the different acronyms exist in practice. 19 Page Page 40 40 of of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. which efficiency is something that is not on the proper level. Currently paying most of the attention to the Yugomar’s interest, some of actual trends are as following: 1. Political instability – during the time of writing this thesis Bulgaria however have got two governments one after another in just a couple of months. This just shows the negative picture to the Yugomar d.o.o. since the state as an institution is obviously inefficient. In case of any legal disputes with the locals 22 or any problems that might occur, Yugomar d.o.o. might experience huge amount of problems. 2. Influence of government policies that control the business – hereby worth mentioning is that government as a biggest employer23 in the Bulgaria has its own interest for protecting certain areas and industries like cement industry, fragrance industry etc. Luckily to the Company neither textile nor retail industry are the areas with big state owned companies. Therefore they are not under the governmental protection and in socalled “support mode”24. 3. Government directions regarding consumer protection – in the respect of protection of consumer, Bulgarian institutions are introducing laws and legislation in line with those in other EU countries. This is especially practiced since 2007. On one hand this might be a problem for a Company since such a practice does not exist in Serbia. But on the other side it is a challenge which if accomplished successfully might present Yugomar d.o.o. as a customer-friendly firm which really cares about their needs. 4. Overall government economic policy – once again political instability caused the huge variations among the economic policies over the years. From one government to another, starting from 1990 economic priorities have been constantly changing and therefore economic policies which support them as well. Worth mentioning is the fact that neither textile industry nor retail/trade industry have not been on the top priority agenda of the Bulgarian governments any time in past 20 years of post-socialistic period25. 22 Including companies, individuals and institutions. National Statistical Institute of Bulgaria; Labor Market Statistics; Labor Market Statistics Department; 2011; 24 Referring to the local expression in Balkan states in case some industry or company receives abundant support from the state. Own translation by D.Mladenović 25 Based on several different sources. Most important: Harry Schwartz: Recent Activities of post-Soviet Economics; The American Economic Review, Vol. 36, No. 4; Sep 1996; 23 Page 41 41 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 3.3.2. Economic factors Economic factors also play an important role that affects a textile Company such as Yugomar d.o.o. and many others from other industries. 1. Average salaries and wages26 - the graphic below shows that with an average of 402 euros per month, the highest salary holders are to be found in the Central (Sofia) region. Behind is Northern-eastern region, averaging 331 euros, and the lowest still is the South-western region, at 291 euros. In aggregate terms, annual Bulgarian GDP per capita is 341 euros per month. Thus, owing to the inclusion of Bulgaria’s capital city, the Central (Sofia) region has both the highest average salary and largest urban area in the country. Figure 4: Monthly wages Source: D.Mladenovic based on Household Income, Expenditure and consumption during the 2011/2012. This parameter is of really huge importance for the company as it gives insight of the income available monthly. On basis on this statistical information Company should strive to reach those regions with the highest incomes. 2. Average spending on clothing and footwear (C&F) in Bulgaria - in the table 1 data about household incomes in Bulgaria per major regions can be found. On the other side, average amount spent of household budget on Clothing and Footwear (hereafter C&F) is calculated. Also, there is summed value of money spent on C&F per major region and Bulgaria in whole. Figures presented are based on the statistical information available at National Statistical Institute of Bulgaria. 26 National Statistical Institute of Bulgaria; Household income, expenditure and consumption during the 2011/2012; December 2012; Page 42 of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Table 1: Average spending on clothing and footwear Source: D.Mladenovic based on Household Income, Expenditure and consumption during the 2011/2012. Category Available monthly income Personal monthly consumption costs in household % spending on C&F Monthly spending on C&F per household Number of households Total yearly spending on C&F in euros Bulgaria 439 € Central(Sofia) 488 € North-eastern 456 € South-western 407 € 417 € 486 € 468 € 355 € 5.00% 3.50% 6.2% 3.92% 20.96 € 17.18 € 28.86 € 18.24 € 2,536,714 575,107 704,232 1,257,375 638,095,957 € 118,573,960 € 243,896,045 € 275,285,544 € 3. Salary trend comparison - the table below concerns both nominal and actual salary changes in Bulgaria for the period 2012 – 2016. Table 2: Salary trend comparison Source: D.Mladenovic based on Household Income, Expenditure and consumption during the 2011/2012. Year Relative nominal change Nominal monthly salary Actual monthly salary Relative actual salary change 2012 100% 2013 108.00% 2014 116.64% 2015 125.97% 2016 136.05% BGN 834 BGN 900 BGN 967 BGN 1024 BGN 1136 439 € 452 € 465 € 478 € 496 € 100% 103.00% 106.09% 109.27% 112.55% Table 2 above shows that over the next five years, the average nominal salary should increase by about 36%. On the other hand, actual salary is expected to increase by cca 12.5% 27. Again, this is important for the Yugomar d.o.o. since it is directly interested in purchasing power of the local population. Information in previous table is subject to the constant changes and they are dependent on many different variables. Due to this reason Yugomar d.o.o. should closely observe development of the trend over the years. 4. Clothing and footwear spending in the average Bulgarian household Table 3 presents expected clothing and footwear spending in the next 5 years. Table 3: Clothing and footwear spending in the average Source: D. Mladenovic based on Household Income, Expenditure and consumption during the 2011/2012 and questionnaire results. Year Average monthly percentage of household budget spent on C&F Monthly C&F spending – Bulgarian Levs Monthly C&F spending -Euros 27 2012 2013 2014 2015 2016 5% 6.0% 6% 6.50% 7% BGN 39.8 20.96 € BGN 41 21.47 € BGN 43 22.51 € BGN 48.5 25.57 € BGN 55 28.88 € This is author’s conclusion based on the extrapolation of economics trend. Page Page 43 43 of of 107 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. The predicted increase is a rise from 20.9628 euros to 28.88 euros. Taking into consideration prices increases in the clothing and footwear market itself, conclusion can be drawn that there are proportionally increasing chances gathering profit and it goes without saying that a predicted market growth of this figure is a very desirable, and one which promises high profit margins if pursued with the right strategy. Definitely market potential exists but on the other side considering political issues it is huge uncertainty how the situation is going to develop on the market. That is why close and constant monitoring of this indicator is imposed as a necessity for the Company. 3.3.3. Socio-cultural factors 1. Attitude towards foreign goods and services – based on the information gathered from the National Statistical Institute of Bulgaria about the preferences and affinities29, conclusion could be drawn that Bulgarian locals do not have problems with purchasing foreign goods. This is again confirmed with launching the survey in which useful comments are being putted exactly on this topic. This is definitely extraordinary news for the Yugomar d.o.o. since this attitude directly affects it and its future activities on the market. 2. Demographics of the population – total number of citizens. Presented in both figures and percentage points, the table 4 is based on expected population changes during the next five years. This table is of quite a big importance for the Company if observed in the context of the target group. It provides the broader view of the demographic on-going trend. One more fact that negatively might influence the Company in the long term is the ageing population30. Year Nominal numbers Percentile change 2012 7,441,295 100.00% 2013 7,407,261 99.53% 2014 7,363,387 99.06% 2015 7,329,672 98.60% 2016 7,286,115 98.13% Table 4: Demographics of the population Source: D.Mladenovic based on National Statistical Institute of Bulgaria; Demographic processes; October 2011. 28 29 30 Exchange rate among BGN and EUM is approximately 1 EUM = 1.9 BGN; National Statistical Institute of Bulgaria; Bulgarian trade with third countries; January 2013; National Statistical Institute of Bulgaria; Demographic processes; October 2011; Page Page 44 44 of of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 3. Urbanization degree in Bulgaria - table 5 reflects the degree of urbanization in Bulgaria as of 2012. The urban/rural divide is roughly equal, with just under half of the population residing in urban areas. This fact is of great significance, given the fact that Yugomar d.o.o. stores are going to be located in urban areas, which in turn reduces and the size of the focus population by around 50%. The age of the average rural inhabitant is 3931, meaning the circumstances are somewhat simpler for the company both statistically and geographically. Therefore, it can be said that with a mostly urban focus population aged 12 – 39, and with all stores located in these urban areas, Yugomar theoretically has exposure to around 70% – 80% of the population between 12 and 39 years of age. These figures are based on official data at National Statistical Service of Bulgaria. Table 5: Urbanization degree Source: D.Mladenovic based on National Statistical Institute of Bulgaria; Demographic processes; October 2011. Population Urban Rural Percentage 52% 48% 4. Population in aspect of age and employment - in the table 6 information considering population in Bulgaria between age of 12 and 39 could be found, and moreover divided into categories of Employed, Unemployed and Not active. This information is of great importance for the Company in order to follow the target group. As its obvious “12-39”32 segment is pretty wide and in the table below subsegments could be observed. Table 6: Population in aspect of age and employment Source: D.Mladenovic based on National Statistical Institute of Bulgaria; Demographic processes; October 2011 and Age interval Total: Employed* Unemployed** Not active*** 12 - 14 233,884 0 0 233,884 15 - 19 389,808 16,741 21,156 351,911 20 - 24 422,072 99,219 99,150 223,702 25 - 29 398,959 192,660 114,321 91,978 30 - 34 369,358 218,180 90,113 61,066 35 - 39 419,609 277,333 86,233 56,042 Total: 2,233,690 804,133 410,973 1,018,583 464,710,524 € 230,526,813 € 67,323,828 € 166,859,883 € Total yearly spending in Euros: * Employed category considers population that finished school and has employment. This population spends 7% of average salary on C&F ** Unemployed category considers population that finished school, but is still unemployed. This population spends 4% of average income on C&F 31 32 National Statistical Institute of Bulgaria; Demographic processes; October 2011; According to the internal documentation of Yugomar d.o.o. this age group is targeted in Serbia. Page Page 45 45 of of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. ***Not active category considers population that is unable to work due to other obligations or incapability, example: pupils, students or handicapped people. This population spends 4% of average salary on C&F In the table presented above we can see that focus population of Yugomar in Bulgaria is about 2.2 million people. That is nominal number, but the real number of focus population (taking into account degree of urbanization) is between 1.5 and 1.8 million people. Population between 19 and 29 experiences rapid decrease of “Not active” population and increase in “employed” category. “Unemployed” population increases also but in a lower degree. After the age of 29 the trend changes again. Unemployed population starts to drop, Employed population continues to grow and Not active still drops down. This is just overall conclusion in order to comment the findings from the table. Once again table above shows that employed population spends more than 230 million euros on C&F annually, than comes not active population with almost 167 million euros and in the end Unemployed population with 67 million euros of money spent on C&F. Unemployed and Not active population is funded by their family (parents, grandparents, relatives abroad etc.). Population between age 12 and 39 spends about 464.7 million on C&F which is about 72 % of total market value. Based on the personal experience and research done by author in the previous years on other projects could be said that this percentage goes above 90 %. 3.3.4. Technological factors Technological progress is important for textile/retail companies, especially for those like Yugomar that strive to be innovative all time long. Technological progress has been astonishing in any aspect in the last 20 to 30 years and will keep advancing in the future. 1. Modern communication channels – communication channels with the customers are present to the sufficient extent without any limitations. Yugomar d.o.o. would not have any problems to communicate with the customer and potential customers. 2. Overall technology of doing a business – once again most of the technique equipment necessary for the purpose of operating in Bulgaria is possible to purchase on the local market without any limitation or restrictions. Worth 117 Page 46 of 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. mentioning is that company does not plan to have its own production lines in Bulgaria, therefore just equipment for retail industry have been taken into consideration. 3.3.5. Environmental factors Environmental factors are important external aspects that cannot be ignored by companies. Increased environmental awareness among customers, consumers and people in general, combined with global warming and other environmental hazards have forced companies to make adjustments. Increasingly consumers do not only request high quality at affordable price but also environmental friendly production procedures and plans to reduce energy and resource consumption as much as possible. Failure to follow this trend could have serious consequences on the Company’s image leading people to belief that the company is polluting the environment and ruthlessly exploiting the resources of the planet. As a result Yugomar d.o.o. has early included environmental issues in his code of ethical business conduct in which it commits itself to the conservation of energy and other resources as much as technology and situation aloud to do so. The situation about environmental issues is more or less the same both in Serbia and Bulgaria. It is of increasing importance for Yugomar d.o.o. to act as an environmental-friendly company which cares about the future. 3.3.6. Legal factors This group of factors is pretty wide but definitely very important for this analysis. The fact that Yugomar would have to align its operations with new Bulgarian legislations could be challenging. For the purpose of thesis I found out that two out of many laws that are of significant importance for the Yugomar d.o.o. Firstly, there is Consumer law33 which is different comparing to those in Serbia (in terms of consumers right and obligations). On the other hand Health and safety law is again quite different which imposes the necessity of adjusting internal procedures and regulations. 33 http://europa.eu/legislation_summaries/consumers/index_en.htm accessed: 03.12.2012 117 Page 47 of 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. However there are not a lot of adjustments to be done and it should not be a big issue for the Company in the following period. 3.4. Competition George Stigler said that competition is the contest among sellers striving to achieve such goals as booming profits, increasing market share and sales volume by adjusting the elements of the marketing mix: price, product, distribution, and promotion (George J. Stigler, 2008). In order the marketing plan to be introduced properly profound analysis of competition is a necessity and one of the starting points in creating marketing plan. Namely analysis of competition requires categorization which would make possible planned and strategic approach to it. Therefore, Yugomar’s competition present in Bulgaria is divided into domestic and international categories for the purpose of this thesis and for the better understanding. 3.4.1. Domestic competition It might sound strange, but the fact there are no significant big domestic players 34 in textile retailer business should be life line for a Company’s future existence and operations on Bulgarian market. There are certainly a couple of huge textile producers, but they are mainly operating for export, completely neglecting domestic market which is by the way offering extraordinary chances for success. Only one company with Bulgarian origin is AGIGEORGE which is worth mentioning. Since it is not striving to reach the same target population as Yugomar d.o.o. it is out of the interest for this thesis. Furthermore they do not have widely established retailer systems within Bulgaria. Throughout the thesis the phenomena of fleas markets and Chinese shops are going to be introduced. There are dozens of small shops (including Chinese shops) 35. These shops sell the clothes to all aged individuals. Main advantage are the prices, which are incredibly low. Of course, as price goes down the quality becomes poorer and poorer. But this fact is widely neglected in 34 35 National Statistical Institute of Bulgaria; Structural Business Statistics - Press Release; November 2012; National Statistical Institute of Bulgaria; Structural Business Statistics - Press Release; November 2012; Page 48 of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Bulgaria, since the most of the individuals put the price on the first place when shopping. Typical shop has just one object, and the outdoor and indoor design is definitely not the subject of architect’s design and work. They mainly focus their businesses on clothes imported from Turkey and China. If we consider their assumed daily and annual individual sales, it is definitely minor comparing to main Yugomar’s international competitors but the simple fact that crowd of them exist, could be very serious problem to the Company. 3.4.2. International competition On the other side, based on the official report36 and on the information gathered via internet37 it can be said that there are not that much of international big players in the form of textile retailer, except NewYorker and Terranova, in Bulgaria. Since opening its first branch in the northern German town of Flensburg in 1971, New Yorker38 has never looked back. By targeted investment in the future, it has not only created new jobs but has also developed into an international clothing company. A staff of 16.000 – full-time and part-time – serves over 4 million paying customers each month. In contrast to the general trend, New Yorker has seen strong growth and continuously increased its profits in the last few years. This success can be attributed to effective market positioning and strong expansion in Europe. The mainstay of the range is Young Fashion, jeans, sportswear and street wear fashions for a young, trend-conscious target group – supplemented by a wide range of accessories and underwear. All in all the New Yorker collection makes a clear fashion statement and is entirely made up of the company’s own labels. The collections reflect the individual seasons as well as the very latest fashion trends and all workmanship is of high quality. The company’s international purchasing activities enable the stores to always have the very latest in stock. Everything from design and manufacturing to channeling to the individual stores and marketing is managed centrally from the company’s headquarters in the German city of Braunschweig. Central logistics, an efficient distribution network and flat hierarchies are 36 National Statistical Institute of Bulgaria; Structural Business Statistics - Press Release; November 2012; http://www.textil-bg.com accessed: 07.12.2012. 38 https://www.newyorker.de/company/ accessed: 07.12.2012. 37 Page 49 49 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. factors that enable New Yorker to position its products on the market successfully and react to changes flexibly. Its flat hierarchies enable New Yorker to be efficient and profitable in all sectors and realise the network principle in the company, providing the foundation for its stable and forwardlooking development. Terranova39 is Italian textile brand. It operates under TEDDY S.p.A. Company, established in Rimini / Italy in 1961. It has already launched 10 stores in Bulgaria, covering the biggest towns and cities. Beside that this company is widely presented around the Globe, operating in 36 countries. Why do we have to pay attention to this Italian textile retailer? Simply, because the clothes they sell is directed to quite the same target population. Besides that, their previous experience in Bulgaria definitely is one of the big threats that might endanger Yugomar’s fragile and sensitive position on local market. In the questionnaire 40, many of the respondents wrote down, that in case they are not able to find some attractive product for them in Yugomar’s store, they would go straight to Terranova or NewYorker store because for some reason they are “assured” they are going to be able to find some particular piece of cloth for them there. This fact should definitely draw attention to the Company’ top management since this trend is definitely one that could be classified as undesired. Table 7: Main international competitors of Yugomar d.o.o. at Bulgarian market Source: D.Mladenovic based on www.newyorker.de and www.terranovastyle.com NewYorker Number of stores in Bulgaria: Total number of countries internationally: Appearance in mass media: Social-based activities: Target group (years): Style: Brands being sold in the stores: Locations of the stores: Price – quality ratio: Business model: Viral/guerilla marketing: Country of origin: Terranova 16; 38; 10; 33; No; No; 12-39; Urban; NewYorker, SMOG, Denim; Downtown areas, Shopping malls, Pedestrian zone; Low; Own business; Some/No; Braunschweig, Germany Rarely; No; 16-35; Urban; Terranova; Downtown areas, Shopping malls, Pedestrian zone; Low; Franchising; No/No; Rimini, Italy 39 www.terranovastyle.com/webapp/wcs/stores/servlet/wcm?storeId=10653&errorViewName=AjaxOrderItemDisplayView&c omponent=%2Fwps%2Fwcm%2Fconnect%2Fterranova_EN%2FAboutUs&page=home&langId=-3&catalogId=10102 accessed: 07.12.2012. 40 For the full questionnaire please refer to the Appendix B. Page 50 50 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Having a look over the competitors table 7, conclusion can be drawn that Yugomar is going to compete serious and well-organized companies that have much more experience and resources to “fight” any new entrants. The reasonable question arises: Is it good idea for Yugomar d.o.o. to enter at Bulgarian market considering those two competitors with all their experience, expertise, resources etc.? It is definitely worth profound thinking and analyzing. The fact is that NewYorker and Terranova exist on local market for a couple of years already. Nevertheless this is just stressing out the importance of careful launching the business operations (in terms of approaching the focus group). But on the other side Yugomar d.o.o. operates based on relatively low prices41 and good quality of the clothes42. Beside this, Yugomar d.o.o. has two ethnic Bulgarian employees with economic educational background. They are from Sofia and Varna and they could surely help with their knowledge of the local market. 3.5. The five forces model Porters five forces model is used in this thesis in addition to other tools primarily in order to gain more information about the current situation. The aim of this section is to come up with as much as possible accurate data considering existing rivalry among competitors, possibility of new entrants, threat of substitutes, bargaining power of suppliers and bargaining power of buyers. 3.5.1. Rivalry among competitors As stated in competitor’s analysis 43 two major international competitors exist (NewYorker GmbH and Terranova S.p.A.). Beside them astonishing number of small competitors operates mostly in the form of small Chinese shops and furthermore flea markets. 41 Internal documentation of Yugomar d.o.o. GfK Serbia; Segmentacija kupaca izvestaj final; Belgrade; September 2012; 43 Section: 3.4.2. 42 Page 51 51 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 3.5.2. Possibility of new entrants There is increasing possibility of new entrants in form of international textile giants like H&M, Reserved and partly Bershka. In this analysis these three main competitors from abroad are taken into consideration because they make and sell more or less similar sort of clothes to the practically same focus groups. Considering domestic competitors44, according to the NSI45 of Bulgaria no serious “players” should appear in the 2013. 3.5.3. Threats of substitutes When using such a broad term as Textile, there are obvious reasons for identifying substitute product groups proves difficult. Of course, there are variations in types of clothing and material. Variations in textile segment can also be identified as trends in fashion and styles. Hence products within the apparel segment can act as substitutes but the general conclusion still stands; there is no substitute to apparel. 3.5.4. Bargaining power of suppliers Since the Firm’s intention is to launch just the retail facilities in Bulgaria the complexity of operating is lowering in terms of possible issues and further negotiating with suppliers. Yugomar d.o.o. has easy going and well-establish system of suppliers in Serbia with which it works for years. The relationship between Yugomar and suppliers is based on mutual respect and understandings. 3.5.5. Bargaining power of buyers Not relevant for the purpose of analysis in this case. 44 45 National Statistical Institute of Bulgaria; Structural Business Statistics - Press Release; November 2012; National Statistical Institute of Bulgaria Page 52 52 of of 117 107 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 3.6. SWOT analysis According to a great number of authors, SWOT analysis is one of the so-called ‘mustto-do steps’ when formulating a strategy, whatever the area. Generally speaking, the most common graphic method for presenting the results of a SWOT analysis is the ‘Matrix scheme’. Within this, one puts all information hitherto gathered in accordance with the main objectives of the analysis. In the table 8 are the main categories which are being derived from the analysis previously done. Table 8: SWOT Matrix scheme for the Yugomar d.o.o. (Bulgarian market) Internal origin Positive Negative Strengths Weaknesses - Competitive prices; - No visible CRM46; - Quality; - Poor social responsibility activities (at - Recognizable store design; least in Serbia) 47; - Young and flexible personnel; - Absolute lack of advertising in medias - Geographical and cultural and low price promotion48; proximity to Bulgarian market. - Lack of international experience. Opportunities External origin Threats - Positive attitude toward foreign - Political instability; goods; - Consumer and health law; - Increasing individual spending on - Low living-standard in Bulgaria C&F over years; - Aging population and decreasing - Modern communication channels number of citizens; available; - Flea market and Chinese shops; - Increasing trend of salaries; - Currently low wages and PPP one of - Relatively stable economic the lowest in the Europe50; environment; - Changeable economic policies; - Not so many international big “players”49 46 Customer Relationship Management GfK Serbia; Segmentacija kupaca izvestaj final; Belgrade; September 2012; 48 GfK Serbia; Segmentacija kupaca izvestaj final; Belgrade; September 2012; 49 Here referring to the international textile/retailer giants like H&M, Reserved, Bershka, Zara etc. 50 http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=1&language=en&pcode=tec00114 Accessed: 27.03.2013. 47 Page53 53of of107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 3.6.1. Strengths If we take the internal aspects of Yugomar’s prospects, there are several important facts worth mentioning. First one is that Yugomar d.o.o. operates with low prices. This is surely huge advantage among other competition. But it would not be desirable for Company to base its business solely on this single fact. In combination with other categories of marketing plan unique and creative approach should be implemented. On the other side is the satisfactory quality of the clothes that it produces51. Recognizable store design and flexible and young staff should help Company to get closer to its focus population. Store design is universal and it is subject of professional architecture work. On the other side when recruiting new employees firm’s HR department stresses out the values one should be in line with. Geographical proximity to the Bulgaria is a big advantage in terms of costs cut and better knowing of the local culture, language and customs. As already mentioned Company has few employees who are originally coming from Bulgaria and who can provide the management with useful insights and expertise52. 3.6.2. Weaknesses On the other side, it goes without saying that every company has its own internal strengths and weaknesses. Firstly, there are few signs of Yugomar taking the initiative in regards to Customer Relation Management (at least in Serbia). This would consist of the company engaging with its customer base as to its level of satisfaction in terms of products and in-store services, in addition to close monitoring of the company’s overall market share. The extent to which this is sorely needed is evident when one observes how many other major firms spend large amount of money just in this area alone. Secondly, there is no obvious evidence attesting to Yugomar pursuing a socially responsible or environmentally friendly agenda in its operations. Once again, this comes across rather 51 52 Results based on questionnaire. For full reference Appendix B. Based on internal documentation. Page Page54 54of of107 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. odd if we consider the fact that a large number of companies in this day and age have successfully fashioned themselves as considerate and responsible towards the wider social and ecological environment. As was frequently alluded to by dozens of survey participants, the complete lack of advertising on local/regional media is a major promotional weakness. This statement is furthermore supported by official research done by advertising company Gfk Serbia. One pretty important fact that is - lack of international experience (including the previous fiasco with getting to the Bosnian market53). This might be a huge obstacle for the company and management. 3.6.3. Opportunities & Threats Opportunities and Threats as such are elaborated in details in section which deals with PESTEL analysis. For further reference please accredit to section 3.3. PEST/PESTEL/PESTLE analysis and respective sub-section. 3.7. Market segmentation Market segmentation is a step to be taken with profound care and attention. However, before further exploring, one must first provide a definition of segmentation itself. Market segmentation strives to the division of prospective customers into segments that have mutual needs, and as such will respond identically to a given marketing initiative (Nault, Barrie R 2005). Market segmentation enables competing companies to target a wide range of consumers who nevertheless perceive the full value of certain products and services differently from one another. On the other side one broader definition by Barton Bownam says that segmentation is the process of defining and subdividing a identifiable segments having 53 bigger similar needs, wants homogenous market into or demand characteristics. clearly Namely Based on informal communication with founder of Yugomar d.o.o. Appendix C. Page 55 55 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. objective is to design a marketing mix that precisely matches the expectations of customers in the targeted segment54. It is of the Company’s most interest to approach to this process with most of its care since failure in finding and recognizing the right segment can present the distorted picture to the company. In case of Yugomar d.o.o. target population on Serbian market is between age of 12 and 3955, which is broad and unspecified in this particular case. Regardless of the author, specific criteria for marker segmentation exist 56. Those are geographic, demographic, psychographic and behavioral criteria. Besides that, certain preconditions57 should be met in order for segmentation process to be accountable and relevant: 1. Identifiable and measurable – characteristics of segment and its members must be easy to identify and measure, including segment size and purchasing power; 2. Substantial – a segment should be valuable for the organization, meaning potential profit being higher than cost. It can be achieved when a segment is relatively large; 3. Accessible in terms of marketing communication and distribution; 4. Responsive timely to marketing efforts (including changes in marketing program); 5. Sustainable – a segment should be willing and able to conduct business with firm on long-term basis. So in terms of Yugomar d.o.o. it should be segment between ages of 12-39 which is easily measurable and accessible with as high as possible profit margins which response proactively to the marketing actions. As has already been indicated several times, in the respect to Yugomar, the focus market in question is aged between 12 – 39 years old. Although, Yugomar, like any company, should consistently endeavor to reach this group, on the other hand it can be said that such a large group hardly can be comprehensively and fully satisfied. 54 Burton F. Bowman & Frederick E. McCormick; Market Segmentation and Marketing Mixes; 1961; p 2 Internal documentation - marketing department. 56 Burton F. Bowman & Frederick E. McCormick; Market Segmentation and Marketing Mixes; 1961; p 17 57 Ferrell, O. Michael D .; Marketing Strategy. 5th ed. Mason: Cengage Learning; 2011; 55 Page Page 56 56 of of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. The segmentation in terms of Yugomar d.o.o. considering geographical, demographic, psychographic and behavioral aspects of the Bulgarian market is based on variety of analysis, research made by author and in constant contact with the Yugomar’s representatives. For the purpose of this thesis and having in mind that customer’s perception of the given company is of the most importance, an online survey/questionnaire were created in order to gather valuable data which could be further used and evaluated. The survey consists of twenty carefully prepared questions. Aforementioned questionnaire includes both open-ended and closed-ended (in form of multiple choice) questions. The process of gathering data through online-survey has been from 10.08.2012 to 29.08.2012 (20 days). Furthermore the volume and quality of the responses are extraordinary and of the very importance for the relevancy of this paper. In terms of the respondents, by the end of collection period 1127 questionnaires have been successfully completed and submitted, a great number of which included constructive comments. Considering the most frequently visited virtual places of Yugomar’s customers, survey has been posted in Facebook, Twitter, LinkedIN, online websites, as well in the form of circular mail. As is self-evident, the survey results feature heavily throughout the proposal itself. For further reference, please find full questionnaire in the Appendix. Based on this survey, conclusions in context of market segmentation, customer’s behavior, average shopping etc. are drawn. Furthermore combined with the interview with the owner of the Yugomar d.o.o. specific strategies within marketing mix are proposed. From the feedback given by the survey participants in the survey, one can get a good impression of the typical Yugomar d.o.o. customer in Serbia behaves like. Dovetailing perfectly with the company’s focus population, 97% of those surveyed were aged between 19 and 32. Quite simply, therefore, the survey has attracted the desired market segment, despite having rooted itself in one that is too wide and broad. With this in mind, the company can devise a fruitful business and marketing strategy geared towards this group which, if executed effectively, should provide benefits on a greater and more palpable scale. In terms of costs, such a strategy would drastically cut the price of clothing and other goods geared towards groups other than this one. If we consider monthly income and revenue, the results of the survey reflect a wider Page 57 of 117 Page 57 of 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. economic trend currently underway in Bulgaria. Exactly 50% of respondents were unemployed. When looking more generally at the answers given, is it also notable that 10% of respondents have an income between 640 BGN and 950 BGN per month (approximately 337 – 506 euros). Furthermore, one could say that, based on this particular piece of online research, the typical Yugomar customer in Bulgaria should be between 19 and 32 years old, and is university educated. Moreover, if in employment, he or she has an average wage between 640 BGN and 950 BGN per month (approximately 337 – 506 euros). The geographic criterion shapes the geographic frame within which a given marketing plan is created. In regards to Yugomar, Bulgaria58 is, of course, the geographical trajectory within which to undertake this marketing plan. The demographic criterion is a little more complex. This considers variables such as age, gender, education and income. Based on my online research and the information derived from it, Yugomar d.o.o. should strive to reach customers between 19 and 32 years old. The survey results showed that if employed, the average Bulgarian Yugomar’ customer has an average wage between 640 BGN and 950 BGN per month (approximately 337 – 506 euros per month). Since almost half of the young populations questioned were unemployed, the company should strive to attract them via promotional activities, contests and complimentary interactive communication. Emphasis should be placed on individuals with less than 640 BGN59 monthly income and the unemployed. The psychographic criteria primarily stress aspects of consumer, such as values, attitudes and most significantly - lifestyle. Fundamentally, what distinguishes Yugomar from other comparable companies is the lifestyle that it promotes 60. It is so-called “western way of wearing”. This is a casual urban style of wearing items with generic yet instantly recognizable sporting insignia. Moreover, this style is strongly aided by the fact that among a great many youths in Bulgaria, it is associated with the eclectic contemporary pop music aired on television channels such as MTV, which have cultural capital in abundance. The behavioral criteria are based on variables such as price sensitivity, brand loyalty and desired benefits. When we consider price sensitivity, Yugomar should strive to attract consumers that are flexible in regards to prices. This would consolidate the company’s 58 Including: Northeast, Southwest, Central and Sofia region. Approximately 320 EUM. 60 GfK Serbia; Segmentacija kupaca izvestaj final; Belgrade; September 2012; 59 Page58 58of of107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. position within the local market, whilst serving to increase the retention rate of its customers. Since the brands Yugomar offers in its stores are not well-known in their own right on Bulgarian market, the company should promote these with a price strategy along the lines of the following. If we think in terms of the expected benefits, the consumer inherently seeks to gain as much as possible for the lowest price possible. Taking in the consideration that the purchasing power of the average Bulgarian consumer is considerably low, as the aforementioned survey showed, Yugomar should try to gain traction with individuals whose average amount spent per shopping trip is less than 31 BGN (approximately 16 euros). 3.8. Target market As William concluded that target market presents a narrow group of potential consumers that the business has decided to aim its marketing efforts and ultimately its business operations (Wiliam; 2005). This practically means that target market is attractive enough for the company in the specific time period that firm focuses its resources and marketing efforts in order to satisfy the needs of the customer. This attractiveness of the market segment is being considered under certain criteria61 like: current segment size and growth potential, competitive intensity and compatibility of the market segment observed. Furthermore, certain marketing strategies are possible to employ in order to reach previously chosen market. The aim of these strategies is to “help” firms to put their ideas into practice taking into consideration the firm long term business strategies.As stated by Keegan three different sort of strategies can be employed: standardized marketing strategy, concentrated strategy and differentiated marketing strategy (Keegan, 1999). Standardized marketing strategy62 implies that world-wide standardized combination of marketing mix is applied to all target groups. Concentrated marketing strategy63 primarily means focusing the marketing mix on a single market segment. 61 V Warren J. Keegan & Bodo B. Schlegelmilch; Global Marketing Management: A European Perspective; Prentice Hall 1999; p 223. 62 V Warren J. Keegan & Bodo B. Schlegelmilch; Global Marketing Management: A European Perspective; Prentice Hall 1999; p 225. 63 V Warren J. Keegan & Bodo B. Schlegelmilch; Global Marketing Management: A European Perspective; Prentice Hall 1999; p 227; Page Page 59 59 of of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Under a differentiated marketing strategy 64, marketing mix specific to each of the global target group is developed. In the respect of Yugomar d.o.o. and considering the preconditions65 that should be met following conclusion can be stated. Currently the target market size is approximately 1.250.000 citizens with down sloping on going trend. This means that the current targeted population will decrease by approximately 2% 66. Since most of the surveyed between age of 19-32 are unemployed currently, with first employment they will tend to spend more on C&F (from 4% to 7% average67). When observing competition intensity as previously stated in domestic context Chinese shops and flea markets are the main threats. These two categories cover almost 94 % of the market68. On the other side NewYorker and Terranova are only that are coming from abroad. More international competitors are to be expected to enter; primarily having in mind H&M Company. In context of Yugomar d.o.o. its chance lies in 94% of market size which is covered by unorganized and anarchic single store retailers. There is a plenty of opportunity for the Company to succeed. This might sound like general conclusion but it is derived from the official statistical data of NSI69. Table 9: Market share of the biggest competitors in the Bulgarian market Source: D.Mladenovic based on National Statistical Institute of Bulgaria; structural Business Statistics - Press Release; November 2012. Yearly sales income in 2011* 10,904,802 € 16,351,941 € “AGI - GEORGE” 10,419,502 € 19-32 age yearly C&F market value in Bulgaria Market share Yearly profit Profit margin 464,710,524 € 464,710,524 € 464,710,524 € 1.71% 1,149,468 € 10.54% 2.56% 2,284,785 € 13.97% 1.63% 1,434,380 € 13.77% Category: “New Yorker” “Terranova” Rest 600,419, 712 € 464,710, 524 € 94.10% n.a. n.a. Finally if target market meets previous two condition, compatibility of the market should be assessed. Basing on the internal documentation of Yugomar d.o.o. long-run strategy is attracting this segment of customers which further means that this precondition is partly 64 V Warren J. Keegan & Bodo B. Schlegelmilch; Global Marketing Management: A European Perspective; Prentice Hall 1999; p 225; 65 Referring to current segment size and growth potential, competitive intensity and compatibility of the market segment observed. 66 National Statistical Institute of Bulgaria; Demographic processes; October 2011; 67 National Statistical Institute of Bulgaria; Household income, expenditure and consumption during the 2011/2012; 2012; 68 Please refer to table 9. 69 http://www.nsi.bg/indexen.php Constantly used. Page Page 60 60 of of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. fulfilled. Second part according to Keegan (1999) is the resources needed and available for such a campaign. And since no information about resources availability is being given from Yugomar’s side this fact presents huge limitations in further research. For the purpose of the overview of the target market Table 10 presents the main dimensions, variables and breakdowns considering “19-32” market. Table 10: Typical Bulgarian customer in Yugomar stores Source: D.Mladenovic based on National Statistical Institute of Bulgaria and Questionnaire; Main dimensions Geographic segmentation Demographic segmentation Psychographic segmentation Variables Breakdowns Region Bulgaria, with its main regions within; Area size 110,994 km2 Density Urban Age 19-32; Gender Male, Female; Monthly income 640 BGN and 950 BGN; Occupation Unemployed; Employed; Pupils; Students; Education Secondary school; College-degree individuals; Personality Anchored in popular culture, very tolerant towards multiculturalism Psychographic segmentation and internationalism (open- minded), quick maturation with modern products; (contd.) Most of them dependent on parents, no major Life style responsibilities, importance of school, work and social life; Benefits sought Behavioral segmentation Price sensitivity Perceptual Benefits - Quality; Good-looking; Functional Benefits - Easy to take out; Price flexible customers (average amount spent per shopping less than 31 BGN); Usage rate Constant over the year; User status: Potential customers; Regular customers; Loyalty status: Low; Medium; Strong. Page Page 61 61 of of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Chapter IV - Marketing Objectives 4.1. Theoretical overview Second step in marketing plan creation is to formulate or to establish the objectives. Based on identifying its best opportunities from its situational analysis, the company ranks objectives and sets goals. The company could also set sub-objectives in respect to its stakeholders, image/reputation and technology etc.70. Again as each of the steps presents critical stages in certain context, setting marketing objectives is again very sensitive step since it should consider all the results of the previous analysis and should further consider the long term goals of the given company. When mentioning goals and objectives, Slater and Olson say that they are a bit challenging but this is the charm it carries (Slater and Olson, 2001). Challenging in that sense that they demand a lot of information to be gathered processed and evaluated. Beside this consideration of internal context of a company is a necessity together with long-run business strategy of the company. For the purpose of this thesis SMART methodology has been employed. Developing sound goals is critical to managing your own and your employees’ performance. An S.M.A.R.T. goal71 is defined as one that is specific, measurable, achievable, results-focused, and time bound. The SMART acronym first appeared in the November 1981 issue of Management Review. "There's an S.M.A.R.T. way to write management goals and objectives. 72" was the title and it was written by George Doran, Arthur Miller, and James Cunningham. Initially it was seen as a business tool and thousands of people across the world were taught how to use it. This was often as part of improving project management processes in business. When it came to creating project objectives George Doran's framework was the way used to define and agree consensus on goals - it still is. 70 Sunny Crouch, Matthew Housden ; Marketing research for managers; The Marketing Series; Chartered Institute of Marketing. Butterworth-Heinemann; 2003; 71 Stanley F. Slater and Eric M. Olson; Marketing's Contribution to the Implementation of Business Strategy: An Empirical Analysis; Strategic Management Journal, Vol. 22, No. 11; Nov 2001; 72 Stanley F. Slater and Eric M. Olson; Marketing's Contribution to the Implementation of Business Strategy: An Empirical Analysis; Strategic Management Journal, Vol. 22, No. 11; Nov 2001; Page 62 62 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. The concept of writing S.M.A.R.T. goals is very important for accomplishing Company’s goals, which in turn are linked to department, division and individual goals73. It is also critical for ensuring good communication between employees and supervisors so there are no surprises during annual performance evaluations. Concept of SMART based goals is easy to put into practice and in context of Yugomar d.o.o. definitely new management tool. 4.2. SMART goals – Yugomar d.o.o. Considering all the threats and opportunities coming from the environment and internal situation of the Company for the purpose of the thesis following list of SMART based goals are introduced. The important fact should be underlined that no information about resource availability (in terms of Yugomar d.o.o.) has been received. This however can affect accomplishing of the below stated goals. 1. Increasing the market share up from initial 0% to 2.5 to 3 percent in following 12 months. Table 11: SMART goal – Market Share Specific What specifically to achieve? Increasing M/S up to 2.5/3% Measurable How shall Yugomar measure that? Tracking the company' rate of new customer acquisition; Achievable Is it achievable right now? Denial; Relevant Is it relevant to Yugomar’s larger goals? Affirmative; Time-framed By what dates shall we achieve it? By 1st of January 2014. This goal goes in line with Company’s entrance to the Bulgarian market. Goal is, as stated to reach up to 3% of market share in the first year of existence. 2. Increasing of sales by 15-20% per month in next 12 month, primarily due to creative guerilla and viral based promotion of the Company as a user-friendly and social responsible toward environment it operates in. 73 Stanley F. Slater and Eric M. Olson; Marketing's Contribution to the Implementation of Business Strategy: An Empirical Analysis; Strategic Management Journal, Vol. 22, No. 11; Nov 2001; Page Page 63 63 of of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Table 12: SMART goal – Sales income increase Specific What specifically to achieve? Increment of sales income up by 15-20% per month Measurable How shall we measure that? Tracking the monthly revenues from the goods sold (within internal documentation); Achievable Is it achievable right now? Affirmative; Relevant Is it relevant to our larger goals? Affirmative; Time-framed By what dates shall we achieve it? By 1st of December 2013. 3. Overall rise of customer retention rate by 40% in next 12 months, primarily by introducing new benefits to the customers, interactive communication and increasing overall customer satisfaction. Table 13: SMART goal – Retention rate Specific What specifically to achieve? Rise of customer retention rate by 40%; Measurable How shall we measure that? Introducing point-of-sale system that use customers e-mail or telephone no.; Achievable Is it achievable right now? Denial; Relevant Is it relevant to our larger goals? Affirmative; Time-framed By what dates shall we achieve it? By 1st of January 2014. 4. Increasing the cost-efficiency in next 12 month, primarily by using less expensive sorts of marketing. Table 14: SMART goal – Marketing expenses Specific What specifically to achieve? Cutting down overall marketing expenses74 by 60%; Measurable How shall we measure that? Tracking the marketingrelated expenses within P/L statements over the periods; Achievable Is it achievable right now? Affirmative; Relevant Is it relevant to our larger goals? Affirmative; Time-framed By what dates shall we achieve it? By 1st of January 2014 These goals might give an impression of generality but they are based on profound research 74 Overall marketing cost refers to the Yugomar’s respective costs both on Serbian and Bulgarian markets. Page 64 64 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. and on the other side limited with lack of information. However, the author is aware of possible distortion that this situation might impose over time. Page65 65of of107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Chapter V – Tactics 5.1. Marketing mix The term marketing mix refers to the primary elements that must be attended to in order to properly market a products and services75. Also known as The 4 Ps of Marketing76, the marketing mix is a very useful, if a bit general, guideline for understanding the fundamentals of what makes a good marketing campaign. 5.1.1. Product strategy A business looking to introduce some product into the stream of commerce must plan and design a product strategy carefully. Two major product strategies include price-based product strategy and product differentiation77. When developing a strategy, one strives to answer the following questions: who the product is aimed at; what benefit the product brings; what your position is in the marketplace; and what advantage the strategy will have over those of your competitors. According to Keegan and Schlegelmilch several different product strategies 78 can be implemented: product extension/dual extension, product extension/communication adaptation, product adaptation/communication extension, dual adaptation and product invention. Now, reasonable question arise: Which one to choose? The choice of product strategy is a function of three factors: the product itself, the market (preferences of potential customers, ability to buy products in question and conditions under which products are sold) and cost of adaptation and production to the company. Just after analysis of these three dots managers can pick the right strategy to implement. The most suitable product strategy in this moment for Yugomar d.o.o. is product extension/dual extension strategy. This strategy implies that company which tends to spread 75 Stanley F. Slater and Eric M. Olson; Marketing's Contribution to the Implementation of Business Strategy: An Empirical Analysis; Strategic Management Journal, Vol. 22, No. 11; Nov 2001; 76 Referring to: Product, Place, Promotion and Price. 77 S. Baohong Sun, Jinhong Xie and H. Henry Cao; Product Strategy for Innovators in Markets with Network Effects; Marketing Science, Vol. 23, No. 2; Spring 2004; 78 V Warren J. Keegan , Schlegelmilch; Global Marketing Management: A European Perspective; Prentice Hall; 1999; p 385. Page Page 66 66 of of 107 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. its operation abroad primarily sells exactly the same products/services. In terms of Yugomar d.o.o. this perfectly corresponds with their intention not to make any kind of adjustments and redesign to the clothes’ collections. To sum up, Yugomar d.o.o. plans to sell the same products on both Serbian (existing) and Bulgarian (upcoming) market. Currently Yugomar d.o.o. in Serbia operates with combination of price-based and product differentiation strategy. It sells few main brands within its stores (Yugomar, Todor, Montobene...) relatively cheap, for the local standards79. Second important feature of dual extension strategy is that mostly inexperienced (in terms of international business operations) companies use it. This is mostly due to the fact this strategy is one of the easiest to implement and demand least effort possible. Again, if we have a look over past Yugomar’s international performance – Company is everything but wellexperienced. Once again, Company’s unsuccessful performance in BiH’s 80 market a few years back is a bitter experience for the Company (both financially and logistically). Beside this attempt nothing else can be said in connection with Yugomar’s international affairs. Finally cost of adaptation and production should be considered. In case of Yugomar d.o.o. no adaptation of clothes for the local Bulgarian market has been planned. Therefore production costs in that terms are going to stay unchanged. 5.1.2. Place/distribution strategy Depending on the type of product being distributed, there are three common distribution strategies available81: 1. Intensive distribution: Used commonly to distribute low priced or impulse purchase products; 2. Exclusive distribution: Involves limiting distribution to a single outlet. The product is usually highly priced, and requires the intermediary to place much detail in its sell; 3. Selective Distribution: A small number of retail outlets are chosen to distribute the product. Selective distribution is common with products such as computers, televisions household 79 Having in mind overall purchasing power in Bulgaria. Here referring to Bosnia and Herzegovina. 81 S. Baohong Sun, Jinhong Xie and H. Henry Cao; Product Strategy for Innovators in Markets with Network Effects; Marketing Science, Vol. 23, No. 2; Spring 2004; 80 Page 67 67 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. appliances, where consumers are willing to shop around and where manufacturers want a large geographical spread. According to the internal documents, Yugomar d.o.o. implements Intensive place/distribution strategy on the territory of Republic of Serbia. This is primarily possible due to the high number of stores in Serbia (15 of them). Carefully managing quality and prices Company is persistent with low-price business strategy. This is quick overview of the actual situation and strategy employed in Serbia. When going abroad a lot of variables82 in terms of out-bound logistics should be considered (which are not that important in local context): transportation, inventory management, order processing and warehousing. Considering transportation costs, proximity of the Bulgarian market does not impose huge and considerable amount of costs (distance between Niš and Sofia appriximately 180 km). Even some destinations in Serbia are further from Niš than it is case with Sofia. Company’s own trucks are to be used to transport the goods to the main planed warehouse in Sofia. In the respect of inventory management, the situation is quite more complicate while the customs procedures still exists between Serbia and Bulgaria. This fact should definitely be taken into consideration when planning optimal stocks of goods and clothes in warehouse. Order processing from the stores in Bulgaria is really important area. According to the internal documentation certain problems have been experience in the past (e.g. late or incorrect processing of orders, loss of business documents…). This should not appear anymore definitely and when we remember international aspect of doing a business, the situation is even more relevant and serious. Order processing is furthermore important because of planning stocks and transport of the goods to the Sofia. Adding the necessary time needed for customs and legal procedures. One warehouse for the territory of Bulgaria should be established in Sofia as headquarter. From there local store’s order should be fulfilled with bearing in mind the costs of holding optimal amount of goods. As McCormick says, that channel strategy in a marketing mix must fit the company’s competitive position and marketing objectives in each national market (McCormick, 1991). 82 V Warren J. Keegan , Schlegelmilch; Global Marketing Management: A European Perspective; Prentice Hall; 1999; Page68 68of of107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. This implies in case of Yugomar d.o.o. as well. If a company wants to enter competitive market, it has generally two choices83: 1. Direct involvement (own sales force, retail stores etc.) 2. Indirect involvement (independent agents, distributions etc.) Yugomar’s management expressed strong support for direct and fully controlled involvement in Bulgaria. This practically means that fully owned Yugomar d.o.o. branch in Bulgaria should be established. According to Keegan, company should pick the proper distribution channel to support such a decision (Keegan, 1999). It should be underlined that this kind of attitude is to rigid and may have a negative influence. The strategy that could lower the overall risk toward the Company is franchise agreements for the certain regions within Bulgaria. Franchising is a strategic alliance between groups of people who have specific relationships and responsibilities with a common goal to dominate markets, i.e., to get and keep more customers than their competitors84. Of course certain advantages and disadvantages of employing this strategic solution exist. The point is that among all industries this system of distribution is being used around the Globe. In Bulgaria for instance one of Yugomar’s biggest international competitors uses this business and distribution model. Since Yugomar d.o.o. is not that known company in Bulgaria combination of direct involvement and franchise could be implemented in order to increase awareness of the Bulgarian citizens. On one side this strategy combination is going to go in line with management’s decision to involve direct the company in Bulgaria and on the other side even more important overall risk to the company should go down. Beside this, considering the fact that company is inexperienced in international affairs franchise agreements should facilitate Company’s performance in the first stages on the market. Some disadvantages of franchise agreements according to Holmes 85; 1. Higher legal expenses - The necessity of preparing agreements, Uniform Franchise offering Circulars (UFOCs) and related documents, and filing them in various states (with attached audited financials) represents a significant expense. In case of 83 V Warren J. Keegan , Schlegelmilch; Global Marketing Management: A European Perspective; Prentice Hall; 1999; Steven C. Michael; Investments to Create Bargaining Power: The Case of Franchising; Strategic Management Journal, Vol. 21, No. 4; Apr 2000; 85 David E. Holmes; Advantages and disadvantages of franchising; California; 2001; 84 117 Page 69 of 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Yugomar additional problem is not previous experience with this type of agreements and possible resources; 2. Control issues - There may be quality control and related issues, at least as compared to company-owned operations. This again can arise to a serious problem considering the original management’s intention to launch its fully owned and controlled branch; 3. Finding qualified franchise partners - Finding and educating (not just training) good Franchisees is vital. The ideal Franchisee combines entrepreneurial energy with the willingness to follow systems and act as a “team player.” The question to be asked should be “Is this the best candidate in Bulgaria?” Finding proper partner in franchising is hot topic and demands a lot of efforts to be done properly; On the other good side of franchise agreements following points are of the critical importance for Company: 1. Ownership mentality - Particularly where the franchise agreement is long-term, the Franchisee will have an attitude of being a business owner and is more likely to devote time, attention and capital to growing the business, following the approved system and not walking away from occasional business challenges. Devoting the time to other developing activities can possible even more help Yugomar to get some more experience and context of performing internationally. And moreover this point goes perfectly along the management’s mentality of so-called “fully involvement”; 2. Building the value of the brand - Critical to retail success of each unit in a distribution scheme, as well as the overall competitive strength of the distribution system, is the presence of strong brand identification covering both the products offered and the retail businesses operated. This is maybe the most important advantage of the whole franchise system since Yugomar with its brand is not well-known on Bulgarian market. Franchise partners could help a lot in this respect; 3. Franchise support and participation - Although not unique to franchising, the franchise model (when well managed) often incorporates valuable Franchisee input Page 70 70 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. and creative participation by Franchisees. Since all of the participants are part of a single “system” with a common identity, Franchisees are more likely to participate in initiatives for the expansion and proper operation of the entire enterprise, sometimes producing new ideas as well as alerting the Franchisor to operational. These are just a few dots that consider Yugomar d.o.o. context. All in all, franchise agreements should be considered as a reality and a good opportunity for the firm like Yugomar is. 5.1.3. Pricing strategy The price strategy that will be undertaken should consider the following aspects86: 1. Consumer demand; 2. The product lifecycle; 3. Potential substitutes. Customer demand is a crucial factor which is driven by tastes, income and availability of other similar products at a different price (mentioned later in the potential substitutes section). For a lot of consumers, value and price are highly related: ‘’the higher the price, the higher the value’87’. To be able to implement higher pricing though, the minimization of the nonmonetary costs to customers should also be included along with awareness of the product (notably by advertising) and value (benefits). Product lifecycle - Yugomar should take into the mind also to the fact that the newer the product and the earlier in its lifecycle the higher the price can usually be. In textile industry it is a bit tricky since every season new collection should come up. Each should be unique, creative and affordable for the customers. Potential substitutes are mentioned primarily to direct attention toward competitors and products/goods they are offering to the market for the relatively same amount of money. The 86 Stanley F. Slater and Eric M. Olson; Marketing's Contribution to the Implementation of Business Strategy: An Empirical Analysis; Strategic Management Journal, Vol. 22, No. 11; Nov 2001; 87 Ferrell O. Michael D; Marketing Strategy; 5th ed. Mason: Cengage Learning; 2011; p 511 Page71 71of of107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Company should be aware that this component makes more complex process of creation of effective and efficient price strategy. According to Wiliam88 in case of Yugomar d.o.o. following environmental factors have to be considered: 1. Currency fluctuation: in case of Bulgarian market there is not that big issue with currency exchange rate fluctuations. Most of the time while this research was done the rate was 1 BGN (Bulgarian lev) toward approximately 1.9 EUM (Euro) 89; 2. Inflation is very important economic indicator for the performance both of national economy an individual companies. Figure 4: Inflation rate in Bulgaria Source: D.Mladenovic based on www.nsi.bg/indexen.php As it is possible to observe from the graph presented above certain fluctuation in inflation rate definitely exists. When observed nominally inflation rate in this moment should be around 4 % which is more than EU average but much less than in Serbia on the other side. In terms of Yugomar d.o.o., new better economic condition is going to be experienced which is surely good news for the company, especially in the early stages of the market entry. 3. Competitive behavior. This point touches the action of the main competitors in the branch (e.g. NewYorker and Terranova) in terms of price strategies. However further more profound analysis should be done in order to gather some more valuable and 88 89 Cohen A. Wiliam; The Marketing Plan; John Wiley & Sons, Inc.; 2005; http://www.nsi.bg/indexen.php Page 72 72 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. relevant data. Author was faced with problems with getting all necessary information while researching. Although there are few different pricing strategies90 (rigid cost plus pricing, flexible cost plus pricing and dynamic incremental pricing) the most suitable one in terms of Yugomar d.o.o. is rigid cost plus pricing strategy. It consists in adding all costs and expenses that appeared after the product left the production line to the total price. It is one of the most convenient and most used methods and because it is easy to implement and to operate with. It does not require some additional calculations and procedures91. Considering the given Company, this strategy would mean adding costs like e.g. transportation, duties and taxes and relevant VAT tax in Bulgaria. It would avoid distributor profit margin and national distributor margin. This means lower price as a consequence of using fully owned subsidy. This pricing strategy combined with stable exchange rate should facilitate Company’s performance on the market. In the respect of inflation rate, since it is relatively stable limits should be set (e.g. if inflation brake limit of upper 6 % and down limit of 2% pricing should be reconsidered). 5.1.4. Promotional strategy There are dozens of possible solutions and alternatives possible to employ and implement. Of course when making a plan, cost efficiency arises as a necessity. On the other side, relevancy of the method and alternative chosen plays an important role. Hence, certain compromise has to be made. Kurtz noted that promotional mix specifies how much attention to pay to each of the five categories (meaning selling, advertising, sales promotion, direct marketing, and publicity) and how much money to budget and devote for each of them. A promotional plan can have a broad scope of objectives, e.g.: increases of sales income, new product acceptance, introducing new brands, positioning, competitive retaliations or establishing and enhancing corporate image (Kurtz, 2010). 90 Stanley F. Slater and Eric M. Olson; Strategy Type and Performance: The Influence of Sales Force Management; Strategic Management Journal, Vol. 21, No. 8; Aug 2000; 91 V Warren J. Keegan , Schlegelmilch; Global Marketing Management: A European Perspective; Prentice Hall; 1999; Page73 73of of107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Theoretically, three main goals92 of promotions exist. These are: 1. To present information about the company to the public; 2. To increase demand and awareness of the customers and potential customers; 3. And to differentiate a product. There are different ways to promote a product in different areas of media. Promoters use internet advertisement, special events, endorsements, newspapers and many others to advertise their product. Many times with the purchase of a product there is an incentive like discounts, free items, or a contest. In case of Yugomar d.o.o. first two aims are of the significant importance. Firstly Company would have to present information about itself and products it offer in such a way to intrigue the local potential customers. Secondly with proper promo activities to affect and influence target group in such a way that increase in demand and income of sales could be expected. Considering the fact that author did not get any information in terms of financial resources availability, the most proper proposal is to use easy to introduce and inexpensive tools and methods having in mind viral and guerilla techniques as well as some store innovation which are going to be explained into details in the following paragraphs. One of the store innovations that can be introduced (inexpensively and easy) is Store-inStore concept (hereafter SiS concept). SiS concept implies previously designed and shaped area that is easily distinctive when having a look at the store93. The products within SiS, are primarily being collected to satisfy the same needs or each of them represent part of the collection or more complex product. It is quite new solution and it is being primarily introduced in order visually to stress out distinctiveness of the products within it. Considering the fact that Yugomar’s stores are usually vast and spacious (in Serbia), SiS would be like a marker toward actuality, promotions and new collections. It would, together with its design, radically improve visual identity of Yugomar store as a whole. Further it would drastically cut time needed for choosing and shopping. Moreover it is going to provide the customers with sense of good organized and weel arranged store. According to some comments in the survey, some of the customers find Yugomar stores “messy and poor organized” 94. 92 Kurtz, Dave: Contemporary Marketing Mason; OH: South-Western Cengage Learning; 2010; Kurtz, Dave; Contemporary Marketing Mason; OH: South-Western Cengage Learning; 2010; 94 For full reference have a look: Appendix B. 93 Page Page 74 74 of of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. On the other side Store-outside-Store alternative (hereafter SoS concept). SoS concept95 is slightly different from SiS. Generally the principle of arranging goods is the same, but instead forming distinctive shopping space/area within Yugomar store, it should be launched and installed (temporarily) in front of the store on the street. Of course, it is less convenient (considering that is outdoor event) than SiS model, but it definitely draws necessary customers’ attention toward carefully prepared and exposed selection of products/clothes. Further, if something interesting can be found, customer will in most cases proceed in the store. This proposal goes in line with two main aims96 of the promotion and conclusion derived from survey that Yugomar d.o.o. did not launch any kind of outdoor activities in order to attract potential customers to get inside the store. Beside these two interesting innovations, plenty others can be employed very cheaply and very easily. Some of them are concerning the increase of sales and awareness (contest, membership cards, couponing, giveaways, events etc.) and other should present Company as a customer and environmental friendly individual (news creation, community service, mailing lists, greeting cards etc.). Guerilla Guerrilla marketing is an advertising strategy, in which low-cost unconventional means are utilized, often in a localized fashion or large network of individual cells, to convey or promote a product or an idea97. The term guerrilla marketing is easily traced to guerrilla warfare which utilizes atypical tactics to achieve a goal in a competitive and unforgiving environment. This tool has been chosen taking into consideration the expenses it causes and the target market it is supposed to hit. Furthermore it is fully based on the idea of so-called “western way of living98” which is being promoted by the Company. 95 Kurtz, Dave; Contemporary Marketing Mason; OH: South-Western Cengage Learning; 2010; 1. Presentation of the information and 2.Increasing awareness. 97 James C. Ward and Ronald Paul Hill; Designing Effective Promotional Games: Opportunities and Problems; Journal of Advertising, Vol. 20, No. 3; Sep 1991; 98 This is a casual urban style of wearing items with generic yet instantly recognizable sporting insignia. Moreover, this style is strongly aided by the fact that among a great many youths in Serbia, it is associated with the eclectic contemporary pop music aired on television channels such as MTV, which have cultural capital in abundance. 96 Page 75 75 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Visual Language Visual language is a system of communication using visual elements. Speech as a means of communication cannot strictly be separated from the whole of human communicative activity that includes the visual and the term 'language' in relation to vision is an extension of its use to describe the perception, comprehension and production of visible signs 99. This method should convey message to the customer and potential customers. The idea is that using simply technique and easy understandable sentences, certain message to the audience could be sent. Mostly ground floor is being used as an area suitable for such an “experiments“. There could be installed different kind of inscriptions or pictures which will customer’s stay in the store make much more enjoyable and interesting. None of this is currently in use in Yugomar stores. As already stated Visual language and Guerilla tools are chosen because of the cost efficiency, they are easy to manage and implement and they both can transmit the way of thinking and the style of life that Company promotes. Considering the current situation none of commercial tools should be planed (TV commercials, radio jingle, outdoor advertising etc). 5.2. Marketing risks Among many definitions of marketing risk, one that is considered as the most proper due to its simplicity and conciseness is: “Marketing risk is the risk that the value of an investment will decrease due to unwanted changes in marketing mix100” According to the standard ISO 31000101 principles and guidelines on implementation the process of risk management consists of several steps as follows: 1. Identification of risk in a selected domain of interest; 2. Planning the remainder of the process; 99 James C. Ward and Ronald Paul Hill; Designing Effective Promotional Games: Opportunities and Problems; Journal of Advertising, Vol. 20, No. 3; Sep 1991; 100 D. Mladenovic; CRO&ERM - How to Expect Unexpected; Rovinj - Brno 2012; 101 http://en.wikipedia.org/wiki/ISO_31000 accessed: 15.02.2013. Page 76 of 107 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 3. Mapping out the identity and objectives of stakeholders; 4. Defining a framework for the activity and an agenda for identification; 5. Developing an analysis of risks involved in the process; 6. Mitigation or solution of risks using available technological, human and organizational resources. Among all the risks for the purpose of this thesis as the most relevant and further considering in Yugomar’s context: 1. Company’s inexperience in international affairs in general; 2. Poor marketing activities so far; 3. Conflicting authorities between sales/marketing manager and management in Serbia; 4. Delays in reporting, primarily in the respect of customer reactions to marketing activities conducted; 5. Lost or stolen equipment or other resources. First and most important general risk is Company’s inexperience in international affairs in general. This fact might affect not just marketing activities but overall performance and appearance of the company. Second risk is closely connected with marketing activities performed by Company’s management so far. In communication with owner of Yugomar d.o.o. Mr. XX information has been given that no serious and profound marketing campaign has been launched by Yugomar so far. Logically this fact combined with inexperienced marketing personnel can affect marketing performance of the Company severely. Third risk is conflicting authorities between sales/marketing manager and project manager. It can have tremendous negative impact on ongoing activities and therefore make great delays due to undefined responsibilities between managers. This risk is possible only at state’ level, but the consequences would be locally experienced. This comes from the management’s rigid attitude toward certain issues (e.g. sort of involvement on Bulgarian market) and possible confrontation with local managers. Page 77 77 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Forth risk is delays in reporting, primarily in the respect of customer reactions to marketing activities conducted. This dot considers importance of efficient reporting after the event/action took place in order to get precious feedback which should be further used to modify/redesign/adapt future. Problem of reporting and promptness is already experienced in Company’s past operating which even caused huge problems for the Yugomar d.o.o. Fifth risk considers following jeopardies: damage of equipment, lost or stolen equipment or other resources. These risks are possible due to human errors (both intentional and unintentional) and can be prevented with implementation insurance. Furthermore, these risks could severely bring into existence delays and financial loss due to maintenance, repairs or buying of new equipment. The list of potential risks is not over with this, there are a lot of other influential risks that might influence business operations. Therefore Yugomar d.o.o. has to put additional attention in early recognition of risk which could come true. Page 78 of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Chapter VI – Budget 6.1. Financial issues Financial issues are very important and therefore one chapter will be fully dedicated to elaborate them into more details. Housden defined budget as following: The company’s planned actions and activities involve costs that add up to the budget that it needs to achieve its objectives102 This means that none of the goals is achievable without causing some kind of costs. Considering that this budgeting is a necessary part of a marketing plan, it helps the company to understand the effects of the actions in the marketing plan. The purpose of a budget is to help the company to choose between the different alternatives that are described in the marketing plan, and it is an essential tool when planning to implement the plan. The budget should show the costs and profits of the marketing actions. The budget is furthermore made to help to control the marketing costs and to evaluate the necessary resource usage for the marketing. (Anttila & Iltanen, 2001). According to Anttila & Iltanen two necessary and very important indicators 103 considering budgeting should be elaborated: sales forecast and expenses forecast. In the sales forecast section should be prediction of sales for a given period. For the purpose of this thesis two methods are employed in order to get as much as relevant data (market build-up method and chain ratios). Expenses forecast section contains data about expenses budget for period January’13 till December ’13 (in terms of Yugomar d.o.o). This period is chosen randomly. In this section there are Expenses budget given for all promotional activities per month and cumulative costs. Expenses budgets for each promotional activity are given in the appendix due to large number of tables. 102 Sunny Crouch, Matthew Housden; Marketing research for managers; The Marketing Series; Chartered Institute of Marketing; 2003; p. 19 103 Anttila M. & Iltanen K.; Markkinointi. 5th edition; Porvoo: WS Bookwell Oy; 2001; Page 79 of 107 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 6.2. Sales forecast Sales forecast is done using two methods: market build-up method and chain ratios. Forecast is made for year 2013 in several important categories such as Sales income, Profit, Profit margin and percentile/figures change in mentioned categories. 6.2.1. Market build-up method This is the method of estimating the revenue potential of a market by identifying the number of potential buyers in the market and the purchase requirements of each104. The source of the data may be published sic coded data, primary research like questionnaires or surveys, or sales history. In the absence of actual purchase data, the annual revenue or number of employees of a buyer may be used to estimate their purchase requirements by assuming their requirements. In case of Yugomar d.o.o. and Bulgarian market the analysis should be based on the simply equation: Q = n x q x p105 Where: Q – total market demand; n – Number of potential buyers in the market; q – Quantity purchased by an average per year; p – Price per average shopping; From the PESTEL analysis it is clear that number of potential customers approximately 1.5 million while average amount spent per shopping tend to be around 31 BGN (15 euros). The quantity purchased on average per year is estimated due to the lack of information. Putting the proper indicator into the equation gives us the final result which goes as outlined below: Q = 1500000 x 2.5 x 16106 Q = 66.000.000 EUROS 104 Hooley, Graham J; Marketing strategy and competitive positioning; 3rd ed. New York; Prentice Hall; 2004; Hooley, Graham J; Marketing strategy and competitive positioning; 3rd ed. New York; Prentice Hall; 2004; 106 Currency used is EURO ( 15 euros approximately 31 BGN) 105 Page Page 80 80 of of 107 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. The total demand for segment of 19-32 which is targeted by the Yugomar d.o.o. is around 66.000.000 euros. However this method has one disadvantage because it is based on the data which come from the past and are more bonded with present than with the future. Therefore it might distort the clear picture of the reality. 6.2.2. Chain ratios model Chain rations is a method of calculating total market demand for a product in which a base number, such as the total population of a country, is multiplied by several percentages, such as the number in the population above and below certain ages 107. In case of Yugomar d.o.o. and considering the data relevant for this case (considering Bulgarian context) the analysis should goes like following: Total numbers of citizens of Bulgaria: 7.364.570108 Percentage of the 19-32 population: approximately 20% Percentage of the population which has average income less than 640 BGN 109: 60 % The calculation should consider in this case these three statistical indicators. 7.364.570 x 0.2 x 0.6 = 880.000 Based on these calculation approximately 880.000 citizens in the age group “19-32” with income less than 640 BGN are potential customers. This is however very rough calculation and management should take it with care. These two methods used combined (in case of Bulgarian market) provide the valuable and to the certain extent relevant information about the potential sales that company might expect in best case scenario. The result of the build-up method however came to the number of cca 66 million euros as a potential sales income. On the other side result of the chain ratio model is cca 880.000 potential customers. This nominal number further multiplied with data about average amount spent per shopping the final amount of cca 15 million euros could be calculated. 107 Hooley, Graham J; Marketing strategy and competitive positioning; 3rd ed. New York; Prentice Hall; 2004; www.nsi.bg/indexen.php 109 Equivalent to approximately 310 euros. 108 Page81 81of of107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Discrepancy is obvious and huge, therefore more profound research is needed in order to get most accurate and precise data possible. 6.3. Expenses forecast Expenses forecast section contains data about expenses budget for period January’13 till December ’13. This period is chosen randomly. In this section data about budget are given for all promotional activities per month and cumulative costs annually. For the further reference for budgets for each promotional activity please refer to the Appendix A. Table 14: Expenses forecast in EUROS Month Jan '13 Feb '13 Mar '13 Apr '13 May '13 June '13 July '13 Aug '13 Sep '13 Oct '13 Nov '13 Dec '13 Purchasing and setting up equipment 2000 0 0 0 0 0 0 0 0 0 0 0 Store inside Store 500 0 0 0 500 0 0 0 0 500 0 0 Store outside Store 0 0 1000 0 1000 0 2000 0 1000 0 0 0 Indoor design and music 400 0 100 0 0 100 0 0 0 400 0 0 Shop window 200 0 200 0 0 0 0 0 0 0 300 0 Contributions 0 200 0 200 0 200 0 200 0 200 0 1000 Used clothes collecting 0 0 0 0 0 3000 0 0 0 0 500 0 Other marketing expenses (20%) 620 40 260 40 300 660 0 40 200 220 160 200 Unpredictable expenses (10%) 310 20 130 20 150 330 0 20 100 110 80 100 Monthly 4030 260 1235 260 1950 4290 2000 260 1300 1430 1040 1300 Cumulative 4030 4290 5980 6240 8190 12480 14480 14740 16040 17470 18510 19810 Page Page 82 82 of of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. The complex table above present predicted/expected expense budget per month and cumulative costs for the whole year. The whole year budget should be around 20000 euros which is less than 1% of sales income in the sales forecast for the year 2013. This fact could be considered very cost efficient due to the fact that similar companies marketing expanses go from 1% to 5% of their annual sales income110. Other marketing expenses (20%) are meant for activities such as Happy hour, Discounts, Couponing, Giveaways, Contests and etc. Unpredictable expenses (10%) category is simply necessity to predict since there is always some unexpected to expect which might cause some costs to emerge and negatively affect budget111. To avoid such problems, Yugomar d.o.o. should devote this amount of money so everything could go as smoothly as possible. 6.4. Expenses and marketing plan This section considers the linkage between expected expenses and monthly sales income (worst case scenario used). However the following table is accurate to the certain extent since the sales income is averaged one (cca 15 million euros per year). Moreover all numbers are calculated in euros112. Table 15: Expenses and marketing plan linkage in EUROS Month Jan '13 Feb '13 Mar '13 Apr '13 May '13 June '13 July '13 Aug '13 Sep '13 Oct '13 Nov '13 Dec '13 Expenses 4030 260 1235 260 1950 4290 2000 260 1300 1430 1040 1300 Sales 35.0 00 50.000 80.00 0 95.000 110.00 0 125000 0 140.00 0 140.00 0 130.00 0 125000 0 110.00 0 130.00 0 0.03 2% 0.003 % 0.01 % 0.003 % 0.15% 0.35% 0.20% 0.03% 0.10% 0.13% 0.10% 0.15% E/S ratio In the table above, could be compared marketing expenses and expected sales income over the following months. Percentile participation of expenses in sales is given to easily track and 110 James K. Binkley; Marketing Costs and Instability in the International Grain Trade; American Journal of Agricultural Economics, Vol. 65, No. 1; Feb 1993; 111 D. Mladenovic; CRO&ERM - How to Expect Unexpected; Rovinj - Brno 2012; 112 Exchange rate 1 EUM toward 1.9 BGN. Page 83 83 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. compare this to the competition, due to the fact that other C&F companies in Bulgaria are spending about 3.5 %113 for marketing activities out of their sales income. Figure 6: Expenses and marketing plan linkage in euros Source: D. Mladenovic 160000 140000 120000 in Euros 100000 80000 60000 40000 20000 0 The Figure 6 shows expenses compared to sales income per month for the period January till December 2013. The Company is supposed to spend around 20.000 euros on marketing activities in Bulgaria; therefore expenses are set to very low level in order to achieve initial marketing efficiency. Long-run observed (3 to 5 years), Yugomar d.o.o. must/should increase amount of money spent on marketing activities in order to improve future market position and provide relevant answer to competitions reaction to this proposed plan. 113 Estimates based on: National Statistical Institute of Bulgaria; Structural Business Statistics - Press Release; November 2012. Page 84 84 of of 117 107 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Chapter VII – Control 7.1. Theoretical overview and importance of control The last section of the thesis outlines the importance of controls for the overall success of the company. Normally, goals and budgets are outlined for each month or quarter. Management can review the results for each timeframe and determine if the plan is allowing the organization to meet their goals114. If necessary, the plan can be modified to contain corrective actions. The company must set review periods and measures that will reveal whether it is making progress toward the goals or not. When performance lags, the company must revise its objectives, strategies, or actions to correct the situation115. There are different types of control according to the Keegan and Schlegelmilch 116. First one is formal control. This type of control includes categories like performance standards, evaluation of actual performance and furthermore corrective actions in order to achieve previously determined goals. On the other side stands informal control. Informal type of control consists of self-control, group or cultural control etc. Which one (formal or informal) is going to be employed depends solely on the management and on the values which are established and spread over the company. The importance of control as such is even more emphasized in time of economic crisis when perfection should be way of operating117 As it is self-evident implementation of proper system of control is a necessity and one tool to prevent future failures and all problems that might appear. In case of improper system of control established, firm’s management is going to get distorted picture of the reality. 114 Stigler George J; Competition “The New Palgrave Dictionary of Economics”; 1987 and 2008; Crouch; Sunny Crouch, Matthew Housden; Marketing research for managers; The Marketing Series; Chartered Institute of Marketing. Butterworth-Heinemann; 2003; 116 V Warren Keegan & Bodo Schlegelmilch; Global Marketing Management: A European Perspective; Prentice Hall; 1999; 117 Yadong Luo, Oded Shenkar and Haresh Gurnani; Control-Cooperation Interfaces in Global Strategic Alliances: A Situational Typology and Strategic Responses; Journal of International Business Studies, Vol. 39, No. 3; Apr - May 2008; p. 428 115 Page 85 85 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 7.2. Variables affecting control system According to Keegan and Schlegelmilch marketing control system is affected from many different sides and variables. Of the most important influential variables 118 for the company are: communication systems, data availability and environment diversion. Communication system This variable is going in line with the distance between branch and headquarter. The greater the distance, higher control costs can be expected and vice versa. Beside this, it considers the telecommunication of a given country meaning that when there is not well-developed telecommunication sector within the country costs are skyrocketing. In the case of Yugomar d.o.o. none of these two important sub-variables are of the great importance since the approximate proximity to the Bulgaria is around 100 km. This implies lower costs of controlling the processes in the Country. On the other side IT and telecommunication sector is on highly developed so no obstacles could be expected in obtaining and implementing control system. Data availability Overall economic, industrial and consumer information is a necessary part of control. In developing and post-socialistic countries transparency of the information might be endangered and furthermore this is the case with Bulgaria. National Statistical Institute of Bulgaria119 provides ocean of information which sometime during the researching were contradictory. In Yugomar d.o.o. context this might present the reasonable threat and obstacle that can endanger the implementation of chosen system of control. Environment When mentioning environment primarily one should bear in mind categories like currency, political issues, advertising options, cultural factors etc. For the successful implementation of marketing plan and further control Yugomar d.o.o. has to have bigger picture of the whole Bulgarian economy. 118 119 V Warren Keegan & Bodo Schlegelmilch; Global Marketing Management: A European Perspective; Prentice Hall 1999; www.nsi.bg/indexen.php Page Page 86 86 of of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 7.3. DMAIC six sigma improvement process For control and evaluation in aspect of Yugomar d.o.o. well known DMAIC six sigma improvement process can be employed primarily based on the marketing goals that are stated, considering all variables that are to be considered and current management attitude toward control. This process is proven in the past period as “good practice”120. Figure 7: DMAIC improvement process Source: http://business901.com DMAIC acronym stands for data-driven improvement cycle used for improving, optimizing and stabilizing business processes and designs. The DMAIC improvement cycle is the core tool used to drive Six Sigma projects121. DMAIC is an abbreviation of the five improvement steps122: define, measure, analyze, improve and control. In the context of Yugomar d.o.o. advantages of using this tool are: cost saving, structured thinking and long-term perspective. On the other side, DMAIC requires specific skills and DMAIC often introduces changes that are radical which furthermore might present huge challenge to Yugomar d.o.o. management. The figure 6123 shows marketing control process in five phases such as are: Define, Measure, Analyze, Improve and Control. These phases come in a row and are repeated to the needs of 120 Antony, M. Kumar; Gearing Six Sigma into UK Manufacturing SMEs: Results from a Pilot Study; Journal of the Operational Research Society, Vol. 59, No. 4; Apr 2008; 121 Yadong Luo, Oded Shenkar and Haresh Gurnani; Control-Cooperation Interfaces in Global Strategic Alliances: A Situational Typology and Strategic Responses; Journal of International Business Studies, Vol. 39, No. 3; Apr - May 2008; 122 Antony, M. Kumar; Gearing Six Sigma into UK Manufacturing SMEs: Results from a Pilot Study; Journal of the Operational Research Society, Vol. 59, No. 4; Apr 2008; Page 87 87 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. the Company. Purpose is to adjust and fine tune companies marketing activities so that marketing goals124 are achieved or adequately modified to suit the real situation on market. 7.3.1. Define First phase is need to Define. This phase consists of setting up marketing objectives 125 and forecasting sales incomes and expenses126. This phase is important for comparison with real figures and it gives answer to the question: What is important? The objectives will be used for comparison and possibly changed after evaluation. 7.3.2. Measure Second step is to Measure. Measure contains tracking performance and implementation of specific marketing activities. This phase gives answer to the question “How are we doing?” or “What are the figures so far?” Great part of this phase is reporting, which is important to be correct and punctual so that further actions would have desired effect. In case of Yugomar d.o.o. this can be achieved by tracking different variables like: 1. Sales tracking (Collecting actual sales data from store managers); 2. Expense tracking (Collecting actual expense data from store managers); 3. Market-share tracking (Collecting actual Market-share data from the marketing sector at country level, NSI); 4. Customer satisfaction. The Company should actively seek and encourage feedback, both positive and negative by creating friendly and ubiquitous complaint and suggestion systems. Frequent satisfaction and customer loyalty surveys should form an integral part of any marketing drive. These surveys should be, for example, conducted through anonymous “Comment board” and “Book of impressions” which would encourage customers to be more sincere; 123 http://business901.com/blog1/using-dmaic-for-your-a3-report-in-the-lean-marketing-house/ accessed: 15.04.2013. For full reference of Yugomar d.o.o. marketing goals Chapter 4.2. 125 For full reference of Yugomar d.o.o. marketing goals Chapter 4.2. 126 For full reference of Yugomar d.o.o. expenses and sales income forecast Chapter 6.2 124 Page Page 88 88 of of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 5. Profitability tracking is also very important indicator for tracking. This indicator will determine the success of all marketing efforts. Data should be collected within Company’s marketing sector at country level; 6. Strategic Marketing tracking should track in which direction is marketing strategy going in the long term aspect. 7.3.3. Analyze Third phase and one of the most important one for the success of the marketing plan is to Analyze. It moreover includes analysis of data collected in previous six points of tracking. This phase gives answer to the question “What is currently going on/wrong?” Sales analysis should be done by comparing sales targets to actual sales figures and calculation of gaps. This principle also applies for the second point (Expense analysis). Further, Market-share analysis should be done by comparing the Company's planned income from sales with the actual one. Moreover data from NSI 127 should be collected in order to get the full answer. Customer satisfaction analysis should be used to provide Yugomar d.o.o. with ideas for possible improvements. It is hard to set goals for this point of analysis128. Sixth point is Profitability analysis and it should be measurement in order to compare actual data with planned figures and determine the trend of on-going profit margin. Trend should be than extrapolated, to create more precise forecasts and plans for the future. The last one is Strategic Marketing analysis. It is important because conducting it, management gets bigger and brighter picture. Data collected previously should be compared with that what was intended by marketing plan and more importantly is it going smoothly toward the right direction. 127 National Statistical Institute of Bulgaria - www.nsi.bg/indexen.php Yadong Luo, Oded Shenkar and Haresh Gurnani; Control-Cooperation Interfaces in Global Strategic Alliances: A Situational Typology and Strategic Responses; Journal of International Business Studies, Vol. 39, No. 3; Apr - May 2008; 128 Page Page 89 89 of of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 7.3.4. Improve Forth phase is to Improve. It contains actions that give answer to the question like this one “What needs to be done?” According to the previous tracking and analysis, some actions need to be determined and implemented. These actions should make things right and put the strategy and marketing plan back onto track. In case of Yugomar d.o.o. if e.g. market share is not on desired level after one year of operating, management has to consider what has to be done in order to perform as much as possible in line with the predetermined goals. 7.3.5. Control The final phase in a cycle is Control. This phase is meant for preventing future mistakes and that previous mistakes must not occur again. This can be achieved by more frequent reporting and data tracking for instance. This is of the crucial importance especially in Yugomar d.o.o. context, since the management wants to control fully its Bulgarian branch and operations. Also, process optimization is one of the possible solutions that can result with decreasing of expenses, time saving in reporting, action implementation and sales increase at the end. Page 90 of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Chapter VIII – Conclusion 8.1. Summary The aim of this thesis is to provide management of Yugomar d.o.o. with possible-to-employ marketing plan which corresponds with marketing goals of a given Company, market trends and current situation in the Firm. Yugomar d.o.o. was decided to go abroad after few very successful and expanding years of operating in Serbian market. However, entry at Bulgarian market was not the first attempt to go internationally for this Serbian company. Couple of years back Company fully experienced the consequences of poor preparation for getting onto Bosnian and Herzegovinian market. As a result Company barely survived following financial tsunami. However back to the topic, employed methodology while researching should provide the author with a solid basis and background support in order to set up marketing plan which is at the same time realistic and ambitious enough. The primary researches consisted of online questionnaire and interview with the owner of Yugomar d.o.o. Mr. Zoran Mitrović. Varieties of useful and usable data are collected in terms of current situation in the company, current trends on the market, long-term goals of the company etc. This information combined with profound secondary researches done provided the author with astonishing number of usefull information for conducting the SWOT and PESTEL analysis. The environment was evaluated by using demographic, economic, natural, technological, political, social and cultural aspects, which helped to maximize the market opportunities of the company. Many useful characteristics were identified with the help of these methods. The market survey was also necessary in order to create more efficient marketing tools. The competitor evaluation was very constructive and helped to find out the possible advantages of Yugomar d.o.o.. The essential of these strong elements is discussed in the marketing plan together with the proposals, how to gain advantage from them in the future. The external and internal environments were studied with a SWOT analysis, which directed the decisions for the marketing plan actions. The characteristics of the company were evaluated by two internal categories; strengths and weaknesses, and the external categories; opportunities and threats. In order to get better the market segment Company strives to reach market segmentation has been done and further based on this segmentation target market has been chosen. Page 91 91 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Furthermore, with solid data base as a support marketing objectives are being set which goes in line with the firms overall long run goals. The SMART methodology has been used in order to set up as precise as possible goals for the specific time frame. Striving to hit the marketing objectives certain marketing plan has been introduced. Marketing plan (place, promotion, price and product) took seriously in consideration the overall Yugomar d.o.o. capacities as well as management attitude toward the internationalization. Furthermore marketing plan also consists of the information and conclusions that are being derived from different analysis conducted. Having in mind primarily marketing plan for Bulgarian market in aspect of Yugomar d.o.o., budgeting arose as a reasonable point in thesis. Financial issues are considered on the basis of the estimated prices and costs. On the other side, forecast of sales income over the period of one year has been made. Income and expanses combined provide the management with socalled E/S ration129 which should be as low as possible. This ratio should be observed and controlled on monthly basis. However in order to fully utilize marketing plan and to get as much as possible benefits of the plan proposed DMAIC tool has been proposed as a system of control. DMAIC should help Yugomar d.o.o. management to stay on track following and measuring critical variables. By controlling the activities in Bulgarian branch management should accomplish its goal of fully controlled branch in neighboring countries. All the actions described in the marketing plan were planned for the company’s current situation. The circumstances change constantly, and the company must develop its functions with them. The needs and requirements of the product customers change; they adapt characteristics of different trends and developing technologies. Yugomar d.o.o. must follow its external environment and develop the company’s services to satisfy customer needs in the future as well. The marketing plan will also need to be updated to remain competitive. The social media and online networks develop fast and the companies of today must evolve with them. 129 E/S ratio – expenses/sales income Page 92 of 107 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 8.2. Contributions of the thesis This thesis can possible contribute in many ways to Yugomar d.o.o. As few times already indicated, its aim is to provide Company with comprehensive and cohesive marketing plan which should fulfill management’s expectations in terms of benefits. Based on the analysis, given Bulgarian market can be grouped as a highly prospective and speedy developing. Company should have in mind that such markets attract variety of competitors in a very short period of time. This marketing plan should facilitate Company’s appearance on the local market and to help to position itself in best possible way. Furthermore, thesis should literally “illuminate” Company’s management about the complexity of international affairs and force them to pay fully attention when going abroad, because going abroad is not as easy as a new store opening. A variety of different factors can affect both positively and negative Company’s operations and activities, this thesis gives attention to those variables and based on them specific marketing tactics are introduced. One of the main benefits of this marketing plan is that it summarizes what an organization needs/should do in order to reach its objectives and how to best communicate with the market and identify new opportunities. Market segmentation can help an organization to better understand and serve its target market and it is a good method to discover new growth opportunities. Periodically Company should revise if it is serving the right target market as well as strategy how it is reaching it. 8.3. Limitations and suggestions Every research has its own limitations. In case of this thesis and the researches that are done in order to gain as much relevant data as possible several serious obstacles appeared that influenced the outcome of this thesis. First one is the time frame. Although the respective researches are launched 10 months prior to the submission deadline, it seems that more time has been needed in order to get even more data and to have even more precise and concise results. Page Page 93 93 of of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Furthermore, the amounts of data that are being processed are astonishing. This implies that probability of making the mistakes is proportionally high which further means that some of the information derived from raw data might represent distorted reality. Maybe one of the biggest obstacles in getting all the data needed for the creation of this marketing plan was the poor amount of information that has been given from the Company side. Yugomar d.o.o.’s management thinks that this way they are preventing any possible leakage of sufficient information that might be misused. For the future researches on this topic definitely more time has to be dedicated. Since this was one of the issues hereon longer time frames can definitely improve the relevance of the research outcome. In terms of amount of data processed and possibility of mistake occurrence, all the results should be crosschecked by another person who is not directly involved in the research. This way the chance of human error would be much lower and the relevancy and credibility of the outcome much higher. And finally in the respect of lack of relevant data from the company, maybe the right move would be the direct Faculty/mentor contact with the given company in order to put a bit of seriousness on the whole research and in order to prevent any possible misunderstanding that might happen later on. This should definitely facilitate the whole process. 8.4. Self-evaluation I finally come to the part of self-evaluation, looking at things that I did well but more important is what I could have done better or different. I believe the topic I chose was the right one because it was important to me on a personal level as well as interesting. Moreover I knew that after my work was finished it would be of practical importance and benefit the Yugomar d.o.o.’s future development. The most interesting part of this study project was the work of designing and delivering the on-line survey questionnaires. Looking back I think I could have asked a few questions differently both in my interview and in my survey but overall I am pleased with the outcome. Page 94 94 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. I was fortunate to find the free docs.google.com web-based questionnaire software since this tool was very feature rich, easy to work with and the fact that all surveys and results are stored and available to access in the future. This enables Yugomar d.o.o. to later reuse and modify existing questionnaires for annual customer satisfaction surveys and to quickly create and launch new surveys for specific customer segments. The only drawback with the docs.google.com platform was that its data analysis capability was limited to only presenting survey results in bar charts. This was not a major issue but the activity of exporting raw data into excel in order to provide a better variety of graphical presentation was time consuming and was also a potential source for human errors when the data was transferred. At the end, I found work on this thesis very useful for me both academically and personally. I feel that the benefits of this work are going to be visible much later. Page Page 95 95 of of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Intentionally left blank. 117 Page 96 of 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. References: 1. Anttila, M. & Iltanen, K.: Markkinointi. 5th edition; WS Bookwell Oy; PervooFinland; 2001; 2. Antony, M. Kumar: Gearing Six Sigma into UK Manufacturing SMEs: Results from a Pilot Study, The Journal of the Operational Research Society, Vol. 59; United Kingdom; 2008: Burton F. Bowman and Frederick E. McCormick (1961): Market Segmentation and Marketing Mixes; Retrieved: December 2012 (http://www.jstor.org/stable/1249528) 3. Baker Michael; The Strategic Marketing Plan Audit; Cambridge Strategy Publications-UK; 2008; 4. Cohen A. Wiliam; The Marketing Plan; John Wiley & Sons, Inc.; New Jersey-USA; 2005; 5. Crouch Sunny, Matthew Housden; Marketing research for managers; The Marketing Series; Chartered Institute of Marketing/Butterworth-Heinemann.; UK; 2003; 6. Committee On the Next Decade in Operations Research, Operations Research (Jul. Aug. 1988): The Next Decade; Retrieved: January 21, 2013 (http://www.jstor.org/stable/171268) 7. David E. Holmes, Advantages and disadvantages of franchising; California-USA; 2001; 8. D. Mladenovic; CRO&ERM - How to Expect Unexpected; Rovinj – Brno/CroatiaCzech Republic; 2012; 9. Denzin, Norman K. & Lincoln, Yvonna S.; The Sage Handbook of Qualitative Research (3rd ed.); Thousand Oaks; California-USA; 2005; 10. Ferrell, O. Michael D.; Marketing Strategy. 5th ed. Mason; Cengage Learning; Austin-Texas-USA; 2011; 11. Given, Lisa M.; Qualitative research methods; Sage Publications; California-USA; 2005; 12. George J. Stigler; Competition; The New Palgrave Dictionary of Economics; USA; 2008; Page 97 97 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 13. GfK Serbia: Segmentacija kupaca izvestaj final; Belgrade-Serbia; September 2012. 14. Humphrey, Albert; SWOT Analysis for Management Consulting; SRI Alumni Newsletter/ Oxford University Press-UK; December 2005; 15. Harry Schwartz; Recent Activities of post-Soviet Economics; The American Economic Review; Saratoga-New York-USA; Sep. 1996; 16. Hooley, Graham J.; Marketing strategy and competitive positioning. 3rd Ed. New York: Prentice Hall; USA; 2004. 17. James C. Ward and Ronald Paul Hill; Designing Effective Promotional Games: Opportunities and Problems; Journal of Advertising; Philadelphia – USA; Sep. 1991; 18. James K. Binkley; Marketing Costs and Instability in the International Grain Trade; American Journal of Agricultural Economics; Oxford University Press – UK; Feb. 1993; 19. J. Susan Ward; Development of International Marketing Strategy; New York university – USA; 2009; 20. Kurtz, Dave; Contemporary Marketing Mason; South-Western Cengage Learning; Austin-Texas-USA; 2010; 21. Kevin P. Coyne and Shawn T. Coyne; A Better Approach To Breakthrough Ideas; HarperCollins Publishers; New Yorker-USA; 2011; 22. Lynch, R.; Corporate Strategy 4th Edition. Prentice Hall; USA; 2006; 23. Lewis K. S. Lim; Development of Archetypes of International Marketing Strategy, Journal of International Business Studies; United Kingdom; Jul, 2006; 24. Lando Ole/Beale Hugh: Principles of European Contract Law, Parts I and II, prepared by the Commission on European Contract Law; Brussels-Belgium; 2000; 25. Kotler, Phillip; Marketing Insights from A to Z: 80 Concepts Every Manager Needs to Know; John Wiley & Sons; New Jersey-USA; 2003, 26. Meyer, Paul J; What would you do if you knew you couldn’t fail? Creating S.M.A.R.T. Goals. Attitude Is Everything: If You Want to Succeed Above and Beyond; Meyer Resource Group; California-USA; 2003; Page 98 of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 27. National Statistical Institute of Bulgaria; Labor Market Statistics; Labor Market department; Sofia-Bulgaria; 2011; 28. National Statistical Institute of Bulgaria; Household income, expenditure and consumption during the 2011/2012; Sofia-Bulgaria; 2012; 29. National Statistical Institute of Bulgaria; Bulgarian trade with third countries; SofiaBulgaria; January 2013 30. National Statistical Institute of Bulgaria; Demographic processes; Sofia-Bulgaria; October 2011. 31. National Statistical Institute of Bulgaria; Structural Business Statistics - Press Release; Sofia-Bulgaria; November 2012; 32. Nault, Barrie R. and Wei, Xueqi (December 2, 2005); Product Differentiation and Market Segmentation of Information Goods; Retrieved December 05, 2012 (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=909604) 33. Paul T. Cherington; The Elements of Marketing; The Macmillan Co.; New YorkerUSA; 1980; 34. Robert M. Grant; Porter's 'Competitive Advantage of Nations; Strategic Management Journal; London-UK; Oct., 1991; 35. S Baohong Sun, Jinhong Xie and H. Henry Cao; Product Strategy for Innovators in Markets with Network Effects; Marketing Science; New York-USA; Spring 2004; 36. Steven C. Michael; Investments to Create Bargaining Power: The Case of Franchising; Strategic Management Journal; London-UK; Apr., 2000; 37. Stanley F. Slater and Eric M. Olson; Marketing's Contribution to the Implementation of Business Strategy: An Empirical Analysis ; Strategic Management Journal; London-UK; Nov. 2001; 38. Stanley F. Slater and Eric M. Olson; Strategy Type and Performance: The Influence of Sales Force Management; Strategic Management Journal; London-UK; Aug., 2000; 39. Stigler George J.; Competition “The New Palgrave Dictionary of Economics”; USA; 1987 and 2008; Page 99 99 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 40. Ungemach, C., Chater, N., & Stewart, N. (2009); Are probabilities overweighed or underweighted, when rare outcomes are experienced (rarely)? Psychological Science; Retrieved: February 14, 2013 (http://www.jstor.org/stable/2091534); 41. V Warren J. Keega, Bodo B. Schlegelmilch; Global Marketing Management: A European Perspective; Prentice Hall; USA; 1999; 42. Vern Terpstra, Ravi Sarathy: International Marketing; Thomson-Southwestern; USA; 1999; 43. Yadong Luo, Oded Shenkar and Haresh Gurnani; Control-Cooperation Interfaces in Global Strategic Alliances: A Situational Typology and Strategic Responses; Journal of International Business Studies; United Kingdom; Apr. - May, 2008; Page Page 100 100 of of 107 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Chapter IX – Appendices Appendix A - Estimated expenses for each proposed events 101. Appendix B - Questionnaire “Yugomar d.o.o.” 105. Appendix C - Interview with Mr. Zoran Mitrović (Yugomar d.o.o.) 119. Page101 101of of107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Appendix A: Estimated expenses for each proposed event Store outside store (SoS) Table 1: Estimated Costs for SoS events Category Amount for single event Paravane with pictures inside Setup construction Promotion girls Surround system Large printed helium balloon LCD TV 42 inches Transport(average) Promo video Total Cost for repetition of the event Annual costs with all repetitions Price in Euros per piece Initial cost for single event 1 200 200 0 200 1 2 1 300 30 50 300 60 50 0 60 0 200 4 x 60 = 240 50 1 150 150 0 150 1 1 2 / 500 110 70 / 500 110 140 1510 0 110 0 170 500 4 x 110 = 440 100 1880 This event should be outside (next to) stores four times a year. About this and every happening mentioned below, customers would be informed by promo video played on LCD TV in stores, staff, internet and informative messages on shop windows. Store inside store (SiS) Table 3: Estimated costs for SiS innovation Category Large scale removable poster Promotion girl Promo video Setup furniture and clothing Transport Total Amount for single event Cost for repetition of the event Annual costs with all repetitions Price in Euros per piece Initial cost for single event 1 200 200 200 600 1 1 15 50 15 50 15 50 3 x 15 = 45 150 1 100 100 100 300 1 / 80 / 80 445 80 445 3 x 80 = 240 1335 Page102 102ofof107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Indoor design - Visual language – Music Table 5: Indoor design and music Category Floor Floor design Music Escalator Total Amount for single event 1 1 1 1 / Cost 200 50 0 150 400 Annual costs with all repetitions 4x 200 = 800 4 x 50 = 200 0 4 x 150 = 600 1800 Indoor design - Visual language – Music should be adjusted in order to establish and improve bonds to the local market, also to make the stores more interesting for youngsters. Floor and Escalator design should be done in stores (if applicable) with different design for each store. The design should be in accordance with the local motives and show awareness of the company for the local market. Outdoor design Table 6: Shop window design/redesign costs Category Poster design Print Informative message Total Amount for single event 1 1 1 / Initial cost 50 100 50 200 Annual costs with all repetitions 3 x 50 = 150 3 x 100 = 300 3 x 50 = 150 600 Shop window design should be the different for every store and adjusted to the ongoing promotion. Informative message plays crucial role in transferring information to the customers about the promotions and new marketing strategy. That is because customers firstly see the Informative message on the shop window and then choose to enter the store or not. Page103 103of of107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Charity events Table 7: Contributions – costs of organizing Category Contribution box Promo video Total Amount for single event 1 1 / Initial cost 10 50 60 Cost for repetition of the event 0 0 0 Annual costs with all repetitions 6 x 10 = 60 6 x 50= 300 360 “Contributions” events should point out Company’s interest in charity work and helping others. The event is very cheap and it should be organized six times over a year with durations no longer than two weeks. Table 8: Used clothes collecting Category Container Promo video Transport Total Amount for single event 1 1 1 / Initial cost 100 50 80 230 Cost for repetition of the event 0 0 80 80 Annual costs with all repetitions 100 = 100 2 x50=100 2 x 80 = 160 360 “Used clothes collecting” event is to Company’s charity work and helping others. The event would attract local media and create positive publicity at the local market. It should be organized twice a year in all stores, lasting no longer than two weeks. Page 104 of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Intentionally left blank. Page105 105of of107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Appendix B: Questionnaire “Yugomar d.o.o.” Number of surveyed: 1127 Test period: from 10.08.2012. till 29.08.2012 1. Gender? Female 49% Male 51% Male: 575 Female: 552 2. Which age group do you belong to? 12 till 18 19 till 25 26 till 32 33 till 39 over 40 65 58 4 0 0 Age groups Age group: Number of surveyed: 12 – 18; 0 19 – 25; 574 26 – 32; 518 33 – 39; 35 over 40 god. 0 Percentages points: 0% 51% 46% 3% 0% Page 106 106 of of 107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 3. Monthly income/revenue? 70 Less than 400 BGN 60 From 401 BGN till 600 BGN 50 From 601BGN till 800 BGN From 801 BGN till 1200 BGN 40 From 1201 BGN till 1600 BGN 30 Over 1600 RSD 20 Currently unemployed 10 I do not want to answer. 0 Monthly income/revenue: Number of surveyed: Less than 400 BGN; 68 From 401 BGN till 600 BGN; 90 From 601BGN till 800 BGN; 90 From 801 BGN till 1200 BGN; 113 From 1201 BGN till 1600 BGN; 68 Over 1600 RSD; 79 Currently unemployed; 564 I do not want to answer. 68 Percentages points: 6% 8% 8% 10% 6% 7% 50% 6% 4. Do you have any previous shopping experience in Yugomar d.o.o. stores? 9% Yes No 91% Page107 107ofof107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Shopping experience: Number of surveyed: Yes; 169 No 958 Percentages points: 15% 85% 5. How often did you shop in Yugomar d.o.o. stores? I do not shop at all. Less than once per month Freqeuncy of shopping. Few times during month Once per month Once per week 0 20 40 60 80 100 Frequency of shopping: Number of surveyed: Once per week; 0 Once per month; 16 Few times during month; 2 Less than once per month; 915 I do not shop at all. 197 Percentages points: 0% 0.15% 0.006% 81% 17% 6. How much (in average) do you spend when shopping (generally)? I do not shop at all. Over 101 BGN From 41 BGN till 100 BGN From 21 BGN till 40 BGN 0 20 40 60 80 Less than 20 BGN Page Page108 108ofof107 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Average spending’s: Number of surveyed: Less than 20 BGN; 67 From 21 BGN till 40 BGN; 518 From 41 BGN till 100 BGN; 349 Over 101 BGN; 67 I do not shop at all. 135 Percentages points: 6% 46% 31% 6% 12% 7. What type of clothes you are used to buy the most? Glasses/accessories Shoes Jeans/pants Top clothes bought Sweater Shirt Shorts 0 50 100 Type of cloth: Number of surveyed: T-shirts; 868 Shorts; 158 Shirt; 417 Sweater; 282 Jeans/pants; 327 Shoes; 101 Glasses/accessories. 124 T-shirts Percentages points: 77% 14% 37% 25% 29% 9% 11% NOTE: People may select more than one checkbox, so percentages may add up to more than 100%. Page Page109 109of of107 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 8. Which category do you put on the first place when shopping? Huge choice Opportunity to use promo prices Politeness of staff Indoor/outdoor shop design 0 50 100 Category: Number of surveyed: Quality; 766 Price; 755 Proximity of shop; 34 Indoor/outdoor design of shop; 22 Politeness of staff; 146 Opportunity to use promo prices; 485 Huge choice. 417 Percentages points: 68% 67% 3% 2% 13% 43% 37% NOTE: People may select more than one checkbox, so percentages may add up to more than 100% . 9. Which payment method do you use the most? 1% 1% In cash 27% 71% Payment/cre dit card By cheque Page Page110 110of of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Payment method: Number of surveyed: In cash; 800 Payment/credit card; 304 By cheque; 22 I do not shop at all. 12 Percentages points: 71% 27% 2% 1% 10. Choosing one of the following adverbs, please asses the outdoor design and visual identity of the Yugomar d.o.o.’s competitors (e.g. NewYorker, Terannova..) Unsatisfactory Nothing that could distinct them. Design Avarage 0 50 100 I/O design: Number of surveyed: Excellent; 180 Quite good; 518 Average; 180 Nothing that could distinct them; 225 Unsatisfactory. 12 Percentages points: 16% 46% 16% 20% 1% 11. Do you think that Company properly treats environment it operates in? Page 111 111 of of 117 107 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Yes 46% 54% No Answer: Number of surveyed: Percentages points: Yes; 586 52% No. 541 43% 12. Do you think that prices and products offered by Yugomar d.o.o.’s competitors (e.g. NewYorker, Terannova..) are carefully adapted to the Bulgaria economic conditions and life standard? Fully adapted 23% Minor adaptatio n 13% Partly adapted 64% Answer: Number of surveyed: Fully adaptation 248 Partly adapted; 721 Minor adaptation. 135 Percentages points: 22% 64% 12% 13. Do you think that according to your previous shopping experience, Company has a solid basis for competitive advantage among huge textile retailers (e.g. NewYorker, Terannova…)? Page112 112of of107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. No 15% Yes 23% Partly 62% Answer: Number of surveyed: Yes; 248 Partly; 676 No. 169 Percentages points: 22% 60% 15% 14. If you would be the Yugomar d.o.o.’s creator of marketing policy, what are the main spheres of business you would fully pay attention to? Something else Local/regional adaptation of stores and products offered; Supports to local cultural events Introduction of so-called „Happy hour“ Sponsorships-donations to the local environments Promotion of corporate responsibility Indoor/outdoor design of stores 0 50 100 150 Sphere: Number of surveyed: Indoor/outdoor design of stores; 169 Promotion of corporate responsibility; 192 Sponsorships-donations to the local environments; 394 Percentages points: 15% 17% 35% Page Page 113 113 of of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Introduction of so-called „Happy hour“; 890 Supports to local cultural events; 394 Local/regional adaptation of stores and products offered; 293 Something else. 124 79% 35% 26% 11% NOTE: People may select more than one checkbox, so percentages may add up to more than 100%. 15. Please asses the location of Yugomar d.o.o.’s competitors (e.g. NewYorker, Terannova..) stores in Bulgaria. Nothing special 18% I do not like it 0% Exclusive 15% Excellent 67% Answer: Number of surveyed: Excellent; 744 Exclusive; 169 Nothing special; 192 I do not like it. 0 Percentages points: 16. What kind of music do you listen to? 16. 16. 16. 16. 16. 16. 0 10 20 30 40 16. 16. Folk Bulgarian music "MTV” music 16. Pop music Rock music 16. Electronic music 16. 16. 16. 16. 16. 16. 66% 15% 17% 0% 50 Page114 114of of107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Answer: Number of surveyed: Percentages points: Electronic music (techno, house..) 22 2% Rock music 90 8% Pop music 338 30% “MTV” music 406 36% Folk Bulgarian music 248 22% 17. Using 1 to 5 grading scale asses: overall satisfaction with Yugomar d.o.o.’s 17. competitors (e.g. NewYorker, Terannova…) 17. 17. 17. 17. 17. 17. 17. 17. 17. 0 10 20 30 40 50 17. 5 4 3 2 1 17. 17. 17. Answer: Number of surveyed: Percentages points: 17. 3% 1 34 17. 10% 17. 2 113 17. 27% 3 304 17. 33% 17. 4 372 17. 23% 5 259 17. 17. Page115 115of of107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 18. Using 1 to 5 grading scale asses: Linguistic adaptation of web site and declaration of Yugomar d.o.o.’s competitors to the Bulgaria language. 0 10 20 30 5 4 3 Answer: Number of surveyed: 1 12 2 90 3 293 4 440 5 248 40 2 50 60 1 Percentages points: 1% 8% 26% 39% 22% 19. Using 1 to 5 grading scale asses: Local/regional adaptation of Yugomar d.o.o.’s competitors’ products offered. 0 20 5 40 4 3 2 60 1 Page Page116 116ofof107 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Answer: Number of surveyed: 1 34 2 124 3 349 4 394 5 192 Percentages points: 3% 11% 31% 35% 17% 20. Using 1 to 5 grading scale asses: Quality/ reliability of the products offered by Yugomar d.o.o.’s competitors. 0 10 20 5 30 4 3 Answer: Number of surveyed: 1 124 2 248 3 406 4 237 5 68 2 40 50 1 Percentages points: 11% 22% 36% 21% 6% NOTE: Starting from question No. 18 till question No.23 grading scale goes as following: 1unsatasfactory; 2-satisfactory; 3-avarege; 4-very good; 5-excellent. 21. Comment/idea/suggestion (only previous customers off Yugomar d.o.o.): - High prices. In Chinese shops and at flea markets is usually possible to buy the same quality clothes for the lower prices; Page Page 117 117 of of 117 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. - The quality of cloths is more or less the same as the cloths being sold in Chinese shops. The indoor and outdoor design seems to be exclusive but you should definitely work out quality issue; - Music is sometimes too loud. A store seems to be overcrowded without signs where to find specific product; - Poor quality of the goods; - Necessity is to develop broader offer of cloths with satisfying quality; - You should definitely not offer so much “fancy” cloths. By the way quality is measurable. But the prices are fine; - Not so interesting brand for me. I am interested what age group you try to cover? No advertising at all; - Definitely accent to be putted on the clothes quality; - A lot of adaptation in the respect of prices, clothes design and certainly not to impose trends that we are not familiar with; - Let there be much more Yugomar d.o.o. stores in our beautiful Bulgaria; - Please try to avoid design based on a dragons and tribal. Finally when I find something suitable for me, when I turn around it I find some f….. dragon on it. After that I immediately hit Terranova; - Everything perfect; - Promo activities and introducing of “Happy hour”; - Considering the fact that living standards are not the same in Belgrade and Niš, you should adjust prices to the locals. st NOTE: Please bear in mind that answers on 21 question should be based on previous shopping experience elsewhere in Serbia. Page118 118of of117 107 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Intentionally left blank. Page 119 of 117 Page 119 of 107 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. Appendix C: Interview with Mr. Zoran Mitrović (owner of Yugomar d.o.o.) The interview has been conducted 28.03.2013. in the Yugomar d.o.o. headquarters at Nikole Kopernika street 28, Niš, Serbia. 1. What is the vision of the company? Z.M. – My vision of the Company is to get abroad and to be successful on the neighboring Balkan markets (FYR Macedonia, Bulgaria, Bosnia and Herzegovina…). 2. Can you describe the strategy of the company? Z.M. – Currently on the basis of the positive result in the previous couple of years Company is implanting the fast follower expanding strategy. Since we are present in almost every bigger city in Serbia we decided firstly to get onto BiH market, which was completely disaster in both financial and psychological way. Now based on that bitter experience, we have plans to launch our retail operations on Bulgarian market. 3. Can you describe the skills of the employees? Skills refer to the level of skills the employees have to carry out the company’s strategy and which skills do the employees have that are the excellent? Z.M – This is one of the questions that I am going to answer with a doze of reserve. According to my findings there is abundance of product control and administrative skills. Please you should understand that I am considering the interest of the Company while answering. 4. What are the shared values of the company? Z.M. – Definitely some of the main values are overall tolerance, open-mind, creativity etc…It is imposable for me to list them down right now. This is something that individual get to know over time while being employed in Yugomar d.o.o. But worth mentioning is that on the job interview we are searching for the candidates who are going in line with them. Page120 120of of107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 5. How do you hire and train employees and how does the company assign them to the right job? Z.M. – For the recruitment we mostly use portals like infostud.com or najstudent.com. Astonishing number of application we are receiving through these web-sites. It is always indicated what kind of vacancies we are offering currently. If the candidate passes testing and interview with the HR representative, internal training is provided by the older employees. The trial period is three months. 6. Why, when and by whom is Yugomar d.o.o. founded? Z.M - As you probably know Yugomar was founded in late 1994 as a limited enterprise. It was one of the worst times for the Serbian economy and I decided because of the previous expertise in this job to found small firm which will primarily employ the members of my close family. To be honest I did not think that it is possible to grow this fast. 7. How many people are employed by Yugomar d.o.o. at the moment? Z.M – Currently according to the internal documentation 250 workers on different position and cities are employed. 8. Could you please send me a recent Annual Report of Yugomar d.o.o., which is to be used for the financial analysis for my master thesis? Z.M. – I am really sorry, but according to the internal regulations the only way for such a document to be sent out of the company is on the explicit demand of State and Tax institutions. I would like to underline that I perfectly understand the situation you are in and that you are experiencing lack of information but this is because of the situation a few years back which I will not describe hereby. 9. What forms of international partnerships in Bulgaria is possible for Yugomar d.o.o. having in mind Company’s interests and current trends on the local market? Z.M. – The fully owned and controlled branch of Yugomar d.o.o. is what we are striving to in this particular moment. That is our middle-term goal and we are doing our best in order to gain as much relevant and precise data as possible. Recently Bulgarian department has been established with Bulgarian citizens as employees. We think that Company should act very carefully and efficient, that is why this entry model has been picked up. Page Page121 121of of107 117 Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 10. Could you please tell me something more about reaching Bosnian and Herzegovinian market? Z.M. – That was a bitter pill for the whole Company and especially for me. I am not going to get into details but the point is that we decided to launch BiH branch very quickly without profound research of the local market and the costs that might be imposed. As a result just six months after the initial opening of the store in Banja Luka, it has been closed. We completely neglected local customs and economic situation – and that caused withdrawing the bank loan just to pay off all debts that arose. One of the worst business experiences I ever have had. BUT this does not mean that we are not interested in this market. 11. Do you think that franchise agreements are something to be considered when going abroad? Z.M. – So far, we did not think that this type of market entry is suitable for the Company. But in the future maybe we will decide to implement it in order to penetrate the local markets as fast as possible. 12. According to you and your researches what are the biggest advantage of Yugomar d.o.o. on Bulgarian market? Z.M. – Primarily low prices and relatively high quality and modern design of the clothes are to be mentioned. Furthermore the proximity of the market (geographical and cultural) should help us to position the Company on the local market on best possible way. 13. What are the biggest threats on the other side? Z.M. – Biggest threats according to me is NewYorker and on the other side flea markets. They sell more or less similar clothes for the lower prices. Without to sound arrogant but the quality of the clothes is incomparable. Legislation might arise as a challenge but definitely not a threat, since we are young, flexible and changeable company. 14. Is Yugomar d.o.o. aware of the importance of the social responsibility activities? Z.M. – Yes we are perfectly aware of this rising trend and we are contributing monthly to the local institutions in accordance with our financial possibilities (e.g. kindergarten, houses for abandoned children etc…). Page122 122of of107 117 Page Faculty of Economics and Administration | Masaryk University Marketing plan | Yugomar d.o.o. 15. How many employees are currently working on research of Bulgarian market? Z.M. – Currently just few of them are employed. I think five employees are tackling those operations, two of which are from ethnic Bulgarians (Sofia and Plovdiv). 16. What kind of advertising did Company used and are using on the Serbian market? Z.M. – Mainly low-cost ways of advertising are used. This means portals, Facebook, Twitter, student parties etc… We are primarily trying to attract youngsters and we are striving to advertise on the places they are hanging the most. None of the specialized advertising agencies is employed for that purpose so far. Everything is done by marketing department. 17. Do you think that some other low-cost advertising methods exist, and if yes which ones? Z.M. – Of course that more of them exist, and it is a pity that Company did not employ some of them so far. I firstly think of viral and guerilla tools which should attract exactly the marketing segment we are trying to reach. That is why we dedicated a considerable amount of time to think out how to present the company on funny and effective way to the market. NOTE: Please bear in mind that Z.M. stands for Zoran Mitrović. Everything stated is based on the own translation by Dušan Mladenović. Page 123 of 117 107