MASTER THESIS Masaryk University B.Sc. Dušan Mladenović

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.
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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
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Faculty of Economics and Administration | Masaryk University
Marketing plan | Yugomar d.o.o.
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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.
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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:
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
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
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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
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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
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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.
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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
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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
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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
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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.
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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.
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Intentionally left blank.
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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.
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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.
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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
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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
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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.
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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.
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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
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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;
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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
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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
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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;
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
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;
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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?
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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).
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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;
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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.
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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).
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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
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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
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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;
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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.
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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;
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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.
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***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
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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
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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;
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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
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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.
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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
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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
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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
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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.
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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.
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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
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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
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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
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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;
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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.
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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.
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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;
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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;
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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.
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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.
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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.
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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;
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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;
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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
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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
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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
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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
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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;
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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.
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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
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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.
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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.
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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.
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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;
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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
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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
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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
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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.
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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.
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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
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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
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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;
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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
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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
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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.
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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.
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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
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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.
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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.
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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.
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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;
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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;
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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;
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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;
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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.
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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
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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.
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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.
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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%
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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%
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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
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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%.
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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
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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?
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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…)?
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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%
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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
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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.
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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
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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;
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- 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.
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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.
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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.
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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…).
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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.
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