Strategic Marketing - Case Study - Netto.

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INTRODUCTION

Netto has become a well-known, established organisation that has over 400 stores in four prime markets. It is also part of the Dansk Supermarked retail group. Netto is currently a nationwide food discounter and has a self-service discount format with a store layout designed to promote easy and quick access to the merchandise. This report analyses the Netto case study from which we are to extract and examine the external environment, the key points of its successful strategy and the problems the company may encounter in the maintenance of their competitive advantage. Additionally, the report provides suitable answers and solutions.

THE EXTERNAL ENVIRONMENTAL ANALYSIS FOR NETTO (LEADING UP TO THE LAUNCH)

The PEST analysis is concerned with the environmental influences surrounding a business; in this case Netto. We will identify influences of the PEST analysis and how it is a useful way for summarising the external environment in which Netto operates. However, it must be followed up by consideration of how a business should respond to these influences.

The table below lists some possible factors that could indicate important environment influences for a business under the PEST headings:

Political and Legal

  • Today’s consumer is becoming concerned with companies being environmentally responsible. Netto may have to invest in schemes that help protect the environment, especially if the government enforce environmental regulation and protection.
  • Netto encourages staff initiative by offering £1000 Tax-free prize for its employees who inform the company a new location for a store.
  • With the expansion of the large supermarkets, the government may implement greater control and more legislation.   Since Netto is trading outside its domestic market, it may be affected by international trade regulation, for example importing/exporting barriers. Laws for food imports and distribution are also applicable to Netto, currently there is great protest regarding GM foods. Netto must conform to any regulations stating that the product must be labelled to contain GM foods.
  • Employment: Netto Staff are recruited locally with training.

        

Economic and competition

  • Monetary policy (interest rates), the Bank of England sets the interest rates and exchange rates for all banks.
  • Policy towards unemployment (minimum wage, unemployment benefits and grants)
  • Exchange rates (effects on demand by overseas customer)
  • Inflation (effect on costs and selling prices) and economic growth. During the recession Netto were very successful, however in a time of economic recovery, Netto may struggle to compete with larger organisations that offer a better service.
  • The market structure has changed since the entrée of Netto. The market is not so defined because of the expansion of large supermarkets; large chains are now competing with discount retailers by offering a value/own product range.

Socio-cultural

  • Income distribution (change in distribution of disposable income), e.g. people having higher income to spend.
  • Demographics (age structure of the population; gender; family size and composition; changing nature of occupations), e.g. most families have got car ownership, to one or more cars. Children have more influence in today’s households therefore signify that marketing strategies, as with Netto, should be adapted to fit around these changing demographics.
  • Attitudes are changing and consumers create cultural diversification. Netto has responded to the British market by ‘buying British’. However, the attitude towards Netto is that the cheap products offered by Netto are of poor quality, not of good value. The changing attitudes are also responsible for the change from a ‘me’ society to a ‘we’ society. Netto is involved with sponsorship and local neighbourhood initiatives in an attempt to gear toward a ‘we’ society, suggesting that the company is socially responsible.
  • Labour and social mobility
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Technological

  • Speed of technology transfer
  • Through technology, information is readily available. This denotes that the consumer can acquire much information on a company without the knowledge or approval of the company. Netto needs to consider all aspects of its company’s movements since it could have repercussions on the company.
  • Government and industry focus on technological effort
  • Internet shopping is a convenient way of shopping; it is a revelation that is taking over conventional retail shopping and changing the face of distribution. Netto, currently, does not offer Internet shopping because it retracts from their company objective ...

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