Export-Marketing Plan For Shoprite Public Limited Company

Abstract

This report is an export-marketing plan for Shoprite Public Limited Company (PLC), which is a South African retail organisation with a dominant market presence in Africa. The purpose of this report is to help the retail company to create and implement a successful export marketing strategy for its business that will see the firm expand its operations beyond its host market. This goal should be pursued by evaluating the company’s internal structural dynamics, global market intricacies and priority areas that would enable managers to follow a systematic framework for implementing its internationalisation plan. The insights outlined in this report about the company’s export potential stem from a comprehensive review of secondary research relating to its internal and external structural dynamics and business. Furthermore, the company’s practical experience as one of Africa’s key retail firms is included in this analysis as part of a wider body of evidence informing key decisions of its export-marketing plan. The findings presented in this report should help Shoprite’s managers to decide which markets to enter and in which ones to invest fewer resources. Although the information detailed in this document is a product of thorough research, it forms part of a living report that can be amended to suit changing market dynamics relating to the retail business.

Introduction

For many countries, the export market is an important economic sector because it offers new markets for goods and services. Chabowski et al. (2018) define the export trade as the process of selling goods produced from one country in another. Together, the import and export sectors form a key part of international trade (Sitabutr and Pimdee, 2017). Several companies and countries participate in this type of trade for many reasons, but the most common ones include the possible increase in revenue, market expansion and technological transfer (Katsikeas, 2018). However, based on the complexity of the export market, which is often characterised by varying legal, cultural, political and social policies, it is difficult to find the right marketing mix that would enable companies to realise their export goals.

This paper presents key information that would be useful in developing a sound export marketing strategy of Shoprite, which is one of Africa’s largest retail chains. The corporation has a market presence in about 15 countries within the continent and is listed on the Johannesburg stock exchange (Chutel, 2016). Appendix 1 shows a list of its direct and indirect subsidiaries, as presented in its annual financial report (Shoprite Holdings, 2020). Key sections of this report explore the main motivations for Shoprite to pursue an export strategy by assessing the company’s preparedness for this endeavour. The process of selecting the right markets, the practical mode of export and the right marketing mix to be implemented will also be discussed in this report. The last section of this paper provides a summary of the main findings.

Export Motives

Being one of the most promising brands in the retail market, Shoprite stands to gain from pursuing an export marketing strategy that will see it expand its market outreach to foreign markets. Primarily, doing so will expand the company’s market share and make it less dependent on the local industry (Monreal-Pérez and Geldres-Weiss, 2020). The company could also benefit from large economies of scale that would be realised by exporting a part of its business because there will be a surge in demand that needs to be fulfilled through an expansion of the company’s operations (Babah, Barth and Ingenbleek, 2020). The quality of research and development initiatives would also be significantly improved by adopting the export-marketing model because it offers companies an opportunity to customise their products or services according to new and emerging market data.

Export Readiness and Export Goals

It takes a lot of time and resources to prepare a company for the export market. However, Shoprite is ready for this type of operational expansion because it allocates adequate time and resources to this activity, as proposed by Morgan, Feng and Whitler (2018). Joseph and Hari (2019) allude to this view by saying that organisations, which want to participate in the export trade need to identify specific goods and services that have a high demand overseas. This process is aimed at maintaining control of business dynamics so that few unpredictable factors could affect the overall plan (Monreal-Pérez and Geldres-Weiss, 2020). Relative to these discussions, the extent of Shoprite’s preparedness to export depends on several factors, such as time and management commitment (Teklehaimanot et al., 2017; Palmatier and Sridhar, 2017). These resources need to be leveraged to improve the company’s readiness for the export market.

Over the years, Shoprite has experienced revenue fluctuations in its domestic economy. These variations stem from an unstable and unpredictable business environment (Chutel, 2016). Consequently, the retail company is ready to engage in the export business because the process would boost its bottom line operational outcomes and competitiveness. By doing so, the corporation would also be striving to meet the rising demand for quality and innovative products and services, which have been key hallmarks of its regional business operations (Shin, Oh and Rho, 2019). Therefore, the extent that the company is ready to engage in the export business is informed by the high demand for the company’s products, the presence of a clear plan for getting foreign buyers, a reliable financial infrastructure for payment and the presence of a predetermined arrangement for shipping goods. Based on this assessment, exporting does not have to be burdensome.

An internationalisation strategy helps companies to grow faster and eventually increase employee earnings. This assertion is true because companies which engage in international trade pay their employees higher wages than those that operate locally (Cruz, Beck and Wezel, 2018; Porath, 2018). Relative to this discussion, while Shoprite’s competitors are expanding their global market presence, the company needs to follow suit and be a leader in this regard through the export business. In other words, it should not sit back and allow such opportunities to go unexplored.

Although Shoprite’s readiness to engage in international trade is undisputed, its export objectives cannot be divorced from its primary organisational responsibility of maximising its shareholder value. Stated differently, its export goals should be deemed an extension of its primary objectives. In line with this assertion, the firm should consider aligning its internal and external goals for maximum operational synergies to be realised. Primarily, the company’s managers should consider expanding the firm’s objectives to include exporting. Stated differently, the company’s objectives should be expanded to include exporting as a key goal. Indeed, by constantly staying focused on adapting to changing customers’ tastes and preferences, emphasis should be made to continually look for products and services that match customer needs in local and international markets. The success of the business will eventually be measured by how many times customers choose the company’s products as an indication of their confidence in the organisation to provide quality goods and services.

Export Market Selection

Prioritising the export market is an important task for Shoprite because it needs to identify demographic cohorts that have the highest potential for complementing their export marketing strategies. Alternatively, selecting the wrong markets may create frustrations in the manner the retail chain conducts its business. Comparatively, selecting the right market may lead to an increase in the quantity and quality of products sold by the enterprise. Based on these potential outcomes, it is important for Shoprite to focus on one single region at a time and refrain from pursuing different markets that could complicate the export plan.

The process of selecting the right export market should be based on a sectoral market analysis, which may rank potential regions based on the quantity or value of goods produced. For example, if the goods or serviced produced by the company are mostly consumed in one market; the company’s managers should rank it high in the order of priority, as proposed by Richeri (2016). Consequently, the selection process would be based on the total demand for goods and services offered by each market. Alternatively, this process should entail an amalgamation of numbers for the total imports and domestic production for each market reviewed.

Economic indicators should guide the decisions of export-marketing planners to find the right market based on the projected demand for goods and services in the potential export region and the level of competition in the same place. Therefore, the demand that a foreign market would offer to Shoprite’s products should be deemed the single-most important determining factor for implementing its export-marketing plan (Kalverkamp and Raabe, 2018). The level of competition should also be reviewed in this analysis as an important indicator for making informed decisions because it may deny the company access to a profitable market.

Export Mode

Firms could use several strategies to implement their export marketing plans. However, Watson et al. (2018) says that no universal framework applies to all companies or industries. For Shoprite, a number of factors influence the business’s operations, including trade tariff rates imposed by different authorities and the level of adaptation customers would have towards the business’s products. Marketing and transportation costs are other considerations that may influence the business’s operations (Georgallis and Lee, 2020). Although these factors may increase the cost of participating in the export market, it may be offset by a commensurate increase in sales.

Based on the characteristics of the retail market, a direct exporting strategy will be most appropriate for Shoprite because it gives immense control to managers when implementing the export strategy. For example, the direct export approach would involve agents and distributors who will be recruited and treated in the same manner as other employees to make sure they remain committed to the company’s export goals (Saez et al., 2015). This marketing strategy also involves allocating the responsibility of direct marketing and distribution to the parent company. However, foreign distribution and the logistics of the activity would be left to third party operators because Shoprite lacks the capacity to undertake such operations seamlessly across international borders. Therefore, reputable logistics firms, such as FedEx and DHL should be part of the export marketing strategy as third-party actors.

The direct export strategy could be appropriately used in expanding Shoprite’s operations because it avoids the costs of delays associated with intermediary operations. It will also give the company’s managers a greater autonomy in their businesses and allow for further interaction with customers (Leeman, 2015). The lack of intermediaries in the export strategy would also be beneficial to the business through increased profitability. This export plan also creates a lot of room for managers to interact with customers, thereby giving planners adequate room to understand their needs and address them accordingly. However, this proposed export marketing strategy is cognizant of the limitations of Shoprite’s value chain in the sense that it has been localised for a long time and cannot address the unique needs and demands of an international supply chain system without additional support (Chutel, 2016). Consequently, the opportunity cost of hiring a third party actor to handle all logistical problems may be attractive to Shoprite’s managers. However, to make this strategy work, all employees should provide their support at different levels of governance.

Export Marketing Mix

A product marketing mix refers to the careful balance that companies make when balancing internal and external forces affecting their marketing plans. A deeper understanding of this interplay of factors emerges in how well a company meets the demands of its customers in foreign markets (Al Badi, 2018; Kumar, 2019). Based on this understanding, the proposed marketing mix plan should be designed to adequately meet the needs of this customer group. One way of doing so is to be cognizant of the four Ps of marketing, which underscores the marketing mix strategy – product, place, promotion and price. Relative to this discussion, Daniel et al. (2018) claim that companies should be aware of the impact that the four Ps of marketing would have on their business outcomes. The art of balancing these four key areas of marketing should be done in the planning phase, which will involve the reorientation of the company’s 4Ps according to unique market and customer needs. In other words, these elements of the marketing plan need to be balanced to develop the perfect marketing mix strategy.

Product

There will be an attempt to standardise Shoprite’s product characteristics with international best practices to address the needs of its international and middle-class clientele. This strategy will affect different types of operations within the company, including a review of the company’s service quality plan that should align with industry best practices. The price of goods sold will also be standardised to match the local competition but price is the main competitive ground for outdoing rivals. Shoprite’s proposed product strategy should be cognisant of three key factors: customer focus, profit orientation and the interrogation of corporate systems to make sure that they work towards the achievement of the broader organisational plans. The presence of these three key indicators of performance means that there should be no expenses spared towards the achievement of the firm’s export objectives.

Pricing

Price is perhaps one of the most important elements of a firm’s marketing plan because it helps to generate revenue for a business. Furthermore, it supports other elements of a marketing plan, such as promotion, place and product because they all cost money to implement (Azeroual, 2018). Furthermore, price is a competitive element in the marketing mix plan and a source of competitive edge for some players in the market (Dominguez and Mayrhofer, 2018; Daniel et al., 2018). As mentioned in this report, Shoprite’s success is partly associated with the company’s pricing strategy, which is affordable to middle-class customers. Therefore, its overall business plan is pegged on the growth of this market, which is one of the most important aspects of its overall growth strategy.

Over the years, the low-cost business model adopted by Shoprite has been successful because it has allowed the company to develop trust with its customers. In other words, Shoprite’s clients are always aware of what to expect by visiting the retail chain’s outlets. It has managed to do so by realising the potential that exists in developing markets, relative to other economies of the world. Relative to these assertions, Shoprite’s pricing strategy will be set up to generate a profit to the seller but still deliver value to customers. Stated differently, the pricing strategy will not be discriminatory or prohibitive to the extent that common ordinary citizens cannot purchase goods and services without hassle.

Promotion

One tenet of the marketing mix plan is advertising and promotion. It is pegged on the adoption of an effective marketing strategy that will be guided by the use of tools and platforms that require little or no resource investments to maximise business returns (Kucuk, 2016). Notably, social media marketing fits this description and will be adopted as the main platform for developing an export plan for Shoprite because direct selling and television advertisements will complement it. This mode of promotion should be adopted because it will reach a wider audience, which relies on traditional media for communication (Dominguez and Mayrhofer, 2018; Kucuk, 2016). Therefore, television and radio advertisements will represent conventional forms of media that should be used to advance Shoprite’s export plan.

This hybrid promotion plan, which integrates aspects of new and traditional media, is specifically designed to meet the needs of Shoprite’s customers because they appeal to different demographics. For example, the social media marketing plan may appeal to a youthful demographic, while traditional media (television and radio) may reach older populations (Kucuk, 2016). This hybrid model is selected for use in the export plan because it caters to the diverse interests of Shoprite’s diverse customer group.

Place

Based on the broad overview of export practices, which could influence Shoprite’s operations, the proposed export plan should see the retail company expand its market outreach to at least two countries in the next five years. The expansion should go on to involve at least five countries in ten years because of rapid economic development in emerging economies and an improving standard of living in most of these regions. Therefore, Shoprite should be motivated to export its products as a strategy for building or fulfilling specific relationships with third parties regarding the execution of global supply chain functions. Another motive for participating in this plan is to develop a well-functioning export department that would administer the business’s export activities. Collectively, these strategies are geared towards making Shoprite internationally competitive, as proposed by Kucuk (2016). By doing so, the company would be making strides towards developing a strong brand image that will not only been known in its host market but also in the global market in the same manner as other retail giants, such as Walmart and Tesco do.

Conclusion

This report outlines key proposals for the development of an export-marketing plan for Shoprite. Its purpose is to help the firm create and implement a successful internationalisation strategy for its retail business that should see it expand its operations beyond the host continent. This goal was pursued by evaluating the company’s internal structural dynamics, global market intricacies and identification of priority areas that would enable managers to follow a systematic framework for implementing an elaborate export plan. The suggestions outlined in this report stem from comprehensive secondary research of the internal and external structural dynamics of Shoprite’s industry and business. Furthermore, the company’s practical experience as one of Africa’s major retail firms is included in the analysis as part of a wider body of evidence informing key decisions of its export-marketing plan. Overall, the current market data presented in this report should help the company’s managers to decide which markets to enter and which ones to refrain from engaging in. Although the information detailed in this document is a product of thorough research, it forms part of a living report that can be amended to suit changing market dynamics.

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Appendix