HRM502 Global Business Marketing
Ugg, founded in 1978 is an Australian footwear brand, and has a global presence. Its signature product, Ugg boots have been a popular product for decades. The boots are famously made out of natural sheepskin and offer unparalleled comfort, especially in the winter (UGG, 2018). Though initially considered unfashionable by some, the popularity of the boots quickly gained traction internationally after a number of celebrities including Eva Longoria, Adriana Lima and Cameron Diaz were seen wearing them. Consequently, the company has seen a significant growth in the past few years, with sales of the Ugg brand reaching a staggering $1.45 billion in 2016 (Decker Brands, 2018). Although marketed to be unisex, the product is most popular among young women. The boots are most popular in the winters due to the comfort and protection the natural sheepskin provides against the cold.
The UK is home to over 65 million people and has a massive footwear industry. According to estimates, the footwear market is expected to generate over $15 billion in 2018 and the market is predicted to grow at a pace of 3.6% over the next few years (Rhodes, 2015). The country also has a prominent winter season, during which Ugg boots are most preferred by consumers. Further, the women’s footwear market is a significant subset of the overall UK footwear industry and has a significant number of young consumers. Around 43 percent of the consumers are between the ages of 16 and 24. These factors make UK an ideal place for Ugg to market their product and increase their global outreach (Rhodes, 2015).
To accurately assess the factors that could affect the market performance of Ugg in the UK, a PESTLE analysis is conducted, which comprehensively explores the different aspects Ugg must consider to effectively market itself in the United Kingdom. The PESTLE analysis comprises of Political, Economic, Social, Technological, Legal and Environmental analyses, which together make up the key macro environmental factors a company faces while conducting business operations.
For the company to operate and conduct its business in the UK, Ugg needs to assess the political climate of the nation and determine its suitability for operations. The main factors that determine the success of a retail footwear organization include the trade policies, export and import tariffs, duties and excises and the general ease of conducting business operations (Deresky, 2017). The factors may also include identifying the barriers and hindrances that may potentially crop up when trying to set up business in the country.
The United Kingdom has a free-market and capitalistic economy. The government is supportive of businesses in the UK and encourages domestic and international trade. However, recent events such as Brexit and the resignation of Prime Minister David Cameron have matters significantly more complex. The fate of the United Kingdom seems uncertain and the political climate seems harsh at this point (Jensen & Snaith, 2016). Thus, the company must exercise precaution and weigh all the factors carefully before taking steps to enter the UK market.
For a for-profit organization, it is of the utmost importance that it's business operations generate a significant amount of revenue and their operations turn profitable. Thus, economic factors should be of prime concern for Ugg and it should evaluate the current state of the market effectively before entering the market. Economic disturbances and fluctuations such as global recessions can significantly lower the spending power of the consumer and result in lower spending rates across all markets including the footwear industry (Bamiatzi et al., 2016). Further, Ugg boots are moderately expensive selling at around $120 to $150 USD. These prices make the company significantly more prone to the effects of recessions and other economic downturns. Currently, the effects of the United Kingdom leaving the European Union also had considerable effects on its economy. Companies operating in the UK can no longer enjoy the benefits of operating inside the EU, such as lower export and import duties to other EU member states and free movement of goods inside the EU countries (Dhingra et al., 2016).
The performance of a company in the market place is heavily dependent upon its public perception and its product’s suitability in the market. Social and cultural factors play a huge role in determining the success of a company. Thus, it is of the utmost importance that a company assesses the suitability of the product keeping in context the social and cultural norms in the market (Gillespie & Riddle, 2015). Fortunately, the culture of the UK and that of Australia are not radically different. Both of the countries have a predominantly White-Caucasian population and have prominent winters that require the use of protective gear against the cold. Further, both the countries speak English and it is their official language for communication. Thus, Ugg has a significant opportunity in the socio-cultural context and has an advantage owing to their experience in marketing in their homeland for decades. However, the company must ensure it addresses all other socio-cultural issues. Britain also has a significant number of minorities belonging to a variety of backgrounds such as Asian, South Asian and African heritages, which the company must address when formulating marketing plans (Nwankwo & Lindridge, 2015). Hence, the company should assess all the variables when entering the British market.
Any organisation conducting business operations in the modern marketplace must address the need to use the latest technologies in order to enhance their business operations and increase their operational efficiency. The rapid embracement of technology by industries all across the spectrum has resulted in a hyper competitive marketplace where companies feel the need to constantly outdo themselves and secure their position as a market leader (Kiel, 2015). Ugg needs to consider the technological factors that dictate their performance in the marketplace such as their manufacturing techniques, their supply chain management techniques and their marketing campaigns. The UK is an industrialised nation and embraces the use of technology. The country has one of the highest rates of internet penetration and almost all of its population uses smartphones (Curran et al., 2016). Thus, Ugg needs to implement effective marketing campaigns that use social media and the internet to increase their brand outreach and engage a greater number of potential customers.
A company must always consider the legal implications of their operations and ensure that their actions do not make them vulnerable to any sort of liabilities (Sadgrove, 2016). This ensures that the company’s operations are smooth and unhindered by any external influences. Additionally, it also makes sure that the company’s public image remains that of a law-abiding corporation that respects the legal provisions in place. The footwear industry is frequently accused of outsourcing its manufacturing processes to low income nations, paying really low wages to them and forcing them to work in inhumane conditions. These manufacturing plants are often dubbed “sweatshops” and have been a topic of controversy in the industry (Markkanen et al., 2017). Ugg, however, claims that it manufactures all of its products in Australia and uses local labour and raw materials for their production, which would help them avoid such issues. The company must also make sure that it stays up to date on all the relevant changes in the legislature to ensure that its operations do not make them vulnerable to any legal actions.
There has been an increasing need to address the environmental issues regarding massive retail operations. Manufacturing and distributing products at such large scales come at a significant environmental cost (Charter, 2017). The constant rise of sea levels and melting of glaciers due to rising temperatures and levels of CO2 have caused alarming events in the global ecological context. Climate patterns have shifted dramatically and the threats of unpredictable natural events have been ever increasing (Trenberth et al., 2014). Thus, organisations all across the spectrum should address these issue s including the footwear industry. Large corporations such as Ugg can significantly help the environment by adopting sustainable practices in their operations. Ugg has a massive supply chain which spans across nations. The company can take steps to ensure that their supply chain becomes eco-friendly such as using electric trucks instead of diesel trucks to transport goods. The company can use environmentally friendly methods of production that reduce their carbon footprint. These measures will also help the company in marketing themselves as an environmentally conscious brand and gain the support of people preferring eco-friendly brands (Banerjee, 2017).
It is important for any organisation aiming at establishing themselves as a dominant brand in another country or region to adequately identify and address all the issues and challenges they may face when setting up and conducting business operations in their targeted country. Ugg is a well known brand in the footwear industry and has significant opportunities to market themselves effectively in the UK. However, to achieve this and start operations in the country, it needs to identify the factors affecting its performance including the prominent political, social, economic and technological factors. Key political factors that may affect Ugg such as Brexit and its implications on the economy have been discussed and analysed. It can be concluded that the assignment provided an effective learning opportunity regarding the role of external factors dictating the fate of an organisation in the market.
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