3. Theoretical Framework
3.2 Retailing
theories will thus be applied in combination with the other theories (Kapferer (1997, 2004) and de Chernatony (2005)), such that the respective theories complement each other and strengthen the overall theoretical foundation.
However, due to the stated limitations of the product, projective and adaptive paradigms, we adhere to the relational paradigm in this thesis. This implies that in the analysis we incorporate both the firm and customer perspectives to reach a solid balance between the two perspectives and support their interrelated and dyadic relationship.
manufacturers communicate to end‐consumers through the retail channel (Tongeren 2008).
In fact, “more than 70% of retailers are also brand managers” (Aberdeen Group 2004:i), which means that they offer products “under proprietary in‐house labels”
(Aberdeen Group 2004:i). This is most often a very controlled branding process that carefully considers the different stages in the purchasing process (Davis & Dunn as cited in Gloppen 2008). The main difference between brand management of national brands and retail brand management is thus the proximity between retailer and end‐
consumer which gives the retailer a significant advantage in shaping the brand experience. In particular, from the pre‐purchasing process (e.g. window display and in‐
store placement of products) to the actual purchasing experience (e.g. in‐store customer communication) to the post purchasing experience (e.g. advice and service), the retailer has a much higher level of control over the branding process compared with that of national brand manufacturers.
It is increasingly acknowledged that corporate brands are often the retailer’s most valuable asset (Ailawadi & Keller 2004), that these brands also constitute difficult to imitate resources, and that they can create sustained competitive advantage (Tongeren 2008). Simultaneously, direct contact with the consumer also places certain requirements on the retailer, as they are constantly forced to live up to their brand reputation in order to maintain customer loyalty (ibid). Nevertheless, the great advantage of retail branding is that the store offers physical proximity to end consumers at the moment of truth, thus creating possibilities for direct communication (ibid).
Despite the rather limited research within the domain of retail branding (Burt & Sparks 2002, Ailawadi & Keller 2004), there are numerous studies of retailers’ marketing tools, customer perception, and store images which are clearly applicable to the branding field (Ailawadi & Keller 2004). In this thesis we thus seek to incorporate general branding practices with the more specific discipline of retailing. Due to the very generic nature of branding theory and the clear relationship between the fields of
retail branding and branding in general, Ailawadi & Keller (2004) maintain that the more general branding theories and brand management perspectives can also be applied when it comes to retail brands. Nevertheless, it is also important to draw on available retail research, and in this regard the following sections introduce and discuss the PLIN retail internationalization model and its constituent elements.
3.2.2 The PLIN Model
The PLIN model consists of four different elements: Product, Lifestyle, Image and Niche, which must be considered prior to internationalization (Simpson and Thorpe as cited in Akehurst & Alexander 1995). Each of the four interdependent elements should be considered as preconditions for creating a competitive advantage in a foreign market; furthermore, they should exist simultaneously and independently. If just one of the elements does not act as a differentiator for the retailer then the best decision may be to postpone, cancel or rethink the international expansion. The PLIN model is illustrated in appendix 15. We will now take a closer look at the four elements that can be determining factors in providing the basis upon whether or not an international expansion is a viable growth strategy. The four elements are presented in Table 5.
Table 5 – The Four PLIN Elements
Product Ideally the product assortment should provide a unique mix of merchandise which will allow the retailer to differentiate itself from its competitors. Several authors have stated the importance of the product range (Alexander 1990; Treadgold 1991; Crawford, Garland & Ganesh 1988) and one retailer even takes it as far as to say that: “Ultimately our success depends upon our products” (Williams 1991). Of course, in some retail sectors, service levels and store environments function as key differentiators in the ‘product offering’.
Lifestyle Ideally there should be a good match between the company offering and the lifestyle patterns and consumption behaviors of the specific target groups in the new market. In addition to lifestyle being about the way that people live and spend their time and money, it can also be about personal values and to what extent they match the values of the company.
Therefore, in order to make the product assortment more attractive many retailers also seek to offer products that are reflective of and compatible with the lifestyle of the target segment.
Image Image refers to the perception that is/has been constructed in the mind of the consumer. Most often the image represents a certain status and/or personality of the store/organization/brand. In order to understand how the consumer perceives the retail brand image, marketers can try to evaluate the consumers’ perception of the store and what it stands for. It is only by determining the company’s image at the domestic level, and then attempting to project this into the target market that the retailer can get a picture of how the specific image will fit in a new international setting.
Niche Ideally, retailers should be positioned in the market so that they fill a gap relative to their competitors. The retail business and the assortment offered should thus appeal to a well defined segment and differentiate the retailer in a defensible market position. Mason, Mayer and Ezell (1991:668) describe niche as “a strategy whereby a retailer carves out a narrow position in the market place that offers a high potential, and then specializes to meet the needs of the consumers in that segment”.
Ultimately, niche simply refers to the fact that a retailer must enter into and be able to maintain a defensible market position. If the competitive landscape is already crowded with similar offerings, then the retailer may clearly want to rethink expansion into such a market, unless they possess a key competitive advantage that would allow them to fight for and
establish market share.
3.2.2.1 Reviewing the PLIN Model
Having established an understanding of the various PLIN factors that impact the internationalization process according to Simpson and Thorpe (as cited in Akehurst &
Alexander 1995), we will now review the model to surface any missing elements.
When evaluating the PLIN model, which constitutes a conceptual framework for the internationalization process and accentuates the overriding importance of creating a
“collective differential advantage” (Simpson and Thorpe as cited in Akehurst &
Alexander 1995:23) through the four elements in the new market, the significance of the potential interplay of national cultures appears to have been neglected. Since the PLIN model is intended to be a generic framework for guiding the strategic evaluation and implementation of international retail expansion, or in other words business growth across national borders and cultures, the disregard for the potential impact of cultural differences would appear to be a significant defect. In addition to the disregard for the potential impact of national culture, the PLIN model is also very generic, which of course can be regarded as both a strength and a weakness. As a consequence of these drawbacks, we adapt the PLIN model (see section 3.5 Adapting the PLIN Model), but prior to that we need to examine the issues of segmentation and culture as these elements also may influence the elaboration of the adaptation of the model.