Principles and Practice of Marketing of Dixon Retail Plc - Case Study Example

? CASE STUDY MARKETING, DIXON RETAIL PLC College: Table of Contents Answer 3 7 Bibliography 12 Case Study Marketing, DixonRetail PLC Answer 1 Dixons Retail PLC is one of most renowned expert electrical retailer from UK. The company has a customer base of over 100 million customers in the country. The retail chain started out as a photography business and slowly it grew into a high street store, selling not only photographic equipments but also other electrical appliance. In this part of the report the discussion would focus on analysing the marketing strategies of Dixons in comparison to formal marketing planning process. This would reveal the extent to which the company followed the formal process of marketing planning. Dixons was a product oriented company when it stated its journey in electrical retail segment. Their followed the strategy “stack-em high – sell-em cheap in brightly coloured stores.” This strategy validated the fact that Dixons focused more towards selling good product in well-designed stores, but customer satisfaction was overlooked and it did not occupy centre position in the strategic approach of the company. A general formal marketing planning process is segregated into four parts that is goal setting, analysing present situations, create marketing strategies and allocate the marketing monitoring system and resources. In the goal, setting segment companies set their mission and objectives. Dixons also established its mission to stock products and sell them in brightly coloured stores. Their objective was to offer variety of products and generate lucrative returns. However, the company missed customer service, which its competitors took advantage of. So it can be said that Dixons followed the first step of marketing planning process. The second step is to analyse current situation. The company came to know about its drawbacks during the economic crisis in 2006. It identified that there were major threats of recession in the global market and its competitors Best Buy started grabbing market share by providing better services to customers. At this juncture, Dixons revolutionised its move towards customers. This proves that the company followed the second step of marketing planning process too. The third step is to create marketing strategies, which Dixons rolled out in order to face the intense competition. It can be also called a transformation strategy of the company because it changed the focus of the company from being product oriented to customer oriented. The new business model also re-defined five specific objectives for the company. The fourth and final stage was to allocate resources and monitor the plan. The major focus was now on after-sales and support and customer choice, value and service was the major function in the new business model. This discussion proves how Dixons followed and applied marketing planning process for devising the strategies (Jobber and Ellis-Chadwick, 2012). Another superior marketing strategy that the organization applied is the integration of technology in their marketing strategy. In the company’s service-led business model the internet was a core component of the customer insight. Gay, Worth and Esen (2007) point out that online marketing is a superior tool for marketing in a technology driven society. In online marketing, Dixon employed a multi-channel approach to allow customers to research about the organization order their desired good, reserve and even purchase goods. To reach to this approach, the organization noted that those people who purchased goods online preferred to collect them by themselves at a later date. Consequently, applying a multichannel approach provided a customer value method by allowing them to have a flexible purchase plan in the company. The success of this strategy can be associated with the global trends of internet penetration that is growing each day. By developing an information rich website, it is possible for an organization to roll out their products to their target customers all over the globe. By taking advantage of the cost effectiveness associated with online marketing, Dixon has been able to minimise its operational cost, and consequently the retail cost of their products. This marketing strategy has enabled the company to expand its range of customers and to offer customers the least prices in the market. Answer 2 Business functions are those operations that are performed in a routine manner to achieve the business objectives of the organisation. In retail chains like Dixons, there are various business functions that they perform such as selling, which include sales, marketing, distribution or logistics, research and development. In supporting functions, activities like purchasing, human resource management, etc are performed. However, these are the internal functions, while the external business function in relation to these functions are advertising, market research, recruitment among others. In this part of the report will throw light on the business functions that supported the marketing plan of Dixons to become a success (Jobber and Ellis-Chadwick, 2012). Before the transformation strategy came into existence, Dixons specifically focused on distribution, supply, purchase, and sales. However, after implementing the transformation strategy marketing strategies were enhanced and objectives were altered to develop competitive advantage. According to the new business model, specific functions under the segment of customer insight was developed, such as Internet, store functions, products, support and after-sales service. The objective of these functions was to offer customers value, service, and choice. This was a low cost model of operation for the company. There were several functions that were considered under every broad function discussed above. The store functions included sales advice to customers, assisting them in making shopping choices easily, offering play tables, etc. Internet offered facilities such as pure play, multiple channels, specialists, etc. After sales and support were the major segments in the new service model. Delivery and installation were primary functions because the company dealt solely with electrical products. Setting up, upgrades, repair, and help are some of the major functions that made the marketing strategies of Dixons a success. However, plans themselves do not become successful unless they are not successfully implemented and monitored by human resource of the company. There were certain significant business functions that were also performed by the members of Dixons, especially the senior management. Creating KNOWHOW brand was another great decision, which strengthens the function of after sales and support in Dixons. Every department ranging from training and development to e-commerce has a role to play in unbeaten success of the company. The marketing mix implementation also involved several business functions that led Dixons towards establishing successful framework to monitor customer advocacy and satisfaction. Functions such as tracking store transformation, sales, and profitability were also significant activities (Jobber and Ellis-Chadwick, 2012). The support function was a priority scheme for Dixon in their transformation from product-led to service-led model (Jobber and Ellis-Chadwick, 2012, P.). The aim of the support function was to provide the customers with adequate knowledge on the products that they were buying from the organization. Dixon decided to offer installation, repair, support, upgrade, training, protection and help to customers as one of the aspect of customer service model. By training the employees in a cost effective manner, the organization allows the employees to familiarise with the organizations products and how to install them. The effect of this is that the customers remain loyal as they opt to purchase goods they are already familiar with. Secondly, after sale services such as installation repair and maintenance assist to gain a better customers attraction and to develop a long term relationship that would be beneficial to the organization. In essence, customer support was an effective strategy for Dixon to gain customer loyalty that would benefit the organization in the long term. Answer 3 The KNOWHOW brand was created for consolidating sales and also the element of after sales service in the business of Dixons. The brand director of KNOWHOW was Niall O’Keefe. The company believed that on the product side, Dixons was already doing a good job, but improvement was required in case of services that were being offered by the company to the customers. They realised that after sales was extremely important when it comes to sales of electronic goods because customers have many queries, issues and requirements even after the product is purchased by them. Though KNOWHOW, Dixons tried to ensure that none of the customers’ problems are left unsolved. Various sales and customer support departments were replaced in the company by launching KNOWHOW. It was a brand that was created by the company just for support services and after sales service. It offered multiple touch-point services ranging from installation, product delivery, setting and upgrading complex technologies, etc. KNOWHOW co-ordinated the service segment of all the brands of Dixons such as Partmaster or Tech Guys. The company identified indigenous ways to offer cost-effective training to the employees of KNOWHOW, so that the company can offer its customers, what it has promised (Jobber and Ellis-Chadwick, 2012). Also, KNOWHOW was directed towards customer behaviour understanding for effective service delivery. A Fives training scheme was introduced by the company so as to ensure that the store staffs have the right behaviour to serve the customers better (Jobber and Ellis-Chadwick, 2012, P. 69). Customer-value based models demand that a customer-oriented approach be used to win the loyalty of the customers in the business environment. To be able to serve customer better, it is crucial to study customer behaviour and effect the right organizational behaviour. KNOWHOW was dedicated to deliver effective customer service by ensuring that all the employees in the organization adopted the right organizational behaviour. Language, hospitability and aesthetics are some of the employee behaviour attributes that attract customers within a company. Looking it from this angle, KNOWHOW was a strategy that was dedicated to attract customers to the company through the right organizational behaviour. Answer 4 In order to analyse how the external environment led the company and its senior management towards altering their business model and changing their marketing strategies, a thorough evaluation has to be done on the situation in which the company was in. As far as report reveals, Dixons was no. 1 in the electronic and electrical retail market of UK, Ireland, Greece, Italy and a few others. This signifies that the sales were apparently good and the reason was that the company offered diverse brands at good price. Dixons has established a robust empire, but the business model was product centric. Customer satisfaction was not given importance. There were major competitors such as Comet and Currys who were setting comprehensive strategies in order to meet the pressure of global competition. Change was the need of the hour because in 2006, the economic forces in the global market were threatening and might have affected the performance of the market. There were serious signs of financial downturn and recession was lurking (Jobber and Ellis-Chadwick, 2012). Due to this future prediction, the competition for market share intensified. The electric retailers in UK such as Dixons, Kesa and other players understood that developing new strategies were the need of the hour. In this scenario Best Buy, which is one of the leading retailers of US showed interest in the UK electronic goods market (Dixons Retail plc, 2013). Best Buy offered good customer services and they identified the flaws that were there in the marketing strategies of the electronic retail companies in UK. Best Buy identified that effective supply chain and customer service would be their tool to grab chunks of market share from major players of UK such as Dixons, Comet, or Currys. This was scenario of the UK electronic retail market, when Dixons revolutionised its strategies and approaches towards business and customers. They understood that customers should be the centre of their business and not products, if they want to retain their position in UK. The transformation strategy, which Dixons floated and were based on five new objectives; focus on customers, reduce cost, transforming business process, focus on wining positions and rule the internet market. The entire discussion reveals the fact that it was solely the external environment which not only propelled, but also motivated the senior management to design service oriented business model (Jobber and Ellis-Chadwick, 2012). Finally, the market environment during that time was dynamic and the trends were changing rapidly. The customer tastes and technology were changing and this was a time that demanded changing marketing strategy. The impact of new technology was defining new marketing trends that were internet-centred. With the proliferation of the internet the market environment was globalising and new strategies were demanded to push business through international boundaries. Over all, this was exposing the organization to a new range of customers whose characteristics were unknown. This seems to be the main reason why Dixons management decided to adopt a customer service approach to learn the new range of customer characteristics. Their intention to become a leading online marketer seems to be a direct effort towards internationalization of business operations. In this view, the decisions of the senior level management of the organization were influenced the rapid changes in the market environment that demanded new strategies. Answer 5 Dixons Retail PLC was highly praised by the critics for their transformational strategy, which took their business to new heights of success. Shifting the company from a product centric organisation to customer centric organisation led the company to serve customers better through KNOWHOW, offer better products, and remain in a strong competitive position. Dixons promoted that launching KNOWHOW was not just a relabeling strategy of the company, but it was a fundamental shift of their business functions. The present business model of Dixons is still based on customer service. It now comprises of three basic pillars that has been integrated by the senior management in their multi-channel offerings (Baker, 2011b). The three major pillars of the company are after-sales service, diverse offerings and excellent support that are all integrated into a low cost model that has been already discussed. Dixons transformed its business model just after getting a glimpse of the economic downturn that was predicted, but after that the global market was actually distorted because of several economic crises and UK was badly affected by recession. Probably it can be said that Dixons took its decision to transform at the right time (Baker, 2011a; Baker, 2010). But Dixons also could not escape the heat of recession. The company decided to sell off its e-commerce segment called PIXmania (The Telegraph, 2013). The performance of the company can be estimated from the increasing share prices of the company. However, the e-commerce segment is dragging the profits down and also engaging further economic problems for the company. From the above discussion it is clear that after a shift of focus in marketing strategies since 2006, Dixons is in total control of its market position and decision and strategies are customer centric, yet lucrative. Doubling sharing price and profitability in the current economic scenario reveals the direction towards which Dixons is heading and that is success (4 Traders, 2013). The dynamic nature of the market demands that the Dixon Retail company device new market strategies. For instance, Comet, major competitor of Dixon was sold away after it underperformed in the market. Another competitor, Best Buy, has exited the market after being unable to expand its business to satisfy the national demand of their products. These are new opportunities for Dixon to explore in future. Dixon should consider winning the new customers that were previously loyal to these customers. This is a change that can be consequential on the strategy of the organization. For a company to satisfy more customers, it requires to increase its investments on stock and the marketing cost. New customers may demand new space that has a financial implication on the company’s budget. To advantageously seize this opportunity, Dixon should consider the option of opening new stores in the territories that Best Buy had dominated. The fact that Comet was sold to another company promises a possible heightening of competition from new management. If Comet is put under a new effective management, it would be a potential threat for Dixon’s survival in this market. In this view, Dixon’s survival in the market depends on its ability to define a new strategy that will take advantage of the opportunities and neutralise market threats. Bibliography 4 Traders, 2013. Dixons Retail PLC. [online] Available at: < http://www.4-traders.com / DIXONSS- RETAIL-PLC-4001270/news/Dixonss-Retail-PLC--Dixonss-eyes-sale-or-closure-of-PIXmania-16865795/> [Accessed 8 November 2013]. Baker, R., 2010. Dixons Introduces “Fundamental Shift” in Service Approach. [online] Marketing Week. Available at: [Accessed 8 November 2013]. Baker, R., 2011a. Best Buy to Withdraw from UK. [online] Marketing Week. Available at: [Accessed 8 November 2013]. Baker, R., 2011b. Dixons Shuffles Marketing Team to Boost Service. [online] Marketing Week. Available at: < http://www.marketingweek.co.uk/Dixonss-shuffles-marketing-team-to-boost-service/3029060.article> [Accessed 8 November 2013]. Dixons Retail plc., 2013. Annual Reports & Accounts 2012/13. [online] Available at: < http://www.Dixonssretail.com/sites/default/files/attachments/Dixonss_annual_report.pdf > [Accessed 8 November 2013]. Gay, R., Worth, A., & Esen, R. (2006). Online marketing: a customer-led approach. Oxford, Oxford University Press. Jobber, D. and Ellis-Chadwick, F., 2012. Principles and practice of marketing. 7th ed. London: McGraw-Hill Higher Education . The Telegraph, 2013. Questor Share Tip: Dixons Had Strong Results but Still Issues to Fix. [online] Available at: < http://www.telegraph.co.uk/finance/markets/questor/ 10136624/Questor-share-tip-Dixons-had-strong-results-but-still-issues-to-fix.html> [Accessed 8 November 2013]. Read More