Marketing Plan of John Lewis - Research Paper Example

?Contents Contents Executive Summary 2 Target Markets 3 Market Demographics 4 Demographics and Behavior Needs 5 Market Needs and Market Trends 7 Market Growth 8 Market Trends and Growth 9 SWOT Analysis 10 Marketing Integration Mix 11 Conclusion 12 Case of John Lewis: 14 Works Cited 21 Client’s Name: Course: 22 September 2011 Executive Summary This paper will shed light upon the marketing plan of John Lewis that is one of the biggest departmental stores in the UK; the marketing plan will comprehensively cover all the important internal as well as external factors. Situational analysis will also be discussed in this paper which will include the strategy of John Lewis, its customers and the SWOT analysis of the organization. The objective section of the marketing plan will shed light upon the vision, marketing objectives and the corporate objectives of the organization. Under marketing strategies important strategies like targeting and positioning, strategies for segmentation will be discussed. The marketing model section will throw light upon generic strategies, strategic alternatives, competitive strategies and other important aspects like innovation and branding. The seven P’s of marketing price, promotion, place, people, processes and physical evidence will also be discussed in detail in this marketing plan. Marketing budget is another area which requires attention, factors like resources, requirements, timing and marketing expenses will be discussed. Target Markets Marketing scenario is ever changing and with changes come unprecedented challenges, the retailer companies are facing several challenges and the need of the hour is to come up with new marketing plans which are capable of tackling these never seen before challenges. John Lewis is one of the biggest departmental stores in UK; it was founded by John Spedan Lewis. John Lewis had to enter into a partnership to compete against the other biggies like Tesco in the UK. “The John Lewis Partnership's 76,500 Partners own the leading UK retail businesses - John Lewis and Waitrose. Our founder's vision of a successful business powered by its people and its principles defines our unique company today. The profits and benefits created by our success are shared by all our Partners.” (John Lewis) John Lewis is one of the biggest players in the market only behind Tesco, Wal-Mart and France’s Carrefour. It is the fourth major player should its revenue be considered, it is in the top five for sure should profitability be considered. John Lewis is a much diversified organization, it is doing quite well. The company operates in televisions, travelling, electrical so on and so forth. It is fair to say that John Lewis has been doing well into its divided segments but the need of the hour is to have a competitive marketing plan in place which would further improve the profits and compete against the likes of Tesco, Wal-Mart and France’s Carrefour. Marketing plan for the organization is as follows: Market Demographics One of the most crucial parts of a marketing plan is situational analysis; important factors like SWOT analysis, organizational strategies, marketing effectiveness, and customers are discussed under situational analysis. It is ideal to apply the FEPOS approach under situational analysis, FEPOS approach will shed light upon functions, environment, productivity, systems, organizations and lastly strategy will be discussed. Functions: Operating in diverse areas that are profitable for the company is very useful, for instance more and more people are opting to buy LCD and LED TVs, John Lewis sells these HD TVs in its store as well as online, this is very helpful and should be continued in the future. Electronic goods are also sold by the company which is again really good. Consumer electronics is in demand these days, the disposable income in the hands of the people has increased and as a result of which they have started buying electronic goods, this is a wonderful opportunity for John Lewis to capitalize upon. Environment: The environment is very competitive, biggies like Tesco, Wal-Mart are doing good business in the UK and this puts further pressure on John Lewis. John Lewis is favored by both Micro as well as Macro environment. More light upon the same will be thrown upon in the following section: Demographics and Behavior Needs Micro Environment: The micro environment consists of several important factors; these factors have either a direct impact or an indirect impact on business. The following will explain the same: Customers: John Lewis provides its services to the people residing in the UK, in addition to this, services are also extended to people in the US, France, Hungary, Poland, South Korea and to a few more countries. Suppliers: The company has several suppliers spread across the globe. Employees: There are several employees who work for John Lewis. Competitors: John Lewis has to lock horns with biggies like Tesco, Wal-Mart and a few other powerhouses. Media: “Online channels are used to make the customers aware of the new products.” (Hague 2002) Macro Environment: Various factors make up the macro environment; these factors can heavily influence a business. More light will be thrown upon on the macro environment in the following part of the paper: Legal and Political Factors: Conservative and Unionist Party is dominating the country; the UK government is led by the liberal Democratic Party. The potency of UK in terms of its legal structure is reflected by the legal foundations for the economy. Cultural and Social Factors: The residents follow the British culture in the UK, there are several ethnic minorities residing in the UK and the same is an advantage for John Lewis. There is no official language but people mainly speak British English in the UK. The residents like to choose from a plethora of options which John Lewis provides and this is again a positive aspect for John Lewis. Economical Factors: UK is considered to be economically very sound; this also provides numerous opportunities to capitalize upon. These opportunities come with potential risks which John Lewis must take into consideration. Mounting oversees cost and foreign exchange, are two of the biggest risks. The economic conditions favor the operations of John Lewis. Market Needs and Market Trends Technological Factors: UK is considered to be very technologically advanced, the IT field is booming and this is why the technology is not-notch in the UK. Several strategic initiatives have been taken by the UK to keep pace with the growing technology. The e-governance program is a fine example of the same. “This is a very important aspect under macro environment and it is also constructive for John Lewis.” (Wilson and Gilligan 2005) Productivity: The revenue and the profit are fine indicators of productivity; the organization is in the top 5 retailers in the UK. System: The system of the company is effective and this is why it is in the top 5 retailers of the UK. The internet website of John Lewis is doing good business which is a good indication of the growth the company can expect in the near future. Strategy: Effective marketing strategies are employed by John Lewis to attain its objectives; the company competes with the help of these effective strategies in the global market. Organization: John Lewis is a very organized company, the Mckinsey’s model of 7Ss like shared values, structure, system, style, skills, strategy and lastly staff are well taken care of. Market Growth Porter’s Five Forces The porter’s five forces are applied to assess the competitive advantage of different organization in this particular case it will be applied to find out the competitive advantage of John Lewis. John Lewis operates in retail industry and its competitive advantage is as follows: New Entrants: The threat of new entrants is low to John Lewis, there are a no of barriers when it comes to opening a new retail store and this is why the threat is low. The low priced discounters are posing a big threat to the company and this certainly needs to be looked into. Existing players and their rivalry: There is no love lost between biggies like Tesco and Wal-Mart and this rivalry affects the profits of John Lewis also. The price cutting strategies have made this rivalry even more intense. “Sainsbury, Tesco, Wal-Mart, K-Mart are posing big challenges to John Lewis.” (Peter and Donnelly 2002) Substitute Products: The products sold by John Lewis can easily be substituted and this is why the risk of people buying substitute products is quite high. Suppliers’ Bargaining Power: Suppliers’ are crucial for retailers and the bargaining power of suppliers is quite low. This is a threat to John Lewis. Buyers’ bargaining Power: The buyers’ have low bargaining power in this business and this is good for John Lewis. Market Trends and Growth (John Lewis) “During the fiscal year ended August 31, 2010 (fiscal 2010), the Company's new showroom was opened in Blackheath, south east London. In November 2010, the second showroom was opened in Beaconsfield, Buckinghamshire. In November 2009, the Artisan Installation Service was launched that provides a one stop-shop to its customers for the purchase and installation of their kitchens.” (John Lewis) SWOT Analysis A marketing plan is anything but complete without a SWOT analysis; here is the SWOT analysis of John Lewis. Strengths: The brand image of John Lewis is its strength One of the market leaders Diversified business is always considered to be good Distribution channel is very competent Weaknesses: City center market is still looking for a leader and John Lewis has not been able to lead it Lack of marketing approaches Opportunities: More and more people want to buy private labeled products and this is a fantastic opportunity for John Lewis Market appeal should be diversified to be in a position of strength Threats: Supermarket discounting stores selling goods at a very low price Economic conditions like recession can hit John Lewis hard Business operations may be disturbed by new entrants Marketing Integration Mix The seven important segments of marketing integration mix are as follows: Product: Value added fair trade products should be provided by John Lewis to attract more customers. Price: Providing fair trade products at a lower price will surely lure more customers and the profit will inevitably go up. Place: “The popular products should be placed in the City Center in huge quantities; these products will sell like hot cakes.” (Hill, O’Sullivan and Hill 2003) Promotion: Aggressive promotion strategies should be adopted by the company to boost its sale in the next quarter. Slogans and logos can be created to lure the customers into buying products. People: “Skilled and well trained people should be recruited to give John Lewis an edge.” (Miller 2005) Process: B2C marketing approach can be adopted to sell fair trade products quickly and at a higher profit. The delivery of the fair trade products should be made swifter to attract more customers. Physical Evidence: Fair trade products must be placed in the City Center store which is located in the UK; it will be a very beneficial step for John Lewis. Conclusion A marketing plan can make or break a company and this is quite conspicuous from the discussion above. John Lewis would do very well should it follow all the recommendations made in the above parts of the paper. City Center is place in the UK which John Lewis must target to improve its profits. It is always good to be proactive rather than being reactive when it comes to business dealings, demand forecasting is a very important process with the help of which the demand of products is analyzed. It is purely a customer-focused activity and the one which requires a lot of information and precision. Where, when and in what quantity would a product be required is normally analyzed under demand forecasting, it is a proactive process which can fetch an organization a lot of profit. The logistic process of a company is also based on demand forecasting, it is a very important process. Capacity planning, inventory planning and overall business planning are some of the other important processes which are supported by demand forecasting. This important activity involves analyzing five main characteristics of demand and they are: Average Trend Seasonality Cyclicity Elasticity Demand forecasting becomes an implausible task without analyzing these five main characteristics of demand. Active forecasting and passive forecasting are the two types of forecasting, used by several successful organizations. Passive forecasting is employed when the factors remain constant over a period of time and active forecasting is employed when the factors change or are flexible. Business is very uncertain, demand forecasting is studies to reduce future risks, it makes precarious circumstances far less precarious. It brings much needed stability into the operations of a company; it also reduces the wastes of an organization. It has several other benefits and they are as follows: The sales targets are set when demand forecasting takes place Pricing policies are determined when demand forecasting takes place Inefficiency and conflicts are reduced drastically because of demand forecasting Case of John Lewis: John Lewis can carry out demand forecasting at different levels and they are at firms’ level, at industry level and lastly at total market level. Forecasting can either be for short term, medium term or long term. It is advisable to forecast for short term and then take the results into account and move forward. John Lewis need not employ the regression method as it requires a plethora of data, judgmental techniques can be employed to kick start the proceedings. John Lewis can employ the microeconomic methods to get the ball rolling, it will involve quantitative methods like prediction of activity, markets, industries, branded products so on and so forth. This method will also include several surveys with the help of which the buying trends and the spending capacity of the buyers will be analyzed. Collective opinions method can also be incorporated by the organization to accomplish the tough task of demand forecasting. The preferences and the biases can only be known when a complete survey has been taken; the survey will also shed some light upon the following aspects: Short term demand of the buyers Medium term demand of the buyers Future requirements without any data Needs and wants of the buyers Assessing demand for new products The above factors can help John Lewis immensely and this can only happen when data is collected through surveys. A survey is an ideal way of knowing the buyers and without knowing the buyers and their demands; no product can be sold to them. "Over the past few years, we have significantly expanded our Qtrac electronic queuing and NeXtrac in-line merchandising product lines," said Perry Kuklin, director of Marketing and New Business Development for Lavi Industries. "With the success of our single-line Qtrac CF Electronic Queuing System, which is now being deployed by major retail outlets across the country, we developed the Qtrac CF Multi-line solution to supply multiple-line queuing for big box retail stores, larger entertainment venues and other consumer facilities that use a multi-line queuing approach." (Global Shop) John Lewis can also adopt the multi-line queuing approach to eliminate the hassle of queuing, this will provide a lot of convenience to the customers and the profits will increase. 2. Supply Chain Management: There is increasing competition these days and it is imperative to have a good system in place, supply chain management is crucial to the success of John Lewis; it reduces the overhead costs immensely and increases the profit of an organization. It involves several important steps like building a competitive infrastructure, synchronizing supply with demand and lastly measuring performance. Supply chain has become the order of the day because it solves several huge problems for an organization; some of those problems are as follows: Clear Information: A lot of misunderstandings occur when supply chain is improper but information is exchanged properly when an organization has a good supply chain management working for them. Cash-flow: Cash-flow becomes very easy when supply chain management is effective and working properly. Inventory Management: Inventory management is also taken care by supply chain management and this is very important for any organization to succeed. Distribution Strategy: Distribution Strategy is also determined under supply chain management. These are some of the most important problems addressed by supply chain management, it solves a lot of serious problems and it is indispensible for an organization. Functions of Supply Chain management: Supply chain management has several important functions at different levels and they are as follows: Strategic Level: It helps in optimizing every important thing Crucial in establishing partnership with suppliers and distributors Crucial in long term planning Tactical level: It is crucial in sourcing contracts Crucial in production decisions Crucial in determining customer demands and habits Operational Level: Demand planning and forecasting Controls inbound operations Controls outbound operations as well “We classify the decisions for supply chain management into two broad categories -- strategic and operational. As the term implies, strategic decisions are made typically over a longer time horizon. These are closely linked to the corporate strategy (they sometimes {\it are} the corporate strategy), and guide supply chain policies from a design perspective. On the other hand, operational decisions are short term, and focus on activities over a day-to-day basis. The effort in these type of decisions is to effectively and efficiently manage the product flow in the "strategically" planned supply chain. There are four major decision areas in supply chain management: 1) location, 2) production, 3) inventory, and 4) transportation (distribution), and there are both strategic and operational elements in each of these decision areas.” (Supply Chain Management) After having had a look at the importance of supply chain management it is very fair to say that this process is crucial for John Lewis, a proper supply chain management will increase the profit of John Lewis and it will also reduce its difficulties. The inbound and the outbound operations will become simpler and a good network with the suppliers will be established under supply chain management. 3. Innovation and Creativity: The competition is cut throat and it is very important to consistently innovate things which have never been seen. Buy one and get one free was innovation which was received a great response and it has been consistently used since its inception. There is a greater need to innovate these days considering the fact that the competition is tough and cut throat. Organizations have profited immensely as a result of creativity and innovation, John Lewis can also benefit from the same, the likes of Tesco, Wal-Mart and other biggies are giving John Lewis a good run for its money and this competition can be handled easily when the organization invests a substantial amount into creativity and innovation. A new machine which can produce unique goods can be called innovation; the organization would have to shell out money to acquire the latest machines. Innovative strategies can also be thought of like buy one and get one free, this will increase the sales and when sales increase profit will also increase. The need of the hour is out of the box thinking; customers have always appreciated something new and unique and will surely continue to do so. When such appreciation is guaranteed, it becomes easier to experiment and to come up with new and unique concepts which can heavily increase the profits of an organization. Failing often is usually the key to success, several business ideas have failed but the think tanks should never give up and the thinking process should continue, this is how it evolves and the process gets better. The organizations should not fear failure, failing cheap and over and over again is often the key to success. Important factors under innovation and creativity: Talent: The talent in an organization depends on the employees who work for the organization. Some organizations may have the cream of the crop working for them while some others may not have good employees and managers. Money: The funding available contributes towards money and it is important when innovation and creativity are talked about. Knowledge: The managers come into play here; their knowledge is applied when out of the box thinking and innovation are talked about. Management System: Several important aspects like planning, quality of information, resource allocation are included under management system Communication: Communication regarding innovation is very important in an organization, without proper communication no organization can innovate successfully. “Businesses, whether for-profit and nonprofit, are facing change like never before. Numerous driving forces to this change included a rapidly expanding marketplace (globalization), and increasing competition, diversity among consumers, and availability to new forms of technology. Creativity and innovation are often key to the success of a business, particularly when strategizing during strategic planning, and when designing new products and services. Creative thinking and innovation are particularly useful during Strategic Planning (when strategizing) and in Product and Service Management (when designing new products and services.)” (Creativity and Innovation) John Lewis also must consistently try new innovative concepts to ward off competition from the other big players like Tesco, Wal-Mart and other biggies. To conclude it is very fair to say that John Lewis must invest time and money into creativity and innovation, it is sure to pay sweet rewards for the organization. Works Cited Creativity and Innovation (2011). Management Help Global Shop (2011). Retail Customer Hill, E, O'Sullivan, T & Hill, L 2003, Creative Arts Marketing 2nd ed, Butterworth-Heinemann. Hague, P. N, 2002, Market Research: A Guide to Planning, Methodology and Evaluation 3rd ed, Kogan Page Publishers John Lewis (2011). About Us John Lewis (2011). Corporate Information. Miller, K, 2005, Organizational Communication: Approaches and Processes 4th ed, Thomson Wadsworth Peter, J. P & Donnelly, J. H, 2002, A Preface to Marketing Management 9th ed, McGraw-Hill Professional. Supply Chain Management (2011). An Introduction to Supply Chain Management Wilson, R. M. S & Gilligan, C, 2005, Strategic Marketing Management: Planning, Implementation and Control 3rd ed, Butterworth-Heinemann Read More