Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.
New Introduction & Background
This report has been prepared for ASDA Plc by Usman Khaliq of Business Builders Consultants. Business Builders Consultants has been commissioned to write a report that considers the theoretical and practical issues of marketing for ASDA Plc. The report investigates ASDA Plc Company’s market and applies recognised theoretical marketing models.
The report addresses three key areas
A suitable strategic marketing planning process for ASDA Plc
Describing and Justifying the activities that would take place at each stage
Explanation and examples of tools and techniques that are relevant to ASDAPLC’s marketing plan
Three marketing strategy options that ASDA PLC could realistically pursue
Estimation of the probable outcomes
A description of the advantages and disadvantages of each option
A marketing audit for the organisation
Carries out a marketing audit for ASDA Plc and gives details of changes occurring in the external environment.
Analyse how ASDA could respond to the changes identified and give realistic marketing objectives that consider could be achieved within 3 years.
State how areas of the organisation that are not part of the marketing department should adapt over a period of 3 years in order to meet the marketing objectives that you have specified.
Strategic Marketing Planning Process
The selected Marketing Planning Process for this report is Malcolm McDonald’s marketing planning process.
2.1 McDonald’s Marketing Planning
Malcolm McDonald marketing planning process has 10 steps.
Figure 1: Malcolm McDonald Marketing Planning Process
The 10 steps of McDonald Planning Process are given below:
Table 1: Malcolm McDonald’s Marketing Planning Process
Stage 1 Mission
To make employees motivated and give them overview about the company and its objectives and goals, mission statement is essential. It gives direction of what the company is going to do and how it will do it. The mission statement provides guideline of actions of the company, bring out its overall goal, provide a sense of direction, and guide decision-making. It also provides the frame work for company’s strategic decision.
Stage 2 Corporate Objectives
Mission statement describes overall objectives of the company but corporate objectives describe the activities that could be taken to successful the mission statement. Objectives are those ends that the organization seeks to achieve by its existence and operation. Organizations are goal attainment devices.
To know the internal and external environment of the organization marketing audit is essential. It provides information about the internal environment; employees’ wages, customer satisfaction, and external environment; market share, political situation.
Stage 4 SWOT Analysis
Company’s internal strengths, weaknesses, opportunities, and threats come out by SWOT analysis. It helps the company to find out the necessary activities to compete with the competitors, increasing profit margin and available resources.
Stage 5 Assumption
Assumption is taken to find out the effectiveness of the marketing plan. It helps the company select monitoring and evaluating process about the marketing activities.
Stage 6 Marketing Objectives and Strategies
Marketing objectives makes plans for marketing activities and marketing strategies is all about how the activities are to be done in order to successful the business.
Stage 7 Estimate Expected Results
It is a monitoring and evaluating stage that applies judgement and analysis of marketing activities to achieve business success.
Stage 8 Identify Alternative Plans and Mixes
Business needs to find out the alternative plan as support to the present strategies. Alternative marketing plan and mix gives the company power to operate its business if its fail with the existence marketing plan.
Stage 9 Budget
Budget gives important information about the cost of the strategies and implementation. Budget also helps the companies find out the alternative ways if present activities go over the budget.
Stage 10 1st Year Detailed Implementation Programme
To implement the 1st year marketing activities, marketing planning processes gives one year detailed marketing plan.
2.2 Justification of Marketing Planning Process
The justification stage tells about the activities and their justification of effectiveness of marketing planning processes.
Table 2: Activities and justification of the Marketing Planning Process
Stage 1 Mission
Board of directors and executives employees make mission state for the company. It may include the objectives of the company its future mission etc.
Mission statement is very important for the company in order to make employees more clear about the company’s goals and objectives. Without mission statement no one knows where they need to go and what they need to do.
Stage 2 Corporate Objectives
Corporate objectives decided the company’s profit margin, increasing brand images and strategic implementation.
Mission statement gives an overview about company’s objectives and goals. Corporate objectives give specific direction and overview about the company’s objectives and vision; e.g. it selects the profit merging for the company.
Marketing audit collect information about the internal environment and external environment of the company.
It collects information about the market growth; collect information customer satisfaction, financial analysis.
Marketing audit gives information about the external environment and the factors that affect the company’s activities. Such as political situation of the company provides information about government new rules and regulation and company can decide its new marketing plan.
Analyse sources and business competitive advantages.
Experiment of information about new entrees.
Market research for new opportunities.
Making correction about present strategies and activities.
Without SWOT analysis company never knows its internal strengths weaknesses, opportunities, and threats.
Forecasting about the result of the activities taken by marketing plan.
Fore casting about expected result.
Assumption helps the company takes budget about marketing activates. It gives information about the success of the marketing plan.
Stage 6 Marketing objectives and strategies
Selecting marketing objectives by analyse target market.
Select the ways of implementing the objectives.
Select necessary activities.
Helps to identify the suitable strategy for the present market and helps to success the business.
Estimate expected result
Taking market research, analysis of customer satisfaction to find out the effectiveness of the marketing strategy
Help to make changes of strategy if necessary. Helps to find out alternative strategy to minimise cost.
Identify Alternative Plans and mix
Make ready alternative plan to operate the activities smoothly.
Take market research and evaluate past experiences.
Analyse any failure history of marketing plan.
Alternative marketing plan and mix make the company effective it fails to operate in difficult situation. It makes the company adapt with changing environment.
Stage 9 Budget
Analysis of previous record and make correction. Find out the cost related to marketing activities.
Budget helps the company to know about its profit and loses. Helps to make changes more costly activities.
STAGE 10 1st Year Plan.
Crete clear 1st year operation plan by analysis of market condition, cost related to the activities, making proposal of activities, analysis of available resources and so on.
It is very helpful to take at least one year implementation plan and make the plan successful. Without 1st year implementation plan companies cannot find the effectiveness of their activities.
2.3 Tools and Techniques
Five tools and techniques are selected that are relevant to ASDA’s marketing plan. This will be implemented under the following:
2.3.1 SWOT Analysis
SWOT analysis is a marketing tool and techniques that help the company find out its strengths, weaknesses, opportunities, and threats. Companies usually uses this tools when its need to identify the current market trends and company situation. It takes place when new decision is essential for the company. Pizza Hut uses SWOT analysis to find out new strategy to increase its sales in the recession time.
If you need assistance with writing your essay, our professional essay writing service is here to help!Find out more
Figure 2: SWOT Analysis
2.3.2 Porter’s 5 forces analysis
Porter’s 5 forces analysis is another marketing tools and techniques. Companies usually takes Porter’s five forces when it launching new products. The fives looks at the bargaining power of the customer, threats of new entrants, threats of substitute products, competitive rivalry within an industry, bargaining power of the suppliers. Pepsi coal company uses Porter’s 5 forces models when it launching Pepsi Diet.
Figure 3: Porter’s Five Forces Diagram
2.3.3 The Ansoff’s Matrix
Ansoff’s matrix is another marketing tool. Companies take Ansoff’s matrix when it decided to expand its market. Ansoff’s matrix has four aspects, market penetration, product development, market development, and diversification. It gives overview about what the company needs to do if it wants to increase its business activities. Such as, when Apple launches IPad they will use the Ansoff’s matrix to help with the decision-making process.
Figure 4: Ansoff’s Matrix
2.3.4 Product Life Cycle analysis
The product development life cycle is other marketing tools that help the company evaluate the present condition of an existing product. It has four steps; introduction, growth, maturity and decline. Each of the steps provides information about the profit margin, market demand, the rivalry and the decreeing market demand.
Figure 5: Product Life Cycle
2.3.5 PEST analysis
PESTEL analysis is a marketing tool that company uses in order make marketing audit and know about the external environment. PEST refers to as Political, Economical, Social, and Technological. Coca-cola uses PEST analysis when it lunches diet-coke. .
Figure 6: PESTLE Analysis Framework
This part describes three marketing strategy with their advantages and disadvantages and probable outcome.
3.1 Market Penetration Strategy
Table 3: Market Penetration Strategy
Market penetration strategy could be useful for ASDA. As ASDA is operating with the lowest prices in market, compare to its rivals. ASDA can increase their market share and sales revenue by implementing this strategy. This strategy works on more advertising and promotion of existing products.
For example. Airtel promoting its services to penetrate in the Indian market.
Probable outcome of this strategy would be that ASDA will be able to increase its market shares and will be able to increase its sales revenue.
Market penetration strategy makes customer think about alternative products as there are many option amiable and rival company may offer better products and more options.
Increase sales revenue.
Increase profit margins.
Would be helpful in expanding business.
Needs extra expenditures.
Tighter budget for company.
Affects could be worse if rivals take the same strategy.
There is a big question mark if the market penetration strategy works or not. If not loses are significant.
Sometimes makes the company more competitive if the rival company takes same strategy.
Some customer has negative feedback and they think that penetration means low quality product.
3.2 Niche Strategy
Figure7: Niche Market Strategy (Targeted Customer) source: google images
Table 4: Niche Marketing Strategy
“In practical niche marketing is the practice of dividing the market into specialised areas for which particular products are made. A niche market is one of these specialised areas. “
Our academic experts are ready and waiting to assist with any writing project you may have. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs.View our services
In niche marketing there are targeted customers for which products are to be made. For further explanation of the niche strategy consider the example of an ergonomic chair, a chair specially designed for the patients suffering from lower back pain. The niche market for this product is to market the product to assisted living centres for elderly. Another niche market for the ergonomic chair chiropractors who could advise this chair for their patients. Therefore to advertise the ergonomic chair in general/broader market will not be a good strategy of marketing rather directly advertise it to specific regions/markets where it fits in perfectly.
Another example of niche marketing strategy, consider the companies like Ferrari, Rolls Royce etc. These companies make customise cars according to the specifications and requirements of their particular customers and specifically approach to elite/rich class people who can afford their products. For an example Ferrari makes formula one (F1) cars for the racers but they especially designs car for their racer Michael Schumacher. Similarly Rolls Royce makes car according to the specifications and requirements of their customers individually.
Probable outcome for this strategy is that ASDA will have high profit margin rather than having more sales revenue. ASDA could divide its customers into number of groups belonging to certain categories and then could mould its product according their requirements, resulting in attracting specific customers and increasing its profit and business eventually.
Approach to targeted customers could effectively reduce the cost.
Low cost associated with marketing process.
It is easy for the company to identify the target market and make them in touch.
If ASDA opens a halal food restaurant in future. It will eventually attract the Muslim community towards it and ASDA restaurant will become popular in Muslim community. Here the niche market for the ASDA will be Muslim community.
Niche markets are smaller in sizes in terms of having targeted number of customers therefore niche markets get saturated in short durations of time.
Potential for sales growth and for the economies of scale is very limited in niche markets.
The target market is very small, there for the cost of the products often high because of low scale production.
If ASDA makes customised chairs for the patients suffering from lower backache problems. It will attract the persons having the backache problem but on an average the number of people having the problem of backache is very less as compared to normal persons. ASDA will gain the profit by this product in the beginning but soon the market for this will become saturated as there are only few people that require this product. Therefore the business duration for this product will be very less and the cost of production per unit will become high.
Market Development strategy
Table 5: Market Development strategy
Market development strategy can help ASDA in becoming no1 store in UK. As ASDA is operating with very big stores. This strategy would require ASDA to open convenient small stores in different parts of the country so that everyone can access easily. In a sense ASDA will increase customer’s loyalty.
This strategy would lead ASDA to become most convenient store in UK working from each and every place from UK. This will help out to increase profit margins for ASDA and more job opportunities for people. Furthermore it can be implemented internationally.
Increase customers trust
Increase profit margins due to more stores
Increase market share
Can be used globally
Company get competitive advantages that make barriers for new entrants.
Increase market share and make the company more profitable.
Create strong brand images.
Needs a lot of investment
Local business could be threat
The failure of the products causes significant losses for the company.
Requires high level strategic plan and related to high risk of success.
The target market is mass and the need huge effort to attract the target market.
3.4 Recommended Approach
3.4.1 Short Term Recommended Approach
The strategy of market penetration is highly recommended for ASDA Plc because ASDA offers products to all general customers. ASDA has major competitors in UK. ASDA needs to attract its customer by advertising, selling products with low prices and offer customer better product and services. For the marketing purpose the upcoming sports event, Olympics 2012, will be a great opportunity for ASDA to promote its business by advertising on TV channels, newspapers, in stadiums etc. Moreover ASDA is been taken over by Wal-Mart, an international company, therefore in future if ASDA wants to expand its business it will be a helping hand for ASDA.
3.4.2 Long Term Recommended Approach
ASDA is now having and opening big stores currently. For opening of new big stores ASDA require much big land for them. Due to huge buildings of ASDA stores these stores are located wide apart whereas companies like TESCO and Sainsbury’s etc emphasise on opening stores of small sizes but increasing their number of stores even in a small region. As a result of this approach by TESCO and Sainsbury’s etc their stores are readily approachable by the people. ASDA must not give an open opportunity to its rivals by emphasising on opening big stores. ASDA should focus on opening small stores and try to open stores that are not very wide apart. This approach by ASDA will attracts more customers towards its smaller stores and will play a vital role in attracting the customers of companies like TESCO and Sainsbury’s etc towards itself.
3.5 Reasons for rejecting the others
ASDA is not able to take market leaders strategy as it has major competitors TESCO and Sainsbury. Moreover the market development strategy is not recommended in short term for ASDA because this strategy requires large number of small stores that requires huge workforce, investment, and it will become more complex to monitor its network however ASDA is already expanding its super and hyper markets every year constantly but for long term market development strategy will be a key factor for its bussiness. Also the niche marketing technique is also not suitable for ASDA as ASDA has products for general customers and ASDA usually does not offers products for some targeted group of people for which niche marketing strategy is recommended.
Marketing audit looks at both external marketing environment and internal marketing environment.
4.1 External Marketing Environment and Marketing Audit
4.1.1 Market Size/Share 2009
As of March 2009, Tesco has a 30.4% share of the UK grocery market while ASDA’s share is 17.1%, followed by Sainsbury’s at 16.1%, and Morrisons at 11.2% and others 25.8%.
Table 6: Market Size/Share 2009
Source: ASDA publishes financial infromation.
The market share of ASDA shows that it is followed by the giant market leaders TESCO. But it has competitive market share as the differences are not too much. ASDA has chances to increase its market share by taking suitable strategy.
4.1.2 Market Growth
The graph below depicts the trend of market growth over the last few years as follows:
Graph 1: ASDA Performance vs. Market
The graph clearly shows that the trend of market growth is increasing every year constantly, which is a good sign for future.
4.1.3 GDP Growth of UK
GDP growth of UK of recent years is mentioned below in the chart. However the UK is still facing the recession phase and the period of 2008-2009 was the worst for GDP growth yet now the GDP growth has increased significantly in the period of 2009-2010. The variations in the GDP growth are clearly shown in the graph (Mintel, 2009) below:
4.3.1 Sales Data
Due to recession people are assigning more priority to eat more at home than eating out which provides more opportunities for the grocery retailers like ASDA to grow their business and increase their throughput (Guardian, 2010). The percentage of the overall customers spending on the food has increased significantly over the last half of decade which is clearly depicted by the table below (Euromonitor, 2010):
Source: Euromonitor Report, 2009
4.1.5 PORTER’S Five Forces
For the factors that strongly influence the business environment are modelled by the Porter. Porter named these major factors as Porter Five Forces. These five forces are:
BARRIERS TO ENTRY:
Due to popularity and running of grocery business there is always a potential threat of entering new rivals in this business. Although ASDA has strong brand image and customers are committed so there would not be any problem.
The local organisations have limited choice of purchasing their goods from the local suppliers. Therefore suppliers have an immense impact on deciding the rate for their goods. Organisations have to bargain with the suppliers, and this bargain is more in the favour of supplier rather to be neutral.
The buyer has a high power of bargaining as compared to organization because the end product is manufactured purposefully to satisfy the buyers. Moreover buyers have more options of switching to other brands as the buyers always want to get high quality product in low price.
Organizations have to face an immense competition in markets. There is a vigorous competition in the retail industry of food, grocery, etc which is majorly because of the price cutting strategies of the organizations to attract the buyers towards them. Therefore ASDA has to always consider the price cutting strategies of its rival organizations in determining the cost for its products in order to capture the market for its product.
THREATS OF SUBSITUTES:
The threats of substitutes for ASDA are very much lesser than its rivals because ASDA always follow the trend of introducing the good quality in as much less price as it can.
4.2 PESTEL Analysis
Table 7: PESTEL Analysis
The Government has provided such policy for employment that strongly appreciates retailers to hire new employees having salaries from low and high both. Therefore by hiring new employees and by training them ASDA can give a hard time to its rivals.
According to BBC News in 2009 there are 10 more countries in European union promoted the trade between western and eastern European countries, which is could be a good sign for ASDA to make its business vast in the whole Europe.
The new increase in the Value Added Tax (VAT) will cause the prices to rise and eventually reduce the profit gains.
Increasing interest rates can also be a harmful factor for the company.
Due to the credit crunch there are large number of peoples are unemployed and it can have a negative effect on the business of ASDA.
Recession is leading to increase unemployment rate.
High inflation rate can also be an alarming factor for ASDA.
The slowdown in international food market and UK food market as well can vigorously affect the ASDA as ASDA is highly dependent on its food items.
Availability of line of products for the Asian and EU citizens.
Large influx of the EU citizens in the UK requires extra accommodation, health and care.
An ageing population could lead to enhance the unwillingness to do work and to rely on pensions.
People are becoming more brand conscious and prefer to choose their trusted brands only.
Consumers are becoming more health conscious and always look for a healthy diet.
Changing trends in the consumer’s demands and increase in the demand of ready to use items.
Increasing demand in self-checkout systems by consumers is highly appreciated by ASDA.
Cash machines are installed within the store premises.
Enabling of online shopping facility made life easier.
Improved efficiency in maintaining stocks by using the bar-coding or RF-ID tags.
Introduction of new product types (mobile phones, mp3 players, etc.) in ASDA.
The new technology is beneficial for both consumers and retailers as it provides ease to consumer, reliability and efficiency to retailers.
More awareness for the environmental issues has been spread out among people.
Recycling is now become a common practical. For example ASDA has its ‘Bags for Life’ ASDA recycles its bags on its own to save the environment from pollution and encourages its customer to support in saving environment from pollution by giving them new replacement bags for the damaged old bags of ASDA.
To save energy is more required and it is the demand for the coming future. In future ASDA is planning to open new stores which will use electricity which will be produced by solar energy.
Reduction in the harmful carbon products affecting the environment becomes a primary goal to be achieved. In new stores ASDA cut down 40% of CO2 (carbon dioxide) and in existing stores ASDA reduced 21% of carbon emission.
ASDA is also taking its responsibilities to take the measures against the above mentioned environmental issues.
“The Food Retailing Commission (FRC) suggested an enforceable Code of Practice should be set up banning many of the current practices, such as demanding payments from suppliers and changing agreed prices retrospectively or without notice (Mintel Report, 2004)”. With the result of this, the prices will be dynamic or uncertain which will affect the repute of ASDA.
Working hour restrictions set by the UK government have to be followed properly. No employee should be allowed to work more than the allowed time.
Health and safety standards set by the government have to be insured and maintain.
“The government’s policies for monopoly controls and reduction of buyers’ power can limit entry to this sector with such controls as license requirements and limits on access to raw materials (Mintel Report, 2004; Myers, 2004)”. Due to these government’s policies ASDA can have only limited access to raw materials and hence cannot stock the raw material over the allowed certain limits. Therefore even if the prices of some required raw materials decreases or the need of some particular raw materials increases, ASDA cannot get the required raw materials due to the limited access to raw materials.
4.3 Internal Marketing Environment and Marketing Audit
4.3.1 Performance/Growth of ASDA (2005-2009)
The growth data shows that ASDA Plc has increasing growth and it has potential market advantages. If ASDA can take suitable market strategy and tries to expand its business it will do that. ASDA has announced to create vacancies for 7500 jobs in 2011. Out of 7500 vacancies, around 3500 jobs will be for their new ASDA stores and 2400 staff will be hired for their home shopping workforce. Market shares are constantly increasing every year and ASDA is also extending their stores.
4.3.2 Market Budget Data
Table 9: Marketing Budget
Source: ASDA Financial Statements (2009)
ASDA spend more money in its marketing sectors in 2009 than 2008. It shows that ASDA incising its marketing activities and making business expanded. It will be helpful in future because marketing of brands and products will play a vital role during olympics2012.
4.3.3 SWOT ANALYSIS:
SWOT analysis acts as a fundamental part of any marketing plan as it determines the strengths, weaknesses, opportunities and threats for the organization. An organization plan its marketing strategy by considering what advantages it have over its rivals and what should be improved to overcome its weaknesses as much as possible.
Table 10: SWOT Analysis
2nd in super markets in UK
Has strong brand image
2nd biggest market share in UK
Products are cheap
Providing healthy and fresh food
No small outlets where everyone can approach
Always working with bigger stores which costs a lot
No proper layout for recycling which leads to huge wastage of money
Have experience of international expansion, so it can use it to explore new emerging markets.
Data base of customers could be used to generate new business
Reliable to go in any business
Rivalry supermarkets are biggest threat.
Decreasing prices affects profits
Not available in all parts of country.
Others supermarkets are not so far in race of market share.
By doing the SWOT analysis it can be clearly identified that what strengths ASDA have that must be taken under consideration while designing its marketing strategies in future.
4.3.4 BOSTON CONSULTING GROUP MATRIX:
Figure 8: BCG share matrix (image taken from google images)
The Boston matrix describes the four stages of the businesses/products in terms of their revenue and the market growth potential. It defines the four stages as a function of market growth and market share.
Question Marks: This is the stage where the businesses/products have high market growth rate but having low market share. These businesses/product
Cite This Work
To export a reference to this article please select a referencing style below:
Related ServicesView all
DMCA / Removal Request
If you are the original writer of this essay and no longer wish to have the essay published on the UK Essays website then please: