Identification of the Target Markets - Term Paper Example

«Identification of the Target Markets» Table of Content Executive Summary 2 1. Introduction 3 2. Situation Analysis 4 2.1 General Information 4 2.2 Organic retailing 5 2.3 Product ranging and diversification 5 2.4 Competitors 6 2.5 Customer rewards and attraction 6 2.6 SWOT Analysis 7 3. Determination of the IMC objectives 7 4. Identification of the Target Markets 8 5. Integrated Marketing Communications Options 10 6. Recommendations for IMC Plan in 2011 11 7. Monitoring and Evaluation of the Program 13 Executive Summary This document presents an integrated marketing communication (IMC) program, recommended to the Woolworths Limited Group, Australia in 2011. Today the Woolworths is the biggest supermarket chain in Australia and New Zealand, which not only dominates on the grocery market, but also has the leading position in consumer electronics sales, liquor production, general merchandising, petroleum products reselling and some other industries. Taking into consideration a unique environment of Australia’s retail market and distinctive characteristics of Woolworths’ business, in particular its highly competitive capacities, the IMC program is developed with the purpose to integrate and coordinate effectively various marketing tools and resources, both online and offline, which are more appropriate for maximising the impact on customers as well as for confirming a positive corporate image among consumers, partners, competitors, civil society and governmental organisations. The recommended IMC program is for the most part based on the analysis of descriptive and statistical information, represented by the Woolworths Limited Group on its corporate web-site, as well as by the National Association of Retail Grocers of Australia (NARGA) (including the PricewaterhouseCoopers’ Report) and the Australian Bureau of Statistics (ABS). The report comprises a SWOT-analysis of the Woolworths Limited Group company with relation to its marketing position and proposed products and services; an identification of target markets and objectives, which the IMC program should be focused on; a review of marketing tools and approaches, their advantages and disadvantages regarding the proposed objectives; and recommendations of the key initiatives, composing the IMC program, with possible methods of evaluation of their effectiveness and ability to meet the proposed objectives. The timeline of the IMC program is one year, from January 01, 2011 to December 31, 2001. 1. Introduction Australia is characterised as a country with a relatively small population and low rate of population growth (McDonald & Kippen, 1999). In spite of Australia has a vast territory (almost as large as the USA), its market is not segmented geographically - the most of population is concentrated in coastal cities or towns, where Sydney and Melbourne are the major ones (CCIWA, 2006). CCIWA (2006, p.9) accentuates common traits of Australians as consumers who have high quality standards, are “very conscious of “value of money” and prefer to purchase the Australian-made products, because they offer better value for money as compared with imported products. In a fast-growing economy of Australia the agricultural sector is one of the key industries that give Australia strong competitive advantages, as well as a reputation of a supplier of clean and quality natural agricultural production (Austrade, 2009). The numerous national and local operators develop their businesses effectively, “investing in systems and facilities to ensure the efficient handling, storage and distribution of grocery and fresh food products daily to their stores, across Australia, to the benefit of all consumers” (Woolworths, 2002, p.3). Today the Australian supermarket and grocery sector became one of the most strong, concentrated and competitive markets. In January 2007 the overall retail turnover was about $6.8 billon (NARGA, 2007). A wide number of various brand packaged and fresh grocery goods are offered by the industry, as it is shown on the Figure 1. Figure 1. Australian grocery retailing sector. Source: NARGA, 2007, p.13. The dominance of two major grocery retailers’ chains, Woolworths and Coles, is established clearly in the market (see Fig.2). It causes the strong competition between major retail chains and among the whole industry, what is an important feature of the consumer product market of Australia (NARGA, 2007). In these circumstances a clear retail strategy and market positioning of retailers play a significant role for business success. Nowadays a concept of the integrated marketing communication (IMC) is widely used as a solution for effective implementation of a marketing strategy. Peltier et al. (2003, p.93) define IMC as “a concept of marketing communication planning that recognises the added value of using a comprehensive plan to evaluate the strategic roles of a variety of communication disciplines”. Thus, the main purpose of IMC program is to integrate all appropriate marketing channels, in order to “provide clarity, consistency and maximum communication impact” (Peltier et al., 2003, p.93). This report presents an integrated marketing communication (IMC) program, recommended to the Woolworths Limited Group, Australia. The key purpose of the program is to integrate and coordinate effectively various marketing tools and resources, which are appropriated for maximising the impact on customers as well as for confirming a positive corporate image among consumers, partners, competitors, civil society and governmental organisations. The program is based on the information, represented by the Woolworths Limited Group, the National Association of Retail Grocers of Australia (NARGA), the Australian Bureau of Statistics (ABS) and other reliable sources. The timeline of the IMC program is one year, from January 01, 2011 to December 31, 2001. Section 2 of the report presents a situation analysis of the Woolworths Limited Group company with relation to its marketing position and proposed products and services. The specific IMC objectives are discussed in the Section 3, while the Section 4 focuses on an identification and selection of viable target markets, towards which the IMC efforts should be applied. Section 5 provides a brief review of key IMC tools and approaches, their advantages and disadvantages regarding to the applicability to the IMC program’s objectives, and a set of the chosen options, appropriated to ensure achieving of the IMC objectives is presented in the section 6. The final section 7 describes possible methods of evaluation of the IMC program’s effectiveness. 2. Situation Analysis 2.1 General Information NARGA (2007) emphasizes a significant market share concentration, as one of the most considerable trends in the Australian grocery industry that have occurred over the past 30 years. Woolworths is one of the major grocery retailers in Australia and one of the Top 2 of them (see Figure 2), which have about 80% of the whole market (see Figure 3). As it is stated in the Woolworths (2010, p.13) the main focus of the corporation activity is on “building and maintaining a sustainable business by reducing costs, improving value and lowering price”. Currently Woolworths operates in Australia, New Zealand and India, managing more than 191,000 employees. The major business of the Woolworths is supermarkets and general merchandise stores, as well as consumer electronic stores. In addition, the corporation sells petrol and operates hotels. In order to focus on customers’ needs and expectations Woolworths make considerable investments in a number of various strategic initiatives, including (Woolworths, 2010, p.6): Refurbishment, aimed to enhance shopping experience for customers. Development of the private label range and controlled brands. Implementation of various customer rewards programs. Figure 2. Participants of the Australian retail and grocery sector. Source: NARGA, 2007, p. iv. Figure 3. Growth in market share of Woolworths and Coles, 1975-2006. Source: NARGA, 2007, p. 14. 2.2 Organic retailing In 1980s Woolworths developed a new marketing strategy “Fresh Food People”, the main purpose of which is to supply the high quality organic fresh food. Since that time Woolworths have partnered with a number of local farmers and growers to deliver fresh food into its supermarkets and stores. Today 12% of all fruit and vegetables grown in Australia, as well as 6% of Australia’s beef and 15% of Australia’s lamb are sold in Woolworths (Woolworths, 2008). One of the main principles of the strategy, the “One Touch”, lays in the basis of the organic supply chains – direct supplying from growers, which includes growing, packing, transportation, and merchandising. Another distinctive principle of the Woolworths “fresh” food strategy is to meet requirements of consumers in terms of safety and hygiene. All suppliers of the Woolworths work in accordance to the corporate quality standards – Woolworths Vendor Quality Management System. Fresh foods constitute now about 20-25 per cent of grocery sales (Woolworths, 2010). 2.3 Product ranging and diversification The Woolworths Limited Group diversifies its business offering an expanded assortment of products and services. Today the Woolworths Limited Group includes 7 major business units (Woolworths, 2010, p.39): Australian Food and Liquor – food retailing in Australia. New Zealand Supermarkets - food retailing in New Zealand. Petrol – gasoline retailing in Australia. BIG W – discount general merchandise retailing in Australia. Consumer Electronics – electronics retailing in Australia, New Zealand and India. Hotels – leisure and hospitality services. Unallocated – other operating segments, such as Home Improvements, etc. Besides, there are a number of the company’s private labels and housebrands (about 30,000 product lines) (NARGA, 2007). 2.4 Competitors The main participants of the Australian retail and grocery sector are listed and compared in Figure 2 and 3 above. One can see that Woolworths takes the lead over its major competitor Coles, although the competitive struggle remains rather tense between two grocery chains giants. Both Woolworths and Coles position itself as “providers of fresh grocery products with low prices on a selection of core goods” (NARGA, 2007, p.16) and implement rather similar marketing strategy. Independent small and medium grocery retailers, which are operating mainly under several banner groups, increasingly expand their selling space and raise sales. In the annual report, Metcash, one of the major suppliers of independent retailers, explains their rapid growth by an effective TV advertising campaign (especially in the eastern seaboard) and a strong local store marketing (NARGA, 2007, p.28). Serious threats are also connected with the Australian government, who responds onto calls from independent retailers, caused by the existing duopoly in the retail grocery market. As a result, the government has undertaken a number of regulating initiatives, restricting the territorial expansion of major chains. One of the latest examples is the ACT Supermarket Competition Implementation Plan issued in January 2010. The document describes a policy and criteria of bidding for particular sites in Canberra, according to which Woolworths and Coles will be likely restricted to bid (Violante, 2010). 2.5 Customer rewards and attraction In order to win customers in the strong competition, Woolworths offers different programs aimed to give its consumers additional value. The most popular of them: Everyday Rewards – a very popular program, implemented with Qantas Frequent Flyer affiliation. Everyday Mobile – a service, developed within a Mobile Virtual Network Operator (MVNO) framework of Optus. Christmas Gift Card Mall. Everyday Money credit card. Australian Supermarkets and Consumer Electronics online shopping web-sites. 2.6 SWOT Analysis Table 1. SWOT Analysis of the Woolworths Limited Groups Strengths Weaknesses Valuable and strong brand, good reputation for value for money Marketing strategy similarities with the main competitor Successful low price consumer politics Presence mainly in Australia, partly in New Zealand and India Effective business diversification, wide range of products and services Not so big territory of coverage The biggest market share Dependence of the customer reward programs from partners’ decisions Access to resources for business development Dependence of the low price consumer politics from purchasing prices Stable economic growth and expansion Various types of stores – from supermarkets to local stores Effective maintaining of grocery chains - from a grower to a seller High quality and safety of products, approved by consumers Wide range of successful customers’ reward programs Effective strategic and operation management Positive image among employees Online shopping Opportunities Threats New partnership with SMEs – growers and suppliers Governmental law Expanding product lines Independent retailers growth and expansion Cooperation with local retailers for licensing, co-branding and franchising Downturn in grocery market Globalisation of business – expanding internationally Bad harvests in the country Forming strategic alliances with other global retailers in specific markets Increasing calls from independent retailers to government Merging and / or acquisition with independent retailers Appearance of new strong major competitors 3. Determination of the IMC objectives Current Woolworths marketing strategy is successful, but, taking into consideration an increased competition on the market, it can be improved, being focused onto more specific target audience. Keeping in mind that the scope of the proposed marketing communication program is one year, the following IMC objectives are identified: To increase the Woolworths brand awareness and preference by 10%. To increase repeating purchasing by 20%. To establish the Woolworths as the up-to-date online grocery retailer by 15%. To establish the Woolworths as the most quality and healthy food retailer by 15%. The key message of the IMC program is that the Woolworths is the only grocery chain where consumers, wherever they live, will find a widest range of high quality, clean, healthy, yet non-expensive products. 4. Identification of the Target Markets One can say that the overall market audience of the Woolworths is very broad and differs in the preferences. However, it is possible to emphasize some distinctive characteristics of customers, on which the Woolworths focuses the business. Regardless of whether the Woolworths customers live in a large city or a village, regional or rural centres, each of them: 1. is conscious of “value of money”; 2. have high quality standards of products and services; 3. shows concern about health, preferring organic fresh food; 4. prefers to purchase the Australian-made products, due to their better value for money qualities; 5. takes a close interest in personal and/or family budget saving, appreciating benefits of complementary services (rewards, credit and debit cards, etc.) Target audience for the IMC program, suggested in this report, is identified by using several key variables: Woolworths business unit – it is suggested to concentrate on the Australian Food and Liquor supermarkets Age – as the Woolworths is quite popular brand, the customers’ age can vary from 16 to 90. For the purpose of the recommended IMC program, it is suggested to choose young consumers, preferably from 18 to 30 years. This target group is the most promising, because young people of this age are concerned about their health and appearance, have not big budgets, and have a passion for stimulatory purchase actions. It is also important that generated loyalty of young customers will work for longer time, in comparing to adults. Geographical location – it is suggested to focus on Australian customers, not bearing in mind New Zealand supermarkets’ consumers, because currently the competition in Australia is much stronger. Occupation – target consumers can be of different occupation. Family status – preferably target consumers should be married, because married people take care about family health, prefer to buy organic products, and more concerned in low prices. However, single young people also represent important target audience, because in this age they form preferences and habits for future family life. Monthly budget – target consumers are not well-off people, they are well conscious of “value of money”. Consumer preferences – don’t like imported food or preserve food with long shelf life, preferring fresh local production. 5. Integrated Marketing Communications Options The IMC program should be a new stage of development of the concept of “The Fresh Food People”, key message of which is that Woolworths is the only place where Australians can find a wide range of fresh, organic, healthy food. IMC program options can include both offline (advertising in press and mass media, public relations, billboards and other outdoor advertising) and online (email and banner advertising, search engine optimisation of web-sites, affiliate programs, and relatively new blogging, micro-blogging, audio and video podcasting, internet TV and radio) marketing channels (Clow & Baack, 2008). Taking into account that the target audience is young people, who are keen on new technologies and good in up-to-date communications (e.g. in social networking), marketing channels should be chosen in accordance to their preferences in means of communication. Possible IMC options for the program are discussed in the Table 2. Table 2. Review of the IMC options (based on Smith & Taylor, 2004). Option Advantage Disadvantage Applicability Print Advertising Good local coverage. Printing discount coupons for repeated purchasing. Young people don’t read print media much. Applicable partly Outdoor advertising Raises the awareness level. Rather expensive. May be unnoticed. Applicable partly Internet advertising Good national coverage. Raises the awareness level and interest to the brand quickly. Various opportunities. Very effective for given audience that is active in internet. Establishes image of up-to-date online grocery retailer. - Highly applicable TV advertising Good national coverage. Raises the awareness level quickly. Effective for given audience that watches TV a lot. Very expensive. Highly applicable Direct marketing Good local coverage. Increases repeated purchasing. Some people may take it as a spam. Applicable partly Public Relation Raises the awareness level. Builds a good reputation and interest to the brand. Proactive, future orientated. Exterior media is unpredictable and may give distorted news. Applicable Sales promotion Provide short-term sales and repeated purchasing. Builds an interest to the product lines. - Applicable Collateral materials Raises the awareness level. Builds a good reputation and interest to the brand - Applicable 6. Recommendations for IMC Plan in 2011 It is recommended to focus the IMC program mainly onto internet and mobile marketing, although several traditional options are also considered to be effective for the given target audience (see Table 3). Table 3. The recommended IMC program. Element Scheduling Costing Internet and mobile channels Internet advertising Special targeted interactive micro web-site for the campaign with online games, polls, contests, sweepstakes, coupons. Launching 01.01.2011 $125 000 Special targeted section on the corporate web-sites with original content (e.g. articles about healthy eating, recipes, interviews with experts and celebrities) Launching 01.01.2011 $125 000 Facebook Page for the campaign with original content (news, contests, sweepstakes, photos and videos) Launching 01.02.2011 $72 000 Microblogging on the Twitter Constantly from 01.01.2011 $18 000 Targeted online retailing on the existing web-site Constantly from 01.01.2011 $280 000 Advertising on the Google AdWords Monthly from 01.01.2011 $13 000 Targeted banner advertising on popular web-sites. Weekly from 01.01.2011 $500 000 Email advertising Direct mailing (newsletters, special announces, etc.) Weekly from 01.01.2011 $6 000 Mobile advertising Direct mailing (SMS-news) Weekly from 01.01.2011 $6 000 Traditional channels Print Advertising Discount coupons in newspapers, popular among the target audience Monthly from 01.01.2011 $120 000 Outdoor advertising Outdoor posters on bus-stops Quarterly from 01.01.2011 $960 000 TV advertising Short TV trailers in the prime time. Bi-monthly from 01.01.2011 $4.9 million Direct marketing Shopping vouchers distribution among the target audience Quarterly from 01.01.2011 $10 000 Public Relation Press-releases and newsletters on the corporate web-site. Monthly from 01.01.2011 $10 000 Video presentations in internet. Monthly from 01.01.2011 $10 000 Interviews with key people on TV (news or popular talk-shows, popular among the target audience) Twice a year $40 000 Sales promotion Sampling and promotion of product lines displaying in supermarkets. Monthly from 01.01.2011 $12 000 Discount and gift plastic cards for the target audience (e.g. for students, for young families, for newly married) Constantly from 01.01.2011 $235 000 Shopping vouchers campaign Monthly from 01.01.2011 $12 000 Collateral materials T-Shirts and other gifts with the logo for winners of games and contests on the web-site. Monthly from 01.01.2011 $6 000 Advertising booklets of unusual design (shape, 3D, moving elements), distribution among the target audience Quarterly from 01.01.2011 $40 000 Total $7.5 million   7. Monitoring and Evaluation of the Program During the year the IMC program will be constantly monitored and evaluated. The objectives of Increasing brand awareness and establishing corporate images will be measured quarterly through consumer surveys online (on the web-sites and Facebook page), as well as offline (in the supermarkets). The final survey will be held in December 2011. Repeated purchasing will be measured weekly via the database of purchases system via plastic cards. In addition, daily sales will be monitored as well. The effectiveness of the Program will be measured quarterly on the basis of the data of monitoring. In a case if the IMC program is being implemented with a shortage of money, it will be financed from the contingency budget. 8. Reference List Australian Trade Commission (Austrade), 2009. Australia – Your Competitive Edge: Stability. Resilience. Innovation. Retrieved September 16, 2010 from: http://www.austrade.gov.au/Invest/Investor-Updates/Australia-Your-Competitive-Edge/default.aspx Chamber of Commerce and Industry of Western Australia (CCIWA), 2006. Australia. A Guide to the Market: A guide for foreign suppliers and Australian importers. East Perth, WA: Chamber of Commerce and Industry of Western Australia. Retrieved September 16, 2010 from: http://www.consuladodecolombiasydney.org.au/Files/Australia_A_Guide_to_the_Market_2006.pdf Clow, K. E. & Baack, D. 2008. Integrated Advertising, Promotion, and Marketing Communications. 3rd Edition. Upper Saddle River, NJ: Prentice Hall. McDonald, P. & Kippen, R. 1999. Population Futures for Australia: the Policy Alternatives. Parliament of Australia, Canberra. Retrieved September 16, 2010 from: http://www.aph.gov.au/library/pubs/rp/1999-2000/2000rp05.htm National Association of Retail Grocers of Australia (NARGA), 2007. The economic contribution of small to medium-sized grocery retailers to the Australian economy, with a particular focus on Western Australia. Report of PricewaterhouseCoopers (PwC). Parliament of Australia, Canberra. Retrieved September 16, 2010 from: http://www.narga.net.au/documents/2007/Economic_contribution_%20SMEs_NARGA.pdf Peltier, J.W., Schibrowsky, J.A. & Schultz, D.E. 2003. Interactive integrated marketing communication: combining the power of IMC, the new media and database marketing. International Journal of Advertising, 22, pp.93-115. Smith, P.R. & Taylor, J. 2004. Marketing Communications: An Integrated Approach. 4th Edition. London: Kogan Page. Violante, V. 2010. Law change to end shop dominance. The Canberra Times web-site. January 23. Retrieved September 16, 2010 from: http://www.canberratimes.com.au/news/local/news/general/law-change-to-end-shop-dominance/1732344.aspx?src=rss Woolworths Limited (Woolworths), 2002. Submission to the Trade Practices Act Review Committee. Bella Vista, NSW: Woolworths Limited. Retrieved September 16, 2010 from: http://tpareview.treasury.gov.au/content/subs/171_Submission_Woolworths.pdf Woolworths Limited (Woolworths), 2008. The Facts About Grocery Retailing at Woolworths. Bella Vista, NSW: Woolworths Limited. Retrieved September 16, 2010 from: http://library.corporate-ir.net/library/14/144/144044/items/287977/FactsAboutGroceRetailingatWoolworths.pdf Woolworths Limited (Woolworths), 2010. Woolworths Limited Interim Financial Report for the Half Year ended 3 January 2010. Bella Vista, NSW: Woolworths Limited. Retrieved September 16, 2010 from: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDU0Njl8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1 Read More