Hypermarket Management and Strategies - Coursework Example

Running Head: Hypermarket Management and Strategies Hypermarket Management and Strategies [Writer’s Name] [Institution’s Name] Hypermarket Management and Strategies A hypermarket can be defines as a huge supermarket which is not usually located out of the city. The services offered at supermarkets, specialty stores and department stores may be found underneath one huge roof. The notion of a hypermarket is that the complete weekly shopping requirements of the consumers must be met below one roof. Every thing is available there groceries to clothes. The best instances of Hypermarkets are Carrefour and Wal-Mart. The Carrefour was the first ever hypermarket (Jansen 1982 p370). Because of the immense size the amount of customers they can satisfy is also immense; hypermarkets are usually located outside denser areas, and thus there is have sufficient place for parking. Hypermarket is a superstore which serves as both a supermarket and a department store. The outcome is an extremely huge retail facility which has a vast assortment of products underneath one roof, as well as full lines of groceries and general products. If they are planned, built, and implemented properly, a consumer can do all their usual weekly shopping in one go (Dawson &Burt 1983 p34) . These sores usually consist of business models that have a high-volume, low-margin sales. A hypermarket is defined as having at least 50000 sq (Baker 2002 784) which fulfills the need for a lot of shoppers to carry huge quantities of goods, a lot of hypermarkets prefer suburban or locations which are far away for the city that are easily reachable by a car or even bus. 1. Market Segmentation Appended below is the market segment identifies by a hypermarket as the key market to focus our marketing efforts on:- 1.1 Target Market They segment their market into 2 types. They focus on serving the upper customer who needs quality product and service. They let the warehouse seller to take the lower rank customer by providing cheaper price product, which quality is also lower as well 2.Hypermarket Management Team The right management team is important for the success of a hypermarket, and has to have a strong base in marketing, management, finance, as well as development of services (Thomas 2006 p18). IT - project success is still highly dependent on strong leadership commitment and participation of the business and the user. 2.1 Marketing Research An advance marketing information system is important in a company especially for hypermarkets. An advance marketing information system is needed in order to gather, sort, analyze, evaluate and distribute needed, timely and accurate information for marketing decision making (Frazier 1983p59). The hyper markets obtain information about developments in the marketing environment via the marketing intelligence system by business magazines, newspapers, trade publications, by communication with customers, suppliers and distributors, internet, and so on. They also gathers information about its target market and industry via marketing research system in order to find out its customers' wants and needs in order to offer products and services that meet their expectations. Basic survey methods of research are for example, face-to-face survey, questionnaire and observation (McGoldrick & Davies 1995 p19) Even though doing marketing research might involves a significantly costs, hypermarkets has never neglect the importance of research. They outsource marketing research to those expert in order to gather the information such which product do customer prefer, what price should be charged, who will buy the products and services, and what their target customer’s need (Floch & Bodkin 2001 p34) Besides gathering information from primary sources such as interviewing, they have also have also adopted the suggestion from managers abroad about the current customers demanded, promotion strategy and so on. 2.1.1 Internal Evaluation Cooperate-Level Strategy Hypermatkers are applying the market development and related diversification strategy and innovatively recognizing the opportunity of the new market segment and the potential opportunity in business, as a result, it has made a strategic decision to setup the hypermarket as a new corporate venture to the new market segment. 2.2 Merchandise Display The customer thinks it would be very hard to find something that you are looking for if so many items were under one roof, but all of the aisles are clearly marked with an over head display that summarizes what's in that aisle. The aisles are also meticulously categorized so the shopper has the ability to find what they are looking for in a timely manner. 2.3 Supply Chain Hypermarkets are using an exclusive distribution strategy. The distribution chain is short and acting as the middle channels who distribute goods and services from manufacturers to consumers. They usually follow a 'direct procurement strategy' acquiring food products and other goods directly from the manufacturers. The company purchased goods from local manufacturers in all the global markets in which it operated (catalogue/Operations/Carrefour-Global%20Supply%20Chain-Operations%20Management%20Case%20Study.htm#Managing_the_Supply_Chain) In Some hypermarkets the supplier only has direct relationship with the Purchasing Department. The purchase order will only be sent by the computer of Purchasing Department to the supplier once it detect the stock is out of level. The system is link to the suppliers, and so they will receive purchase order online and deliver the stock to the market later on (Vida & Fairhurst 1998 p143). Then only those stocks will go to the distribution centers, and be distributed to those outlets across the nation wide by their own delivery system. Under the new operation, the hypermarket manager will no longer have any relationship with the suppliers. Only Purchasing Department can order and take stocks from supplier. And the problem of overstocking will not occur again, since the Central Management has controlled the flow of stocks (Fernie 2004 p25). Besides, this move has standardized all the products that store, purchase and display in every retail centre. This gives the customers one kind of convenience, which they will get and see the same amount of products. Besides that, Supply Chain Management (SCM) let us know how unique and reliable the hypermarket is in conducting purchasing process. The product range of a hypermarket is so large that inevitably some are slow selling products which are supplied by immediate depot to avoid access stock of the store. Thus one hypermarket may have more than one supply chain, of which one would be direct from the manufacturer.( Reynolds etal 2004 p68) A good example of a hypermarket supply chain can be of wal-mart their purchase of large amounts of merchandise from suppliers, along with a successful system of controlling stock help lower the costs of Wal-Mart merchandise significantly. This works in part due to Wal-Mart using an inventory that is vendor controlled, i.e., suggestions are made to Wal-Mart by the suppliers, resulting in the reduction of overhead by virtually eliminating an inventory department . The exclusive supply chain used by the organization is a channel that Wal-Mart uses everyday, so there would be no set-up cost or other such extra mark-up passed on to the consumer The purchasing power of Wal-Mart also gives the rare ability in the retail marketplace to change production of their goods to be tailored to the needs of Wal-Mart. This is usually accomplished by more inexpensive products being produced, but at a higher volume. 2.4 Employee Training In order to improve the employees' quality and professionalism, Hypermarket is very concern on importance of training and development activities. This is because Hypermarket strongly agrees that the quality and profession of their employees will help and affect the businesses of a hypermarket. The loyal and professional worker will serve the customer better (Belk 1995 p58). Since the current position of a hypermarket is in retail industry, so Hypermarket needs a lot of professional and qualified sales people or employees to provide a better service to their customer (Fernie 1992 p269). So they provide training and give motivation to employees, so that they can handle the customer better. 3. Hypermarket Strategies 3.1 Pricing Strategy Hypermarket is to offer reasonable and affordable price with advance technological services. A hypermarket purchases in bulk, therefore they enjoy economy of scale and able to offer competitive pricing (Alexander 1990 p75). A hypermarket using market based pricing strategy which is both responsive to market and their competitors. Hypermarkets should offer the online service to minimum purchase of RM 100.00 and above only. 3.2 Image of Quality Brand A hypermarket tends to demonstrate a successful approach in altering its reputation into an outstanding brand to guarantee value and satisfaction to its customers. Hypermarkets usually communicate the differentiation and quality of what they their brands have to offer by means of personal interaction and media. Hypermarket environment gives a lot of opportunities and challenges for the marketing department . Two most important things to keep in mind from during marketing for hypermarkets are: Branding & tracking (de Chernatony 1999 p157). The marketer has to handle the complicated demands of relationship of the hypermarket retail environment and along with this the hypermarket has to give their clientele a memorable shopping experience. Their branding as well as marketing should aim at increasing customer traffic (Callingham 2004 p 7). Branding will assist hypermarkets in communicating the power of quality merchandising to the retailers, whether it is by quality apparel tagging, in-store merchandising or product labeling solution (http://checkpointeurope.com/app/?page=problem&id=156&locale=UK) 3.3 Private Label Brand Increasing the value and sales of private labels has been a trend for international retailers in the hyper market industry. Image building and consumer education are the biggest challenges for retailers when trying to win consumer trust in their own-brand products (http://www.taipeitimes.com/News/biz/archives/2006/02/11/2003292570) A good example of how private label brands have worked wonders for hypermarkets is that Carrefour's main advantage is strong portfolio of global and local private label products. 3.4 Wide Assortment/ Item Verity A hypermarket may have 50,000 items representing about 8 present of customers buys (O'Shaughnessy 1995 p654) Groceries, lawn supplies, clothes, car care products, electronics, personal hygiene products, toys, stationary, cosmetics, slippers, undergarments, kitchen utensils, bags and bed sheets the hypermarket has it all. Think about all of those things in hypermarket. France and Spain have been responsible for more speculative forward buying of stock and holding more inventories in hypermarkets (Bruce etal 2004 p53). 3.4.2 Product Hypermarkets Offer quality groceries and household products via advance technology and exclusive services. Cater for the convenience of customers in term of secure, hassle-free and time saving shopping by offering a state-of the-art on-line purchasing systems which provides flexibility of purchasing and collection of goods (Bendapudi & Venkat.2005 p124) 3.4.3 Product Life Cycle The competition in the retail industry is intensively high as there are multitudes of supermarket, hypermarkets, convenience stores, pharmacies and others available in the country. These are the reasons driven hypermarkets to develop the new product life cycle which is inclusive of e-retail venture, new market and product. Hypermarkets also would be able to enjoy the first-advantage in e-retail as this is totally a new concept with only minimum competitors (Ailawad 2004 p331), for example, Subangrocer who offered limited grocery only with delivery concept. Subangrocer also enjoy the first-mover-advantage in e-retail as this is totally a new concept with only minimum small competitors, many hypermarket plan to patent the new concept as well as to explore into franchising the concept and know how in the near future (de Chernatony & McDonald 1992 p56). Stage 1: Introduction Stage 2: Growth Stage 3: Maturity Stage 4: Decline 3.5 Customer Relation Management Maintaining good relationship with customers is also one of the reason lead to hypermarkets today's achievement. Their Customers Relationship Management (CRM) is a specialized unit that responsible in keeping contact with customers in order to maintain their loyalty. All members of staff are to be carefully trained on the good customer relation service (Kapferer 1997 p 10). Proper training to be conducted by the Human Resource Department and should be consistent. Some services proposed:- a. Serving light refreshments and beverages for customers while waiting to pick their goods. b. Assisting customer to load the goods into their respective car. c. Provide special care to senior citizens and disabled people. d. Online staffs need to be fast and efficient (to minimize mistakes with order taking and confirmation). Standard operating procedures to be prepared. e. Traffic control Customer relation management (CRM) is not only an effective technological tool that helps develops a more intimate relationship between the retailer and the shopper but it also helps move sales (Wong 1995 p49). 3.6 Positioning Strategy Hypermarkets should be proposed in gearing up and placing a greater emphasis on the needs of the consumers in response to the shift in lifestyle, habits and keen interest shown for this new mode of communication. The objective is to offer value added services to the company's legion of loyal customers and to attract new target markets as mentioned above (Doherty 1999 p379). 3.7 Place Strategy Hypermarkets also tend to reach its target market via e-mail advertisement, newspapers and selective business magazines advertisements and direct mailing. The distribution channel is exclusive via the hypermarket's Website directly to its customer . The purpose of the operation hours is to target on late night grocery buyers. Taking advantage on the government regulation on hypermarkets not to operate after midnight, this will provide an opportunity to target on these groups of buyers (Nandan 2005 p 264). 4 Marketing Methods Marketing methods are important for any business, thus they can help hypermarkets to get a good lead (Davies 1992 p 23). Marketing can either make the product successful or it will lead to it falling apart; it all depends on the product that is being marketed and how it is being marketed. With competition being at an all time high, if you are not one-step ahead of your competitors you may lose any new or current business you may have (Nebenzahl& Jeffe 1996 p5). Marketing methods are always changing to provide your company with the best opportunities possible to becoming successful. 4.1 Relationship Marketing Hypermarkets tend to pay a lot of attention to public relation activities as it results in building good relations with the various kinds of customers that come to hypermarkets for shopping. This is done by gaining positive publicity and creating a good and strong corporate image. Some of the proposed Public Relations activities are:- 4.1.1 Tie up Promotion on Special Events The objective is to create exposure amongst public on the promotions organized by hypermarkets usually sponsor meals and vouchers to respective media in return for credit and product mention (Burt 2000 p875). The Public Relation Department also tries to get some write-ups (newspapers/magazines) in return for our sponsorship. Hypermarkets are also known for its annual ceremonies - anniversaries, where people are given souvenirs and may take part in the lotteries with much more expensive prizes. Such methods always attract plenty of customers and are one of the best methods of spreading the loyalty among costumers (Doyle 1991 p45) 4.1.2 Seasons Attractions Hypermarkets usually give out Free Issues of the newsletter and special mailers via internet to frequent visitors of the webpage. These issues also are circulated to the loyalty programme card members in order to encourage them to purchase the goods online. The issues usually stress on the issues pertaining to the or growth and special promotions which will take place in months to come (Olins 1991 p234). 4.2.2 Christmas Eve Celebration At Christmas hypermarkets usually follow the charismas theme, they bring in bakery goods shaped like Christmas trees ect. They also have charismas discount sales and set a corner where Santa sits to attract children. Sweaters and decorations are sold at low prices some hypermarkets even sell trees outside their stores. . 4.2.3 Community Projects Hypermarkets even take part in community projects. The objective of these activities is to work together with welfare homes or identify current community issues which require financial or moral assistance. 4.2 Word Of Mouth The Promotional objectives are different for every hypermarket. Marketing efforts may be utilized in a lot of ways. Promotion helps to generate knowledge of a product and to increase the demand of the product or place in question (Jeannet &Hennessey 1995 p45). Thus, hypermarkets tend to use traditional word-of-mouth marketing and the latest buzz marketing strategy in order to promote them selves. Marketing efforts that have become favorable communications are word of mouth marketing (Burt 1991 p487). Hypermarkets use it to endorse manufactured goods or service to a relative, companion, associate, acquaintance or anyone else who may be a potential patron for the same service. The fundamentals of an efficient word of mouth marketing plan necessitate that it allows for natural transfer of information, promotes ordinary incentive and behaviour, and uses the resources supplied by others (Dunne 2003 p23). Finally, hypermarkets must remember that aside from the many types of verbal marketing campaigns, a marketing concept hit the bulls eyes every time and provides the Hypermarket with competitive advantages, even though long-term success is not attained via concepts alone (Urban etal 1993 p213). Hypermarkets there for usually focus on excellence in service the outcome of this is that consumers constantly suggest the hypermarket , always respond positively to the products and services it provides and as a result buy and repurchase these products as well as services. Conclusion Hypermarkets usually require a lot of marketing as there is a lot of competition in their industry. However the fact that one can buy everything under one roof is what has attracted a lot of the working class. Thus it can be said that hypermarkets have taken over the entire shopping industry, and its seems that their future seem extremely bright as they use every kind of marketing strategy possible to attract their customers. References . Fernie, J. (1992), "Distribution strategies of European retailers", European Journal of Marketing, Vol.26, No. 8, pp 269-85 Ailawadi, K. and Keller, K.L. (2004), "Understanding retail branding: conceptual insights and research priorities," Journal of Retailing, 80 331-342 Alexander, N. (1990) "Retailers and international markets: motives for expansion," International Marketing Review, 7(4) 75-85 Baker John Michael (2002); The Marketing Book, Butterworth-Heinemann; 5 edition p784 Belk R W, 1995, "Studies in the new consumer behaviour", in Acknowledging Consumption: A Review of New Studies Ed. D Miller (Routledge, London) pp 58 – 95 Bendapudi, Neeli and Venkat Bendapudi (2005). "Creating the living brand," Harvard Business Review, 83(5), 124-128. Bruce Margaret; Moore Christopher; Birtwistle Grete(2004); International Retail Marketing: A Case Study Approach Butterworth-Heinemann p53 Burt, S. (1991), "Trends in the internationalisation of grocery retailing: the European experience", International Review of Retail, Distribution and Consumer Research, Vol.1, No. 4, pp 487-515 Burt, Steve (2000), "The strategic role of retail brands in British grocery retailing," European Journal of Marketing, 34(8), 875-900. Callingham, Martin (2004), Market Intelligence: How and Why Organizations Use Market Research, Kogan Page , Journal of Marketing p7 catalogue/Operations/Carrefour-Global%20Supply%20Chain-Operations%20Management%20Case%20Study.htm#Managing_the_Supply_Chain retrieved on December 15 2008 Davies, Gary and Janice Brooks (1992), Positioning Strategy in Retailing, Paul Chapman, London p23 de Chernatony, L. and McDonald, M.H.B. (1992) Creating Powerful Brands, Butterworth-Heinemann, Oxford p56 de Chernatony, Leslie (1999), "Brand management through narrowing the gap between brand identity and brand reputation," Journal of Marketing Management, 15(1/3), 157-180. Doherty, A.M. (1999), "Explaining international retailer's market entry mode; internationalisation theory, agency theory, and the importance of asymmetry information," International Review of Retail, Distribution and Consumer Research, October 9:4, 379-402 . Doyle, P. (1991), "Branding," in Baker, M.J. (Ed.), The Marketing Book, 2nd ed., Butterworth-Heinemann, Oxford . p45 Dunne, P.M. Lusch, P.F. and Griffith, D.A, (2002), Retailing, Harcourt College Publishers, Foxworth, TX p23 Fernie J (2004) ; Logistics and Retail Management. Second edition. Kogan Page :London p25 Floch Jean-Marie , Bodkin Orr Robin 2001 Semiotics, Marketing and Communication: Beneath the Signs, the Strategies (International Marketing Series) Palgrave Macmillan p34 Frazier, G.L., Howell, R.D. (1983), "Business definition and performance", Journal of Marketing, Vol.47, pp 59-67 http://checkpointeurope.com/app/?page=problem&id=156&locale=UK retrieved on December 15 2008 J A Dawson and S Burt (1983); Hypermarkets and Superstores Bibliography. Euromonitor : London p34 Jansen, A. C. M. (1982), "Consumer studies, retail planning and policy; a qualitative perspective." Tidchrift voor Econ. en Soc. Geografie 73(6): pp. 370-381. Jeannet, J.-P., Hennessey, H.D. (1995), Global Marketing Strategies, 3rd ed., Houghton Mifflin, Boston, MA p45 Kapferer, J. N. (1997) Strategic Brand Management; Creating and Sustaining Brand Equity Long Term, 2nd edn, Kogan Page, London, UK p10 McGoldrick, P.J. and Davies, G. (1995) International Retailing: Trends and Strategies, London, Pitman Publishing p19 Nandan, S. (2005) "An exploration of the brand identity-brand image linkage: A communications perspective," in Brand Management, Henry Stewart Publications 1350-231X Vol. 12, No. 4, 264-278 Nebenzahl, I.D., Jaffe, E.I. (1996), "Measuring the joint effect of brand and country image in consumer evaluation of global products", International Marketing Review, Vol.13, No. 4, pp 5-22 Olins, W. (1991) "The power of corporate identity," World Executive's Digest October, 34-9. O'Shaughnessy John (1995); Competitive Marketing: A Strategic Approach; Intl Thomson Business Pr; 3 Sub edition p654 Reynolds Jonathan, Cuthbertson Christine, Bell Richard (2004); Retail Strategy p68 Butterworth-Heinemann Thomas Tsu Wee (2006), Retail Management: 11 Immutable Laws, Singapore: Pearson-Prentice Hall p18 Urban, Glen L. and John R. Hauser (1993), Design and Marketing of New Products, Second Edition, Englewood Cliffs, NJ: Prentice Hall, 213-216. Vida, I. and Fairhurst, A. (1998), "International Expansion of Retail Firms: A Theoretical Approach for Future Investigations," Journal of Retailing and Consumer Services, 5(3), 143-51. Wong A, Kleiner H (1995); Breaking the rules to success Managing Service Quality (UK) Vol: 5; Issue: 5; 49 Read More