Marketing Project for Harrods - Essay Example

Marketing plan for Harrods Contents Executive Summary 3 2. Introduction 3 3. Company Background 4 4. External audit 4 PEST Analysis 4 Porter’s five Forces 5 Competitor’s analysis 6 5. Internal audit 8 SWOT 8 Current Marketing Strategy and tactics 8 Analysis of past marketing campaigns with reference to marketing mix policies 9 Successes and improvement points 10 6. Objectives 11 Marketing Campaign 11 Communication Tools 11 Budget 12 Schedule for promotion 13 8. Conclusion 14 Reference List 15 Appendices 18 1. Executive Summary Fashion industry is one of the few industries across the globe that has witnessed dramatic changes over years. The industry of fashion is marked by seasonality and volatility and is subjected to various vulnerabilities. The objective of the current report was to understand and evaluate present marketing strategies adopted by Harrods. The report analyzed the external and internal market, which will further help in establishing future strategies and tactics for sustainable business development. External audit of Harrods will include PESTEL and Porter’s analysis. While PESTLE will evaluate the external environment surrounding the fashion retailer in United Kingdom, Porter’s analysis will provide a deeper understanding of the fashion industry in United Kingdom and ways in which industry factors affect strategies and functioning of Harrods. SWOT analysis helped in evaluating internal strengths and weaknesses and external threats and opportunities. The major marketing objective of Harrods was to improve brand awareness and establish itself in the foreign market. The brand implemented an integrated marketing campaign involving all promotional and marketing activities. The IMC campaign consisted of advertising and media, promotional strategies as well as use of latest media strategies for maximum penetration. 2. Introduction The current global fashion industry is defined by intensive competition as well as frequent implementation of creative marketing strategies and tactics. This is a direct result of increasing competition and necessity for creating a sustainable marketing advantage. Fashion industry consists of different fashion seasons, each characterized by new style or design of clothes. Nevertheless, these hyped fashion periods are short lived among fashion enthusiasts. Owing to the huge demand of fashion brands, control of the top fashion retailers over the industry is way more compared to political bureaucrats (Aaker, 2009). However, recent changes have witnessed a fall in demand for luxury fashion products. The current report will evaluate current positioning of Harrods and ways for the company to implement strategies for future growth and development. 3. Company Background Harrods is a globally recognised upmarket departmental store established in Chelsea and Kensington, London. The brand has also diversified itself to other sectors such as, Harrods Estates, Harrods Bank, Air Harrods and Harrods Aviation. The stores in London are the biggest departmental stores in entire Europe with space of 20000 meter squares or 5 acres. The selling space extends to more than 90000 meter squares and more than 300 departments. Some of the departments, such as, Food Halls and Seasonal Greeting, are famous across the world. The brand was established in the year 1834 by Charles Henry Harrod, which had begun by selling luxury and quality goods. Currently, the company employs more than 12,000 employees (Harrods, 2014). The company has maintained its rich tradition and cultural heritage and has been favourite among royal family members as well as elite families of Europe. The services and products offered by Harrods include apparel range for men, women, infants and children, jewellery and electronics, pet accessories, home appliances, house ware, furniture and packaged gifts, to name a few. Harrods was sold to Qatar Holdings in the year 2010 (Harrods, 2014). The company is planning to expand overseas with its first expansion in China. This decision came after an extensive study on Harrods customers, according to which Chinese shoppers are increasingly shopping in the department store. The retail brand is synonymous with qualitative services and products as well as innovative store experiences. As a result of an early establishment, the retail brand has a well-established relationship with the UK political bureaucrats, which eases its global expansion strategies 4. External audit PEST Analysis Political The activities of shoppers and retailers in the fashion market are often affected by changing political structure as well as its volatile nature. One of the prominent political influences can be seen while exercising power in areas such as, location and setting. In countries with strict real estate policies, it is difficult to obtain permission for planning and establishment of retail chains. Economic The overall contribution of UK fashion sector in the year 2009 crossed 20 billion dollars, representing its influence on the economy of UK (Easey, 2008). At present, the fashion industry contributes almost 2 percent of the total GDP of UK (British Fashion Council, 2014). The biggest economic advantage of UK fashion industry is that almost every service point of the supply chain, including manufacturing, suppliers, wholesalers and retailers, is all based locally (Hines and Bruce, 2001). As a result, cost of transportation is minimal and profits margin are high. Social Changing lifestyle and socio-cultural considerations have influenced majority of changes occurring in retailing and shopping, in recent years. Beliefs and attitudes as well as needs and wants have seen major transformations. As these attitudes continue to develop, marketers can expect subsequent changes. Technological At present, United Kingdom is suffering of various issues such as, lack of creativity among its designers and stiff competition from fashion brands in other countries (Neumeier, 2006). There is also a lack of technical and scientific innovations in the fashion industry. The above threats could possibly hamper the strategies of Harrods in future. Porter’s five Forces Rivalry among competitors- Here, companies need to sub-contract to local manufacturers and producers. The emergence as well as advancement of technology and information has also contributed to the increasing competition among top fashion retailers. Threat of new entrants- Threat of new entrants is low to medium in UK fashion market. Though it is difficult to establish a high-end luxury brand in a short time frame, clothing manufacturers are still vulnerable to new entrants. The major reason can be attributed to start-ups taking away a good share of market as well as current and potential customers from the top fashion retailers. Power of suppliers - In the fashion industry, the supplier’s bargaining power can be considered as high. Clothing manufacturers are frequently exposed to irregular and low supplies, resulting in gap between demand and supply of products. The major reasons behind these are irregularities in export and import regulations and policies (Porter, 2008). Buyer’s bargaining power- In fashion industry, the buyers can be divided into retail buyers that include manufactures; and the customers. In the UK fashion market, manufacturers are controlled by the leaders of supply chain owing to strategies such as, multiple sourcing, making bargaining difficult for retail buyers (Kendall, 2009). Threat of substitute products- Threat of foreign brands as well as substitute products is high in the fashion retail industry. Substitute products are those garments manufactured outside United Kingdom and suit needs of local customers, replacing the local fashion brands. Competitor’s analysis The existing rivalry among local fashion brands is extremely intense. This rivalry among clothing firms manufacturing and selling in the home market as well as worldwide has been further intensified due to complex supply chain and logistics policies (Jackson and Shaw, 2006). On the other hand, customers’ purchasing power has increased many folds; and with rising dissemination of information about brands, consumers are now more aware about different brands and pricing ranges. As per industry experts, the three major competitors of Harrods include Marks and Spencer Group, Harvey Nichols and Selfridges Retail Limited (Hoovers, 2014). A competitor analysis for Harrods’s competitors is as follows; Harrods Selfridges Retail Limited Marks and Spencer Group Unique selling proposition High-end designer apparel coming from a unique and culturally rich organisation. Preferred among rich customers, especially those having traditional inclination Direct competitor to Harrods, for its culturally rich background, unique architecture and large retail space across United Kingdom Brand recall much higher than Harrods and Selfridges because of heavy expansion. Perceived as qualitative and affordable making it preferred choice among middle and upper middle class customers. No of employees 12000 (Hoovers, 2014). Employees are exchanged with the parent group, data not fixed. 82000 (Hoovers, 2014). No of locations London, Birmingham London, Manchester, Birmingham Worldwide Target customers Top class Upper middle and upper class customers From middle class to upper class Market share Top/Largest luxury retail department in United Kingdom (Luxury Daily, 2012). Second Largest luxury retail department in United Kingdom Due to its overseas expansion, the overall market share of Marks & Spencer is much more compared to the competitors Financial strength/Resource Backed by Qatar Investment Authority, the company has strong financial resources. Parent company is Sears Group, backed with strong financial reserves Company’s profits and revenues generated as well as its overall financial performance over the years reveals that the firm has established strong financial backings for itself 5. Internal audit SWOT Strengths- Harrods is one of the oldest retail companies in Europe, giving it a unique advantage of rich history and heritage as well as unique traditions. The extensive selection of merchandise appeals to customers of all demographics and age groups. Other strengths include high revenue and profitability, experience in business as well as deep-penetrated sales and distribution networks (Okonkwo, 2007). Weakness- The economic downturn has resulted in diminished customers sentiments, leading to loss of profit margins and revenues. This has further hampered strategies and expansion plans. Another weakness is the excessive budget spends on training staffs and employers who are outsiders, in general. Frequent criticism regarding eccentric methods in the shop has made the brand a centre for negative publicity (Gobe, 2009). Threats- The huge variety of services and products offered by Harrods can sometimes be overpowering for the customers; thus, increasing their expectations, which might create a gap between demand and supply in future. Current changes in the structure of taxes as well as increasing local and global competition are other threats for the company (Hancock, 2009). Opportunities- The brand has various market opportunities such as, opening up exclusive stores in other European markets, expanding into global markets, targeting middle income group customers as well as young students and enhancing brand loyalty among established and current customers. The brand can advertise itself on its strong ties with the country as well as brand value among the nation’s traditional customers (Haberberg and Rieple, 2008). Current Marketing Strategy and tactics Current strategies of Harrods include both external and internal marketing and communication tactics. The company is involved in internal communications with the employees and workers for generating pride and train them with skills to transform them into brand ambassadors. External marketing strategies are aimed at two-way and proactive communication approach to generate interest and demand regarding the fashion retail brand among youngsters and families as well as build awareness among foreign customers about the brand’s rich heritage (Kapferer, 2008). These include personalised advertisement service through emails, brochures and catalogue as well as providing special offers and discounts to premium members. The company has also introduced strategic promotional activities fulfilling the objective of maximum penetration and delivering exact messages in most effective manner. The company has aligned various local and national events in order to promote culturally rich heritage of London. This helps in enhancing positive affinity towards London and as a result towards the brand. Apart from evoking national pride, these events also help in enhancing brand awareness and subsequently affinity and interest for the brand, among non-local as well as local audiences (Luxury Daily, 2012). Analysis of past marketing campaigns with reference to marketing mix policies In order to utilise its marketing mix policies, the company has been involved in various marketing campaigns; Product: with the changing needs in consumer preference, the company has also realised the need to reinvent its product portfolio. As a result, the company introduced new product portfolios as well as departments in order to engage existing customers as well as attract new customers. For instance, the company introduced Christmas department offering special products and gifts for the occasion. The retail departmental store is also constantly updating its world famous Food halls, with unique and new arrangement as well as new cuisines in order to enhance the quality and footfalls. Price: Recent economic slowdown has also let a huge impact on Harrods’s regular consumers. In order to counter the effect, the retail firm keeps offering discounts and freebies on a regular basis. The company has also launched making campaigns in the past where huge discounts have been provided in order to attract customers and generate temporary sales and customer footfalls. Place: The retail department store is situated in the heart of London market, providing opportunities as well as easy access to its customers and other prospective audiences to visit the place. However, because of its rich traditional heritage and pride, it only allows selected customers from royal and high class background. It also maintains a strict dress code where people who are, according to the mall authorities, with shabby and unaccepted clothes cannot enter. Promotion: With the increasing popularity of digital media, the also stepped into the digital marketing arena. The company entered into the digital media in the year 2012 with an objective of engaging young consumers as well as increase social interaction. For instance, the company engaged its Facebook users through a social charity campaign. Successes and improvement points Harrods is the largest independent department store based in London. As a result, it has achieved wide recognition as well as diverse customers from across the globe. The brand is more than 100 years old and has seen generations pass. As a result, it has established high brand equity among its customers as well as competitors. Few successful campaigns will explain the company strong brand recognition as well as brand equity. 1. The company launched a new membership club for its youngest customer group. This group included young children of the age group 2-10 (Luxury Daily, 2013). The campaign was named as toy kingdom introducing new product lines exclusive for the target customer group. The campaign was also supported by exclusive contests, in-store events as well as benefits. The campaign was a huge success as it was able to fulfil the needs of affluent couples. The company also introduced a membership club named as Mini-Harrods with conjunction with Toy Kingdom. 2. The company won ‘Retailer of the year’ in the year 2013. The company demonstrated enthusiastic events across London, engaging in-store functions as well as a strategically collaborated communication tactic through social media (Luxury Daily, 2013). Improvement points 1. An increasingly fast paced life coupled with lack of time has forced consumers to opt for readymade fashion products and multi-tasking dresses. This opportunity can be well-utilized by Harrods by tracking changes and trends in the fashion market and effectively channelizing it through launch of new clothing and accessories line ahead of competitors. 2. The company has been frequently criticised for allowing only high profile customers to enter the shopping centre. The departmental store is also strict in terms of dress code for their customer which has garnered much negative publicity for the company. In order to improve its image, the company can increase its flexibility in terms of allowing customers from different background and demographic profiles. 3. The company can increase its online media space by deeper involvement in online media marketing. Media sites such as Facebook, Twitter can be utilised for brand promotion, communicating latest events as well as discount offers. 6. Objectives 1. Establishing effective promotional campaigns and marketing programs for leveraging awareness about the brand among target customers. 2. Repositioning the brand with a new and better image that complements the psychographic and demographic profiles of various target markets. 3. Increasing the brand’s equity by a minimum of 30 percent by end of 2014. This objective can be achieved by evaluation of branding and promotional strategies over time as well as customer feedback, in terms of loyalty and satisfaction. Marketing Campaign In the present scenario, an integrated marketing advertising campaign will be launched for the brand; divided into proper steps and timeframes, each having a clearly defined objective. Communication Tools The various communication tools will be; Sales Promotion Implementing seasonal discounts and special offer will provide opportunity for new customers to experience the luxury brand and its various ranges of products (Smith and Taylor, 2006). These customers, in future, might turn in without sales promotion strategies; thus, increasing brand preference and loyalty. Press Releases For continuous support from investor as well as community at large, it is important for Harrods to involve itself in community and environmental activities such as, child right campaigns, waste management, reduction of greenhouse gases and pollution control (Kalla, 2005). Social Media The brand can increase its share of budget for media marketing as proper utilisation of social media though activities such as, online campaigning, viral marketing, open forums and feedback, will not only open arenas for two-way communication, but will also help in increasing the brand recognition to many folds (Mangold and Faulds, 2009; Chaffey, 2009). Promotional pages on various social media websites, such as, Facebook and Instagram, will generate interest among consumers and divert them towards online website of Harrods, thereby generating web traffic (Maria Hanlon, 2014). The brand can also create unique website offerings (Semeijn, et al., 2005). In-store experience The various in-store experiences can include special play station for kids to let mothers shop at ease; signage and information boards showing directions; help desk for new visitors; and luxurious sanitation and toilet facilities inside the mall. Budget The total budget allotted for the advertising campaign will be 500,000 Euros. The budgeting will cover a period of six months. The distribution and placement of each media channel over a period of six months are given below; Amount/Activity (in Pounds) Jan Feb Mar Apr May Jun Advertising Outdoor 16000 16000 16000 16000 16000 Print 7000 7000 7000 9000 Television 16000 16000 16000 16000 16000 Social Media Viral Marketing 10000 10000 10000 10000 10000 Website Design 10000 20000 10000 10000 10000 Promotional campaign 30000 40000 30000 40000 30000 Press Releases 10000 10000 10000 Schedule for promotion A Gantt chart has been prepared to evaluate and monitor the promotional tools for a period of six months. Activities Jan Feb Mar April May June Advertising Sales promotion Sponsorship Public Relation Direct marketing Radio Advertising E-Marketing 8. Conclusion Organizations competing in the fashion industry have devised numerous strategies and techniques for maximizing resource utilization and reaching customers from all segments of market. So, success of the fashion industry is capability of fashion marketers to align with the ever-changing and fast developing industry as well as to develop innovative and creative marketing strategies. Organizations failing to adapt the above tactics run huge chances of vanishing from the market. Online media is increasingly being dominated by online retail brands offering products and services, often at huge discounts, thereby generating heavy price wars. Thus, Harrods will have to stay competitive for future survival and growth. For completion of the objectives set after strategic evaluation, communication tools such as, media channels, advertising and social media marketing, used were. Budgeting as well as schedule for promotional campaigns was also implemented. Reference List Aaker, D.A., 2009. Brand Leadership. London: Pocket. British Fashion Council, 2014. The value of UK fashion industry. [pdf] British Fashion Council. Available at: [Accessed 12 March 2014]. Chaffey, D., 2009. E-Business and e-Commerce Management: Strategy, implementation, and & practice. Harlow: Financial Times/Prentice Hall.  Easey, M., 2008. Fashion Marketing. Blackwell Publishing: London.  Gobe, M., 2009. Emotional Branding: The new paradigm for connecting brands to people. New York: Allworth Press. Haberberg, A. and Rieple, A., 2008. Strategic Management. Oxford University Press: New York. Hancock, J., 2009. Brand/Story: Ralph, Vera, Johnny, Billy and other adventures in fashion & branding. New York: Fairchild Books. Harrods, 2014. About us. [online] Available at: [Accessed 12 March 2014]. Hines, T. and Bruce, M., 2001. Fashion Marketing: Contemporary issues. London: Heinemann.  Hoovers, 2014. Top Competitor’s for Harrods Limited. [online] Available at: [Accessed 20 March 2014]. Jackson, T. and Shaw, D., 2006. The Fashion Handbook. London: Routledge.  Kalla, H.K., 2005. Integrated internal communications: a multidisciplinary perspective. Corporate Communications: An International Journal, 10(4), pp. 302 – 314. Kapferer, J. N., 2008. The New Strategic Brand Management: Creating and sustaining brand equity & long term. London: Kogan Page. Kendall, G.T., 2009. Fashion Brand Merchandising. New York: Fairchild Books.  Luxury Daily, 2012. How luxury brands can translate Harrods’ localized strategy. [online] Available at: < http://www.luxurydaily.com/how-luxury-brands-can-translate-harrods%E2%80%99-localized-strategy/> [Accessed 20 March 2014]. Luxury Daily, 2013 Luxury Retailer of the Year. [online]. Available at: http://www.luxurydaily.com/harrods-is-2013-luxury-retailer-of-the-year/ [Accessed 20 March 2014]. Mangold, W. G. and Faulds, D. J., 2009. Social media: The new hybrid element of the promotion mix. Emerald Management Reviews, 52(4), pp. 357-365. Maria Hanlon, 2014. In-House Campaign. [online] Available at: [Accessed 12 March 2014]. Neumeier, M., 2006. The Brand Gap: how to bridge the distance between business strategy and design. Berkeley, CA: New Riders.  Okonkwo, U., 2007. Luxury Fashion Branding: Trends, tactics, techniques. Basingstoke: Palgrave & Macmillan.  Porter, M. E., 2008. The Five Competitive Forces That Shape Strategy. Harvard Business Review, 86(1), pp. 78-93.  Semeijn, J., Van Riel, A. C. R., Van Birgelen, M. J. H. and Streukens, S. 2005. E-Services And Offline Fulfilment: How E-Loyalty Is Created. Managing Service Quality, 15(2), pp.182 – 194. Smith, P.R. and Taylor, J., 2006. Marketing Communications. London: Kogan Page. Appendices Figure 1 Economic contribution of fashion industry in UK (Source: British Fashion Council, 2014). Figure 2 Advertising spend in fashion industry (Source: British Fashion Council, 2014). Figure 3 Retail spending on fashion products in UK in 2009 (Source: British Fashion Council, 2014). . Figure 4. In-house campaign from Harrods (Source: Maria Hanlon, 2014) Read More