Waitrose Market Expansion Plan - Case Study Example

 Waitrose Market Expansion Plan Table of Contents 1.0 Summary 3 2.0 Waitrose Analysis 4 3.0 SWOT Analysis 4 4.0 Ansoff’s Matrix Analysis 7 5.0 Waitrose Segmentation, Targeting and Positioning 9 6.0 Marketing Mix and Report Summary 10 References 12 Figures Figure 1 - Tourist Arrivals 6 Figure 2 - Ansoff’s Matrix 8 Table Table 1 - Brits Abroad: The Top Countries 6 1.0 Summary This proposal represents a marketing expansion plan for Waitrose that builds on its strength as the best supermarket in the UK. The company has replaced Aldi due to its overall customer score of 73 percent where it achieved top marks in a survey of 7,000 UK shoppers regarding store environment, customer service and its company-branded labels as well as fresh produce. The above are extremely important factors that guided the decision to expand the company’s market base outside of the United Kingdom into Spain. This recommendation is based on the company’s established UK and international wholesale division to businesses, suppliers and retailers and the fact the company has stores in the United Arab Emirates, Channel Island, Bahrain, Abu Dhabi, and Dubai. The above areas represent the foundational reasons for the recommendation that the chain seeks to expand its market into Spain. As shall be developed in this report, this recommendation is being made because the chain has successfully entered one of the most discerning markets in the world by expanding initially into the Middle East. These customers are highly discerning and demanding that have the income to select what they want, and expect a service and product level that has to meet their high standards. The high number of UK, and American tourists, as well as expatriates visiting and living in Spain, represents a built in market for products not found in the country. The superior service and product levels represent another aspect that will be developed. 2.0 Waitrose Analysis Waitrose is ranked as the top UK supermarket in terms of customer service, store environment and the quality of its private label brands as well as produce (The Huffington Post UK, 2015). The chain carries a full range of supermarket products and prides itself as a specialty retailer (D&AD, 2010). Known in the UK supermarket segment as an upmarket food retailer, Waitrose supplies 46 countries with products that include “Singapore, Thailand, New Zealand and India” (Neville, 2013, p. 12). The chain has also studied the U.S. market and used that country’s Whole Foods chain as a model for the Essential Waitrose stores (Cave, 2010). The analysis of Waitrose in terms of its suitability as a retailer for Spain has a number of important points. Its global experience as a supplier to 46 countries, understanding of the U.S. market, the company’s website ordering system that includes delivery, and its excellent customer service means it has the operational background to meet the demands of the Spanish market and tourists from the UK, United States, and other locales. The chain’s product portfolio resides in its capabilities and proven expertise to understand the nuances of the Spanish market and the opportunities represented by tourists and expatriates. 3.0 SWOT Analysis The SWOT analysis consists of looking into the Strengths, Weaknesses, Opportunities and Threats a company faces which will be used to look into Spain as a market for expansion (Helms and Nixon, 2010). In terms of strengths, Waitrose has demonstrated superior administrative organisational capabilities that have permitted it to successfully enter varied Middle East Markets. Strengths also include the company’s broad array of product types that it can customise to the Spanish market along with the tourism and expatriate segments. Waitrose has a highly sophisticated online grocery ordering system that offers free delivery (Waitrose, 2015b). Other strengths are the high level of customer service, the layout, and environment of its stores, the quality of its produce and branded label products (The Huffington Post UK, 2015). These are all important factors in the Spanish market where the supermarkets are all of high quality in terms of layout, appearance, and the quality of their produce (Sierra and Sierra, 2015). The preceding aspects concerning the quality of Spanish supermarkets means that Waitrose’s entry will have to adhere to its own high quality standards in order to be competitive. In terms of Weaknesses, the Waitrose brand is not known in Spain to non-UK tourists, expatriates, or those that have not visited the country (Waterfield, 2008). This is a brand recognition problem that Waitrose will have to conquer in order to lure Spanish consumers as well as American tourists and expatriates. This is a key weakness facing Waitrose as it has to appeal to not only the large number of British and American expatriates and tourists but also Spanish residents as well. El Corte Ingles, Spain’s largest department store chain, has supermarkets located in its stores that are known for having the best quality produce, meats, fish and a broad array of quality products at reasonable prices (FIS, 2014). In looking into Opportunities, Spain is the fourth most visited global destination after France, the United States, and China. This represents a key reason for its selection as France has the food retailing giant Carrefour that is a giant company that is difficult to battle within its own domestic market (French-Property, 2014). Spain’s food retailing giant is El Corte Ingles, and its diverse line of quality food products and produce make it the premier food supermarket chain in the country that does not have Carrefour’s clout (FIS, 2014). The number of tourists arriving in Spain is a key market variable in this analysis. Figure 1 - Tourist Arrivals (mecometer.com, 2014, p. 1) Tourist arrivals when added to the large British expatriate population of 761, 000 provides a built-in foundation to aid in establishing Waitrose’s brand familiarity (BBC News, 2010). Table 1 - Brits Abroad: The Top Countries (BBC News, 2010, p. 1) Another important fact is that Spaniards spend $2,483 per person annually for food at home, compared to $2,213 for British consumers, and $2,274 for Americans (Satran, 2013). These are significant figures that indicate that Waitrose would be looking at a market that offers high potential. Threats that face Waitrose’s expansion into Spain represent that its brand recognition and quality are basically unknown in the country (Waterfield, 2008). The threats that the chain will face represent the formidable competition of France’s Carrefour that is well established in Spain (Carrefour, 2015). Domestically, El Corte Ingles operates Supercor and Hipercors (El Corte Ingles, 2015a), the Eroski Group (Eroski and Caprabo) (Cooperative Grocer, 2014), and Merconadona (2015) are the largest food retailers. The above list does not include approximately fifteen other smaller chains. This represents formidable competition in the Spanish food retailing market as all of these chains are well entrenched, have secured the best locations, and their brand names are well known. 4.0 Ansoff’s Matrix Analysis The application of Ansoff’s matrix to this analysis of Waitrose expansion into Spain will look into four factors (Jarratt and Stiles, 2009). Figure 2 - Ansoff’s Matrix (AnsoffMatrix, 2014, p. 1) Market penetration represents what Waitrose would be seeking to accomplish by entering the Spanish market. The advantage the chain has is its extensive experience in over 46 international markets where it supplies its own brand label products to a diverse set of cultures in the Middle East, Asia and South America (WaitroseWorldwide, 2015). As mentioned under the SWOT analysis, the marketing strategy would consist of locating the initial stores in Spanish markets that have a high UK and American expatriate population to help serve as an initial base of potential customers. In terms of the Spanish market, the Waitrose attributes of an upscale store environment, fresh high-quality product, and customer service will help to attract domestic customers (Siro et al, 2008). These two strategies will be meshed in the market penetration approach along the advertising line of “Waitrose, The international chain that knows what you want”. This purposely plays down the British element and appeals on an international level as an upscale food retailer. The above market penetration approach has direct applicability to product development. In this case it represents the products sold in the stores, along with store design. In terms of the first, Waitrose should utilise its UK customer pleasing layouts with a few modifications. By this it is meant that its products should carry the more popular brands sold in Spain placed next to international ones from the UK, United States and South America. The use of shelf labeling that identifies the country of origin for international brands in colours provides an alternative line for customers to sample. In terms of market penetration, the approach represents an all-inclusive strategy as Waitrose is entering a Spanish market using an international flair to attract UK and American expatriates. It is key that the chain locates its initial stores in Madrid, Barcelona, and the upscale Spanish Costa del Sol region as these are the most visited tourist destinations and locations with a high number of UK and American expatriates (O’Reilly, 2007; Croucher, 2012). In terms of the best option for market penetration, it is the international flair approach that utilises the concept and marketing line represented by “Waitrose, The international chain that knows what you want” that holds the most promise. This is because it provides a conceptual foundation that can be built upon for all locations and as a common marketing theme to achieve market penetration. Market expansion offers the best prospects for growth as it adds new customers to the chain’s base in terms of sales. 5.0 Waitrose Segmentation, Targeting, and Positioning The complexity represented by the proposed entry into Spain has used an assessment of the company, a SWOT analysis, and Ansoff’s matrix. The reason for recapping these areas is that the above are used to explore segmentation, consumer market targeting and the positioning of the chain. Under market segmentation, the Spanish market would be approached using a three-prong strategy that targets British and American expatriates and tourists along with appealing to upscale Spanish consumers. It seeks to establish a common ground of interest as explained by Wedel and Kamakura (2012) that uses quality food, store layout, customer service and home delivery that includes Spanish food brands combined with international offerings from the UK, the United States, and South America. Targeting fell into this same overall combined strategy as the approach to a new market entails taking into consideration the target market where the principle strategies would be directed at (Huddleston et al, 2009). Target marketing represented an essential part of selecting Spain is its large UK and American expatriate population, and tourism figures for these groups along with high Spanish consumer food spending budgets are important elements. By positioning Waitrose in the same category as Spain’s upscale El Corte Ingles and using “The international chain that knows what you want”, the positioning was an inclusive aspect of the overall assessment of the company, the SWOT analysis, and Ansoff’s matrix. The positioning represents establishing Waitrose in the same category of El Corte Ingles, that is perceived by Spanish consumers as quality retailer whose food supermarkets carry quality products in a customer friendly environments that are well designed and a pleasure to shop in (Nogales and Suarez, 2005). The positioning for Waitrose uses the El Corte Ingles model as a basis for this expansion recommendation because Waitrose has common quality, customer service, store environment and high-quality food attributes in common with this successful Spanish food retailer. 6.0 Marketing Mix and Report Summary Comprised of price, product, promotion, and place, the marketing mix (Constantinides, 2006) is a critical tool in terms of assessing the potentials for Waitrose’s expansion into Spain. In terms of price, the strategy for entering Spain does not deviate from Waitrose’s current policy that is to offer consumers the best pricing for products (Waitrose, 2015c). This is the same pricing model utilised by El Corte Ingles (FIS, 2014). As mentioned in this report, by emulating the look, feel, and pricing of this Spanish chain, Waitrose is positioned to attract domestic customers and the tourist/expatriate audience. In terms of product, the UK and U.S. tourism/expatriate market combined with Spanish locals represents a new format. It is practiced to a mild degree by El Corte Ingles, but the nuance of the format for Waitrose is more pronounced. By carrying and labeling the country of origin for additional products next to their Spanish counterparts it represents a distinct international appeal. This means that Waitrose is encouraging trial of products from the UK, United States, and South America along with presenting popular Spanish brands. El Corte Ingles does this to a degree but there are many products that it does not offer. The promotion of Waitrose will utilise the market entry points identified under the assessment of the company, the SWOT analysis and Ansoff’s matrix. This was summed up in the marketing tag line that represents “Waitrose. The international chain that knows what you want”. This was devised to inform consumers of the international product offerings of the store without offending Spanish consumers that are an important market. All of the marketing mix aspects are weaved into the proper placement of the initial stores that represent Madrid, Barcelona and Costa del Sol as these are the country’s premier markets. This will create media exposure that is a part of the overall marketing mix plan. The above summarises the approach to the proposed entry of Waitrose into Spain and why it has a basis for consideration. References AnsoffMatrix (2014) What is the Ansoff Matrix? (online) Available at (Accessed on 9 August 2015) BBC News (2010) Brits Abroad. (online) Available at (Accessed on 9 August 2015) Carrefour (2015) Carrefour. (online) Available at (Accessed on 9 August 2015) Cave, A. (2010) Waitrose takes on the world. The Telegraph. 17 July. p. 16. Constantinides, E. (2006) The Marketing Mix Revisited: Towards the 21st Century Marketing. Journal of Marketing Management. 22(4). pp. 407-438. Cooperative Grocer (2014) Mondragon's Eroski as a Mass Retailer. (online) Available at (Accessed on 9 August 2015) Croucher, S. (2012) Privileged Mobility in an Age of Globality. Societies. 2(1). pp. 1-13. D&AD (2010) Waitrose. (online) Available at (Accessed on 9 August 2015) El Corte Ingles (2015a) About Us. (online) Available at (Accessed on 9 August 2015) El Corte Ingles (2015b) Corporate Information. (online) Available at (Accessed on 9 August 2015) FIS (2014) El Corte Ingles. (online) Available at (Accessed on 9 August 2015) French-Property (2014) Shopping in France. (online) Available at (Accessed on 9 August 2015) Helms, M., Nixon, J. (2010) Exploring SWOT analysis – where are we now? A review of academic research from the last decade. Journal of Strategy and Management. 3(3). pp.215 – 251. Huddleston, P., Whipple, J., Mattick, R., Lee, S. (2009) Customer satisfaction in food retailing: comparing specialty and conventional grocery stores. International Journal of Retail & Distribution Management. 37(1). pp.63 - 80 Jarratt, D., Stiles, D. (2009) How are Methodologies and Tools Framing Managers' Strategizing Practice in Competitive Strategy Development? British Journal of Management. 21(1). pp. 31-35. mecometer.com (2014) International tourism, number of arrivals - by country. (online) Available at (Accessed on 9 August 2015) Merconadona (2015) Home Page. (online) Available at (Accessed on 9 August 2015) Neville, S. (2013) Waitrose to supply Chile with the best of British. The Guardian. 27 Mau. P. 12 Nogales, A., Suarez, M. (2005) Shelf space management of private labels: a case study in Spanish retailing. Journal of Retailing and Consumer Services. 12(3). pp. 205-216. O’Reilly, K. (2007) Intra-European Migration and the Mobility - Enclosure Dialectic. Sociology. 41(2). pp. 277-291. Satran, J. (2013) 18 Countries That Love To Eat, Drink & Smoke More Than The U.S. (online) Available at (Accessed on 9 August 2015) Sierra, L., Sierra, T. (2015) Grocery Shopping in Spain. (online) Available at (Accessed on 9 August 2015) Siro, I., Kapolna, E., Kapolna, B., Lugasi, A. (2008) Functional food. Product development, marketing and consumer acceptance - A review. Appetite. 51(3). pp. 456-467. The Huffington Post UK (2015) Waitrose Voted Best Supermarket In The UK, And Look Who Got Voted The Worst... (online) Available at (Accessed on 9 August 2015) Waitrose (2015a) Waitrose Abroad. (online) Available at (Accessed on 9 August 2015) Waitrose (2015b) Waitrose Home Page. (online) Available at (Accessed on 9 August 2015) Waitrose (2015c) Brand Price Match. (online) Available at (Accessed on 9 August 2015) WaitroseWorldwide (2015) WaitroseWorldwide: UK and International wholesale to business, suppliers and retailers. (online) Available at (Accessed on 9 August 2015) Waterfield, B. (2008) EU food labels 'would overwhelm brands'. The Telegraph. 6 November. p. 10. Wedel, M., Kamakura, W. (2012) Market Segmentation: Conceptual and Methodological Foundations. London: Springer Science. Read More