Halfords Bicycle Marketing Planning - Case Study Example

Halfords bicycle Marketing planning – A marketing strategy plan Executive Summery Halfords group is a retail group which is involved in the selling of car accessories and bicycles. Halfords group takes the largest share of cycle’s retail sales in UK. The company witnessed a 2.9% drop in its annual sales in 2010. This marketing plan will aid in increasing the sales volume of Halfords. It will cost the company approximately £70,970 to implement the plan. Various product, place, pricing and promotional strategies will be used to spur the company to increased sales volume. The prevailing legislations which encourage cycling will be a boost in the marketing of the company’s products. Table of Contents Introduction 3 Situational Analysis 3 Internal Analysis 5 External Analysis 8 SWOT Analysis 9 Marketing Strategy 10 Marketing mix 11 Implementation, Control and budget 13 Conclusion 15 References 16 Introduction Halfords group is a retail group which is involved in the selling of car accessories and bicycles. Halfords group takes the largest share of cycle’s retail sales in UK (Halfords Bicycle, 2010). The group also operates in Ireland, Poland and the Czech Republic. Bikehut brand is used by the company in the field of bicycle retail. Halfords group was founded in 1892 by Frederick Rushbrooke as wholesale ironmongery (Kerin, Hartley, and Rudelius, 2003). The company started selling cycling goods in 1902. As of April 2010, Halfords group had 462 stores, which are found in UK, central Europe and Ireland. The company has a range of bicycles, which come with Apollo brand (Halfords Bicycle, 2010). The company witnessed a 2.9% drop in its annual sales in 2010. This was because of uncertainty around election in UK, distribution problems in China where the company sources most of its bikes, the emergency budget and the world cup. This paper aims at preparing a marketing plan to spur the growth in sales volume of the Halfords bicycles. Situational Analysis It is estimated that by 2050, the UK government will be spending over £ 50 billion on the growing obesity problem. Public health experts are advising the government that active travel and physical activity could help alleviate this problem. Thus, they are calling the government to support cycling as one way of reducing this problem (Davids and Newcomb, 2006). Cycling and walking have been found to be the most practical ways which are inexpensive and accessible to be many persons as a way of daily physical activity (Halfords Bicycle, 2010). In addition, it has been found that cycling helps one to cut the risk of developing heart related ailments and thus the British Medical Association recommends daily cycling (Sutherland and Sylvester, 2000). Britain holds annual National Bike Week, which enables over 350,000 people to participate in varied events across the country. This helps in promoting cycling habits among the population (Allred, Addams and Chakraborty, 2007). Because of the advantages associated benefits of bicycle industry, British bicycle business have been thriving in spite harsh economic climate, that has hit many parts of the world in recent times (Yue-Ming, 2005). The bicycle industry did not experience recession as most industries did in UK. Experts say that the industry experienced a renaissance in the recent past, which has helped to buck the UK economic trend (Halfords Bicycle, 2010). It is expected that by the end of this year (2010) bicycles and cycling goods market in UK will exceed £ 2.1 billion. This will be a 15% increase from the 2009 market. It is estimated that the market will exceed £ 3 billion mark by 2015. A report by management consultancy indicates that 6% of all adult bicycles purchased in the last one-year period cost over £1000 while the average cost of all bicycles sold exceeded £ 300 (Halfords Bicycle, 2010). Researchers have projected that by the end of this year sales of bicycles ion UK will reach a high of four million units. Other reports have also indicated that about 12 % of British adult population is active cyclers while another six percent of the adult population constitutes people cycle most days. Furthermore, UK has witnessed an increase in the membership of bicycle clubs an indication that many people are cycling. London has seen a 117% increase in bicycle journeys since 2000 on major roads (Halfords Bicycle, 2010). It is estimated that in London a round half a million journeys are done using bicycles. This number is expected to rise according to experts. The increase in cycle trade has been attributed to change in culture. Many people have come to be interested in the cycling activities in UK in recent days. Many youngsters are being encouraged to take up cycling events organized by Cycling England in preparation for 2012 Olympic Games. This has added more enthusiasm in cycling activities. The Cycle to Work scheme initiative introduced in UK in 1999 by the government has been a major contributor to growth in cycling trade (Davids and Newcomb, 2006). This scheme allows workers to buy bicycles tax efficiently. The scheme resulted in an increase in interest in cycling in addition to increasing the average value of bicycles (Sandhusen, 2000). Unlike in the past where people would buy a bicycle for about £ 79.99 and use it for two to three times before damping it in the garage, now days they buy bicycles for different intentions (Halfords Bicycle, 2010). Thus, many people are looking for bicycles, which are different from the mass produced items. The customers are now days in need of more realistic about user requirement and functional features on bikes unlike in the past where a trend for mountain bikes was good for going down mountains (Kerin, Hartley and Rudelius, 2003). Internal Analysis Halfords has a scheme called Halfords Cycle2work, which provides tax-free bikes to support the government initiative of 1999, which enable employees to commute to work using bikes. The company enable employers to access a wide range of bikes and accessories in UK. Companies buying bicycles from Halfords bicycles for their employees are able to save up 52% on the cost of bicycles for their employees. given the experience, cycling heritage and varied brand offer by Halfords bicycles employers have the a wide range of bicycles to chose from as they get the best offers for their Cycle2work needs (Halfords Bicycle, 2010). Halfords provides its customers with solutions, which are managed end to end. These solutions are set up free of charge and provide full administration services for these Cycle2work needs. The company has experienced and dedicated team, which provides standard full back up and support to its customers (Davids and Newcomb, 2006). As a result, many employers buying bicycles for their employees from Halfords enjoy several benefits. One of this is saving on tax and national insurance. Another benefit is that by buying bicycles the firms add green travel or environmental policies, which are excellent (Baker, 2003). This also eases problems such as congestion and parking for the firms that shift from use of motor vehicles to use of bicycles. The shift also enables the firm to save on costs of medical attention for their employees since use of bicycles helps the employees to enjoy improved health, fitness and moral. By buying the bicycles firms also help to boost their capabilities of retaining staff and reducing carbon footprint of the company. Halfords has many shops in UK, which ensure that their customers can access them easily (Halfords Bicycle, 2010). In addition to physical shops, the firm has an excellent online shop from which customers can order their bicycles at the comfort of their chair (Ruskin-Brown and Clarke, 2000). Furthermore, the company offers a wide range of bicycles, which include BMX bikes, mountain bike, hybrid bikes and road bikes, which are sourced from top brands (Halfords Bicycle, 2010). Given their spread, Halfords offer customers excellent competitive pricing for the bikes offered at the Halfords stores (Srinivasan, Rangaswamy and Lilien, 2005). Moreover, customers can opt to reserve via online shop and collect their bikes from their local Halfords shop (English, 2006). The building of the bicycles and its safety check up is done free of charge by specialists who are well trained. A further bike safety check up is carried out after six weeks to ensure that the bikes are in sound safety conditions (Kerin, Hartley and Rudelius, 2003). The company introduced a revolutionary electric bike in March 2010 tagged Urbanmover (Halfords Bicycle, 2010). The sales of this new invention are expected to hit a high of 30,000 within its first year in the market. The company has an excellent balance between the quality and pricing of its new electric bikes (UM44L step through and UM33X mountain bike style) which gives it a competitive advantage over its competitors. Those who own these electric bikes save greatly in terms of money and the environment as opposed to use of car for travelling. This is based on the fact that it costs 5p to fuel the bike as compared to an average of £2.00 for fuelling a 1200cc petrol car. In addition, riders do not require a driving license neither do they need to pay road tax nor congestion fee (Halfords Bicycle, 2010). The bikes are also easy to use with no or limited carbon emission. The UM44L U Sprite electric bike provides Halfords customers up to 20 miles on a single battery charge in addition to being light. It also comes with a maintenance free 200w motor that is mounted on the rear wheel to enable safer handling. It also comes with controller that is easy to use and tyres, which are resistant to puncture. Urbanmover electric bikes are able to help riders to peddle uphill and pull away from junctions easily and safely (Davids and Newcomb, 2006). Even though the Halfords stores offer self-service to its customers, what actually takes place in the stores is assisted service. Thus, the stores have excellent customer service as opposed to any other competing stores. The employees at these stores offer customers advice regarding goods found on the shelves. They in addition are involved in assembling bikes and provision of tune up services to customer’s specifications (Halfords Bicycle, 2010). The employees also help to fit tyres on the bicycles. Even though the company uses the internet shopping option, it ensures that its services are excellent at the stores to ensure their customers keep on coming back (Weinstein, 2004). The company offers seasonal promotions to attract customers to its stores. The company offers product segmentation with differing pricing strategies dependent on the quality of the products. The products are grouped as good, better and best (Grover and Vriens, 2003). The good and better categories comprise Halfords brands while foreign products make up the best category. This gives its customers a wide range of products to choose from. External Analysis The cycle2work scheme at Halfords is guided by the Consumer Credit act (CCA). The scheme operates under specific group license, which is held by the office of fair trading (OFT). To run the scheme, Halfords is not required to get any preapproval or to sign off any marketing collateral with OFT (Halfords Bicycle, 2010). The scheme at Halfords is compliant to the CCA requirements. The CCA requires that no group of employees is excluded from the scheme and HMRC is more vigilant to ensure that this is adhered to. Halfords has a legal team, which helps in reviewing of the scheme regularly to ensure that it is compliant to the CCA requirements. The company also works closely with leading firm of tax advisors and HMRC policy division to get an agreement that its cycle2work scheme is full compliant with all legislative requirements. UK is politically stable and since many of Halfords, stores are found in UK it enjoys the political stability. However, the recent uncertainty that characterized recent elections resulted in a drop in sales volumes of the company. The UK government is supporting a shift from use of cars to use of bicycles through schemes such as the cycle2work. This is essential in increasing the demand for bicycles and cycle accessories and hence expansion of the market for cycle companies like Halfords. DAWES Bicycles Company is one of Halfords competitors (Halfords Bicycle, 2010). The company once had bikes with mutts nuts but this has since been overtaken by its competitors. Another competitor is Bexhill Bikehut, which has decent touring bike as stock. They also stock good commuting bicycle models. However, their own brand inner tubes are of low quality and seem to leak air and thus require frequent pumping. JJB sports plc is another major competitor of Halfords bicycles. It has over 250 stores in UK. However, it does not specialize in biking goods but rather sells anything that is required for sports. SWOT Analysis This is an analysis of Halfords bicycles’ strengths, weaknesses, opportunities and threats. Strengths Biking can be enjoyed by people of all ages and it is simple and is a low impact means of exercise. Halfords is involved in the sale of a variety of bikes which includes mountain bikes, electric bikes, folding bikes, classic bikes, 26 inch wheeled flat bar road bikes, touring bikes, flat handlebar road bikes, and road (race) bikes. Employees at Halfords stores are involved in provision of excellent services such as training, fittings and instruction on proper safety tips, use and repair. Halfords also sells a wide range of bicycle accessories and parts It is the largest retail bicycle company in UK. The stores of Halfords are about 400 and are found all over UK for ease access by its customers and it also runs an online shop. The cycle2work scheme at Halfords is an excellent option for employers and can help them save up to 52% on the cost of bicycles. The company has over 100 years of cycling heritage and superb brand choice Weaknesses The company faces challenges which come with the seasonality of biking business Challenges of changing people who are accustomed to sedentary lifestyles. Opportunities There is an increase in the trend toward active lifestyle The government has several initiatives in place to encourage cycling Bikes can be used by people of all ages. Threats Online bicycle sales in addition to catalogue sales and service Instability in the economy that is as a result of recent economic recession that has affected discretionary spending Marketing Strategy Business objective To increase annual sales volume by 6% by the end of 2011 Marketing objective To increase awareness of the advantages of bicycle use by 60% within our target market To increase interest in the use of bicycles among UK population by 40% To help our target market in evaluating the advantages of buying bicycle from Halfords so that they make their list of possible choices at least 30% of the time To ensure that customers select Halfords as the preferred store for buying bicycles at least 20% of the time because of competitive pricing and quality of bicycle products To built adoption of more than 75% among our target market Target markets The target market for this marketing plan will be casual bikers who use biking as occasional recreational activity, to children of all ages and adults who are enthusiastic about biking. It will also target companies which are in need of cycle2work scheme for their employees. Product offering Halfords will be offering bicycles and other cycling products accessories. The products will be divided into good, better and best. The better and best products will include imported products while good products will include bicycles assembled at Halfords. The pricing of the products will be based on the quality and origin of the products. Bicycles to be offered will include mountain bikes, electric bikes, folding bikes, classic bikes, 26 inch wheeled flat bar road bikes, touring bikes, flat handlebar road bikes, and road (race) bikes. Positioning Halfords bicycles will be position as a store which offers all cycling needs. The bicycles at the store will be positioned as alternatives to driving which are health, cost savers, in addition to being luxurious. The bicycles at Halfords will also be positioned as the best priced in the UK cycling market. The cycle2work scheme will be positioned as the best for employers looking to save a lot on the cost of bicycles for their employees. Marketing mix The 4P marketing mix will be employed to attain marketing strategy. This will entail product strategy, pricing strategy, place strategy and promotion strategy. Product strategy- Halfords will continue sourcing its cycle products from world best manufacturers of bicycles and accessories (Weinreich, 2001). The company will continue offering a wide range of bicycle choice including mountain bikes, electric bikes, folding bikes, classic bikes, 26 inch wheeled flat bar road bikes, touring bikes, flat handlebar road bikes, and road (race) bikes. Halfords will intensify its product segmentation strategy of grouping its products into good, better and best to offer customers of all economic background something to buy (Ogilvy, 2007). The company will also source for best accessories for bikes across the globe to offer its customers quality products (Davids and Newcomb, 2006). The company will also continue to build its own brand and thus it will be able to offer its customers both exotic and local test to increase customer base choice options. Pricing strategy-the company will strive to balance between offering high quality products and competitive pricing strategy in the market. Since we are a large company, we will be buying our stock in large quantities and this will help us get the products at good prices, which we shall pass on, to our customers. In addition, we will intensify our services offered in our stores. The pricing of the bicycles will depend on the segment in which they fall, that is, whether they fall in good, better or best category. Thus our customers of all kinds will have a choice which best fits them in terms of pricing and quality. We shall continue to offer free services after sale of bikes to our customers. Place strategy-distribution of our products in UK will be done through our 400 stores located all over UK. Repairs and other services will be provided at these stores. We will intensify our online shopping website to allow our customers to shop at the comfort of their chairs (Petley, 2003). We will make the website to be more interactive as possible so as our customers can seek advice through this media and be aided in making sound decisions on what to buy and what we offer at our stores. The website will also be used to find out special needs of our customers so as we can source for products which best fit customers in special categories. Promotion strategy-several mediums will be used to market our products and business (Isenberg, 1987). They will include television, radio, newspaper advertisement, printed promotional material, web advertisement and promotional events (Baker, 2003). Major local television and radio stations in each region of UK will be used to advertise our business and products. Dependent on the region, two local major newspapers will used to advertise our business. We will collaborate with major websites to advertise our products on their websites in addition to advertising on our own website. We shall also utilize fliers and post cards to promote our products at special events in addition to sponsoring some participants at Cycling England event. Implementation, Control and budget To implement our marketing mix, we will be carrying out survey on customers who visit our stores and our websites on their likes and dislikes concerning biking products (McDonald, 1992). This will help as know which types of products are liked most by our customers and to ensure that they are always available in our stock (Simkin, 2002). Since we are major players in bike industry in UK, we will collaborate with our government to sponsor preparation of our national team that will be participating in 2012 Olympic Games. This will help us promote our business. To control our marketing plan, we shall divide the implementation of the plan into the nine regions found in UK. Each region will have a budget of its own. This will ensure that our marketing plan do not concentrate in one region at the expense of other regions. The budget for marketing plan will be as follows:   North East North West Yorkshire and the Humber East Midland West Midland East London South east South west Television Ads £2,000 £2,000 £2,000 £1,500 £2,000 £800 £2,500 £2,000 £1,500 Radio  £ 1,000  £ 1,000  £ 1,250 £1,000 £1,500 £1,250 £1,250 £900 £2,000 Newspaper Ads  £1,500  £1,000  £ 1,000 £1,000 £1,500 £1,800 £2,000 £2,000 £1,000 Web Marketing  £1,000  £1,000  £1,000 £1,000 £1,000 £1,000 £1,000 £1,000 £1,000 Promotional Events  £2,000  £2,000  £2,000 £2,000 £2,000 £2,000 £2,000 £2,000 £2,000 Printed Promotional Materials  £ 500  £120  £250 £500 £200 £250 £1,000 £400 £500 Total Sales and Marketing Expenses  £8,000 £7,120 £7,500 £7,000 £8,200 £7,100 £9,750 £8,300 £8,000 Grand total £70,970 Conclusion Halfords group is a retail group, which is involved in the selling of car accessories and bicycles. Halfords group takes the largest share of cycle’s retail sales in UK. The company witnessed a 2.9% drop in its annual sales in 2010. 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