Opportunities in Australian Do It Yourself Market - Case Study Example

Jiaqi Dong, Product Development Manager, Department of Product development 4 September 2011 Grace Johnson, Chief Executive Officer Dear Ms Johnson, As requested, the product development department has prepared a report examining the future expansion of the B2C area in the Australian market. The purpose of this report is to present the findings of the secondary research and provide recommendations for potential opportunities. The findings of the report indicate that in spite of the emerging trends in the Australian DIY renovation market, through formulation of good strategies the emerging trends can relate to your company’s development of the “Just Add Water” category. This will help your company to expand its prospects beyond the current market share hence contributing to the positive and sustainable growth of your company. Yours sincerely, Jiaqi Dong Opportunity Identification [Course Name] [Course Code] [Due Date] [Student’s Name] [Student’s Number] Executive Summary The purpose of this report is to present the findings of the secondary research and provide recommendations for potential opportunities. The report addresses the specific opportunity elements of: Emerging Trends in the Australian DIY renovation market and how they can relate to the company’s development of the Just Add Water category. A literature review was used to gain an understanding of the Australian DIY market in terms of opportunity identification. The report also considers how to customise the product for this market, prior to prior to the installation of new packaging equipment at its Brisbane bagging facility. The report reveals that the emerging trends in the Australian DIY renovation market is out of the need to command more market share and getting a competitive edge over other producers. The report recommends that the company should aim to create a sustainable and advanced competitive position through adopting a customer-based approach to meet the market dynamics. Contents Executive Summary 3 Contents 4 Opportunity Identification 6 INTRODUCTION 6 Cement Australia is an Australian company operating two key business units: the business to business market (B2B) which includes products for large scale construction projects and the packaged goods market which services both the brick & block home construction sector and the consumer goods market (B2C). In the B2C market, Cement Australia is the leading supplier of packaged cement-based products and is the supplier of choice for the largest DIY (do it yourself) retailer in Australia - Bunnings. This business unit has been identified as an area of strategic focus to grow the organisation as the DIY market expands driven by both the trend in renovation, television shows and the imminent entry of Woolworths into the Australian DIY market through the new “Masters” joint venture with Lowe’s from the USA. 6 The Cement Australia brand encompasses many product types suitable for use in home construction, renovation projects, simple repairs and maintenance as well as relevant additives like Oxides for use in colouring cement (Chatveera, et al., 2006). 6 Product platform 6 Opportunities in Australian DIY Market 7 Product customization 8 Product concept 8 B2C Expansion 9 Value Addition 9 Market Needs 10 Recommendations 10 Conclusion 11 The report has addressed the product platform of the “Just Add Water” category which is a range of pre-blended dry products made from a cement base which just needs the addition of clean water for use. Particularly, it has dealt with the future expansion of the B2C area in the Australian market in relation to “Just Add Water” category. 11 Reference 13 Opportunity Identification INTRODUCTION Cement Australia is an Australian company operating two key business units: the business to business market (B2B) which includes products for large scale construction projects and the packaged goods market which services both the brick & block home construction sector and the consumer goods market (B2C). In the B2C market, Cement Australia is the leading supplier of packaged cement-based products and is the supplier of choice for the largest DIY (do it yourself) retailer in Australia - Bunnings. This business unit has been identified as an area of strategic focus to grow the organisation as the DIY market expands driven by both the trend in renovation, television shows and the imminent entry of Woolworths into the Australian DIY market through the new “Masters” joint venture with Lowe’s from the USA. The Cement Australia brand encompasses many product types suitable for use in home construction, renovation projects, simple repairs and maintenance as well as relevant additives like Oxides for use in colouring cement (Chatveera, et al., 2006). Product platform “Just Add Water” is a range of pre-blended dry products made from a cement base which simply need the addition of clean water for use and includes: Mortar Mix Concrete Mix and Rapid Set variant Render It Sand and Cement Sand and Cement and Rapid Set variant All these categories are from the same product families as they have similar design, development and go through the same production process (Gale & Kaya, 2003). Therefore, the customers can identify themselves with the product and thus choose the category that best suits their needs. Opportunities in Australian DIY Market Cement Australia is the supplier of choice for the largest ‘Do It Yourself’ (DIY) retailer in Australia- Bunnings. However, the company has not exhausted the Australian DIY market as there are potential customers who are unaware of their product (Harper, 1998). The company has considerable experience with regard to packaged cement category. This can be specifically tailored to meet the needs of the final consumer. The DIY market is expanding at a very high rate and this creates a business opportunity for Cement Australia. This expansion is attributed to the trend in renovation, TV shows and the entry of Woolworths into the Australian DIY market through the new “Masters” joint venture with Lowe’s from the USA. This joint venture provides a market segment that was not there before and therefore some measures needs to be taken to customize the product for this market (Hoffman, 2006). Product customization Currently, the company uses “big bag” 20kg format. This is not well cut for an ideal customer and therefore the company needs to have a solution that is customer focused. The external market calls for rebranding of the products in such a manner that the USA market will relate with the products from Cement Australia. The company should consider redesigning its “big bag” 20kg format to suit this market. A brand name should promote brand equity and a good product concept. The platform category should be based on the type of the product or the type of the customer (James & Chanson, 2000). The product for this market should be customised to achieve the following outcomes: Enhanced category visibility from the warehouse The individual product should be identified with ease Instructions on how the product is used should be provided The product should have a practical directions on how it is used Product concept Product concept relates to what should be changed and the ways in which the changes will lead to customer satisfaction or dissatisfaction (Macfadyen, 2006). The inputs used in the “Just Add Water” category are the same. However, they differ in other aspects of need, form and the technology used. The “Just Add Water” category is packaged in various sizes to suit the different customers’ needs. There is a package for 20kg and other smaller packages like 4.5kg and also 9 to 10kg. The customers benefit from these categories as it is easy to use and its packaging flexibility hence addressing small and large quantity requirements (Raph & Grant, 2009). The company will improve its packaging through installation of new packaging equipment at its Brisbane bagging facility. B2C Expansion The business environment is dynamic and for the company to thrive in such an ever changing environment, it has to know its strength and maximize on the potential opportunities for its growth. Cement Australia has been doing well in the B2C market, but there is still room for expansion. There is a significant number of potential customers in the Australian market who have either not used “Just Add Water” category or have not heard of existence of such a product. This means if the company boosts its product promotion effort its stands to realize an increase in its revenue. According to Thomas (1999), potential consumers have to be made aware of the existence of the product. An educated customer is well placed to make an informed choice and therefore they will always go for the best. Through product awareness many consumers will switch to the “Just Add Water” category. Value Addition “Just Add Water” category, like any other product is anticipated to go through the product stages in the product life cycle. These are the pre-introduction, introduction, growth, maturity and the decline stages. According to World Bank (1996), companies have to keep abreast with the rising technology and advance its products in line with the changing needs in the market. The company has to consider developing the “Just Add Water” category before it clicks the decline stage. The “Just Add Water” category is in the growth stage and therefore it will require a lot of resource allocation for; Mass production Mass distribution To fight completion To address new market segment To maintain growth momentum Market Needs People who use “Just Add Water” category come from different backgrounds and hence their products needs differ accordingly. Furthermore, the product needs of the customer keep changing depending on their requirements at that time (Sandrolini & Franzoni, 2001). The company’s “big bag” 20kg format is not the ideal in all usage occasions. A market research has also shown that customers tend to alter their consumption behaviour to fit in their present income. The company should reconsider repackaging their product in 5kg and even 1kg. Recommendations The report recommends that the company engage in a rigorous B2C market as a customer focused approach will help the company to gain a considerable market share beyond the current command in the Australian market. It is recommended in this report that the company should redesign format in the “Just Add Water” category in order to meet the diverse needs and requirements of its clientele. This should be accompanied by a product customization to meet the needs of the new market which should include rebranding of the categories to achieve product loyalty. The report further recommends that Cement Australia take part in activities that are geared towards product promotion. This will create awareness of its products which in the long run will translate to increased profit and sustained growth. Conclusion The report has addressed the product platform of the “Just Add Water” category which is a range of pre-blended dry products made from a cement base which just needs the addition of clean water for use. Particularly, it has dealt with the future expansion of the B2C area in the Australian market in relation to “Just Add Water” category. The report has looked at the opportunity for the company to add value to its portfolio by exploring usage occasion needs outside of their ‘big-bag’ 20kg format. The report has also established a good understanding of the Australian DIY market in relation to the identification of opportunities. In addition, the report has considered the means of customizing the product for the new market before the installation of new equipment for packaging purposes. It has been established in this report that for a product to pick well in the larger market share, it has to be of a form that is safe to use by all kinds of customers. It has to meet the diverse needs of the company’s clientele in terms of packaging and other customer’s needs. The report concluded by giving recommendations on the way forward in order to maximize the gains from “Just Add Water” category. Reference Chatveera, B., Lertwattanaruk, P. and Makul, N., (2006). Effect of sludge water from ready- mixed concrete plant on properties and durability of concrete’ Cement & Concrete Composites. London: McGraw Publishers. Gale, J. & Kaya, Y., (2003). Greenhouse Gas Control Technologies: Proceedings of the 5thinternational. Oxford: Oxford University Press. Harper, C., (1998). Edward Dobson and the Mass Concrete Dam on Stony Creek for the Geelong Water Supply. Oxford: Oxford University Press. Hoffman, G., (2006). Pozzolans and supplementary cementitious materials: Industrial Minerals and Rocks. (7th ed.). Colorado: Littleton. James, D. P. & Chanson, H., (2000). Cement by the Barrel and Cask: Concrete in Australia. Melbourne: CSIRO Publishing. Macfadyen, J. D., (2006). Cement and cement raw materials: Industrial Minerals and Rocks. (7th ed.). Colorado: Littleton. Raph, H. & Grant, T. (2009). Life cycle assessments: principles, practice and prospects. Melbourne: CSIRO Publishing. Sandrolini, F. & Franzoni, E., (2001). ‘Waste washes water recycling in ready-mixed concrete plants’. Cement and Concrete Research. London: McGraw Publishers. Thomas, T., (1999). Portland cement: composition and properties. London: Bookcraft Printers. World Bank, (1996). Pollution Prevention and Abatement: Cement Manufacturing. Draft Technical Background Document. Environ. Read More