K-Mart - Stakeholder Analysis - Case Study Example

Case Study: K-Mart Name Institution Industry Analysis Market Analysis The marketing approach for the retail industry has gone a full cycle transformation in the recent past. Previously the industry has been dominated by the manufacturers and wholesalers striving to avail the products at the consumer’s point of convenience. This state of affairs has, however, changed with the advent of online shopping. In the digital age customers have the opportunity to shop online, make orders on items of their choice and delivery is effected on request (MacGowan 2011). This has been a major breakthrough in the retail industry in Australia and globally. There has also been massive and constant change in customer tastes and preferences. Constant change in customer perceptions and their desire to keep up with fashion are attributable to this. What this means for the industry players is that they must keep themselves updated on the most recent model of all ranges of commodities if at all their shelves will have a combination that will be appealing to customers. They also have to work closely with the manufacturers so as they can pass on vital information gathered from consumers regarding their tastes, preferences and even complains. The emarketing objective is aimed at modernization of consumer relations management by placing the customers at the center of all marketing operations. That means that all online initiatives are dedicated at providing what the customer perceives as valuable. This is a total marketing perspective. In essence the first stage is ensuring that what the customer needs is availed in the place he/she would most prefer and on time. Market information and real time data is passed to the consumer to guide him/her on the buying behavior. This is with regard to new models, change in prices, packaging, branding and such attributes (Weller 2007). In this regard online shopping should be made the most convenient and easiest way of interacting with customers. The information they may want to have regarding the most recent market trends is made ready for them for use for the mutual benefit of the consumers and the company. Marketing automation and increasing of the customer contact points will facilitate this move. Product/Service Analysis The retail industry has made its mark in provision of three major services. These are: providing convenience for the customers to shop. This means that a customer needs not to visit different manufacturers for different needs. Rather he/she can access the collection of all their products online from a distributor. The other significant role has been the after sales services and auxiliary services. Such include the credit arrangements and installation services among others. Finally the players have been integral in identifying market for the producers. The industry has almost taken up the role of sourcing the market in totality (Stafford 2010). Competitor Analysis Next on the changes is the invasion of the industry by very powerful companies. The impact they have had is the variety of products that they have flooded in the market as they have access to products from the well to do manufacturers and are able to shed off their bulk and replace it with the recent model whenever necessary. This has made the retail industry probably the most versatile in the economy (Callahan 2003). The high level of competition subsisting in the industry makes entry into the industry extremely difficult. Majorly this is because a player needs to have the capability to compete on cost. New entrants find it difficult since they do not enjoy the economies of scale unlike their existing rivals. To some extent Kmart befits from this economies of scale which has enabled it to protect its position in the industry. Many players in the retail industry have been able to automate their operations by use emarketing initiatives. The major entities’ application of computer systems enables them to tap suppliers directly while keeping track of every transaction and this has greatly improved efficiency. By extension they are able to predict their market extent to some extent. Marketers in this field have gone ahead to apply advanced techniques of service quality improvement such as total quality management and service blueprinting. By so doing they are able to electronically generate their market reports and analysis. This demonstrates the extent to which market automation has been adopted in the industry. Macro-environmental Factors These cover aspects of the economy of a country such as economic forces, demographic forces, social forces, innovation and related attributes. Much of these attributes have a lot to do with the external environment. The economic factors like interest rates, money supply and other macro-economic concepts are proper province of the national government and not the company management. However, their effects spill over to company’s performance. The past few decades have seen great advancements in Australia’s retail industry and many factors are attributable to this state of affairs. Technological advancement and high rate of innovation are unquestionably some of the contributing factors. Basically, technology has changed the approach to business. From market promotion strategies to closing of sale, the concept of emarketing is the tone of the day. There is no longer much necessity for the consumers to physically visit retailer premises for shopping (Pascoe 2011). The government has also been integral in shaping the industry. Initially this was through the protectionism policies adopted in an effort to protect the local firms. Later these were significantly withdrawn but the hand of government is still felt in this industry. Majorly the state has imposed regulations through the Australian Competition and Consumer Commission (Schivardi & Viviano 2011). Stakeholder Analysis A stakeholder refers to an entity that has an effect on the operations of the organization. An analysis of stakeholders entails assessing the impact each one has on the performance of the organization. Based on the analysis henceforth the management devises ways and means of mitigating any adverse effects the actions of the stakeholders may bring forth (Brinkerhoff 1998). Each organization has to deal with a big set of stakeholders each with a different potential impact on the well being of the entity. They range from shareholders, employees, suppliers, competitors, government, tax agencies and the list can be as long as company in question may identify them. These stakeholders will react differently to varying environmental conditions and hence the complexity in dealing with the concept of stakeholder analysis. In essence, a viable analysis must focus at identifying the stakeholder at the most specific level possible. This must then be followed by assessing the impact his/her actions can bring to the organization - positive and/or negative. The hurdle lies with the fact that many attributes of stakeholders are qualitative yet a proper and effective analysis would almost call for numerical study of their impact (Brinkerhoff 1998). Competitors Kmart is one of the largest companies in the industry with both Big W and Target being its closest rivals. These two pose the greatest competition in the market. However it ranks among the players that benefit from economies of scale. There exists many barriers to entry into the retail business in Australia but this is a complement for Kmart and other large players (Callahan 2003). Competition in Australia is regulated by the Australian Competition and Consumer Commission. This commission has been integral in influencing certain behavior in the industry, some of which that have impacted on Kmart. For example in 2007, the commission opposed the proposed acquisition of Kmart Australia Limited by Woolworths Limited. According to this commission the move was undesirable for public competition in the industry (Schivardi & Viviano 2011). On the soil of Australia, Kmart’s major competitors are Target and Big W. Kmart and Big W have for a long time been the closest competitors and probably the two players sharing the most similarities. Target is largely viewed as a differentiated competitor. These companies have had their enough share of tussles revolving around intended takeovers or mergers (Stafford 2010). The rivalry in this industry has been intense particularly among the three major players. Originally competition was squarely on price thanks to little differentiation within the industry. While other players have managed to position themselves with a specified market strategy either through cooperation or service quality the case has not been the same for Kmart. However, it has tried to remain competitive by seeking to establish links with designers and manufacturers as well as targeting specific niche in the market to appeal to specified customer groups and it has worked considerably well (Stafford 2010). Close rivals such as Big W and Target have been ahead in implementation of emarketing. They have executed this by use of their websites, blog spots even you tube. Furthermore, they have been able to appear in the social media a feat Kmart is yet to fulfill. With this form of marketing they have managed to achieve many feats. The most significant is the e-promotional and advertising campaign. The move has seen them increase their customer base by creating massive awareness regarding their products. The other notable milestone is the online shopping where consumers have made orders and closed sales by click of a button. Companies have also used emarketing to make timely forecasts of their performance through application of computer generated metrics. Consumers The nature of this industry limits the options of competition strategies to pricing and Kmart has had to toe that line. The complexity in pricing strategy has been brought about by the nature of consumers it serves who happen to be highly price sensitive. On occasional circumstances the company has managed to apply price discrimination. It has effected this through coupons and bulk discounts for the highly price sensitive consumers. The challenge has been diffusing this information to the market meaning only a small segment of the market respond to these promotional campaigns. Consumer groups have also been responsive to fashion and technological advancement. This implies that Kmart has had to keep up with the speedy change in fashion of all products and particularly the electrical appliances and home wears. Youthful customers are the most responsive to style and such dynamics (Weller 2007). Recently a new trend has been identified with customers. This is where customers have bypassed older shopping stores to shop at Kmart’s modern malls. This has put the management at a tight angle with resource allocation dilemma – whether or not to modernize all stores or to continue market automating projects (Sherri 2003). Consumer groups have also demonstrated demographic trends. The female gender is the most frequent group in the shopping malls though studies have shown that they rarely visit the website nor use the online shopping option. For every five men knocking in the shopping store there are fifteen women doing the same. Mostly, the people who are usually frequent on the stores are aged thirty five and above (Sherri 2003). Unfortunately for Kmart, the negative publicity that has faced the company has led to loss of customers to rival firms. Some of its top executives have been subjected to investigations by authorities and the effect has been immense in the market place. Consumer groups have also complained that the company has been alienating some its customers. According to a United Nations report the income of households will continue to be on the rise, with the world economy having successfully negotiated the crisis of 2008. Income levels of persons living in developing countries are expected to rise by 7% while that of residents in developed nations will rise by 2%. Australia being thirteenth largest economy in the world will definitely be one of the countries to experience the rise. What this implies to the retail industry is that as people’s income stabilizes, they run for quality products as well as increasing their levels of recurrent expenditure (Crawford & Benedetto, 2006). Substitutes Kmart has also had to deal with substitutes. Such have not posed much of a threat but shave been effective in taking up the market of small scale buyers. These substitutes include grocery stores, club stores, dollar stores and many others that are able to extend soft credit to their customers. The emergence of small players in this industry cannot be slighted. This is because the small operators have a greater capability to keep track of their customers. In this sense they are able to give a more personified attention that can be a strong factor in maintaining customer loyalty (Sherri 2003). Suppliers This has been the company’s major source of competitive power. It has already made its name as a company with the best links with designers and producers. By so doing it has been able to negotiate better terms and consequently has been able to keep up with the price wars subsisting in the retail industry (Sherri 2003). Suppliers have made the aspect of emarketing to be two way. They have also strategically positioned themselves to do business online. They place their invitations to treat on the internet and potential customers can make offers electronically. Payment for orders is electronically through the use of e-banking services such as pay pal. Employees Virtually no company would perform well without paying due attention to the welfare of its employees. Employees give the organization its motion. Without them the company is a muddle of machines that cannot function. Employees of a company make huge representation to the public and are mostly used to gauge the strength of an entity. Kmart has special packages for its employees and it is difficult to find another company with a similar system of rewarding its workers. Most of the workers are put on a two week pay system. This saves the long wait and ensures they can attend to their duties stress free. The remuneration is based on hours worked and the rate varies with the experience and time spent in the service of the company. Starters get as much as $7.5 per hour while those who have worked for amore that twelve months can take home approximately $12 per hour. Payment is done through pay cards or check account depending on employee’s choice (Pech et al. 2009). The workers of the company do enjoy high discount on the products of the company. For example they receive as much as twenty percent discount on clothing material and 10% on other items. Sometimes, senior employees receive share options based on performance (Pech et al. 2009). Shareholders Kmart is an entity owned by many shareholders who play a central role in major decision making practices. They make their contribution through the general meeting held annually as stipulated by law. They have in the past been instrumental in certain actions of the company and sometimes aired their displeasure in certain engagements of the company. For instance, there was a tag of war between the management and the shareholders regarding the acquisition of Sears. Initially the shareholders had blocked the move but finally gave their consent after the terms of agreement were revised (Sherri 2003). Shareholders access all company information available from the on the website. The management communicates its intended expansion or restructuring strategies to the shareholders through the internet. The system has also been applied to invite new investors by marketing the company as financially viable entity a move that helps to attract new investors during capital reorganizations and finance sourcing. A transformation of the company to the emarketing approach would be appealing to existing shareholders as well as investors sourcing investment opportunities. Statement of Marketing Objective Majorly the company should focus on fulfilling three marketing objectives. These are creating massive awareness; increasing sales volume and lowering operational costs in the marketing function. All these will be realized through emarketing initiatives. These objectives will be realized as summarized herein: To create a record customer awareness of one million of Australia’s population through e-promotion initiatives by mid 2013. To increase periodic sales by 50% through adoption of online shopping strategy by the end of year 2014. To reduce annual marketing costs by 25% through replacement of manual management by electronic systems by the end of 2013. References Anderson, K& Garnaut, R 1987, Australian Protectionism. Sydney, Allen & Unwin. Brinkerhoff, D 1998, From Design to Implementation: Stakeholder Analysis in a PHC Project in India. 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