Upload
clovis-djoumessi
View
105
Download
1
Embed Size (px)
DESCRIPTION
i hope this assignment could help some of you to get more ideas about marketing and competitive advantage thanks to read itif you have any remarks just write your comments on the botton
Citation preview
TITLE
MORRISON’S STRATEGIC MARKETING AND COMPETITIVE ADVANTAGE
COURSE
PRE-SESSIONAL BUSINESS ENGLISH
SUBMITTED TO
EMMA MURPHY
SUBMITTED BY
CLOVIS DJOUMESSI JIOFACK
ENROLEMENT NUMBER: 1270889
SUBMISSION DATE
29/11/2010
1
CONTENTS PAGES
I- INTRODUCTION
II- MAIN AREAS OF BUSINESS
III- GENERAL OVERVIEW OF:
1- Strategic marketing
a- Segmentation
b- Positioning
c- Targeting
2- Competitive advantage
IV- How does Morrison gain competitive advantage through strategic marketing?
V- CONCLUSION
2
I. INTRODUCTION
The objective is of this assignment is to examine how Morrison uses different
marketing strategies to be successful in the highly competitive UK market. In order to
achieve success in their business companies have to develop different methods and
techniques to be successful in highly competitive market. In this case, Marketing
appears as one of these elements. It is a concept more used by companies in many
perspectives for example products promotion, improving profit and increasing
satisfaction customers. My assignment focuses on studies of strategic marketing
used by different companies to cope with the competition and for this reason I have
chosen to study competitive advantage in relation to Morrison.
So there are some questions that we need to ask if we are to better analyse a
company, such as what is the strategic marketing? What is the competitive
advantage? And how does Morrison gain competitive advantage through strategic
marketing? This assignment covers some aspects of marketing such as
segmentation, targeting and positioning used by Morrison. It will be prepared based
upon the information collected from different books written on the topic and internet
resources. Moreover, different websites will provide information about Morrison. The
focus here is on presentation of facts as discovered. I divide this assignment in three
parts; firstly, I will start by the Morrison’s main areas of business. Secondly, I will talk
about a general overview of strategic marketing and competitive advantage, and
thirdly, I will show how Morrison gains competitive advantage through strategic
marketing to be successful in the competitive UK market.
3
II. MAIN AREAS OF BUSINESS
Created by William Morrison in 1899, Morrison supermarket is one of UK’s
leading supermarkets engaged in providing a broad range of goods including
branded and own label products. The company, along with its subsidiaries, offers a
wide range of products, which include grocery, fish and meat, bakery items, alcoholic
and non-alcoholic beverage, pharmaceuticals, and dairy based products. So
following the takeover of Safeway, Morrison claims to have a strong geographic
spread right across the UK, providing the opportunity to give shoppers everywhere
the benefit of high quality products at low prices and a strong offer across all fresh
foods. So according to the Morrison’s annual report (2010), the good first half
performance was also built on the diversity of the company’s product offering,
Morrison offers a wide range of food and non-food uses has a wide selection of
shoppers something which larger chains such as Sainsbury and other have been
slow to appreciate.
Ever since the start of its business, Morrison Supermarkets has always been
a sales-oriented business entity. Morrison gives premium value to their clients
because it believes that this is the key towards increased sales and maximization of
operations. Morrison Supermarkets claims to be governed by an effective
management group which helps in maintaining the delivery of quality services for all
its customers, (Ivythesis.typepad i, 2010.)
4
III. STRATEGIC MARKETING
Satisfying customers is a central tenet of the marketing concept, but it is not
enough to guarantee success. In the whole, marketing is at the core of business.
Outperforming the competition requires solid marketing knowledge and precise
marketing decision making, an organisation’s positioning, and the positioning of its
products and services depend on the formulation and implementation of intelligent
and well-informed strategic marketing plans. So marketing can be defined as the
process by which companies create customer interest in goods or services. It
generates the strategy that underlies sales techniques, business communication,
and business developments.
Moreover, all organisations operates in a dynamic marketplace, where the
competition, consumers, technology and market forces constantly redefine the way
organisations operate. So to be competitive means that organisations need to
continuously adjust and adapt their customer approach to meet changing needs and
expectations. In this case, Strategic marketing is the reflection and analysis of the
environment, technology, markets and consumers, it defines objectives and
describes the way you are going to satisfy customer in your chosen markets.
It is why some authors like Philip Kotler (2001), Michael Porter (1985) think that the
essence of the marketing concept is the idea of placing customer needs at the centre
of the organization’s decision- making. At the heart of the marketing concept is a
process of segmentation, targeting, and promotion (STP) this starts with trying to
understand the market by segmenting it.
5
a. Segmentation :
According to the da-group web site (da-groupi, 2010) market segmentation can be
defined as the process of breaking down the total market for a product or service into
distinct sub-groups or segments where each segment may conceivably represent a
separate target market to be reached with a distinctive marketing mix. So
segmentation research can help marketers to determine which kinds of customers
exist, and who are potentially favourable to buy the new product. It can be also
simply summarised as dividing a market by a set of pre-determined criteria. Truly
understanding the needs of potential and actual customers in a market, allows a
company to segment only the lines of needs, needs which can serve, from those
which cannot. The concept is to segment along only using variables that having
meaning in that context of the company and where the market is operating in, not to
just jump feet first and use the tried and trusted geo-demographics.
b. Targeting :
According to Andrew Whalley Strategic marketing (2010: 76) Targeting marketing
can be defined as the identification the way people want to view the product of the
market segments that are identified as being the most likely purchasers of a
company’s products. It is done for many reasons such to create marketing
opportunities firstly, it can be illusionary in terms of the way people want to view the
product (for example happy, aloof, silly, or moody).secondly market and product
appeals through manipulation of the marketing mix can be more delicately tuned to
the needs of the potential customer, and thirdly it helps each company to be
concentrated on the market segments which offer the greatest potential for the
company to achieve its goals.
6
PRODUCT
C. positioning:
After segmentation and market targeting, the next important step in developing an
effective marketing strategy is product positioning. It refers to the way in which an
organisation sets itself apart in the market and how its products and services are
perceived by the target market as a whole. According to Ries and Trout (1981), a
positioning result in the image you want to draw in the mind of your customers, the
picture you want him or her to visualize of you what you offer, in relation to the
market situation, and any competition you may have. Positioning is about the
communication of the overall value position such that it creates and maintains this
clearly to customers, thus creating a distinctive and ideally unique, place in the
market for the organisation. To be effective, the basic value proposition offered by an
organisation must be something that is relevant to the target market, it must be
differentiated from the competition and it must be sustainable and communicated
clearly to that market. This aspect fits more closely with differentiation as a generic
strategic option and this in part helps to explain the proliferation of brands, products
and services.
Source: adapted by W Andrew, strategic marketing
Figure 1: positioning and its main elements
7
PRICE
Premium
basic
Durable value
Low price
Premium
Executive
PROMOTION
Prestige
fun Selective
intensive
DISTRIBUTION
POSITIONING
Implementing by chosen image and appeal to chosen segment
Powerful
This figure shows that the concept of positioning has two dimensions: firstly what the
organisation wishes to achieve (how it wants to be viewed by consumers) this will
involve deciding where the organisation wants to compete and how it sets about
competing. Secondly, what consumers actually believe about a particular product or
service? In this case there are three major concepts which can be use such as:
Functional positions (solve problem, provide benefits to customers, and get
favourable perception by investors and lenders) and, symbolic positioning (self-
image, ego identification, and affective fulfilment) then, experimental positions
(provide sensory stimulation, provide cognitive stimulation).
So briefly before an organisation establishes successful positions in the marketplace
four key considerations are important; clarity, consistency, credibility and
competitiveness according to Jobber, 1995 – the 4c positioning framework, firstly the
Clarity (the positioning idea must be clear with regard to both the target market and
the basis of competitive advantage.),secondly, there is the Consistency ( in order to
break through the ” noise” level of competing message, a consistent message and
image is necessary) and thirdly, comes the credibility the company have to make
goods products of better quality so that customers will fell in confidence and finally,
Competitiveness (any successful market position is depend on having a distinctive
value proposition which is not being offered by the completion.)
8
1- Competitive advantage:
A competitive advantage is an advantage over competitors gained by offering
consumers greater value, either by means of lower prices or by providing greater
benefits and service that justifies higher prices. Competitive advantage grows out of
value a firm is able to create for its buyers that exceeds the firm’s cost of creating it.
So value is what buyers are willing to pay, and superior value stems from offering
lower prices than competitors for equivalent benefits or providing unique benefits that
more than offset a higher price. According to the two influential books, competitive
advantage (1985) and competitive strategy (180), written by Michael Porter, growth
and diversification alone do not guarantee a company long-term success, he argued
that success comes from having a sustainable competitive advantage, which derives
from the value a company creates, in excess of its production cost, and passes on to
its customers. He underlined five competitive forces that could be adapted in order to
gain competitive advantage such as rivalry among existing firms, the threat of new
entrants, the threat of substitutes, and the bargaining power of both buyers and
suppliers.
Furthermore, inter-firm rivalry affects prices, advertising and sales budgets. So the
threat of entrant in the new market competitors in an industry limits the prices a
company can charge, and often results in expensive investment designed as a
deterrent. The power of large buyers such as retail chains, and the possibility of
consumers switching to cheaper substitute products, both limit prices. Powerful
suppliers determine the cost raw materials. Successful firms are the one which
sustain their competitive advantage by making sure they retain their value, and it
9
isn’t industry rivals, new entrants, or lower prices, or appropriated by powerful buyers
or suppliers. As we can see in this picture below source adapted from Porter M E
(1998) Competitive Strategy, New York free press: 4
10
BuyersSuppliers
Substitutes
Determinants of buyer power
Bargaining price
Leverage sensitivity
Buyer price/ total
Concentration purchase
Buyer volume brand identity
Cost relative quality/ perform to firm
Switching cost
Determinants of supplier power
Differentiation of inputs
Switching cost of suppliers and firms the industry
Supplier concentration
Importance of volume to supplier
Cost relative to total purchase in the industry
Impact of inputs on cost or differentiation
Threat of forward integration relative to the threat of background integration by firms
Determinants of substitution threat
Relative price
Performance of substitutes
Switching costs
Buyer propensity to substitute
Entry barriers
Economies of scale
Proprietary product differences brand identity
Switching costs
Capital requirements
Access to distribution
Absolute cost advantages
Proprietary learning curve
Access to necessary inputs
Proprietary low -cost
Rivalry determinants
Industry growth fixed or storage, cost value added
Intermittent overcapacity
Product differences
Brand identity
Switching costs
Concentration and balance
Informal complexity
Diversity of competitors
NEW ENTRANTS
Industry competitors
Intensity or rivalry
Threat of
New entrant
Bargaining power suppliers bargaining power of buyers
Threat of
Substitutes
11
IV. HOW DOES MORRISON GAIN COMPETITIVE ADVANTAGE
THROUGH STRATEGIC MARKETING
UK grocery market continues to be affected by the difficult current economic climate.
According to the Financial Times (August 2009) Consumer trends have stabilised
compared to the prior year when behaviours changed to adapt to rising food inflation
and constraints on disposable income. Morrison is today considered as the UK’s
fourth largest food retailer with almost 403 stores according to the Morrison’s annual
report (2010i).
1- Morrison’s strategic marketing
Its business is mainly food and grocery, for Morrison, mostly of the fresh food that it
sells through its own manufacturing facilities and it tries to give to customers close
control over provenance and quality, and it also has more people preparing more
food in store than any other retailer. With competitive prices in the market Morrison
develop some strategic in order to be successful in highly competitive market. So
according to the Morrison’s annual report 2009, its vision is to be “the food specialist
for everyone” its strategy is developed around three distinct brand values: fresh,
value and service, having these three brand values gives us the flexibility to react to
market changes and consumer trends.
a- Fresh: vertical integration in the supply chain, Morrison aims to offer more
freshly prepared food than any other retailer. That’s because it has more staff
preparing food than any other supermarket. It is also vertically integrated by
12
having their own factories, production facilities and distribution network. With
these facilities it can get food to their stores faster so that it’s always fresher.
b- Value: keeping costs low to ensure that its prices are competitive, great value
across their range. Value is the key to their vision and it is especially
important in the current market conditions. Morrison offer quality and
freshness at a price people like. And their famous promotional offers always
save its customers money. It doesn’t just offer value on a few items; their
prices are great value across the ranges.
c- Service : ensuring the right product is always available, great selling and
service for its customers. By having its own distribution network, it can ensure
that the right products are always available for its customers. With its
commitment to great selling and service it aims to get it right for our
customers every time.
Morrison’s strategy will enable the business to continue sustainable, long term
growth. It builds on their strengths, and is in tune with its customers’ needs for
excellent value and their increasing focus on the provenance, quality and freshness
of the food they buy. In order to deliver its strategy, Morrison has previously outlined
the building blocks that need to be put in place, and their plans to do this were
incorporated in the Optimisation Plan that has now completed.
2- Morrison’s segmentation ,targeting and positioning :
According to the Financial Times (February2010) a detailed strategic marketing
analysis of Morrison reveals the supermarket retailing industry has become highly
competitive in the U.K and unlike other developed regions in the world, still shows
potential of growth opportunities. However it is also vital to acknowledge that
opportunities are available for only industrial players who are willing to provide high
13
value for customers at competitive prices. From being a regional player, Morrison
has arrived at a major crossroads by acquiring Safeway supermarkets and it has
come to challenge the major national and global competitors.
Despite the current economic environment, consumers are still interested in
where their food comes from. Health, quality and provenance remain important
factors in food choice. Although the market environment remains difficult for the
consumer, they claim to continue to provide value and a unique fresh offer with great
service.
a- Segmentation and targeting of Morrison :
Customer segments of a super market chain like Morrison could be analysed
clearly from a 'lifestyle perspective'. The whole of the U.K market has to be
considered because Morrison has a clear plan of embracing the whole market.
Further it would be appropriate to consider the total population, irrespective of
social class, income and other factors because a major super market chain will
be able to approach all types of customers. The U.K customers are divided into 6
lifestyle segments according to the bookrags web site, bookragsi, (2010) there is
firstly, the traditionalist (18% of the population): Is influenced by the culture,
socio-economic history and situation of the regions/country. Morrison was able to
cater to the needs of this segment in Northern England. However the company
will have problems with appealing to the traditionalists of the other parts of U.K
because it might be perceived as alien to them.
Secondly, the homebody (14% of the population): Is. Less preoccupied with
economic security than the traditionalist, the homebody needs to feel in touch
with the social environment. Morrison has successfully targeted this segment up
to now because of the homely environment it provides and however in the future
14
the company will be finding it difficult to meet their requirements in the newly
expanded areas.
Thirdly, the homebody (14% of the population): Is driven by a strong attachment
to his or her roots and childhood environment. Less preoccupied with economic
security than the traditionalist, the homebody needs to feel in touch with the social
environment. Morrison has successfully targeted this segment up to now because of
the homely environment it provides and however in the future the company will be
finding it difficult to meet their requirements in the newly expanded areas.
Furthermore, the striver (15% of the population): Holds the attitudes, beliefs and
values that underlie the dynamics of social change. This segment has always been
attracted by the novelty of Morrison but it will be a necessity to continuously innovate
and change to meet the needs of this segment.
Last but not least is the trendsetter (13% of the population): Favours non-
hierarchical social structures and enjoys spontaneity rather formal procedures. This
segment of customers fancies changes and are highly difficult to retain, according to
the bookrags website (bookragsi, 2010).
3- Morrison’s competitive advantage :
In the U.K supermarket industry there is very high competition and therefore
customers easily switch to a competitor if they are not satisfied with the service
provision they receive. As a result, Morrison is compelled to ensure optimum
satisfaction in order to retain customers. The supermarket retailing industry is a
highly competitive. However, it is dominated by only 4 major players. They are
Tesco, Asda, Sainsbury’s and Morrison. Morrison is going to improve its position to
15
fourth by taking over Safeways. Amongst the other three competitors Tesco is in the
forefront followed by Asda (owned by U.S retail giant Wal-Mart). These two possess
great threats to Morrison due to their sizes, financial strengths and cost efficiencies.
Sainsbury’s possess lesser degree of threat due its current financial problems and
inefficient operations, bookragsi, 2010).
First of all, there is a threat of New Entrants due to the lucrative nature of the
U.K industry, the threat of new entrants is high. Large European players, especially
French and German, are contemplating entering the U.K market. Already German
super market chains such as Lidl have opened up retail stores in major British cities.
In addition, major North American super market chains might also enter in order to
weaken U.K players and thereby tackle potential threats in home markets, bookragsi,
2010.
Then, comes the threat of Substitutes which could be viewed as various
individual groceries, off licence, specialist outlets and franchised store chains such
as Londis, Budgens, Cost-cutters, etc. At the moment, the threats are subdued.
However the concept of smaller franchised store chains are gathering in popularity
and could become a considerable threat in the future.
Furthermore, about bargaining power of Buyers, the buyers are customers of
Morrison. Their bargaining power is very high due to the availability of several
alternatives. If the buyers are not satisfied, they will easily switch options and the
switching costs are very low. In addition, due to the hyped information awareness the
customers have full details about demand and actual market prices.
Finally, according to the Bookrags website (2010), Morrison has up to now
been not threatened by the bargaining power of suppliers greatly. This is partly due
16
to its policy in house sourcing of major proportion of its products. However with its
market expansion, especially in terms geography has necessitated the search for
new suppliers. Therefore, future bargaining power of suppliers is highly
unpredictable. Conversely, Morrison will be able to use its economies of scale
advantage to subdue the suppliers, bookragsi, (2010)
17
V- CONCLUSION:
Since Morrison competes within the U.K industry and has not branched out
internationally, my analysis has been limited to the U.K environmental implications.
However on the occasions, where a Global perspective is required it has been
analysed so. The comprehensive analysis presented above provides the foundation
for the development of future strategies of Morrison. It should keep a regular eye on
consumer trends, and develop programmes where it could talk to customers about
their shopping trip and how they feel about grocery shopping in the broader context
of their personal circumstances. It should also make good use of market data to
understand what it will need to do to improve their business for customers
18
BIBLIOGRAPHY
BOOKS:
Jobber, D. principles and practice of marketing –sixth edition (2010). Mc- Graw-
education, Maindenhead place
Porter M, Competitive Strategy: Techniques for Analyzing Industries and
Competitors, (1980). The free press edtion1980, a division of Simon
and Schuler Inc. 1230 Avenue of the Americas New York, NY 10020
Porter M, Competitive Advantage: Creating and Sustaining Superior
Performance, (1985) the free press edtion1980, a division of Simon and
Schuler Inc. 1230 Avenue of the Americas New York, NY 10020
Philip K, ON MARKETING how to create, win and dominate markets, published in
Great Britain by Simon and Schuster UK Ltd 2001 A CBS Company
Whalley, A. Strategic Marketing, Andrew Whalley and Ventus publishing APS
2010
World Wide Web Documents
1- BookRags Morrison’s analysis summary (2010) [online].available from:
http://www.bookrags.com/essay-2005/2/25/7497/65475 (last accessed 21stoctober
2010)
2- Coursework4you - Segmentation targeting and positioning papers4you
(2010) [online]. Available from:
19
http://www.coursework4you.co.uk/essays-and-dissertations/marketing/segmentation-
targeting-and-positioning/segmentationtargetingandpositioning.php (last accessed 13th
October 2010)
3- Morrison annual report 2010
http://www.morrisons.co.uk/corporate/investors/Financial-Reports/(last accessed 4th
November 2010) http://www.morrisons.co.uk/Global/Images/Corporate/Annual
%20Report/Morrisons_AnRep10.pdf ( last accessed 16th November 2010)
4- Morrisons i – Offers – Morrisons (2010) [online].Available from:
http://www.morrisons.co.uk/Offers1/ (last accessed 08th November 2010)
20