Retail

Nikkei appeared in 1978 in the USA and Aids started to lose market shares. By 1990, the brand was sold to a French Investor won uses ten colorless’ endorsement communication strategy. In the aim of surpassing the American brand, one of the other main strategies of Aids was acquisitions such as the French ski equipment company: Salomon AS. The brand increased its revenues and was then able to acquire Rebook. Aids still had to overtake Nikkei but is now number one in Europe. In 2009, Aids made a profit of more than 245 million в? and employed almost 40,000 persons.

The German brand is proposing products for a large range of sports such as running, football, tennis, golf, etc. Environment Context Nowadays, the competition on the footwear market has become really strong as in the current time people really care about well being but also because sports has still a strong place in our world. People also care about sports brand because they have become a social symbol and enable people to value their personality and show their membership in some certain social group. Consequently, sports brands fight with each other to become the leader by having the most market shares.

Aids is fighting mostly with Nikkei which is the current leader in the footwear market as we will later in this case study (in the competition part). However, Aids has strong tools to become at least the leader in the future. Aids is recognized has the brand of excellence in the sport, in terms of technical and performing shoes but also has since the beginning of its history a strong link with the sports community, being supported by several famous athletes. Aids is also the leader in innovation and design in order to anticipate consumers’ needs.

The brand tries to help its athletes to increase their skills and their performance with every product of the Aids’ range. Generally speaking, Aids is a global organization which is socially and environmentally expansible. It knows how to attract employees and shareholders for financial interest. Aims Aids’ mission is to become the global leader with a real passion for sports and a sporting lifestyle. The best way to reach this mission is to have a wide brand and a unique product range for professional and fashion sportive.

This gives the possibility to affect lots of consumer needs and exploit each opportunity that market can furnish. They do a difference between quality and quantity. This concept comes from the founder of the brand. Doll Dasher was passionate about sports. He wanted his hoes to be different. They provide excellent comfort while improving athletic performance. These are the statutes of the brand. Its heritage allows Aids to be different from competitors and gives it strength base for future. Marketing objectives In the medium term, Aids wants to increase its leadership in Europe and its shares in the US footwear market.

It wants also to be as good as Nikkei, the actual leader. To reach them, it has to furnish constants efforts to maintain and increase hopefully its position on footwear and apparel market. It has to imitate the competition on their trench points and in the same time, innovate in order to be different. Aids is completely Touches on Its consumers Ana on tenet expectations. I Nat Is winy teen are constantly improving the quality, the look and image of their products. With this, the company hopes to exceed the expectations of their consumers and at least becoming the leader in the footwear market.

Contextual analysis The market * Presentation of the global footwear market The footwear market from 1998 to 2009 has gone up: demand for footwear has increased over the last few years. Thus, sales have grown by 9. 3% from 1998 to 2007, even though it went down abruptly in 2009 (-2. 5%). Women’s shoes category is the most significant with 47. 7 % of market share, following by the men with 34. 1% part of the market. The children’s footwear is the smallest market share category. * Aids footwear market Aids is the world’s second largest footwear brand with 22. 9% of market share, after Nikkei (37. %) in 2006. 45% of its revenues are from footwear. Aids distribute its products in 160 countries. They earn most of money selling to large retail stores such as Dick’s Sporting goods, Foot locker, or directly to the customers. They had a total of 2 212 retail stores in the world. Western Europe and North America are the two main markets for the sale of Aids products with 31% and 23% of sales 2009. PASTEL analysts * Political First, it is beneficial for Aids to operate in democratic countries as they do not introduce drastic policies, which could affect its sales.

Regarding to trading policies, there are no quotas for imported Aids products. However, there is the antiquating law which forbids any company to export its footwear products “in a country at a price which is below the price at which the product is sold in the market f origin”. Then Aids follows all the current employment laws, for the rights of its employees. However, the minimum wage in several countries (such as I-J, France… ) is a constraint for Aids, and which could have a negative impact on its costs of production.

That is why, Aids relocates its production activities where the workforce is less expensive such as Indonesia, China and Vietnam. This has made a bad publicity for Aids in these countries as Aids does not give to its employees good working conditions, with a low wage. We can quote as an example the “Play fair” 2008. * Economic The home economy situation which is the crisis could have a negative effect for Aids as the purchasing power is low. Thus, the unemployment and the decrease of wages could have a bad effect on Aids sales, as customers would not have enough money to spend in its product, vital costs having priority.

Interests and exchange rates have also an impact on the consumer behavior. The increase of raw materials’ prices as 011 wanly Is a component AT plastic NAS an Impact on ten Tall cost AT ten production. Aids has two solutions: increase the sales prices or level down its profit margin. * Social Nowadays, the demography is special: the age distribution is getting higher in most of the world. The target is especially young people who identify themselves to the brand. Maybe Aids should think to the long term.

Aids sells in large cities, as there are the highest amounts of customers able to buy sportive shoes in these places. The lifestyle trend of people has changed, compare to several years ago. For instance, more and more people use internet. Aids should have a good platform to sell its products. The obesity is a current problem in our society. Most of the time, these people do not practice sports. It could also have a positive effect: they could want to lose weight and so, buy Aids product to train. People are also becoming less busy and can spend more time to their leisure activities like sports.

Regarding to the consumer attitudes, we can notice that the frequency of purchase of Aids footwear is, for most people, to buy one or two football shoes per season. Aids should take that in consideration to promote its shoes during the pre-season. Promotion could also be made before major events such as the World Cup or the European Championship which have an influence on the Aids ad and sales. There s also a fashion and role model with stars wearing Aids shoes: several endorsement contracts have been made with stars such as David Beckman or Lionel Mess. Technological In the footwear market, the key to success is the innovation. Thus, there are new technological advances are becoming more performer as the football shoes which allow the user to kick the ball with more precision and power. Aids needs to be aware of the latest technologies. The use of new materials could be strength for the brand, such as materials able to resist over long distances, humid conditions or extreme temperatures changes. A lot of researches are made in the aim to improve the quality of a product.

Thus, Aids is the world’s first smart shoes (adding a microchip inside the shoe for instance. * Environmental The Sustainable Development is an important subject in our current society, and also for Aids: it has launched its new ecological footwear collection made with natural raw material, recycling material and which are biodegradable. Then, in the aim to protect human health and environment, Aids eliminate PVC and is making progress in finding substitutes like polyurethane, ethyl vinyl, silicone thermoplastic rubber. Yet, global pressure is pushing on Aids which uses for its shoes materials from animals.

For instance, it has been seen that Aids slaughtered million of kangaroos, for their skin using to produce leather shoes. In February 2006, David Beckman officially announced that he would not wear Aids shoes anymore. Thus, the environmental campaigners could be a problem for Aids, who should make some R&D to find others materials, not taken from animals. * Legal Concerning the regulation, Aids needs to be aware of the legal legislations (most of them protect the customers) such as Sales and Supply of goods act (1979), Trade ascription Act (1968).

There is also the European Union (1993), which is the free trace Detente countries Trot EYE: traces are not changer Day customs anymore Ana there are no quotas. Aids has to deal with the counterfeit of Aids footwear products. Competition analysis The competition on the sport footwear has become really aggressive because of many reasons. Nowadays, many people do sports because of the care about well being but also because sports brands have become social symbols that permit to people to distinguish from the others and show their membership in a social group much as for making sport in itself.

Consequently, competition on the sport footwear market increase dramatically with the idea of making everything to make your best competitor has a bad image in front of customers and to prove that your brand is the best by all means, we can even talk in some case about unfair competition. In the market of footwear, Disdain’s first competitor is Nikkei with 37. 9% of market share, and Aids had 22. 9% % in 2006. Nevertheless, Aids is gaining everyday market shares and we see a close fight between Nikkei and Aids for gaining the global market.

Aids makes everything to become the leader on the footwear market. Consequently, to become a bigger threat for Nikkei, Aids has acquired Rebook in 2005, world non in the sport market, in a friendly takeover for 3. 1 billion of Euros (3. 8 billion of dollars). This takeover allows Aids to combine its popularity in Europe among soccer and athletics fans with Rebook popularity in US in basketball and football fan. This takeover is a highly strategic action as it is made in order to win market shares in the U. S where Nikkei is the leader and finally catch its eternal competitor, Nikkei.

As we can see, everything is made to become a huge threat for Nikkei ND there is a real fight between those two global brands. It can also be seen by the war they lead during major sports events as the football world cup of 2010. They fight to have the biggest number of team who wear their brand and finally in this case it’s Aids which wins but which stays close to Nikkei. Indeed, in this football world cup in South Africa, Aids sponsored 12 countries such as South Africa, but also major and favorite teams like those of Germany, Argentina, Spain and France.

Aids also made huge benefits in other events, such as the official ball of the world cup, named “Jubilant” which was created by Aids. Nikkei owns also in this cup 10 famous teams like Brasilia, Netherlands, Portugal and Great-Britain (which wear Umbra, property of Nikkei). It’s with this example that we see that Aids and Nikkei have another competitors, named Puma. This brand is well known by Aids, as it has been created by the brother of Aid Dasher after a huge argument between the two brothers. Puma is gaining everyday little by little market share and is gaining in popularity.

Puma’s strategy is different from its two other big competitors, they are positioned in the luxury market of sport because it has been by the French luxury roof, PR. This brand has a strongly attractive for fashion people, seducing big stars like Brad Pit, or in the sport community the footballer Ankle. Puma is trying to follow Aids and Nikkei by making a lot of actions like for the football world cup. Puma has sponsored 7 teams, mostly African teams, but also a famous team, which won the previous cup, Italy.

To better understand the market share that each brand has, we have found a pie chart which represents the market share of each brand in the athletic footwear market where we have decided to focus on, on this case study. Network wellness. Com/stock (It is important to notice that this chart is a bit old as it has been made in 2005, and that for now, Rebook is now part of Aids) It can be also relevant to make a mapping (See appendix 1) to see where Aids is located / positioned relatively to its competitors in terms of price and technicality.

Aids and its competitors Its second competitor is Puma which has been created after a huge argument between the two brothers Dasher ; Aids has to be careful about Puma because it has been buy by the French luxury group PR and is winning little by little market shares. Puma’s strategy is different from its two big competitors Nikkei and Aids, they are more specialized in the luxury market, seducing fashion actors (Brad Pit) and famous footballer (Ankle). There is also another competitor in the footwear world named It is also important, in a world of globalization, to highlight the growing power of new entrants from China.

There are two domestic famous brands in China: * Lie Inning * Anta They are leaders on the Chinese domestic market in footwear as people prefer to buy domestic brands but also because they are cheaper than Aids and Nikkei. Even if “Lie Inning and Anta are not competing directly with the two global leaders, they are taking more and more market shares in China, whereas Nikkei and Aids market shares remain the same. ” Aids has to be careful of China competitors. Porter’s five forces (including generic one) We can introduce this part by the Porter’s five generic in order to describe the footwear industry.

The five criteria are: * Fragmented * Emerging * Mature * Declining * Global The footwear market is global because the market is saturated in products (everybody has sport shoes at home) but the market is rapidly growing. Porter’s five roses can be summarized by many schemes and then, we will apply these forces to our case study. * Threat of new entrants New entrants cannot easily enter in the running shoes’ market because a few big companies control the market and they own very important brand awareness, thanks to their advertising budget.

It implies that no new firm can quickly win many market shares without be exposed to a competitive reaction of leaders that will kill the new firm. Nevertheless, some retail companies try to sell low-cost footwear with lower prices than Aids or other important company but with a lower quality as well. With such a positioning, they want to target the people who have not enough money to buy expensive shoes and who are not really the target of Aids. * Threat of substitute products or services Because AT some meal reports wanly Alamo ten running Ana can Impact AT ten leg on the ground.

So, some sports which require athletic footwear can be dangerous for the bone structure. That means other sports which do not have such an impact on the health can be a threat for the footwear market such as: swimming, cycling etc. * Bargaining Power of suppliers Shoes’ fabrication and technology needs are more and more complex, so Aids upends on more suppliers than before. Raw materials: The insole is a thin layer of man-made ethylene vinyl acetate (EVA). The components of the middle consist of polyurethane surrounding another material such as gel or liquid silicone, or polyurethane foam given a special brand name by the manufacturer.

Outsells are usually made of carbon rubber. Increase of the cost of plastic because of the rise of the oil’s price. Working conditions of outsourced production are often qualified to be against the human rights and Aids can be obliged to raise his employees’ wages. * Bargaining power of buyers Demand is growing and companies are fighting for selling their products to consumers who become more and harder to please. In big retail stores, consumers have a large choice of running shoes. It means that if prices of a brand are too expensive compared to it quality, they will buy shoes of another firm with a better rate Price/Quality.

The market is very competitive and customers can choose between several brands such as: Nikkei, Aids, Puma, Acacias, Mizzen, New Balance, Puma, Spiral, Salomon, Lawful etc. * Rivalry among existing competitors The footwear market is growing quickly with 9. 3% of growth between 1999 and 2007. Despite of the footwear market is oligopolies, because a few companies control it, the competition is very intensive and all firms aim to be the first. The main actors of this market are: Nikkei (Leader), Aids (2nd), Puma, Acacias, Mizzen, New Balance, Puma, Spiral, Salomon and Lawful.

Portfolio analysis * Product range Aids has more than 90 million pairs of shoes including 3. 000 different styles. The following shows some example of Aids shoes contingent on performance and price. This provides a clear idea of the various proposals of the mark. (See Appendix 2) So, this brand affected all sports. To be more efficient, we will find Aids athletic shoes in each sport. We choose to focus on it because Nikkei, the dominant brand on this market, is much stronger on fashion shoes. Aids gives priority to performance instead of fashion.

This means Aids will be aimed at professional person than those practicing a sport as leisure. The next list is not an exhaustive list: * Football: Predator, OFF, Dipper, Dizzier * Tennis: Barricade, Genius Novak * Hockey: ADSTAR, Gel Platinum, * Golf: Garbage, Million, Tour 360 * Badminton: Court, Stabile Optimist * Running: Dizzier, Supernova, Jumpstarted, Response cricket: Twenty’s, HOOKAH * Basket: TTS Suspected CRU, The Oracle * Rugby: Flanker, Predator, Regulate * Boxing: ADSTAR, Box Hog You can Tina In appendix 3 a can’t Witt some pictures way to illustrate the product range of Aids. The BCC manta Decease It Is ten more relevant Using this Boston Consulting Group Matrix, we will evaluate the interest of fields of activities of Aids thought two criterion’s: the market share and the market growth. We can observe four areas, crossing the market share axis and the market growth axis: star, problem child, cash cow and dog. The Dog represents products which have low market share and market growth. These products do not have any interest for the company: indeed, they do not generate any profits anymore, and are usually products which have been around for a few years.

In this case, the company has better abandon these products. In the Aids range of products, the Aids Predator Precision has become a dog, having declined, such as the previous version of the Original Stan Smith 2, dating from 2005 or the ancient Respect Low, Respect Mid or Midrib for running. The Question mark shows products with a low market share and a low market growth. It means that these products have an interesting potential for sails (consequence of the low market share), but their high market growth risks to reduce their competitiveness. It would involve significant investments from the company.

The objective is to transform them into stars, with the possibility they can turn into dogs. In the Aids range of products, the Aids OFF is a question mark, recently introduced to the market. We will see if it turns into a dog or a star. The same situation is observed for the AS Wings from Jeremy Scott, which is the new collection, or the new men TTS Supernatural Commander ALT. The new environmental election with the Superstar, the Forum Mid Natural or the Vintage XX 500 are also recently introduced, and Aids will see if the “green spirit” will have a good effect on the sales of these shoes.

The Star corresponds to markets having high growth, and where the company owns high market share. It represents the most profitable products for the company, as they bring in a large amount of profits. The Aids Predator Pulse fits in this section, as it generates profits and significant sales. The Goodyear Race and the new version of the Stan Smith are also the most wanted shoes, and generate an important profit! The Cash Cows are characterized by a low growth market and a high market share. These products are very profitable, as they generate high profits.

Their dominated position gives them a competitive advantage concerning prices and margin. Arise from the low market growth, investments are not very high. Thus, these cash cow products are those which enable the company financing its question marks products. The Aids Predator Mania falls in this area, as it is a profitable product, with high sales. The new version of the Barricade V is also a profitable product as it generates high sales with competitive advantage on its price. We can see in Appendix 3 the BCC matrix. * Anions matrix The Anions matrix is a useful tool for noticing future intensive growth opportunities.

We can observe four strategies. First, there is the Market Penetration Strategy: the idea is to gain more market share with current products, implementing different promotions. It is the least risky strategy, as it does not cost a lot of money to the company. Thus, Aids could consider this method to acquire more market share, using Its Totally snows, already present on ten market, developing promotions around it. Secondly, the Market Development Strategy is the fact to develop new arrests for current products of a company, through branding and advertising.

The current product should also be sold in area where it hasn’t been located before. Using this medium risky method, Aids could sell a current footwear product in a new country. Then, there is the Product Development Strategy which is the fact to develop new products (in the aim to replace old products) to current markets. This is the case when each season, a new version of a previous product is bringing out such as Aids with its Predator football shoes. Finally, there is the Diversification Strategy which is for a company, the opportunity to develop new products for new markets!

This method is the riskiest one, as there was no previous knowledge of the product or of the market. Thus, Aids could use this strategy to produce a product that the company is not familiar with, to be sold in a new market. We can see in Appendix 3 the Anions Matrix. Strategic Business Units Strategic Business Unit or SIBS corresponds to the different units which structure the company and represent the corporate identity. It is typically a strategy used by large company. It is the case for Aids. There are several types of SIBS regarding the type f product, the geographic area, etc.

Aids is applying a product strategy composed of four Subs: * Aids Sport Performance * Aids Sport Style * Aids Originals: from niche to fashion mainstream * The Fashion Group: Aids is fashion Aids Sport Performance It is the most sport-oriented SUB with all the products proposed to professionals. It represents the idea of performance that Aid Dasher wanted to diffuse. Innovation and transcendence are keys words of A. S. P. It covers most of the sports and focuses its efforts most particularly on five of them. * Football * Running * Training * Basketball * Outdoor Aids Sport Style

As all of its competitors, Aids also provide street wear and lifestyle fashion footwear. It was primarily a niche but as the target market correspond to the mass market, it became quickly one of the most important SIBS of the brand and the firm started opening new divisions such as Stella Ms Carney and Propose Design Sport. Aids Originals: from niche to fashion mainstream This is the classical SUB which is composed of the first models designed at the beginning of the brand such as the Stan Smith model. It emphasis the “Celebrate Originality’ philosophy. The target is more the youth and teenagers. That is why the

Linking the HRS objectives with the business strategy demonstrates the fast paced nature of the industry and the relationship between human capital and strategy. Issues in Commission and Bonuses ( Rewards Benefits) Paul Cheroots HRS Director of Avoidance commented that Avoidance ‘saw flexible working hours, part time and home working as an imperative aspect of Job requirements for staff. He acknowledged that they would also still be looking for commitment and productivity likewise. Policies that were promoting flexible working and reasonable work life balances ‘used to be nice to have, now they are a must.

Its become a core demand from candidates. Carination (2005) According to CHIP such working patterns are still in high demand today. Training is performed a TA residential Recommendations for the HARM issues that Avoidance face: Using something other than redundancy to save money – clear impact on motivation and morale. Suggest other ways. Accommodating for changes in External Environment with in the workforce such as the need for flexible working. Get stats from IONS Avoidance have 8 Losing the staff to better paid industries such as banking and estate agency.

Good sales people or often required in Re ; Specialist agencies for each sector of business Recruiting in a Recession http://www. Personality. Com/articles/2009/01116/4901 Wrecking-in-a- recession. HTML Module phone retailer boatmen NAS 1 K employees Dates at Its nonstarters in Newbury, Berkshire, a number of regional contact centers, and about 350 retail stores. It recruits about 3,000 staff into new positions each year – 2,000 from external candidates, and 1,000 internally. The disciplines covered include customer services, retail, technology, marketing, finance and HRS.

The economic climate means that looking for value for money is more crucial than ever in all areas of business, but resounding operations manager Anna Tompkins says that establishing best-value, cutting-edge quality recruitment processes has always been essential in this competitive market. “We are always looking at ways to be more effective in how we recruit,” she says. “We have to be focused and deliver what is needed to support the business strategy. This may mean delivering things in a different way to before.

Avoidance partners with three firms for recruitment process outsourcing, each of which manages a different aspect of its recruitment process. Alexander Mann Solutions manages specialist and head office roles Adduce handles retail adviser roles and Reed manages recruiting customer service advisers. All have been working with Avoidance for the past four years. This has improved the effectiveness of Avoidance’s recruitment systems, says Tompkins, and the company has an ongoing improvement programmer designed to encourage partners to deliver the best possible experience for the candidate during the process.

Working with resounding partners helps us take stock of what opportunities there are to do things more efficiently,” she says. “For instance, each partner provides regular activity information and suggests improvements to the process and experience. “Last year, we found we were running a number of assessment centers for roles where we felt this was not the most appropriate approach. By developing and implementing interview skills training for line managers, we were able to give them more confidence to participate in the right type of assessment at the right time.

It also helped streamline our approach and improve the candidate experience. ” The company is also using input from external recruitment specialists to help improve the experience of candidates applying for Jobs, and to hone the recruitment skills of line managers. “We are careful not to expect line managers to accommodate too many changes at once and we plan our calendar of improvements around what the business is doing overall,” says Tompkins. She believes that while the perspective of external specialists is useful, any findings should be fed back to staff if they are to have an impact.

For example, nine managers were involved at every stage in a recent initiative to improve their interview skills, and their views and expectations were built into the process. At Avoidance we are committed to helping you perform at your best and realism your full potential. Join us and you’ll benefit from regular development reviews to understand your goals, strengths and development areas. You will work with your manager to create your own Personal Development Plan. You will have access to a range of learning experiences including on-the Job experience, Job rotation, coaching, mentoring as well as online and face to face learning programmed.

KEA has been suffered from the difficulties faced by production-oriented retailers. KEA project manager said that It was not enough for them to manage the demand only. They must manage the production too, and keep the supply and demand In balance. In the mid-sass, it became clear to KEA that the retailer’s inventory model wouldn’t work smoothly. The inventory costs were already too high. After mid-sass, ERP implementation failed to fix Kike’s inventory management problems.

The planning team composed a rudimentary list of the qualities, so stability and reliability were obvious musts. KEA manages a whole range of production, which from raw materials to finished product. They have to coordinate with more than 1,600 suppliers worldwide. When sales for a product turns out surprisingly high, It would empty from their warehouse, and when the demand didn’t reach the expectations, the merchandise had already produced would back up in the facilities.

However, the most important problem for KEA was an integrated planning platform that can provide a consistent working environment for the retailer’s product managers worldwide. KEA has been working on differentiate itself with other retailers. They not only offer unique designs, but also share a typical warehouse on Its ground level. Meanwhile, on the second level they provide a cozy environment where customers can enjoy all kinds of furnishing concepts. KEA in-stores logistics model is very novel and was welcomed by their customers.

The most important thing is it can help KEA saving costs and increasing productivity significantly. On the ground floor, the products selected by customers are picked from pallet location that placed as high as the typical person could reach. Additional product Is stored In reserve zone above these locations. Inventory Is cut down to the lower space at night because forklifts and pallet jacks are not used during store hours for safety reasons. The rest space contains items too bulky for customers to load without help.

Since KEA advocates as much self-service as possible, it tends to minimize the number of products in this bulk storage area. KEA has over 200 stores in 30 countries worldwide. This requires exceptional logistics and outstanding support as well as the best solutions. In all, KEA has 1,600 suppliers In 55 countries, and trades through local KEA purchasing offices in 33 countries. In order to make sure that the supply chain works, t must cooperate with the best technology and the right people. Therefore, KEA chose the demand forecasting and modules from a software supplier JDK.

JDK customized a demand forecasting system for KEA so that they can manage a decline in the number of its suppliers. KEA began working with JDK in 2001 and the first solution was to implement demand solutions on all KEA products globally. KEA set a number of objectives for JDK such as developing sales planning methodology and tools that gained realistic forecasts used for designing supplier, warehouse, and transportation capacities. JDK also developed a ability of planning methodology and LOL that make it possible to benefit from the cost-savings of long-term commitments.

A global and regional supply planning system component would make it possible to have a collaborated and consolidated sales. The solution would also allow KEA to take all Inventories Into account and to have supply chain visualized In the order processing management. I en retable or’s nana AT supply canal planning salsa TN has been a successful move for them and has made it far simpler to start focusing on low-cost countries and cutting back on suppliers. In the long run, this will help them to improve profits and make their management system more efficient.

The case covers both the history of Marks & Spencer throughout the last century ND, in more detail, from 1998 to 2004, the period when it moved from a position of market dominance to one In which it was deemed to be a take-over target. The case charts the attempts by Its deferent chief executives to address the problems during this time and, therefore, the various change Initiatives that were mounted. 2. Position of the case The case study relates, in particular, to the problems and means of managing strategic change in Marks & Spencer.

So it is particularly related to the coverage of strategic inertia and strategic drift in chapter 1 and programmatic design and hang in chapter 10. With this In mind it might be taught at the end of the strategy course. However, It could also be used as a case to require students to analyses the reasons for the problems of Marks & Spencer, not only In terms of organizational culture, but also in terms of the market and competitive position of the firm.

In this sense it could be used as a strategic analysis case earlier in the course. It also poses the question of the strategy that should be followed to regain competitive advantage, and Is therefore also concerned with strategic choice. 3. Learning objectives The case study requires an understanding by students of some important concepts and tools.

In particular: ; the concept and the causes of strategic drift (chapter 1) Instructor’s Manual 504 Pearson Education Limited 2005 ; how this links to organizational culture, and therefore the cultural web and its relevance (chapter 4) ; the concept of differentiation: what It means and what It does not mean (chapter 5) ; incremental versus transformational change in organizations: and the challenges associated with each (chapter 10). ; the feasibility and practicalities of designed strategic change in organizations chapter 10) ; the role and style of strategic leaders (chapter 10). 1 en teaching process One of the benefits of this case is that almost all students (UK at least) will have heard of Marks ; Spencer, and very likely will have personal experiences of it. They may well also have personal views about the reasons for its demise. However, care must be taken that it does not override a reasoned understanding of the background of Marks ; Spencer and some of the documented rather than personal evidence to do with the organization. Nonetheless, the personal experience an be useful in generating discussion in class, and even as data in relation to some of the problems experienced by customers.

It is useful to begin the case discussion by getting students to recognize the huge success of Marks ; Spencer for most of its history, and to try and account for that success. This might be done by raising the question of why and how it achieved a position of competitive advantage in relation to other retailers. The class session can then move on to discuss the reasons for the problems it faced in the late sass; what strategy it should follow to overcome these; and finally the attempts to manage change that the management undertook in the sass. 5. Questions 1 .

Why was Marks ; Spencer so successful? 2. What was its basis of competitive advantage? 3. Why did Marks ; Spencer suffer its downturn in performance in the late sass? 4. What competitive strategy should Marks ; Spencer seek to follow? 5. Evaluate the change initiatives mounted since the departure of Richard Greenberg. Instructor’s Manual 505 6. Why was Evenhanded initially seen as successful, and what led Marks & Spencer to once again perform badly? 7. What are the underlying problems at Marks & Spencer in the early sass? 6. Case analysis 6. The years of success A useful way of running the class here is to ask for contributory explanations as to the reasons for success of Marks & Spencer. These are likely to vary quite a lot in terms of both the time period being talked about, and also the characteristics of the organization that led to success. For example: ; in the early days price clearly played a part ; as did consistency of quality and service ; as did the caliber of staff recruited and their training. Certainly the last two characteristics were carried forward throughout the century: but others came to be important too.

For example: the consistency of quality of merchandise insisted upon by top management, closely monitored in suppliers ; direction from the head office for identical store operations, for example in items of layout, merchandising and training of staff, which further ensured consistency ; the prime location of stores ; the middle of the road appeal of the shops and merchandise ; the no questions asked returns policy, which was a guarantee to customers of quality acceptable to ; the strongly embedded sense of family, which permeated throughout the entire organization; this meant that for much of the century employees felt care for and, in urn, adopted the same feelings to the organization ; the successful development of new product ranges (e. G. Food) with a similar emphasis on quality/value. The important point to get students to understand is that all of these may well be relevant: that the reasons for the success are not based on single characteristics, but rather on the mix of characteristics and how they fit together. Instructor’s Manual 6. 2 Bases of competitive advantage This last point leads nicely onto a discussion about bases of competitive advantage.

Why did Marks ; Spencer achieve the advantage it enjoyed over so many decades? This should provide a useful discussion in class, which might conclude: ; It is not any one characteristic but a mix of characteristics that, as a set of linkages, would be very difficult to imitate. Any one of the characteristics may be possible to imitate, but the mix would not. ; Marks ; Spencer had identified a market that had the benefits of being large, middle of the road with weak competitors in it. (Of course the competitors were in part weak because Marks ; Spencer was strong. ) Most of the niche retailers concentrated on younger market segments or more fashion-conscious market segments.

There remained a large percentage of the population who looked for more conservative clothing, and durable merchandise and consistency. ; It was the quintessential British store, and had been like this since its establishment. The price of its products was always reasonable, and the quality was always assured to be high. Furthermore, traditionally it used only a few dedicated British suppliers, and was proud to do so. The same debate may be used to illustrate what is meant by differentiation. Differentiation here is based not on a product or service, so much as on a mixed set of competences and resources. . 3 Strategic drift and the problems of the sass Marks ; Spencer provides an excellent vehicle by which to discuss the issue of strategic drift.

Recall the Circus Paradox (see chapter 11 of Exploring Corporate Marks ; Spencer store monitors quality identical garments sent to every store direction for identical store operations enhanced customer service location on every main high street no questions asked return policy middle of the road appeal sense of family Head Office Suppliers Extemporaneousness’s Manual 507 Strategy): namely that an organization’s success is often the root of its demise. Over he years Marks ; Spencer developed a whole culture around the way it did things and how it built upon its competences. This was a tremendous strength for it and led to its success. However, it also led to an entrenched and embedded way of doing things, together with a degree of certainty – even arrogance – in so doing, which was extremely difficult to change. It appears that no one saw the need for any change; indeed the strategy of the organization was, in effect, a function of the certainty of ways of doing things. For the most part and for many years this worked. However, there were early signs of it not doing so.

The manifestations came in the late sass, but decline in performance lagged. By the early sass commentators were critical of the arrogant attitude of Marks ; Spencer towards customers. Other retailers had moved to credit card facilities; Marks ; Spencer had not. Marks ; Spencer did not introduce changing facilities for customers until the mid sass. Research had shown that people were tolerant of inefficiencies in Marks ; Spencer, such as lines being out of stock, when they would not be in other retailers. Moreover it had become clear that the culture was not only driving the strategy, but also driving the appointment of senior personnel in the firm.

Up to and including Greenberg, there had never been a chief executive of Marks ; Spencer who had not been a member of the family, or who had worked with the firm for the whole of his career. These strategic leaders came to embody the Marks ; Spencer way of doing things; so it was hardly surprising that they could see few other ways of doing things, or the threats of competition that were looming. The internal workings of Marks ; Spencer had also become highly deferential, male oriented, with layers of management and considerable bureaucracy. These were all symptoms of an organization removing itself from immediate contact with customer need. In addition the market was changing. Increasingly customers valued higher levels of service, and were seeking novelty and difference.

Paradoxically Marks ; Spencer malign nave enumerators tens Ana Its consolable Its range, since It was a leader in providing novelty in prepared food. However, the core clothing ranges remained determinedly middle of the road. At the same time other retailers were beginning to target the traditional Marks ; Spencer market, but with more focused fashion ranges. On top of this, lower-priced clothing retailers began to improve their quality. So Marks ; Spencer found itself in a pincer movement, where traditional low- priced retailers and hagiographer retailers were entering its markets. It is, perhaps, important to note that many of these changes took place over many years. This was not a sudden occurrence.

Most retail observers would agree that the changes were evident from the late sass onwards. The point that can be emphasized again is the extent to which there is a lag effect in terms of performance. Instructor’s Manual 6. 4 Competitive strategy It is no easy matter to resolve the question as to what the competitive strategy of Marks & Spencer should be. Students will probably recognize the need for greater clarity on bases of differentiation. However, encourage the students to think in terms of who they see the customers as, and what their needs are. This is not straightforward given the past ‘middle of the road’ customer segment occupied by Marks & Spencer.

For example, would students suggest that Marks & Spencer should substantially reduce the size of the market segment it is targeting, or that it should target multiple segments? Should it be more focused in terms of merchandise? Should it try to remain focused on a middle range market? ; Given any of the above what would they see as the proposition for the Marks & Spencer offering? ; Who would they see Marks & Spencer competing against, and on what basis? ; How does this compare with the current strategy for clothing? ; What would the consequences be? For example, a tighter range of merchandise would require a change in store size presumably, as well as reduced market presence and turnover expectations. 6. 5 The change initiatives

The case shows the almost frenetic activity in trying to manage change and turn around the organization since the departure of Richard Greenberg. It might be useful to encourage the students to use the diagnostic approach suggested at the beginning of chapter 10 as a basis by which to evaluate these initiatives. Specifically they might be asked to: ; Use the cultural web as a basis for identifying the main features of the culture of Marks & Spencer. ; Perhaps do a re-webbing analysis similar to that in illustration 10. 2 to identify required change and draw up a force field analysis. Use the checklist in section 10. 2. 2 and exhibit 10. 3 to consider the contextual features of Marks & Spencer which might inform required change.

Marks & Spencer culture The characteristics of the Marks & Spencer culture identified through a cultural web exercise might include: Instructor’s Manual ; paradigm: we are the best; we set the standards; we know best; we occupy the middle ground; we are synonymous with high quality; people respect us and will always shop here ; power: very top-heavy with deference to top management; male dominated ; origination: mechanistic, bureaucratic; top-down; hierarchical ; control: top-down control in detail both of the stores and of suppliers; insistence on conformity ; rituals and routines: deference; knowing your place; store layout; family atmosphere ; stories: history and legacy; Simon Marks; power over suppliers; authoritarian behavior of top management; staff welfare benefits ; symbols: the SST Michael brand; Simon Marks and Coos as father figures; identical store appearance The picture that emerges is one of tradition, formality, set ways of doing things and huge self-confidence bordering on arrogance. It is an internalized system where everyone knows their place and their role.

In times of success it would ensure the continued delivery of that success. In terms of threat or downturn it would be very difficult to change and would insulate the firm from seeing the problems. If the students undertake a re-webbing exercise, encourage them to identify what the competitive strategy would need to be, and then what the cultural web would need to be like to deliver it. This is no straightforward matter, especially as there is likely to be considerable debate about what the strategy should be. For example, students might suggest that there needs to be a great deal more sensitivity to market needs, and perhaps identification and selection of target markets and action based on target market needs.

If so, encourage the students to think through what this would mean culturally, in terms of routine behavior, power structures, organizational structures, etc. The change context Using the checklist in exhibit 10. 3 students may arrive at the following conclusions. ; Time: Just how much time does Marks ; Spencer have? The chief executive has set a fairly tight timescale. Is it realistic or does it have longer – or perhaps shorter? What would determine this? Students may believe for example that, unless success is evident within a relatively short period of time, acquisition may be a serious possibility. Instructor’s Manual 510 ; Scope: It is transformational change or realignment that is necessary?

Students are likely to arrive at the view that in cultural terms at least it is transformational change that is required. If the time period is short and transformational change is required then in terms of exhibit 10. 2 it is ‘revolution’ that is needed. So students should valuate the current change initiatives in that light. ; Preservation: Clearly there are aspects of Marks & Spencer that should be preserved: its brand name; perhaps its store locations; perhaps many aspects of the logistics of the organization. However, it is equally important to ask what should not De preserved: students may rater Deck to ten cultural wed to Intently many aspects there that need to be replaced or changed. Diversity: There has been a high degree of homogeneity within the firm. Students are likely to argue that this is not appropriate to the current situation; but is the sort f new experience brought in to the organization appropriate? Students may argue that it has introduced new blood. Others might point to worrying aspects of appointments, such as fashion designers totally unused to the traditional Marks & Spencer customer. Others may observe that diversity is beneficial if there is a clear overall purpose or mission: but is there for Marks & Spencer? ; Capability: The vast majority of managers at Marks & Spencer are not used to change.

Where is the evidence that experienced change managers have been introduced to the organization? If they were to be introduced, is there any evidence that middle management and supervisory management have any expertise or experience in this area? What are the implications? ; Capacity: Marks & Spencer does not lack the financial resource to change: but does it have the systems facilities to change; or are these so embedded in the organization that it would be difficult to change them? ; Readiness: By the time of the case study, presumably the workforce recognized, at least intellectually, the need for change: is it possible there was more readiness here Han at middle or top levels of management? Power: Marks & Spencer has traditionally been a top-down organization with very authoritarian control from the centre. However, this has been used to maintain the status quo rather than implement change. Could that tradition of top-down control be used as a basis for managing change? Or would that be inappropriate? In the context of all this, how do the initiatives described in the case study look? Conclusions that students may come to might be: ; There is a lot of activity, but a great deal of it is at an operational level. It is not clear hat the future strategy of the organization is to be, or if there is a clear purpose/ mission.

Instructor’s Manual 511 ; New managers have been brought in but, without a clear strategy for the future, they are likely to contribute their own individual endeavourers, which could lead too fragmentation of strategy. ; What efforts are being made to transform the embedded culture of the organization as it affects those throughout the organization? What more could be done here? 6. 6 The success and failure of Vendible’s strategies Throughout his time at M&S Evenhanded implemented a number of different traceries. Many of the first strategies he implemented were seen as successful, and after some initial criticism by the press, City, analysts and shareholders, he became quite favored and was rumored to be the ‘savior of Marks ; Spencer’.

However, after this initial success many of M&G’s strategies were not very successful. Some of Vendible’s successful strategies were: ; A rebind and update of the corporate image thus avoiding the confusing ‘Marks ; Spencer’ and ‘SST Michael’ symbols. ; A restructuring AT ten supply canal winner stores were stock demographic patterns. EAI oases on Evenhanded also implemented a strategy that attempted to gain knowledge from the overseas stores, each of which had established its own locally orientated strategies. However, Vendible’s overarching priority was to stabilize M;S in the I-J, so before the overseas knowledge could be gained he announced his plans to withdraw from all European and American markets.

This was one of his first failures, because although analysts could see that the disposals were necessary to bring focus to operations, it was not a success in terms of how it was managed and the damage it did to M;G’s reputation. There were a series of problems associated with the retrenchments across Europe including strike action, trade union negotiation, and the French Government taking M&S to court. Headlines describing these occurrences shocked the UK public, especially since angry picket line photographs often accompanied the articles. Another prominent strategy of Evenhanded was his announcement that M&S would be moving from its headquarters in Baker Street, London. This was heralded as a massive change for the organization and a huge step away from its old culture.

As the move was set for Spring 2004, analysts tit with baited breath to see what effect the move will have on the deeply ingrained culture at M&S. This is an area that the students could discuss: would the move to a new headquarters change M&G’s culture? Chapter 4 on culture could be used to support this discussion. Over time Evenhanded continually stressed the importance of restoring confidence to M;G’s ‘core customers’, the primary aim being to make women once again feel that they could rely on the organization. To achieve this Evenhanded implemented several strategies in tandem. M&G’s fashion collections were designed for traditional shoppers Instructor’s Manual 512 ND described as ‘classically-styled’; it also launched the more youthful range ‘Per Nun’.

Initially these strategies were successful, with figures showing the first quarter on quarter sales increase for three years; its shares also rose by 10%. Shortly after this positive impact on the figures, Evenhanded presented his three pronged approach to expand in the I-J: development of homeward; expansion of ‘Simply Food’ and leveraging of financial services. He also streamlined M&G’s logistics; this again led to stronger financial results and Evenhanded being praised for successful, appropriate, strategies. Yet the praise came too quickly and soon turned to problems and failure, as there still remained strong concern regarding the clothing and food ranges. After originally making some headway into M;S clothing recovery, Evenhanded shifted the focus to his three pronged approach.

However, a number of problems had persisted in the clothing range, significantly with womanlier and childlessness, the traditional ‘core’ of M;S. The problems came from overstocking and markdowns for sale items. Clothing was also losing a lot of market share. Evenhanded also stepped down as CEO (remaining as Chairman), and took up the session of non-executive director in a number of organizations. Commentators felt it was too soon Tort Venezuela to make sun moves, as teen Dell eye off the ball’. en was taking Till M&S also launched ‘;more’, which, in addition to some of its other successful strategies, led too rise in profits and an increase in dividend. It also allowed M&S to begin to generate a relationship with some of its customers; this was heralded as a success.

By November 2003, however, there was concern that M&G’s recovery had faltered significantly. Much of this was blamed on the remaining problems in the ore areas of food and clothing, which the implemented strategies had failed to address. Although the Simply Food outlets were performing well, food in the stores was underperforming the market. Problems in clothing were worse, products were in the wrong places, ranges were weak and clothes were severely discounted. Finally, although from his early employment commentators had felt that Evenhanded would be addressing M;G’s culture, they agreed that he had failed to make an impression on changing it. The answer to question 6. (below), which discusses the underlying problems at M&S, can also be used to understand why the majority f its strategies were ultimately unsuccessful. 6. 7 The underlying problems of M&S in the early sass There were a number of underlying problems in M&S throughout the early sass. These can broadly be separated into two areas, culture and core products. Many of the underlying problems experienced in the sass echo the problems that had occurred in Instructor’s Manual 513 the past. As is shown below many of the problems were not addressed by M;S when they first surfaced and so continue to remain problems for the organization today.

Culture Even though Evenhanded, and then Holmes, had wanted to update M;G’s ultra, many of the old beliefs and values that had been instilled for decades were still believed and pervaded the organization. There had been some changes, for example the removal of the ‘SST Michael’ symbol. In addition because of the poor financial performance there was less off feeling that We are the best’. In spite of this, though, much of the old culture remained, for example M;S still wanted to be synonymous with high quality, and to have respect from customers. There also remained many of the old elements of tradition and formality, much of which was felt would not alter until M;S moved into its new headquarters.

There continued to remain a feeling that employees knew their place and role. The structure, which had been subject to many reorganizations over the years, was felt to be too complicated, with too many members. This resulted in problems with lengthy and convoluted decision making. At this point a further re-webbing exercise might be useful to identify what the cultural web would need to be like to address the problems which remain at M;S. The ‘Core’ of M;S Throughout the early sass Evenhanded attempted a number of different strategies to improve the flagging performance of its core ranges: food and clothing. Both ranges had been performing poorly and for the most part underperforming the market. 0 attempt to stem tense problems new Innovative T solutions were created to improve the food range, and collaborations with Despond and Sons and George Davies were undertaken in the clothing range. After these measures were put in place there was an immediate increase in profits and share price. Once this had occurred Evenhanded focused on his three pronged progression plan; this resulted in the focus shifting away from the core ranges and moving towards homeward, financial services and the Simply Food motorway outlets. With clothing M;S continued to hang on to the traditional idea of its customers. It wanted to restore the confidence of its core customers and so returned to classically styled clothing; this was targeted at the traditional shoppers.

To attempt to attract younger shoppers into the stores M;S used Per Nun. This resulted in many different looks, in terms of style ranges, all trying to find a place in the store. M;S was attempting, in accordance with the strapping its advertisements were carrying, to be ‘exclusively for everyone’; to achieve this it wanted to offer things to all TTS customers. It was again accused by commentators of lacking focus in its operations. Instructor’s Manual 514 Offering different products to all of its customers resulted in the neglect of the core ranges, and ultimately the food range was deemed to be performing ‘adequately, but below market levels.

The clothing range, both women’s- and childlessness predominantly, had taken a severe set-back, with sales, profits and market share having decreased. As a footnote to the case, it should be noted that in late Spring 2004, both Luck Evenhanded and Roger Holmes were removed from Marks & Spence’s management. Stuart Rose, a former Marks ; Spencer executive, but one who had worked extensively outside, became the new Chief Executive Officer. During May and June, Rose successfully fought Off hostile takeover bid by the retail entrepreneur Philip Green, owner of British Home Stores and other high street chain stores. For the moment, at least, shareholders seemed confident that Marks ; Spencer could fix itself under its new leadership.

The Importance for cleanliness and to make clothes smell good has lead to growing penetration of the detergent powder portrays a cultural influence on the consumers buying behavior. The various reasons that the consumers mentioned for using detergent powder is described in Exhibit . Attribute Importance, Brand Positioning, And Consumer Expectations In the North East Exhibit 1 Source: – Milliner Research Cleanliness which has a 24% Importance helps to determine the motivation of the consumers; they believe that cleanliness Is part of their social status; It also caters to heir need for being part of the society.

Only 28% household own a washing machine and the rest 72% household”s washing attitude (behavior) is to scrub the clothes with laundry soap and then add bleach to remove tough stains and only add a little detergent powder at the end to make the clothes smell good. So their perception about detergent powder Is that It Is only for good smell. In the EN, people consider washing clothes as more of a leisure activity because the activity is generally taken up outdoors (physical environment), in the nearby ponds where people can socialize amongst each other.

This is an Important aspect of the culture of EN, which differentiates it from the people of SE. As the social needs (Moscow”s hierarchy of needs theory) of the people are reflected in cloth-washing activity. The influences of mother in the decision making process is substantial in the case of detergents(FMC). Moreover the frequency of washing clothes is higher as they believe that cleanliness of clothes reflect on the responsibility taking behavior of the mother. Low income consumers were attached to boxes and regarded anything else as good for only second-rate products.

Mom is positioned specifically to be used in gashing machine which shows that it is targeted for the people belonging to a higher social class. Southeast Region: The lifestyle of people of this region is better than EN which is evident from the 67% of households owning a washing machine. The washing attitude Is more using a machine than hand wash. Hence the consumption of detergent powder Is more as against EN. Their learning from the washing experience is that hard stains are not cleaned in a washing machine in spite of using the most expensive Ana Test product. So teen need to use laundry soaps Tort cleaning ten tough stains on collars.

This behavior has led to an 88. % penetration of laundry soaps. Players and brands in Brazil and their strategy: Milliner is the leading player in the detergents industry with a market share of 81%, with the detergent division in the cash-cow phase (as outlined in the BCC growth-market share matrix), helping the company generate funds to fuel the growth of its upcoming segments of home-care and personal-care products, which were still at a nascent stage. The market structure could be considered as a duopoly, with Milliner and P&G as the major players in the organized market.

The market has been broadly categorized into the detergent odder and the laundry soap segments. The former is predominantly used in the SE part, while people in the EN used it in little quantity to make the fabric smell good. Hence, the growth of this segment was comparatively higher (stood at 17% against 6% for laundry soaps). The entry barriers were quite high for the detergent powder segment because of high investment in terms of the capital outlay, as sophisticated processes and machines were used in the manufacturing process.

At 75%, Milliner”s share of the EN detergent market is below its national average as against P&Gs market share which is slightly above its sectional average. The local brands make up for only 8% of the share. A detailed breakup of the market share of each of the brands is shown in exhibit 2. Market Share and Wholesale Price of Major Brands in the Laundry Soap and Detergent powder categories in Northeast in 1996 senses Detergent Powder 70. 00% 60. 00% 50. 00% 40. 00% 30. 00% 20. 00% 10. 00% 0. 0% Laundry Shop Exhibit 2 Source: – Nielsen On the other hand, the laundry soap segment had low entry barriers because of the ease of the manufacturing process for soaps, as it could be produced relatively easily using animal fats and oils. The water in EN is soft as compared to SE region. Thus the amount of foam created is more leading to a higher usage and also appealing the consumers. Milliner faced competition in this segment from other established local players, like AS whose brand BEMA-tee-vi had an market share. SOOT ANALYSIS Strengths: 1.

Milliner is leading the detergent powder category with 81% market share achieved with mainly three brands; Mom one of Brazil”s favorite brands across all categories; Minerva the only brand to be sold as both detergent powder and laundry soap; and Campfire, Milliner”s cheapest brand. . Brand Recognition: a. Milliner brands have a good market position as it was a pioneer of the consumer goods industry in Brazil. As against the other brands in the market, Milliner products have the higher % of brand knowledge, market penetration and top-of-mind awareness.

Weakness: 1 . Distribution: Milliner is lacking the expertise in distribution of its products among the small outlets. In approximately 75,000 small outlets it is hard to find any of the Milliner products. Local distribution is important as the low-income consumers rarely shop in large supermarkets like Wall-mart. . Price: EN is a price sensitive region. For such consumers price = quality. So Milliner”s premium brand, Mom is perceived as a high quality at a premium position, while the other Milliner brands are considered to be of inferior quality. . Mom is regarded as the best product while the others are hardly able to satisfy the customers” expectations. 4. No prior knowledge or experience of dealing with low-income consumers. Opportunities: 1 . The EN market has good scope for growth. There is a big possibility of better business with respect to the low-income consumers. 2. P&G has not entered into the laundry soap market. So Milliner only has a few local competitors. And since the usage of laundry soap is the maximum in EN, Milliner can capture the market for laundry soap. 3.

The purchasing power of the low-income consumer has grown by 27% during 1995-96 which will probably lead to an increase in the usage of detergent. 4. The EN is 48 million predominantly low-income consumers whose consumption is 42,000 tons of detergent and 81 ,250 tons of laundry soap which is a big number. 5. Brazilian government is providing tax incentives to encourage investments in EN. 6. EN women wash frequently (5 times per week). Cleanliness is part of their culture. Also the symbolic value they attach to cleanliness is of high regard. . 28% of EN has washing machines. 8. Popularity of laundry soaps is higher in EN region due to the softness of the water in this region. Threat 1 . Brazil (EN) has illiteracy rate of 40% which can lead to unemployment. Such factors can have an adverse effect on the purchasing power. 2. P&G is a strong competitor in detergent powder market with Ace ranking third in the market share. 3. The R&D of P&G as a whole is far advanced than Milliner. Strategy for Milliner in Brazil Marketing communications strategy options (Chris Fill, 2005, Peg. 32) Strategy Pull Push Profile Target audience Consumers End-user bib customers Channel intermediaries All relevant stakeholders Message focus Product/ service Product/service The organization Communication goal Purchase Purchase Developing relationships and distribution network Building reputation The push strategy is aimed at pushing the product through the channel intermediaries and then finally to the end users. Whereas a pull strategy is aimed at pulling the consumers to retailers.

A successful marketing involves a mixture of push through the trade and pull from consumers and thus the two areas are not mutually exclusive. , Peg unlived can Implement ten Tooling strategies: 1 . Push Strategy (Promotional Strategy) (Chris Fill, 2005) Manufacturer Wholesaler or Distributor Direction of Communication Retailer or value-added reseller Consumer or buyer The consumers in Brazil have a strong brand knowledge and top of mind awareness for the Milliner products. Mom is regarded as one of the premium products and does not have a close competitor.

But this product is beyond the budget of the low- income consumers and hence the people of this particular sector cannot afford this brand. But by taking the advantage of the brand success, there are two options that Milliner can adopt: 1 . Launch a completely new product under the brand name of Mom with different detergent formulae. 2. Use one of the brands that satisfy the requirements of the low-consumer of a detergent from its existing portfolio. There is a disadvantage with the 1st option; the cost involved in the R&D in formulating a detergent from the scratch would be an additional expense in the budget.

In option 2 t is not certain if the launch of an existing brand from the portfolio will be interpreted the way it is expected. The risk involved in the 2nd option is higher than the price factor in option 1. Thus option 1 although involves more time is a much wiser decision. Hence under the brand extension, launch a new product under the Mom brand (family) umbrella. Therefore the marketing mix (4 AS) for this strategy would be: Product: Package the product in different quantities of games, games and 1 keg so that it is affordable for people having either a weekly or a monthly budget.

Like every other product of Milliner let this new product also be distributed in boxes as the low-income consumers consider anything other than a box to be inferior. At the same time design the packaging in such a way that it protects the contents from humidity and also very attractive to pull the attention of the buyers. Include pictures of popular parties like Carnival so that people can relate it to their rich cultural background. Price: Keep the price of this new product definitely less than Mom but almost of the same range as Campfire since for the low-income consumers price= (is equal to) quality.

Hence lesser the price, the more it is vulnerable to be perceived as a low standard product. The wholesale price of Campfire is 1. 7/keg so the pricing for the new product could be between 1. 5 and 1. 7 per keg. Promotion: Promotions in this case rules out some of the forms like personal selling as the targeted market is very large, also television marketing as most of the people are low-income families, even magazine ads as most of them are illiterate.

So the forms that will make an impact on the consumers are: direct marketing, buzz, word of mouth, banners with simple messages relating to the cultural and religious history EN has. Concentrate on visibility of the products in small stores so that when customers enter the store they should realize that there is a new product which is catering to their needs, this way create an Montreal Impact on ten minas AT ten consumers Tort Tanat product. Place: Milliner lacks the distribution skill in EN.

More than 75,000 small outlets don”t have any of the Milliner products. So the first step towards placing the new product is to make sure Milliner does a strategic distribution among the small outlets as the consumers in EN usually shop at a nearby store instead of going to large stores. Also considering the fact that 21% of consumers in SE are in the social class E, the new product should be carefully placed among the small outlets even in the SE region. 2.

Pull Strategy(Selling Strategy) (Chris Fill, 2005) Communication Flow Originator or manufacturer Wholesaler Flow of goods and services Retailer Customer The consumption of laundry soap in Brazil is (6. 8+20. 4) keg and the detergent consumption is (12. 9+11. 4) keg. These figures reveal a very important fact that many of the consumers are still tied to laundry soap and so by using the “pull” strategy, Milliner should attract these laundry soap consumers towards detergent powder. The pull strategy is successful when people have brand awareness and go to the shop to buy a particular product.

So considering the washing habit (detergent powder in a very small quantity only for good smell), one of the ways of pulling the customers towards the detergent usage is by giving a small sachet of the new product for free with every purchase of a laundry soap(Minerva). By doing this the consumers would be forced to use the product and if the performance of the new product is convincing to them then the chances of people switching to detergent is tie high, which in turn will increase the brand recognition of the new product and as a result it would be a success of the pull strategy.

Also once the consumers start buying the new product reward them by putting some coupons inside the packaging so that the consumers are motivated to buy it the next time. Moreover, certain freebies like a container to store the detergent, a spoon to measure the quantity of detergent to be used in a given amount of water, can be deployed during the initial phases of launch of the product.

One more way to increase the brand awareness of the new product is to vive a demonstration of the new product in and around the small outlets or at places most visited by the targeted consumers. Refill packs should be produced, and the product should be made available across all locations, because of the very nature of the product which is that it is a low-involvement one, and people would not travel long distances to buy the product.

Since the product is targeted to a low-income and price sensitive segment, the company should make sure that it optimizes the distribution network and save on the logistics cost so as to transfer the benefits to he end consumer. While the product is gaining more brand loyalty, the producer/ manufacturer should make sure that the new product is available on all the shelves (small stores, large malls) Tanat consumers can possibly reach out to. 0 encourage this give suitable incentives/rewards to the dealers. Thus convince the retailers to stock up in response to the demand created for the new product. The success of the new product can be achieved by striking a perfect balance between the push and pull strategies. So push or launch the product into the market and create awareness or the same and through the pull strategy create a strong affinity for the new product thus converting the laundry soap users to detergent powder.

Electronic commerce which Is commonly known as E-commerce or E-business Is a modern concept of doing business. In layman’s language, It Is the buying and selling of products and services over electronic systems which mainly comprises of Internet. In this form of business the payment for goods and services is also done electronically I. E. By using credit cards. This concept has reached its maturity in developed countries like the united States of America and united Kingdom, but it is still new for emerging economies of developing countries like Pakistan, India, and

Egypt etc. E-commerce is mainly considered to be limited to the sales aspect of the business, but it also entails the exchange of data and payment aspect of the transaction. 1. 2 Types of E-commerce: E-commerce Is mainly divided into the following types: 1. 2. 1 Business-to-Business (BOB): The BOB transactions are taking place between business concerns I. E. Manufacturers, wholesalers, suppliers, distributors. Applications of e-commerce for BOB not only Involve efficient trading but also encompasses myriad of activities like forecasting of customer demand, flow of the needed information among concerned parties, etc.

Transactions with ultimate consumers by manufacturers, middlemen, etc. Are however excluded from the area of BOB. 1. 2. 2 Business-to-consumer (BBC): BBC advert to a business transaction taking place between a manufacturer, or retailer on the one hand, and an ultimate consumer for non-business use, on the other hand. Opening an online store is not a big investment today for a SEEM. In developed countries retailers are selling wide range of products and services over the net.

They consider web site as a major part of the promotional and advertising campaign along with the use of other tools such as advertising directories, newspaper advertising ND signage. A number of advantages accrue to both the retailers and consumers, Included among them are; Shopping can be faster and more convenient; retailers get access to larger customer base: retailers can make approach not only to national but also to international customers; and incur lesser running cost than physical stores. There are also some challenges that are faced in e-commerce in using its BBC model.

The two major hurdles that come across BBC e-commerce are, firstly, bringing and making large number of customers to buy online, and secondly, to make a customer loyal to your online store for a longer period of time. Small retailers mainly find it difficult to maintain their competitiveness due to the rapid changes taking place in technology, changing customer preferences and maintaining lower prices. Generally online customers are more price-conscious and are easily tempted by slightly lesser price, which makes It more difficult for retailers to retain online customers. . 2. 3 Business-to-Employees (BEE): BEE e-commerce generally refers to ordering for supplies by employees which they use in their jobs, but this concept has now really grown and includes much more. For very easily by using BEE e-commerce. These orders are completely electronic in tauter and supervisors are asked to approve these orders Just to monitor that employee does not exceeds its order limit. BEE allow the employee to access their own records in order to update address information, and maintain their internal resume.

A major benefit that companies have got by adopting BEE technologies is that it has dramatically reduced the administrative cost and has also lowered the burden of human resources department for maintaining employees’ information and records. 1. 2. 4 Consumer-to-Business (CB): CB e-commerce refers to a setting in which consumers decide what they want to ay, and the vendors decide whether, or not to accept the consumer ‘s bid. The following is an example of CB. A person wants to fly from Appeaser to Karachi, but has only RSI. 8000 in the bank account to make the payment for this round- trip.

He advertises on an Internet CB site, looking for airlines that are offering this round trip for RSI. 8000, or less. The main feature of the Internet here is that it creates a segment of customers with specific need of services in which a number of airliners will be interested in offering those services. 1. 2. 5 Consumer-to-consumer (ICC): ICC e-commerce refers to a setting where consumers among themselves buy and sell goods. The most popular example of ICC e-commerce is “e-bay’, it is a website which brings a large number of people from all over America and I-J, provide them a platform where they can auction their personal belongings.

This concept has also been adopted in Pakistan. Most popular example from Pakistan would be “Passels. Com” where cars are being auctioned by their owners, and are purchased by other consumers. ICC e-commerce has its own advantages, including the following are some: access to broader market, no intermediary is involved, convenient or buyers to search the product they are looking for with the required specifications. Other than five major types of e-commerce, the following are the names of some not so popular types of e?commerce which are not meant for commercial use.

Government-to-Government (EGG), Government-to-Employee (GEE), Government-to- Business (BOB), Business-to-Government (826), Government-to-citizen (EGG), Citizen- to-Government (COG), are amongst these modes of commerce. These modes are mainly used for administrative work such as registrations to licenses renewal, filing taxes to businesses, etc. This research is mainly related to Business to Consumer (BBC) e-commerce which is commonly known as E-tailing or virtual storefront.

So before proceeding forward in the report it would be better to first explain E-tailing briefly and review its history. 1. 3 E-Tailing: E-tailing (electronic retailing) is the selling of consumer products on the net, examples of goods commonly transacted includes books, garments, games, fashion accessories, etc. The idea of E-tailing was one of the talked about topic, whenever discussions related to internet took place among economists, analysts and entrepreneurs back in the year 1995. E-tailing is synonymous with business-to- consumer (BBC) transaction.

E-tailing began to work for some big companies and some Seems in America in the year 1997 when Dell Computer reported that multimillion dollar orders were taken at its Web site. In the same year Barnes and Nobles e-tail site was launched. This website was launched in haste after watching e-tail site was opened on the same footings as that of Amazon. In the year 1997 many companies biblically announced their achievements they had made in their e-tailing business, for example sale of the millionth car over the web by Auto-By-Tell, and Nielsen Media’s recorded 10 million people purchasing goods on the Web in the same year.

Growing popularity of e-tailing resulted in the development of software programs that were used for creating online catalogs, and also had management tools that will help businesses that are operating on the internet. 1. 4 Key drivers of E-tailing: Different key drivers of E-tailing are identified by many researchers over the years because the understanding of these key factors, E-tailing trends in different countries can easily be analyzed. The following are some of the main key drivers that are generally discussed by many writers and researchers.

For this report the organization that I have chosen is Tests and I will be explaining how they use deferent types of business communication to run their organization. I will be looking at all of the functions used by Tests to get an entire observation on the business communication used and the reasons why. I will Identify advantages and disadvantages of different methods used and Investigate strategic decisions made by Tests and what Information they used.

Types of Information Example Description Purpose Sources Verbal Detects verbal Information could be a Tests Sales Assistant Interacting with a customer by trying to persuade the customer to buy one of their products and another example could be Tests staff making an announcement over the Tanana system about a lost child. Verbal communication is information that is shared between individuals by talking. It can be done in may different ways such as telephone, face to fact and meetings. The purpose for verbal communication in

Tests is they must respond quickly to any action that is needed to be sorted. The sources for Tests verbal information could be description of products or service. Written Deco’s written information could be surveys and questionnaires for the customer service like What you think about fruit and vegetables? Another example is Tests displaying posters promoting their latest offers. Written communication can be interactive communication that is used in words or symbols to convey a message eke memos, emails, letters, reports, leaflets etc.

The purpose of written information is that this will help Tests to understand how the customer feels about their services and products and also to understand where they are achieving and where they are failing. The sources for Tests written information are completed customer questionnaires, where Tests can review and make changes and adjustments to meet their customers’ needs, for example customers requesting a bigger variety of fruit and vegetables.