A Research Report on Marketing Strategies of the Business Essay Example

A Research Report on Marketing Strategies of the Business Essay Example A Research Report on Marketing Strategies of the Business Essay A Research Report on Marketing Strategies of the Business Essay A Research Report on Marketing Strategies of the Business| Muhoo [Pick the date] | Table of Contents 1Introduction2 2Market ProfileError! Bookmark not defined. 3Macro-environmental Analysis of Victoria’s Basement3 4Micro-environmental Analysis of Victoria’s Basement4 5Market Segmentation5 5. 1Demographic Segmentation:5 5. 2Psychographic segmentation:6 5. 3Behavioural segmentation:7 6Target Market7 6. 1Purchasing Pattern and Purchasing Power7 6. Brand Positioning Based on Target Segment8 7Marketing Mix9 7. 1Product9 7. 2Price9 7. 3Promotion9 7. 4Place9 7. 5Process10 8Recommendations10 8. 1Use of Technology10 8. 2Customer Service10 8. 3Store Decoration10 8. 4Advertising about Expansion11 9Conclusion11 10References12 * Executive Summary Victoria’s Basement is a small business which started its journey in the Queen Victoria Building and successfully grew into its current status of holding 5 locations around Sydney of significant sizes.From an outside perspective it is easy to conclude that the main ingredient of the success of Victoria’s Basement is its prime location in the Queen Victoria Building. However, a detailed research into various marketing aspects of the business reveals that the store’s product mix, target market, and promotions are significant contributors to the success of the store. A macro-economic and micro-economic analysis of Victoria’s Basement reveals that the business has utilized some of the main advantages of being in Sydney CDB area and being close to railway station has given it additional exposure to its customers.It also shows that technology is the business’s main opportunity to grow and that the threat to the business from rival businesses is the biggest threat to the business. Also, studying the market segments suggest that tourists and adults of age range 20-35 years are the target market segment of the business which is also being assisted by online selling strategy. Exploring the marketing mix of the business detailed its business marketing strategies and illustrated how each aspect is playing role in the current success of the company.Finally, based on all the research done, some recommendations have been made on what are some of the aspects that the business could improve on. Use of technology, improvement of customer service and increasing advertisement about other locations than the QBV store are the main areas of improvements to the company. Introduction Victoria’s Basement is a business whose large comic advertising signs grab attention of any pedestrian walking through the Queen Victoria Building, a historic building that gets the most foot traffic among all the buildings around the Town Hall area of the Sydney CBD.Victorias Basement has been well established for over 10 years, However the foundations were laid more than 20 years ago when the Kalanderian Brothers opened their first Mr Tablecloth store on November 1986 in Sydneys historic and restored Queen Victoria Building. This research is carried out on the business atmosphere, marketing strategies, marketing mix and target market of Victoria’s Basement, with a recommendation based on those studies about any further improvement that the business can make to attract more consumers.The company definitely has gained some forte by being in a prime location, where it gets at least 50% of the foot traffic from Town Hall railway station. Town Hall is Sydneys second-busiest station on the CityRail network. About 70,050 people move through the station each weekday and the number is increasing every year (Malkin amp; Dick, 2005). Also, Victoria’s Basement has expanded its strength in the market because of its product mix, exposure to different market segments and advertising strategies. Macro-environmental Analysis of Victoria’s BasementIn this part of the report, the marketing environment would be discussed in brief for the Victoria’s Basement. The PESTEL framework could be adapted to analyse the macro-environmental forces for the company. Table 1: Macro-Environmental Analysis for QVB Factors| Descriptions amp; Analysis| Political amp; Legal| * Free trade policies of multiple countries could provide QVB [hence, Victoria’s Basement] good busin ess opportunities for exporting their products to the foreign markets (Whaples, 2011) and also importing products at cheaper rates. Legal regulations including taxations, consumer protection legislations, and employee protection legislations in NSW would also matter in deciding how business is operated. If Victoria’s Basement is considering expanding to other states, the business will also encounter difference in taxation and local legislations to adapt to. | Economic| * Global economy recovered from the financial crisis had allowed the buying power to increase (Coffee, 2012). Therefore, more people are able to spend on luxury home wares and kitchenware. Global high level of unemployment would still make the costs for labour lower than expected (Coffee, 2012). Therefore, Victoria’s Basement can employ people at lower rates, hence reducing the fixed cost of operating business. Also, the imports are remaining cheaper due to cheap production labour from other countries. | Socio-Cultural| * Emergence of DIY (Do It Yourself) allowed more consumers to be more in favour of cooking and baking at home (Pearce, 2012) * Emergence of usage of social media in the current society had allowed social media to be the newest and very efficient marketing tool. Emergence of online retailing allowing retailers to develop new sales channel within the global market. | Technological| * Increased RFID technologies with electronic price labels allowing customers’ self-service in the retailing stores (Hancke, 2011) which the store is not utilizing yet. Also the store is not yet using anti-theft devices. * The more advanced information and communication technology (ICT) and transportation technology could allow globalization to be more possible and management being more efficient and cost-effective. Micro-environmental Analysis of Victoria’s Basement In terms of the micro-environmental analysis, the Porter’s Five Forces framework could be adapted for th e company. Table 2: Micro-Environmental Analysis for QVB Factors| Descriptions amp; Analysis| Buyer Power| Medium. The bargaining power from customers would be strengthened from the increasing competition in the market providing the similar products in the industry, and the buyers’ switch costs for different brands would be low.On the other hand, the bargaining power from customers would be weakened from the fact that there was no buyer association established in the world for the industry. | Supplier Power| Low. The bargaining power from suppliers would be lowered because there were multiple suppliers for the materials and services (steel, plastics amp; business services such as logistics) in the market, and the switch costs for suppliers would not be high. | Threats from New Entrants| Medium.The threats from new entrants would be strengthened because there were no barriers set for in the market and the capital and technological requirements were low. On the other hand, the threats from new entrants would be lowered because the market is matured with stable growth of the consumption of products being sold by Victoria’s Basement| Threats from Substitutes| Low. There was very low threat from the substitutes because the number of substitutes is restricted in the CBD area for similar product mix.Woolworths Group and Coles Group also sell kitchen and home wares but the diversity of product is significantly low in comparison to Victoria’s Basement. | Threats from Rivalry| High. The threats from rivalry is strengthened because the number of competitors in the global market is large, and multiple retailers, such as large retailers (David Jones, Myer etc. ) and specialized retailers (Ikea, Harvey Norman, etc. ) are all competing in the market. Product differentiation was low with products providing the similar functions, and the switching costs for customers from different brands would be low.Therefore the threats from rivalry are high. | Market S egmentation In order to develop a marketing strategy, it is very important for a company to understand its exposure to customers. If the company can understand its customer base then only it can plan its business and marketing strategy as well as what their target consumer sector would be. Victoria’s Basement has exposure to consumers according to the basis of Demographic, Psychographic and Behavioural patterns. They have segmented their products and positioned them according to consumer segments.The purpose of the dividing the market into small segments is to make it simple to address the needs of smaller groups of customers and try to analyse that different products are being carried to appeal to consuming habits from different segments. We can categorize the market segmentation for Victoria’s Basement consumers into three different bases: Demographic Segmentation: Every year, more than 2 million international visitors come to the Sydney metropolitan area. It is esti mated that a further 483,000 people travel to the city on any day to shop, be educated, conduct business or simply to be entertained.This is in addition to the 385,000 people who arrive every day to work in the local area. More than a third of these working people are classed as professionals, with another 17% of them classified as managers (City of Sydney, 2013), which justifies their ability to be attracted and ability to purchase quality and luxury home ware and kitchenware brands. The median age of the City resident is 32, which is 3 years below the average for the rest of Sydney. Almost half the Citys residents are aged between 18 and 34.Two-thirds of the population increase in the past 5 years has occurred in this age group. From the above statistics, the exposure of a typical business in Sydney CBD can be approximated as presented in Figure 1. As we can see, the largest consumer group that Victoria’s Basement has exposure to is the 45% group which is the age group of 2 0-34 old Young Adults and Visitors. Figure 1: Demographic Segmentation of a business in Sydney CBD Psychographic segmentation: Psychographic segmentation refers to dividing the consumers into groups based on personality, value, social class and lifestyle.Victoria’s Basement has products that are appealing to lifestyle of the sophisticated multicultural consumers, as Sydney has a huge amount of visitors who come to visit city every day for shopping, relaxation and even for entertainment. On average, individual residents in the City earn a weekly median wage of $717, compared to $518 elsewhere in Sydney. A quarter of residents aged 15 or more have a weekly income of over $1300 a week, while another quarter receive less than $250 per week (City of Sydney, 2013).Therefore, Victoria’s Basement can attract those customers that are choosy, maintain high social status and stylish daily life but also those who want to maintain a stylish standard of living but are in financial c runch. As it is a commercial area, it is very easy to target both stylish luxurious and also stylish but economic customers. As a result we see that victoria’s basement has salt and pepper sets that are $4 a set and also designer salt and pepper sets that are $39. 95 a set (Victorias Basement, 2013). Behavioural segmentation:Behavioural Segmentation refers to splitting customers in terms of buying patterns based on occasions, uses, and benefits. Victoria’s Basement is not only a very popular shop but also a mark of tradition in Queen Victoria Building (QVB). The QVB itself arranges different entertainment events to attract tourists and city visitors which add to the image of QVB. The people who visit QVB due to special occasions are mostly visitors. It is a behavioural pattern that when people become part of a special event, they want to bring back a token as part of their experience.So, visitors think that because they had been to a historic building, they need to buy at least something that would remind them of their visit; hence, they end up buying products from the most historic store in the QVB, Victoria’s Basement. Target Market Based on study of the different market segments in the above discussion, it can be concluded that the age group of 20-34 years old are the main demographic target of Victoria’s Basement. Psychographic and behavioural pattern of this age group suggest that visitors and comparatively wealthier residents living near city area form the majority of the target consumers of Victoria’s Basement.In the next discussions we will discuss more in depth about the behaviour and buying pattern of these target segments. Purchasing Pattern and Purchasing Power It is necessary to classify the target segment in order to identify those with sufficient purchasing power, authority, and willingness to buy. Based on that, a Victoria’s Basement should strategize their marketing mix. Usually women make 90% of home improvement decisions and they can pay for quality and variety of products. Based on that we can estimate that majority of the target consumers are female.In addition to that female from other age ranges (35+) also add to the gender segment. Women are more likely than men to express concern about consumption’s broader impacts and to act upon those concerns’ (Luchs amp; Mooradian, 2012), which justifies the necessity of Victoria’s Basement to pay attention to quality and brand. Workers in Sydney get the second biggest bang for their buck in a survey of prices and earnings in 73 cities, conducted by the global investment bank UBS. The results show that Sydney ranks second only to Zurich in domestic purchasing power the quantity of goods and services you can buy with the average wage.Sydneys relatively high wages and moderate costs explain the surprise ranking (Irvine, 2009). Compulsive buying is a prominent behaviour among this target segment of 20-34 years old a dults. The Australian Bureau of Statistics shows that the total balance on credit and charge cards has risen an average of 17 per cent over the five years since 2002 and the Australia’s credit card bill has hit a record $42. 698 billion in December 2007. In today’s society, status is regarded through the ownership of status products rather than through personal, occupational, or family reputation.Thus, in their effort to come out best in this social comparison and possession, individuals must demonstrate their social power by displaying their wealth through the ability to purchase goods and services (material objects)’ (Phau amp; Woo, 2008). Keeping the above behavioural patterns in mind and also the fact that there are more than 20,000 retail stores in the Sydney CBD area (City of Sydney, 2013), Victoria’s Basement need to pay attention to the right pricing pattern with facilities to pay through credit cards to keep their target segment loyal to the stor e.Brand Positioning Based on Target Segment Victoria’s Basement has had an interesting history in Australian retailing from its poor beginnings in 1986 to its new position entirely riding on the tourists pouring into the city. The shop run their peak business during summer time as a lot of tourist come to Sydney during that season. The contents of the shop are such that it also attracts people other than tourists. That is how they run their business during all seasons.During off season, they try to remain in focus by advertising 80% off’, One Day Offers’, Super Saturdays’, Secret Sales’, half yearly Stock take’ and Mid-Season sales’ in addition to catalogue offers to keep their sales floating and to keep the Brand Equity up. Moving forward, the team at Victoria’s Basement is trying to limit their dependence upon price based promotions, which have been slowly damaging their brand positioning, and return to status of a premier re tailer brand. Recent survey has shown that people want the souvenir shop in delocalized area.In that realization, they have opened 5 shops in suburbs which are away from the city but close to where households are. They have also started selling their items online over the internet. Their popularity is increasing day by day hence their business strategy is changing because becoming more available within the reach of general people will maximize their customer base. It will regain their ability to project a more sophisticated image and targeting more sophisticated consumers. Marketing Mix Product Victoria’s basement is popular for its product brand line-up.If we compare in the marketing mix framework then we can find that its wide range of products are all of very popular brands, which is one of important reasons for its rapid success. Brand automatically ensures that the product quality is also really good. Some of the popular brands in their collection are Wedgwood, Royal Dou lton, Villery and Boch, Waterford, Dan Samuels, and many more. Branding can build an expectation about the business services or product and can encourage the business to maintain that expectation, or exceed them, bringing better products and services to the market place.Presentation of their product is a important part of good marketing which is one of the areas of improvement that Victoria’s Basement has to note. Currently because they have a lot of products but limited sales area, the presentation in QVB store is more like a basement bargain store. However, their other stores have much better product presentation. Lastly, their return policy is very simple like other big retail giants. Price Price is the most important part of their continued allegiance from targeted customers. Victoria’s basement offer cheaper price than any other business with the same product.This made them popular in the short period of time. They have a wide range of discount which starts from 1 5% to 75% (approximate). This magnetize customer more towards this shop. However, they need to keep in mind that extreme low pricing sometimes damages the brand value. Promotion Victoria’s basement is very advanced about their business promotion. As mentioned earlier, they maintain sales promotion in special events such as charismas, New Year, mother’s day etc. As part of advertising their promotions, they distribute catalogues all around the city area and nearby residential areas as well.Also, they have big sale events at every store opening, promoting new business entry in that area and informing customers about their entry. Place Victoria’s Basement originated from their prime and most important location in Queen Victoria building. According to Sydney Morning Herald in 2005, Town Hall is Sydneys second-busiest station on the CityRail network. About 70,050 people move through the station each weekday and the number is increasing every year’ (Malkin amp; Dick, 2005). Even if half of these people walk through the QVB as of 2013, we can estimate that the QVB store has exposure to more than 40,000 foot traffic per day.Since 2002, Victoria’s Basement expanded to areas like Auburn, Artemon, Castle Hill and Alexandria which are densely populated residential areas but these households have above average income and more space inside the house. Obviously, homeowners with expendable income will be attracted to shop in such store if it is conveniently located within their reach. Process Victoria’s Basement is only using traditional POS terminals that are not interconnected among all other stores or to their supply chain management.As a result customers have to wait in long queues and can only shop what is available at that store. However, Victoria’s Basement is also offering online selling with option of bridal registry. This is definitely a good process to reach customers that are too far away or too reluctant to travel to their stores. Also, it opens their consumer base to gift-shoppers, specially when people use the bridal registry facilities. Recommendations Use of Technology The biggest area of improvement that Victoria’s Basement has is in its use of technology.They are not using any anti-theft device, making the merchandise prone to vandalism. Even though they have security guards in store, considering the fact that their target consumers are majorly tourists, it might be highly uncomfortable and depreciatory to customers that are not use to bag-check culture in Australia. Also, since they have expanded to multiple branches, they need to improve on their supply-chain management by incorporating IT to be able to assist customers with better information about product availability. Customer ServiceVictoria’s basement is employing very small amount of customer service representatives in the stores for which customers are often unable to decide which product to purchase. Also, since majority of their target consumers are tourists, the customer service should be able to advice purchases. For example, items with liquids in them of more than 300ml will not be allowed to pass through screening if placed in hand luggage, purchase of more then $300 in a single receipts will make them eligible to get tax refund at the airport while departing, etc. Store Decoration This recommendation about store’s decoration is mostly applicable for the QVB tores. Due to lack of space, the products are placed on the floor and shelves in a very compressed pattern, allowing limited area for shoppers to walk, stand to look at products, and move with strollers/wheelchairs. Only based on lack of accessibility, customers often prefer to go to other bigger brands (David Jones and Myer), although the price is cheaper in Victoria’s Basement. Also, if customers accidentally bump to a shelf or a product that is fragile, they often end up breaking or damaging the product. The store often makes the customer pay for the broken product, causing dissatisfaction among customers.Advertising about Expansion Until this research was carried out, none of our group members were aware of the fact that Victoria’s Basement has 4 other locations that are even bigger than the QVB store even though some of us have shopped at the store many times. This is evidence of the fact that Victoria’s Basement doesnot have enough advertisement going on to promote their other locations. Promoting other locations in the QVB store might be a good strategy for the business since some customers go to the QVB location in the belief that they cannot get such items at a place closer to them for that comparable price.Conclusion With minimal expense of advertising, technology, and employee engagement, Victoria’s Basement has been successfully able to increase their brand equity to become a considerable competition in the homeware/kitchenware market. They have marketing advanta ge of being in prime location and having been associated with image of a historic building as Queen Victoria Building. However, to be able to continue its growth at the present globalised market, they need to move towards technology and customer service to give better retail experience to shoppers while retaining its Brand image.