Asda in the Retail Market and Its Marketing Strategies

Executive Summary

The main aim of this report is to identify the current stage of Asda in the retail market and its marketing strategies. Current analysis shows the improvements to be made. The current recession has made the retail market down due to less spending by the consumers. In addition, the trend shows that customers prefer online shopping in order to save time. Due to the brand image as a subsidiary of Wal-Mart, Asda has large opportunities in the market to serve variety of customers. The SWOT analysis gives a clear idea about the internal and external environment which could help planning of the resources. The low price strategy together with setting up large number of online stores can contribute to the objective of ASDA to become Britain’s biggest retail giant. The participative style of obtaining feedback from the customers will help George at ASDA to achieve the objective.

Introduction

This paper is proposed to take up the case study of the second largest cloth retailer in the United Kingdom, George at Asda. The main objective of the study involves reviewing its present strategic marketing processes and procedures and delineate how better mobilisation of critical strategic management tools need to be implemented in order to retain its market leadership status. George at ASDA is a subsidiary of Wal-Mart with a market share of 16.94% in the UK economy. Currently ASDA has over 259 stores all around UK and other countries and 19 depots employing 122,000 staffs, which shows the efficiency of the company. The main areas covered by Group ASDA are retailing mainly fresh food, grocery items, and clothing, home, leisure and entertainment tools, thus finding new ways competing with other players in the market. The retail industry is especially in a fiercely competitive marketplace having the likes of Tesco, Sainsbury, and Marks & Spencer in the race for market supremacy of UK’s prime retail marketing business.

Research Methodology

The Research methodology paper needs to consider the topic under discussion under two distinct heads, firstly, in terms of primary data, and secondly, with reference to secondary data.

Collection of primary data could be done based on first hand knowledge (observations), surveys and field studies, personal interviews with the senior management team at Asda, and discussions with selected respondents and members of the consuming public.

Coming to secondary data, they could be said to be data gained through books, journals and internet searches, and published information gained from previous research studies, recordings and archives of earlier surveys and research studies. In addition, the definitions and analysis of marketing strategies of Asda shall also form a part of the secondary research programmes.

Organizational Background

Industry Background

It is seen that global food and clothing markets are a burgeoning industry and this century has witnessed dramatic changes in the global food commerce, including the invasion of virtual and online retail stores. In most countries, besides local stores outlets, a major paradigm shifts in growth pattern in retail sectors of countries either big or small. “It is estimated that 50% increase from population growth – from 6 billion to at least 9 billion. This could be seen in the context of possible rise in world food and clothing demand that could double by year 2050, with 50% increase fuelled from low-income countries. ¹

The UK cloth and apparel market is characterized by increasing competition between three major giant retail firms Primark, Asda and Tesco. The changes in the sociological factors in the UK business environment such as decreasing birth rates and declining population have negatively influenced the business growth in the country. Changes in the labor environment increased such as increased women participation in the labor resulted in increase in demand for consumer goods. Online shopping is at a lower level in the country. From the research results, it is estimated that 20% of the total customers are of least spending and they are not involved in any consumer society. Of the total customers, 15% are regular buyers. The buyers are always selecting their stores on convenience basis. In addition, comparison on the basis of price is not functioning among the UK retail marketing. The existing condition in UK market is characterized by low purchasing power of customers and some of the customers are adopting the services offered by co –op food stores at low prices and wide range of products. “One of the main factors behind this slowdown is that value is now ubiquitous in the clothing market as middle market retailers have sharpened their own prices in response to the growing competition.” ²

Organization’s Description

ASDA has one subsidiary, George Clothing that mainly sells groceries and clothes and now George Clothing is the only subsidiary Asda has. The others have since been sold off. George brand of apparel for all are sold through more than 250 ASDA stores in Britain and other independent stores. “ASDA’s US parent company retail giant Wal-Mart Stores plans to make George a worldwide fashion force through distribution in Wal-Mart stores.” ³

Products/Services and Market

There are mainly two types of customers focused by Asda; homebuyers and business purposes. Their major product category involves women’s clothing, means clothing, kids clothing, baby clothes, shoes, lingerie etc. The main services in the store include men’s clothing, including tuxedos, suiting, shirting and men’s dress materials. The stores also stocks large varieties of men’s jeans, t-shirts, jackets and pants. It stocks all kinds of occasion wear, and branded formal and formal wear, shorts, vests and swimwear and other dresses for men. The fashion clothing is marketed mainly for men and women in the name of George label in the UK economy.

They carefully manage virtual value chain as it has full potential. Asda considers its delivery service as a special attention area and assures fast delivery for all its consumers. Through this, the potential customer has the opportunity to choose the time of delivery. The products and services offered in the Group ASDA superstore are given in the diagram below:

Vision/Mission

Asda’s mission is “”to be the best value retailer exceeding customers needs always” delivered to be the best value retailer exceeding customers needs always” delivered by our purpose “to make goods and services more affordable for everyone” and out values are “Respect for; Strive for Excellence and Service to our customers.”” ⁴ These target customers are ordinary working people and their families whose weekly shopping needs Asda is trying to meet. The re-establishment of Asda’s reputation on price is at the heart of its strategy.

The vision of ASDA is to become Britain’s largest retailer by selling quality products at lower cost than the competitors.

Department and My Role

I have been working as a sales manager for a year in the George Asda store located in UK. My role and duties are to support the management team in daily operations and maintain friendly business dealings and communication with customers. The products handled by me include men’s clothing, including tuxedos, suiting, shirting and men’s dress materials. Besides, the stores also stock large varieties of men’s jeans, t-shirts, jackets and pants all at economical and affordable prices. Besides, it stocks all kinds of occasion wear, and branded formal and formal wear, shorts, vests and swimwear and other dresses for men. ⁵

Current Marketing Strategy

Strategic decisions relating to external environment is essential to any organisation. Strategy helps to identify the customers, competitors, market trends and to cope up with the required changes according to the business environment. Marketing refers to the interaction of an organisation with its market. Therefore, marketing is required for the strategic planning of an organisation. Strategy could be defined as “making major decisions affecting the long term direction of the business.”⁶ Strategic objectives are defined as goals of the company aimed to meet the strategic intent and tactics. Strategic planning and strategic thinking are interrelated representing a core of modern management. Vision is the important strategy of an organisation.

Definition of Marketing Strategy

In marketing, strategy refers to the bond between military power and political intention. Customer, competition and corporation are the three strategic Cs, which are essential for marketing strategy. Marketing strategy is based on the following decisions: Where to compete refers to the area of marketing, in which market to introduce the products, how to compete refers to the means of competing i.e. what all techniques could be used to capture the market like advertising programs and when to compete shows the timing of market entry. If the above three decisions are properly taken, then marketing strategy with a set of activities helps to develop a unique position in the market.⁷

Current Marketing Strategy

The marketing strategy of George at Asda is to create a mix of products with its own label before the competitors introduces. In addition, it has a strategy of selling quality products at low price with a slogan of “always low prices”. Then it changed to “more for you for less” to capture more customers on emphasizing quality.

Current marketing tactics:

The company has introduced the new strategy to encourage the brand by offering customers a variety of products thus having their own new look. The company stay close to the trends of the market and listen to the customer’s viewpoint.

The company has George stores in UK, Canada, and Mexico etc, which do the sales. As part of their marketing strategies, the company has invested about £8 million per annum for advertising and promotional activities. In addition, point of sale strategy called Good Better Best is used for attracting the customers by communicating worth, excellence and fashion. Also each product has a distinct slogan. Society of Dyers and Colourists (SDC) has been chosen to deliver best quality coloured textiles.

Internal Analysis

SWOT analysis: helps to identify the strengths and weakness of George at Asda, which is mainly internal, and its opportunities and threats in the external environment thus leading to compete in the market.

Market Analysis

Competitor Analysis

The UK retail-clothing sector is composed of the retail giants like Primark, Tesco, Asda, and Marks & Spencer by supplying a wide range of products and aiming at same type of customers. The main competitor of George at Asda is Primark with a market share of 17.7% as Asda has a market share of 16.94%. Other competitors are Marks & Spencer and Tesco. Comparing the price of different players, we can see that, Asda offers the low price as compared to others. Simple evidence is the uniform prices as follows:

“George at Asda £ 4.75, Tesco £ 15.25 and Marks & Spencer £21.50.” ⁸

The promotion strategy of the competitor is also the same which could be identifies by Primark’s slogan “Look good pay less” with competitive prices. It is seen that Primark mainly focus in cost leadership strategy and the differentiation strategy which could be referred as the key factors to success. The market segmentation of Primark, which mainly focus on the customers under the age of 35 also led to its position. By comparing the marketing strategies of Asda and that of Primark, it is seen that Asda mainly create a private label brand at out of town stores, i.e. branding whereas Primark focus on logistics and supply chain management

Macro – Environment analysis

PESTLE analysis: It is mainly used to scan the business environment mainly external environment. The opportunities for the company in the market and threats in the external environment like competition etc could be analyzed using the PESTLE tool. PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental factors for assessing the market.

Micro environment analysis

Porters Five Forces Analysis of Asda and generic advantages allow saying that ASDA is on maturity stage. As large players exist in the market i.e. Tesco, Primark, Marks and Spencer, obviously there will be rivalry. However, when stiff competition and rivalry among them exists, it helps Asda to provide substitutes for other retailers’ goods at low price. If the prices of groceries in Asda are high, customers will move on to Tesco and others, which shows the buying power of customers. If the suppliers are less for supplying the goods then, the supplier power demands for paying a certain amount for their goods and they negotiate it for better return. However, in the case of large supermarkets like Asda, the supplier power has less impact. Asda has low price marketing strategy, which makes barrier for new entrants, as the new supermarkets cannot afford selling at cheap price. Maturity stage shows that the organisation is resource intensive and the product has most acceptances from customers. The main characteristic of this stage is decline in the sales growth and the company should remain abreast with the current developments in its own environments with marketing objective of maximizing profit while defending market share.

Market Segmentation

In order to satisfy all customers, a company should identify the market segments, which can be served effectively. Market segmentation can be done in seven steps proposed by Roger Best as follows:

1. Needs-based segmentation in which the customers are grouped based on similar needs.
2. Segment identification: the demographics, lifestyles, usage behaviours are determined for the need based segment.
3. Segment attractiveness: Based on market growth, competitive intensity etc, the attractiveness of each segment should be identified i.e. if the existing players obtain a large market share, the cost of production is low, etc then it attract more players if the barriers of entry is less.
4. Segment profitability: the profitability is a major factor of entering into a particular segment which can be identified through the profit analysis of the current players.
5. Segment positioning: based on the customer needs and preferences, their taste, etc the product should be positioned in the minds of customers to have a value.
6. Segment Acid Test: “create segment storyboards to test the attractiveness of each segments positioning strategy.
7. Marketing mix strategy: expand segment positioning strategy to include all aspects of the marketing mix.” ¹⁰

Market segmentation is done based on geographic, demographic, psychographic and behavioural variables. Geographic variables include segmentation based on region, city, density of population, climate etc. Demographic variables include age – childhood, adult etc, family size – small, medium, large, family cycle, gender – male and female, income – higher level, middle income and lower income, occupation, social class etc. Lifestyle, personality of the customers is some of the psychographic variables.

Market segmentation of George at Asda

ASDA mainly concentrates on the pricing strategy due to the fact that, income mainly constitutes to the buying habits. The selected store i.e. in George Asda, which mainly satisfies the dressing attitudes of UK economy, segmentation, is done based on demographic segmentation and psychographic segmentation. Asda mainly focus on the age and gender segmentation. In addition to it, Income, social class etc are also used as the segmentation variables. Consumer attitude, lifestyle, values constitute the psychographic variables which are used in segmenting the customers purchasing clothes.

“When customers said they frequently found jeans the wrong size, ASDA introduced a range of mid-sized women’s jeans in sizes 11, 13, and 15.”¹¹ The quoted words show the proof for the market segmentation profile.

Analyse and evaluate Asda’s market segments

ASDA attributed its success in the retail chain at second position due to the three key elements – outstanding value because of the subsidiary of Wal-Mart, improving quality with low selling price, and the use of customer insight to introduce new innovative products and offers, thus satisfying a majority of customers. In order to be successful and gain customers, there should be a clear identification of the product and potential target audience. Product differentiation strategy creates a unique market proposition by creating entries of barrier to other companies. “Ongoing cost efficiency initiatives the company has engaged its 165,000 colleagues in a Save £1 A Day challenge. The passion of ASDA’s colleagues to save customers money is the central theme of the supermarket’s current advertising campaign.”¹² The main aim of Asda is to keep it different from the competitors thus positioning in the minds of customers in content, context and infrastructure. The pricing strategy establishes confidence in the customers and builds a strong relationship.

Areas of improvement

By reviewing the retail market sales, George at ASDA and its operations, we can summarize the following findings as the key areas for improvement:

1. Asda has about 16.94 % market share. It has an opportunity to increase and overcome the UK retail giant Primark with a market share of 17%.
2. ASDA is on maturity stage, and therefore, new measures are to be taken to attract more customers.
3. Improving the different sections like men, women, kids etc. especially women’s section. Also due focus should be given in the design section as some complaints rose from women on one form of T-shirt, which has to withdrawn from sale.
4. Even though low pricing strategy and wide range of clothes for has contributed to success, more tightening should be given to the pricing strategy with respect to the competitors
5. ASDA should also focus in the areas of supply and logistics management along with branding.

Preparation of the Marketing Plan

Marketing objective

The main objective of ASDA is to become Britain’s lowest price supermarket by selling wide range of products with low price to the customers. Currently ASDA serves a wide range of customers offering variety of products. To increase the sales in George Asda with an increase in market share is the main marketing objective through friendly business and communication to the customers. It is seen that the annual buying power of customers is $175 billion. “As Britain’s lowest price supermarket we continually challenge ourselves to reduce our cost base.”¹³ Words of ASDA’s Chief Financial Officer, Judith McKenna points out the marketing objective of the company.

Marketing strategy and marketing mix

To achieve the marketing objective, everyday low price marketing strategy and increasing the in-store facilities can be used to increase the sales and profits. The following strategies – where to compete, when to compete and how to compete help in achieving the marketing objective of increasing the sales and becoming the Britain’s largest retailer with selling quality products at low price:

1. Where to compete: Introducing number of stores in UK main city and in other states of UK can increase the sales.
2. How to compete: Increasing the variety of products in the cloth section for both men and women at George ASDA and selling at low price can increase the customers. “The passion of ASDA’s colleagues to save customers money is the central theme of the supermarket’s current advertising campaign.”¹⁴ Setting specialty divisions only for men and women can attract more people as it helps the customers a wide range of selection.
3. When to compete: increasing the sales and promotional activities in the festival seasons like Christmas, Easter etc. can attract more customers. Focussing on online shopping can attract more customers. Changing technology has contributed e-commerce and online shopping as the best distribution channel.

Selling quality product at low price increases the customers, thus reducing the share of competitors. ASDA can become the Britain’s Retail Super giant. Thus, more online stores with less selling price could be the proposed marketing strategy.

Responsibilities

Before setting up the new stores the marketing department should conduct a customer satisfaction survey to obtain the responses, which may lead to the total quality of George ASDA. This helps to: (1) attract wide target audience; (2) educate buyers how to use online shopping; (3) educate buyers about life styles and new trends in the market; (4) include entertainment segments for the children of the customers.

Implementation and Control of promotion campaign

1. August 1^st – identifying the areas for setting new Cloth stores
2. September 1st- Production of the new stores begins.
3. September 15^th – Conduct advertising and promotion campaigns for the new stores proposed to be opened.
4. October 1^st – opening of the new stores
5. October 8th- launch Internet promotion programs like discount offers for online business.
6. October 15th- Special promotional programs for the new online stores to attract the customers

Monitoring and controlling

Continuous feedback from customers about customer satisfaction, their tastes and preference towards the proposed programs helps to identify the defaults in current mechanism and to make improvements. Therefore, getting filled feedback forms from the purchasing customers helps to know their views. Required changes should be made for improvement. Thus, George at Asda can take up the position of first from its current position of second.

Justification of the marketing strategy

Now customers are busy with their job and like to get their shopping done in less time. If the stores are available at the nearest, direct shopping takes place otherwise customers prefer online shopping. Other consideration is selling the quality product at low price, which increases the customers, thus reducing the share of competitors. In course of time, Asda can become Britain’s Retail Super giant.

Recommendation Letter

Report to the Senior Manager:

Subject: Present stage and proposed marketing strategy of Asda.

By analysing the retail market of UK and Asda it is seen that Asda is in the second position and the credit crunch and financial crisis has lowered the purchasing due to the increasing unemployment. In retail market there is a division between prosperous and weaker in terms of income. Having a clear idea about the customers will lead to maximize profit in future. “Data prior to WW II are less reliable, but what we know suggests that a saving rate of near zero is a rare event—the saving rate went negative during the worst years of the Great Depression, but those were extreme conditions in which a vast number of consumers had no income and had to draw on whatever assets they had to stay alive. The average saving rate over the past 150 years appears to have been somewhere around 6%.” ¹⁵

“To a considerable extent, families’ life style is characterized by the goods purchased and displayed — homes, furniture, furnishings, services, recreation, and travel. Important shifts are occurring in low and middle class family life”¹⁶. The roles of husbands, wives, and children have changed. Modern families tend to become more democratic and the power of children has increased. Reducing leisure, night and weekend shopping hours, and shopping centres located away from homes encourage online shopping. Low and middle class family decisions are also based on their income. Home-delivery services are becoming a more important part of shopping. A large proportion of cloth and fashion products and services is purchased and consumed at a considerable distance from home. Many services involve direct contact between the buyer who furnishes and the person who receives them¹⁷. Therefore, I suggest that by setting many online stores and providing quality products at low price can attract even more customers leading ASDA as the market leader.

Conclusion

In sum, by analyzing the company’s internal and external environment, it is seen that the quality of the product and the pricing strategy has helped Asda to create a strong international brand image not only in UK but all over the world. Asda has a brand image, as it is a subsidiary of Wal-Mart, a major retail giant in US. Brand loyalty will discourage the customer from switching over to competitors. When a customer switches over to other product, it is a loss to the company. Using an international mar­ket development strategy, i.e. market saturation and market penetration helps to capture a larger share of a market by Asda with variety of products than competitors do. Setting up new stores in all around UK can help marketing of Asda which can substantially increase the level of sales and market share, as now customers are conscious about the time they spend on purchasing. Marketing plans, which is very essential for the success of an organisation heavily depends upon the feedback of consumers or buyers. The perception and experience decides the purchase of customers. Sometimes their needs or wants may not be satisfied with the current product, thus leading the way to new product. However, many of the needs and desires are rarely identified by the research. Identifying the special type of consumer and drawing out their ideas, who can articulate these possibilities requires special research efforts. However, most powerful giants are not proactive; give less attention thus losing customers, and image – both the present and future.

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Footnotes

1. Sustainable development UK conference 2008
2. UK value clothing retailers 2007 n.d.
3. George clothing 2009
4. ASDA stores 2009
5. Men’s clothing 2009
6. Drummond & Ensor 2001
7. Concept of strategic Marketing n.d.
8. George fires first shot in back-to-school war 2009
9. UK retail sales stall in February: Supermarkets 2009
10. Kotler n.d., p. 286
11. ASDA wins customers by making good quality food and clothing affordable to everyone 2008
12. ASDA wins customers by making good quality food and clothing affordable to everyone 2008
13. ASDA out perform market again 2009
14. ASDA wins customers by making good quality food and clothing affordable to everyone 2008
15. Consumer behaviour: the impact of the current crisis 2009
16. Johnson and Scholes 1998
17. Mintzberg et al 2004