Introduction
Asda stores is one of the leading retailer chains in the UK and positions itself as a discounter that sells food, clothes and goods for home and office. Nowadays many Asda branches are becoming unprofitable as the inflation skyrockets in the country and people are less able to spend money on what they like. The retailer is looking for ways to achieve greater efficiency in order to maintain its status as the cheapest supermarket in the country and withstand price competition from the upcoming international chains Aldi and Lidl (Bentham, 2018). The challenges Asda faces come from external environment that creates threats and opportunities for the business growth. Measured against the company’s innate advantages and disadvantages, opportunities and threats the company faces lie at the core of its marketing plan that, with the help of SWOT analysis, will serve to enhance the company’s effectiveness and productivity.
SWOT analysis
SWOT analysis is a strategic planning method for assessing internal and external factors that affect the development of the company. The method is needed to assess the strengths and weaknesses of the company and determine the prospects for development and threats from the outside (Teoli, Sanvictores and An, 2022). Relating the external factors to the internal ones, marketing specialists can elaborate ways to improve the company’s effectiveness.
Asda company, being a key player at the UK retailer market, enjoys strengths unparalleled on the part of smaller shops and specialized stores. Firstly, Asda is a recognizable brand associated with a high quality of goods for moderate prices. Indeed, many Asda clothes are sold the day they are delivered into its shops as the customers measure the quality and style of clothes against their moderate prices. Secondly, Asda has an extensive shop chain that allows it to be present in large cities such as London and Dublin, and smaller cities alike. Thirdly, Asda has an established network of suppliers who provide high-quality goods for moderate prices, making Asda assortment wide and catering to every taste. Finally, Asda is not heavily indebted and has enough money to bring into life its projects (Yamoah, 2019).
Despite its stable position at the market, Asda stores have weaknesses that threaten to reduce its effectiveness in the future. The first weakness is the lack of analysis about the consumers and their preferences. Indeed, the company received practically no feedback from its customers as to the services provided which puts the company into a weak position compared to its competitors (Bentham, 2018). Secondly, there is a lack of advertising and, as a result of it, the promotion of Asda services stagnates. Finally, the company lacks a well-defined strategy of development that significantly hampers its progress in attracting new customers. Thus, the company has recently developed a rather rigid Asda Essentials store concept, which had mixed results in two stores and was quickly abandoned (Bentham, 2018).
The external environment for Asda company presents threats as well as opportunities for further development. First of all, Asda company faces competition from discounts who offer lower prices such as Aldi and Lidl. Secondly, economic instability with high rates of inflation decreases the ability of people to buy goods. Thirdly, the instability of supply chains as suppliers are struggling with inflation and search for ways to produce goods at a reasonable price. As far as opportunities are concerned, the company has a good opportunity to increase its market share as people shift from more expensive goods to cheaper ones. Secondly, since the company has an extensive network of supplies it can diversify its assortment to meet the needs of customers (Yamoah, 2019). Thirdly, the company has a unique opportunity to increase the number of goods sold as people seek to buy additional amounts of goods until they became more expensive due to inflation. The overall analysis of Asda company’s strengths, weaknesses, threats, and opportunities is presented in Figure 1.
Figure 1. SWAT analysis (own illustration).
Asda’s Key Service Marketing Challenges
Asda’s key service marketing challenges for the last three years have comprised meeting the customers’ needs without raising the prices, providing quality customer services and operating within a highly competitive market. Since the company has limited feedback from the customers and this field is underdeveloped, Asda cannot react quickly to the changes in customer preferences which results in large supplies of goods people do not need and a shortage of goods everyone wants to buy (Yamoah, 2019). A good example of this is Asda’s clothes store where things of necessary sizes are sold within days of their arrival while others lie on the shelves for a long time.
Quality customer service is the basis of retail; people like to receive extensive answers to their questions delivered in a polite manner. Personnel that are knowledgeable about a wide range of goods and inquire about people preferences are in high demand. The challenges Asda faces in this respect are that, being a discounter, Asda cannot afford to pay high salaries and has difficulties attracting competent staff. However, the image of the retailer, its reputation and stability it offers can largely diminish the impression low salaries have on prospective employees. ST, energy, personnel, as well as convince Asda operates in a highly competitive environment facing competitions from international chains as well as smaller shops, it should develop a recruitment programme that would allow prospective the best employees consider Asda’s vacancies. To meet this challenge, a flexible system of bonuses should be elaborated and workers should be considered to receive non-monetary rewards along with monetary stimuli.
Threats and Recommendations
When speaking about services marketing, theoreticians add to a standard market mix that comprises price, place, product and promotion another three entities – those of people, processes, and physical evidence (Darmawan & Grenier, 2021). Services are unthinkable without personnel involved in them and these are often reputation of the company and its key figures that determine customers’ choice in the matter of services. Being a discounter, Asda cannot afford to pay high salaries to its employees. However, given its reputation and history, the company may elaborate flexible working terms that will attract professionals to the retail chain. The company is recommended to develop a system of non-monetary stimuli that would be attractive for the staff as well as a system of bonuses and discounts for buying goods at Asda’s stores. Such a system will not only stimulate employees to work more efficiently, but may be instrumental in offsetting threats the company faces – those of growing prices and inability of people to buy all they need.
The processes within a company are usually evaluated in terms of friendliness and efficiency (Wilson, 2018). While friendliness mainly has to do with well-trained and professional staff, efficiency of the processes can be brought about by careful assessment of the volume of goods needed and sold. Moreover, effective interactions within supply chains must be effective in terms of timing and pricing, a challenge Asda faces as the threat of inflation creeps in and many suppliers raise their prices. To make the company’s processes effective, it is recommended to carefully choose suppliers and adjust to the difficulties they might have, contacting alternative suppliers where possible and seeking to buy high volumes of goods with discounts.
To overcome the challenges within the constraints of strengths and opportunities, it is necessary to consider Asda’s strong sides. Being a discounter, Asda has a unique chance of increasing its market share in terms of volume and number of customers as people turn from more expensive goods to less expensive ones. To use this opportunity, Asda is recommended to carefully consider its suppliers and choose the ones where prices are the most democratic bearing in mind the current situation with inflation. Moreover, being a recognizable brand people want to work with, Asda has an opportunity to diversify its assortment in discount category so that even people on a budget can have a reasonable choice of products and goods. Asda is recommended to review its assortment to comprise more goods from a discount category to be able to compete with international retailers who offer democratic prices.
Conclusion
Finally, Asda is recommended to further extend its network to those towns and villages that as yet have no network shops in the vicinity. It will allow the company to gain new customers as prices at smaller shops currently operating in those districts are usually higher than the ones Asda can afford. Being a financially stable company, Asda should consider channeling its money into extending its customer base as well as improving the level of its interaction with the customers. Asda is recommended to gather feedback on the brands customers want to see in the shops, and on the discount programs they prefer. Flexible pricing with consideration to the number of goods people buy and the regularity with which they visit Asda shops will attract more loyal customers. Moreover, offering the brands people want to see will undoubtedly increase the turnout of goods and make Asda’s operations more profitable.
Reference List
Bentham, J. (2018) ‘Business and economics in the news–Sainsbury’s and Asda-the decade’s mega-merger’, Teaching Business & Economics, 22(3), pp. 11-12.
Darmawan, D. and Grenier, E. (2021) ‘Competitive advantage and service marketing mix’, Journal of Social Science Studies (JOS3), 1(2), pp. 75-80.
Teoli, D., Sanvictores ,T. and An, J. (2022) SWOT analysis. Treasure Island, FL: StatPearls Publishing.
Yamoah, F. A. (2019) ‘Fairtrade UK in retrospect: from the niche genesis to the revelatory mainstreaming marketing strategy era (late 1950s-late 2000s)’, International Review of Management and Marketing, 9(4), pp. 110-120.
Wilson, A. (2018) Marketing research. London: Macmillan International Higher Education.