The objective of this marketing plan report is to analyze the current market of SPAR Oman and recommend marketing mix strategies for improved competitiveness. Porter’s Five Forces analysis revealed a medium competitive rivalry from Carrefour and Lulu and a high supplier power. Rising demand for high-value halal food accounts for the sector’s attractiveness. Based on SWOT analysis, SPARs strengths lie in a strong brand, store format, and strategic partnerships. Expansion opportunities exist in tourism and peri-urban and youthful segments. To realize improved market performance four strategic options are recommended: diversification into canned groceries and red meat, low-priced halal food, omnichannel distribution, and digital marketing.
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Introduction and Objectives
SPAR Oman was established in 2014 through a franchise partnership with Khimji Ramdas (KR), a local corporation with operations in the retail, distribution, and manufacturing sectors. SPAR International is a Dutch multinational that operates over 12,000 food retail stores in 48 countries (The PRS Group, 2014). The brand’s value proposition focuses on quality/freshness, variety, customer service excellence, and value.
In Oman, SPAR opened its first three outlets in Muscat and has plans to expand its store network to 21 by 2018 (MarketLine, 2017). The retailer follows neighborhood stores and local supermarket formats in this market. Within the GCC region, SPAR plans to increase its operations by opening 20 new stores in the UAE and one in Qatar and entering Saudi Arabia (SPAR, 2018). The objective of this report is to gain insight into SPAR’s operations and competitive landscape in Oman and recommend strategic choices for the retailer.
Current Market and Company Situational Analysis
The Competition: Porter’s Five Forces Analysis
The threat of entry
Oman’s retail market is highly regulated, which limits retailer pricing power. However, the sultanate’s investment in infrastructural facilities, including 16 malls and warehouses in Muscat, is rising (MarketLine, 2017; CountryWatch, 2018). Other factors such as financing options, souk tourism and increasing demand for halal food make Oman attractive to foreign retailers. Overall, the threat of entry is average.
The power of buyers
Highly differentiated offerings (fish and poultry by A’Saffa Foods) and fewer powerful brands – LuLu and Carrefour – increase switching costs between retailers. However, the pricing system is highly controlled. Therefore, the power of buyers is average.
The power of suppliers
Oman’s reliance on imports means that food prices in Oman rely on international rates. Local supplier concentration is low; hence, switching costs are high. Thus, supplier power is high.
The threat of substitutes
Diversified offerings by big grocery retailers, including Al Safeer, make product-for-product substitution difficult. Further, economies of scale enjoyed by dominant brands ensure low prices. Overall, the threat of substitutes is low.
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Low exit barriers, fewer food retailers, and a growing consumer market lower competitive rivalry. However, competition between established brands is fierce. Thus, competitive rivalry is average.
Comparative Analysis of Competitors
Table 1: Competitor Analysis of Oman’s Major Food Retailers.
|Item||Lulu||Noor Shopping||Carrefour||Al Safeer|
|Headquarters||Abu Dhabi||Muscat||Boulogne Billancourt||Sharjah|
|Number of stores||156 stores in the GCC||Five stores in Oman||12,300 shops in 30 countries||80 outlets in three countries|
|Market focus||Middle East||Oman||Mostly Europe and international markets||Middle East|
|Strengths||– 32% market share in the Middle East (Belwal and Belwal, 2014) |
– Quality, variety, and innovation
|– Strong presence in neighborhood locations |
– Broad product range
|– Strong brand name and market presence |
– Pioneer hypermarket
– Excellent customer service
|– A strong presence in the GCC |
– Brand loyalty
|– Poor customer relationship management |
– Low-quality customer service
|– Limited store network||– Negative media attention in the past||– Limited capital base|
|Market presence||Strong in the Middle East||Strong in Oman||Strong globally||Low|
Grocery stores are increasingly popular retail formats in Oman. Local urban consumers and ex-pats prefer hypermarkets to traditional outlets called souqs (Belwal and Belwal, 2014). Hypermarket shoppers are satisfied with “product completeness, customer service, trading format, and customer satisfaction” (Sugiati, Thoyib, and Hadimidjoyo, 2013, p 68). Among the factors that influence local consumer choice of grocery stores to include advertising, neatness quality, variety, parking area, and customer service (Belwal and Belwal, 2014; Fatima and Lodhi, 2015).). Additionally, environmental cues also affect the shopping motivations of urban clientele.
Table 2: SWOT Analysis of SPAR Oman.
SPAR Oman operates in the grocery retail sector. From the market situational analysis above, its current target segments are the Oman Muslim population in coastal urban centers like Muscat and expatriates/tourists. SPAR offers fresh fruits and vegetables, packaged food, poultry, meat, and seafood to this market. Projected growth in urbanization and per capita income will increase the demand for quality processed food by up to 3% (IGD, 2015). SPAR can expand its production and downstream logistics for halal poultry and seafood to satisfy the rising appetite.
The trendy middle-income group is a potential new market segment for SPAR. Due to limited prior exposure to foreign brands, young men prefer high-quality suits to traditional dishdasha outfits (Hassan, Sade, and Rahman, 2013). SPAR can diversify into international fashion products to serve this new segment. It can also target peri-urban and rural populations with its neighborhood stores. This segment provides long-term growth opportunities for SPAR, as the current market is increasingly becoming saturated.
Marketing Plan Objectives
- Leverage on e-commerce to expand the number of users that register and order through the system by 20% by the end of 2019.
- Open 10 new retail outlets in locations outside Muscat municipality by the end of 2021, five each in Al Khoud and Bausher.
- Acquire a market share of 5% more in Muscat alone through franchise agreements with KR and sales promotions by the end of 2019.
- Grow sales by 15% by the end of 2019 by leveraging on e-commerce and social media campaigns to promote halal food to more Omani consumers.
Marketing Mix Strategy Recommendations
A good marketing strategy for SPAR Oman should be based on the market situational analysis described above. Using the 4Ps marketing mix– product, price, place, and promotion – retail management recommendations can be made for the retailer.
SPAR Oman’s broad product range includes halal food – fruits and vegetables, packaged food, poultry, and seafood constitutes a significant strength. Its value proposition is centered on freshness and quality. Improving the current offerings to include frozen vegetables and fruits and diversifying into red meat are the recommended product development strategies to enhance durability and reliability and serve a growing foreign segment (expatriates, migrants, and tourists).
The rising minimum wage in Oman is projected to increase the demand for high-value halal food (IGD, 2015). International brands are perceived to offer better value than local retailers. Offering lower prices than competitors (Al Safeer, Lulu, and Carrefour) will enable SPAR to position itself as a budget grocery store. Launching low-priced “special editions” of halal food is recommended as a market development strategy to target price-sensitive pre-urban and rural segments.
The current place consideration for SPAR includes store location in major urban centers, such as Muscat, Al Khoud, and Bausher. An omnichannel distribution strategy is recommended to ensure cost-effective access to customers. Online purchase and delivery of ordered food to consumers can lead to a competitive advantage. Additionally, selling through local franchises can revolutionize SPAR’s distribution system.
Retail promotions that center on quality, value, and freshness can increase SPAR brand awareness. Therefore, the recommended promotional mix strategies include digital/online marketing and sponsorships. An interactive website and floor ads can increase recall and purchase intentions (Shrivastava, Saini, and Pinto, 2014). Sponsoring CSR programs is a critical public relations strategy.
Evaluation and Control
Organizations use performance standards to measure the success of marketing efforts. The focus areas include profitability, strategic, efficiency control (Wood, 2014). SPAR’s marketing plan will be monitored through the evaluation of sales, expenses, market share, and customer attitudes. Profitability monitoring will involve analysis of earnings per product and market segment. The evaluation and control tools will include customer feedback, competitor analysis (SWOT), and cost analysis. The Key Performance Indicators (KPIs) that will be employed are shown in Table 3 below.
Table 3: KPIs for Marketing Plan Evaluation.
|Sales numbers||Comparison of monthly sales with the annual target figure of 15%|
|Percentage of market share||SPAR’s market share in Muscat|
|Number of outlets||Retail shops opened outside Muscat|
|Brand’s online visibility||Number of users registering and ordering online|
Table 4: Cost of Marketing Mix Strategies.
|Diversifying into canned vegetables and fruits and red meat||15m||Product development and promotion costs|
|Low-priced halal food||25m||Product distribution costs and new outlets in target areas|
|Omni-channel distribution||5m||Developing an interactive and secure online platform|
|Digital marketing and sponsorships||35m||CSR activity and games|
Belwal, R. and Belwal, S (2014). Hypermarkets in Oman: a study of consumers’ shopping preferences. International Journal of Retail & Distribution Management, 42, 717-732.
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