Asda Stores’ Strategic Marketing

Introduction

The expansion of food companies is happening at an ever-growing pace. Most virtual and online stores have shifted from multi-domestic marketing to international marketing. The appearance of the food market has been enthused by the speedy enlargement and mixing of countries; the configuration of local trading blocs; the formation of market economies; and advances in production and communications technologies. Today, food marketing is proving to be of ever-increasing importance to companies of all sizes, to their customers, and to national economies. Worldwide, most companies are now selling to, using materials or equipment from, or competing with products from other nations.

Research Methodology

The paper will be based on primary data collection, including first-hand knowledge (observations) and secondary data related to the company and its economic analysis. Also, the paper will involve a substantial number of theoretical publications which help to define and analyze the marketing strategies of Asda.

Organization’s Background

Industry Background

The food market in the UK is influenced by farce competition between three giants: Tesco, Asda, and Sainsbury’s. The demographic forecasts indicate that the food retail needs are and will be quite different from those in the north. A fall in birth rates has led to a decline in population throughout the country. Although the states have experienced a decline, the rate of decline is much slower than in the north. Social changes such as increased labor force participation by women will also affect the demand for consumer goods. In the UK, the scale of operations in online shopping is very small. There is approximately one retail store for every fourteen households in the country (Drucker 1974). The researchers found that 20% of consumers scarcely bought anything, rejecting or never entering the consumer society, while the next largest group, 15%, never stopped buying and showing off. Most people did their shopping at the first store they came across and did not compare prices. In the UK, the current market situation is marked by the low purchasing power of buyers as some of them switched to so-called co-op food stores. The advantage of these stores is low prices and a wide product range (Asda Group 2009; Jacoby et al 1998; McDonald and Christopher 2003).

Organization’s Description

Asda Stores (UK) is a subsidiary of one of the United Kingdom’s largest supermarket retailers, Asda Group plc, which also operates Allied Maples Carpet and Furnishing Stores and Gazeley Properties, a commercial property development company. The company also retains a 25% stake in MFI, a furniture retailer, resulting from a management buy-out of the company back from Asda in 1987 after an unsuccessful merger. Asda Stores led in the development of the superstore concept in the United Kingdom. The basic concept of the Asda superstore is a free-standing unit with a large, generally, over 25,000 ft2 or 2,323 m2 sales area, operating away from conventional shopping areas and offering free parking and low-price petrol as additional customer incentives. Asda stores carry a large selection of food and related nonfood products, toys, clothing, and footwear. The store currently stocks 30,000 product lines, considerably more than its competitors (e.g., J. Sainsbury stocks approximately 14,000 product lines, and Tesco markets 18,000 lines). Private label products account for approximately 32% of Asda’s grocery lines compared to 55% at J. Sainsbury.

Products/Services and Market

Asda proposes products for two types of customers: home buyers and for business purposes. The main types of products involve general grocery, meat, and seafood, the Deli, meals made easy, health and beauty products.

Like the traditional value chain, the virtual value chain is carefully managed if its full potential. The processes by which this value is created are themselves online (bringing together disparate pieces of information, analyzing, sorting and distributing that information), as are its customers (companies that need information for their own needs). The methods and underlying company’s ideologies of the virtual economy are likely to be of direct interest to the local community, but understanding how these concepts can be applied in the new environment also tells a lot about how these new ways of business and shopping can be exploited in other functions within the industry. Asda pays special attention to delivery services and proposes fast delivery for all consumers. The advantage is that a potential customer can choose the time of delivery and check on the site whether this time is available or not. The actual product is grocer while the augmented product is delivery service (Gardiner, 2005).

Vision/Mission

Asda’s mission is “to become the UK’s leading value for money grocer with an exceptional range of fresh foods together with those of clothing, home, and leisure products that meet the everyday needs of our target customers” (Asda Annual Report 1992). These target customers are ordinary working people and their families whose weekly shopping needs Asda is trying to meet. The reestablishment of Asda’s reputation on price is at the heart of its strategy.

Department and My Role

I work for a year as a sales manager in one of the stores. My role and duties were to support the management team in daily operations and maintain friendly communication with customers.

Strategy and Marketing

In marketing, strategy means the bridge that relates military power to political purpose; it is neither military power per se nor political purpose. Strategy is the use that is made of force and the threat of force for the ends of policy” (Dobson and Starkey 2004, p. 54). 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. The most successful strategies are visions, not plans because it is impossible to create an ideal and perfect plan: internal and external environments demand constant changes and amendments. “Vision” is an obligatory component of strategic plans, even though the actual declaration seemed most like a description of current events, a justification of the existing system. The basic problem with visions is that they are always fleeting and elusive. Palpability is of no significance to the bright or shadowy images that haunt the landscape of tomorrow (see appendix 1).

Strategic marketing objectives are the means by which gods and other supernatural beings revealed to mortals, via some chosen seer, pictures of either a heaven or a hell, figuratively–literally, For some perverse reason, there were always more visions of hell, usually accompanied by a clamorous divine warning and the last chance to mend one’s ways. Beatific visions are so rare that they are enshrined, the visionaries canonized. Even so, there was considerable tolerance in the visions’ specifications and veracity. The overall effect was the thing. After all, details lead only to trifling misunderstanding, argument, and squabbling. Organizational structure may limit or provide a great deal of freedom in how we approach a job. Other people, the task to be done, and technology all impact what we do on the job and how we go about doing it. All these depend on the purpose of the organization, which defines why we exist (Graets 2002).

Applied to Asda, any planning process that begins with vision is immediately suspect. There is little chance that anything of substance will come of it. No one can be exactly sure about what goes on in the spectral realm. Every day brings a new revelation. But discernible words, now and then echoing from the outer mists, suggest many strange things–all apparently aimed at creating an air of mystery, heavy with the fragrance of the supernatural. Some, especially those drawn from Native food traditions, probably cross the line in the profanation of sacred traditions. Admittedly, much is to be said for the attempt to escape the shackles of purely rationalistic processes–certainly a blow for emotional freedom, popularly known as “thinking out of the box.” However, one would expect that strategic thinking would be at least intellective, if not intellectual, but that is not the case. Instead, there is a distinct tendency toward rationalistic ambiguity, indicative of no doubt of psychology of ambivalence about oneself, others, and the way the world works (Geneen 1984).

Asda management recognizes that acceptance of plans e is not enough. Certainly, the current definition of consensus as the majority will over minority acquiescence does not constitute agreement. In strategic decision-making, there must be no winners and no losers, but everyone must experience gain. Specifically, the six components of the plan–beliefs, mission, parameters, objectives, strategies, and action plans–must be matters of full agreement. If there is no agreement, there will be no commitment. For example, there is the traditional rational decision-making model: identify the problem; analyze the situation; set an objective; explore alternative courses of action; examine obstacles and adverse consequences; and reach a conclusion.

In Asda, strategic marketing is based on strategic thinking which can be seen as a unique vision of the problem. The subject of decision-making raises the larger issue of the planning organization’s strategic thinking; specifically, the question is about prerogative and responsibility. Although most “professionally managed” organizations now subscribe to “participatory” decision-making, there is nowhere any uniform understanding of exactly what that means. And, as if to add injury to insult, it is usually force-fitted into a rigid autocratic construct, which makes real participation impossible (Grant, 1998).

External Environment and Competitor Analysis

Following PESTEL and SWOT analyses, it is possible to say that the strengths of Asda are strong brand image and expert system, excellent website and customer support. Resource-based philosophy and innovations create new opportunities for market development and brand recognition. Customers’ loyalty can be achieved through the people who are employed by Asda. The strengths are strong brand image and expert system, excellent website and customer support. Resource-based philosophy and innovations create new opportunities for market development and brand recognition. The unique vision of the customer needs becomes the responsibility of R&D, which is staffed by specialists in visualizing and realizing trivial or main product changes.

The opportunities of Asda include the high potential for growth and profitability, professional management team and unique corporate culture, customized order system and discounts. There are great opportunities for supermarkets in this field, because specialized shops, throughout the world, are interested in goods produced in an environmentally friendly manner (Asda Group 2009). The opportunities include high potential for development and expansion, professional approach to management and wider product range. Retail service assesses the areas in which the organization can benefit the most from greater emphasis on creativity and innovation. Competitive advantage serves both as a way of identifying what creative and innovative things competitors are doing as well as finding out for each of the areas requiring imagination and innovation who is the best (Walker et al 2005).

The main weaknesses of Asda are low market potential in some geographical areas. Competition is the main threat for Asda. In spite of weaknesses and threats, Asda has an attractive position based on a combination of cost management and customer services. In spite of weaknesses and threats, Asda has an attractive position based on a combination of cost management and customer services. The market trends establish challenges for generating creativity and innovation for large companies like Asda. They also provide research challenges from a creative and innovative management perspective. Research challenges fall into two major approaches of further success: one deals with methodologies and the other deals with issues to rethink, realign and reorganize large-scale retail companies. Limited geographical market and increased competition are the main threats for Asda. The main threat for Asda has increased competition and the near-monopolistic position of other retailers on the market. New methods of accountability will be needed to ensure that creative and pioneering activities are truly better than traditional ways (Thompson and Martin 2005).

The main competitors of Asda are Tesco and Sainsbury’s and other supermarkets specialized in cheap food and grocery products. The grocery market is marked by increasing capital markets activity over the past 5 years. It is estimated that average annual returns are anticipated to exceed 13 percent over the next 10 years, with investment alternatives performing at single-digit growth rates (approximately 7 percent to 9 percent). This approach is based on Asda’s superior understanding of the problem solved by the product, the benefits it offers and issues it addresses (Fill, 1999). As consumers become more concerned about price, mobility and quality consumer electronics are the best choices for this target group. When product is standardized it becomes established for minimum quality and features, competition shifts to a greater emphasis on cost and service (Graves 1998). Consumer marketing strategies are the broad approaches intend to adopt in the longer term to achieve its marketing objectives in accordance with its mar­keting policies. New strategy will take into account increased competition. The blend of controllable marketing variables required producing the response wanted in the target market. The mix includes new products, prices, promotion, packaging, advertising, field sales and distribu­tion. Internet services and Internet providers are other potential areas for Asda (Teece et al 1997).

Porter’s analysis and generic advantages allow us to say that Asda is in maturity stage. The traditional characteristics of this stage are exceedingly resourced intensive. They require the company to remain abreast with the current developments in their own environments and preferably several other fields as well. The core benefit of the product is fast delivery and high-quality products of all types. The customer can order exotic and traditional goods online and check their availability and time of delivery. In other words, the more experiences to which customers are subjected, the more likely they are to be able to make an effective purchase (Drejer, 2002). Also, the more perceptive they are, the more likely they are to generate effective purchases from that experience. The virtual world can positively increase the level of quality that a buyer can assimilate. Asda refers to the Internet throughout because online shopping represents a very real and very accessible attempt to introduce the concept of a virtual business alongside the physical world. Online shopping is beginning to touch all aspects of modern life; it is the new society that, probably, continues to make the best use of it today (Sterman, 2000).

Market Segmentations and Options Analysis

The core strategy of Asda is based on value propositions and product differentiation is well developed. The main strengths of this strategy are clear identification of the product advantages and potential target audience. This strategy will result in a plan that can assist the company in selecting and positioning the product. Product differentiation strategy helps Asda to create an entry barrier for other companies and creates a unique market proposition. This strategy makes sense because of a prod­uct’s perceived uniqueness. Differentiation should be achieved as a result of unique product attributes and effective marketing communications. In the case of Asda, product differentiation and brand loyalty increase for would-be industry entrants who would be required to make substantial investments in R&D or advertising. As with the selling philosophy and relationship strategy, Asda must include comprehension of the target market’s characteristics and the fact that pre­vailing needs and wants may mandate products that are different than those offered in the home country (Dobson and Starkey 2004). As the first marketing tactic element, differentiation should create a truly different and unique product for cus­tomers. Asda not only has to be perceived differ­ently by customers (positioning), it has to be really differ­ent in content, context, and infrastructure (differentiation). In addition to differentiation strategy, product positioning will help to establish trustworthiness, confidence, and competence for customers. If Asda has those ele­ments, customers will then have the “being” of the com­pany within their minds. It is about earning customers’ trust to make them willingly follow Asda. Because customers cannot be managed, they have to be led. Asda has to have credibility. So posi­tioning is not just about persuading and creating an image in the consumers’ minds, it is about earning consumers’ trust and loyalty. The positioning strategy should support a differentiation strategy in order to widen the product potential market. It will help to occupy the consumers’ minds with unique offer­ings and will lead the customers’ credibly (Rugman, 2000).

Segmenting decisions are complicated by the fact that national income fig­ures, such as those cited for Italy are averages. Age segmentation involves young people between the ages of 18 – 76+ and young families who value good products and low cost. These people by virtue of their shared interest in fashion, music, and a youthful lifestyle, exhibit consumption behavior that is remarkably consistent across borders. Young consumers may not yet have conformed to cultural norms. For Asda, gender segmentation will have a great influence on a marketing campaign, but it is predicted that the majority of consumers will be males (Grriffin and Mcarthur 1997). Psychographic segmentation will help to group people in terms of their attitudes, values, and lifestyles. For Asda, the majority of the target audience is stylish young people who admire fashionable cars and lifestyles. They will feel the new model is tailored according to their needs and wants. Income segmentation: the grocery market consists of those who are willing and able to buy. The buyers belong to upper, middle and low-class families. Taking into account standards of living in Italy, they will offer 0% interest for five years or the option (Reed, 2006).

Strategic Marketing Plan

Potential buyers of Asda are diverse in character. They represent $175 billion in annual buying power and about $1000 per week in disposable income. These customers expect to find unique products, regardless of the price and proposition. This target group can be characterized as skeptical consumers who are health conscious. Most of them are looking for a toy chest of automotive accessories including interior lighting, taillight dress-up kits, carbon-fiber shift knobs, and sports mufflers. The best distribution channel is online shopping and shopping thought agents (Heracleous, 1998). The proposed improvements and changes will deal with new channels of distribution and pricing strategy. The new channel will be positioned as a unique one that promises mobility and social freedom. Personalization, innovation, and technology will be the core of positioning strategy. The buyer perception of the benefit-generating attribute will be based on unique design and stylish image appealing to a wide target audience. Social mobility and personalization will be the main attributes of the positioning strategy. A unique image of the grocery purchase and sense of belonging to the new generation will appeal to potential consumers (Pittengrew et al 2006).

The main objective of the first year is to help traditional buyers of Asda to use online shopping and save time on traditional shopping practices. More narrowly, the function of the new strategy will be to provide the informational and analytical inputs necessary for effective planning of future market marketing activity, control of current marketing operations, and evaluation of results (Griffith et al 2000). Three programs will be involved at Asda:

1. customer feedback input,
2. customer satisfaction surveys,
3. total quality control.

So-called worldwide relationship surveys are run about every 12 months. The objectives will be to:

1. attract a wide target audience;
2. educate buyers on how to use online shopping;
3. educate buyers about healthy lifestyles and the importance of fruits and vegetables in the diet;
4. include exotic fruits and vegetables in the Asda’s product line (Marx 2006).

Implementation and Control of promotion campaign

August 1st – Start creating advertising campaigns and the internet website for consumers:

• September 1st- Production of the new online stores begins.
• September 15th – national and local advertising and promotion campaigns
• October 1st – the first online stores will be opened out to the different channels
• October 8th- Internet promotions will begin for individuals who are looking to purchase their products online.
• October 15th- Special promotions will start for the new online stores

Special attention will be devoted to the milestones (each month) which determine whether or not sales are being met.

For Asda, the market skimming pricing strategy will be part of an attempt to reach a market segment that is eager to pay a special price for a particular product. Companies that seek competitive advantage by positioning their products in the premium segment frequently use market skimming. For Asda, the skimming pricing strategy is appropriate in the introductory phase of the product life cycle when both online shopping capacity and competition are limited. By setting a relatively low price, demand is limited to innovators and early adopters who are willing and able to pay the price (Moore, 2001).

Recommendations

For Asda, a family is an identifiable unit that can be studied through purchase reactions, tastes, and consumption decisions. To a considerable extent, a family’s lifestyle 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 (Johnson and Scholes 1998). 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 centers located near homes encourage online shopping. The impact of either husband or wife varies with the exact purchase in Ireland (Ireland et al 2005). On a broad level, the allocation of financial resources must be specified — for instance, what portion of the family fiancé goes to food, grocery, recreation, and travel. Then there are decisions concerned with the special food to be purchased within each category — the kind of meat, produce, or grocery. Low and middle-class family decisions must also be made on the special purchase within each class. Lastly, a choice of the food itself must be made (Hollensen, 2007). Delivery services are becoming a more important part of shopping. A large proportion of food and grocery products and services is purchased and consumed at a considerable distance from home. Therefore, transport to and from services is important, and consumers become increasingly dependent on efficiently organized delivery systems. Many services involve direct contact between the buyer who furnishes and the person who receives them (Mintzberg et al 2004).

Conclusion

In sum, the company analysis allows me to say that the advantage of product originality will allow Asda to create a strong international brand image. Brand loyalty will also be an important factor in increasing the costs for customers of switching the products of new competitors. Using an international mar­ket development strategy, Asda will capture a larger share of a market for current products through market saturation and market pene­tration. Taking into consideration the rapidly changing environment and customers’ expectations it is not enough to operate only on a national market. Online marketing will help Asda substantially increase the level of sales. marketing plans are heavily dependent on consumer or buyer feedback, which in turn is dependent on the limited perception and experiences of the consumers or buyers. Too often these consumers or buyers are unable to articulate their needs or want in terms of a futuristic perspective. Latent needs and desires that may identify futuristic product possibilities are rarely identified by most survey research methods currently in use by Asda. It is a special type of consumer that can articulate these possibilities, and special research efforts are needed to find these people and draw out their ideas. This implies that, once certain plans and financial decisions are made, business continues as usual. The necessary flexibility and proactive behavior are not built into promotional plans. Furthermore, it is assumed that business conditions are not likely to change significantly and that the best approach is to implement the plans as they were originally devised. This type of conservative and traditional point of view makes it impossible for the firm to cope with turbulence. The case of Asda shows that firms can behave this way because they are big and powerful. Therefore, they reinforce the survival of the fattest. Though, Asda must realize that by not being proactive and not attempting to counteract instability in business is likely to lose money in both the present and future.

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Appendix