This HND Assignmentrequires individual written report on a large FMCG organization marketing strategy. One of the most fashionable and desired brand in the country – Harvey Nichols is an esteemed luxury department store which has international branches. While here, myriad of customers can find the best fashion designer’s clothes here. The store was found in 1831 and sells fashion accessories – for men and women; beauty products, food and wine stores. By the end of 2011, the store had branches in six cities in the country and has over 6 branches outside of the UK. In the year of 2000, the company opened its first store in Riyadh in Saudi Arabia(Harvey Nichols, 2013). The company is de listed from the London Stock Exchange and has returned to private ownership. In this Icon College marketing strategy assignment, the brand’s marketing plan has been evaluated and analyzed keeping in mind the recently introduced product line – men’s grooming products range. A secondary analysis has taken place where data and research has been gathered using several books, journals and articles. Relevant marketing principles, theories, strategies and concepts have also been elaborated keeping in tandem with the case study. Furthermore, company’s target market, buyer behaviour and other strategies have also been explored and evaluated. The company uses Maslow’s need based hierarchy model which is also evidenced in the paper. Self image which is part of self actualization in Maslow’s model has been explored throughout the paper. An integral part of psychology of every person is the satisfaction of the self image. Therefore, the brand’s interpretation is interpreted by the desired image sought by the consumer. This Icon College marketing strategy assignment also highlights what Harvey Nichols represents for its customer base.
TASK 1 (LO 1)
a. Examine a few definitions (at least two) of marketing and explain the marketing process with example drawn from your chosen organisation.
b. Recommend a marketing orientation for your chosen organisation in relevance to the newly developed product.
The term marketing has evolved over the course of many years. One of the best definitions of the same has been provided by the notable writer, Philip Kotler who says marketing as an activity satisfies wants and needs through the process of exchange(Kotler, 2010).
On the other hand, the Chartered Institute of Marketing defines the term as the management process which is responsible for identification, anticipation, and satisfaction of customer’s requirement in a profitable manner(Fitzroy, 2005). The main aim of the chosen company or this paper which is Harvey Nichols is to provide a different shopping experience to their customers. The company’s main aim is to continuously show their customers that their growing in sales operations and functions to meet and satisfy their demands. This implies that the company’s marketing strategy is in line with the definitions drawn by many writers and institutes. Its competitor, Harrods, wants to be all things for all people; however, many of its policies such as banning flip flops and unkempt clothing have kept many prospective customers at bay(Shannon, 2013). Therefore, in this regard, the marketing strategy of Harvey Nichols works for them in reaching out to the target market.
One of the most recent products added to the company’s range of comprehensive products is men’s grooming products. The grooming products for men include perfumes, wash bag accessories, after shave balm, shower gel, moustache wax, men concealer, face cleanser, daily moisturiser, bronzing gel, skin revitalizing cream, eye serum, hydrating lip balm, eye treatment cream, purifying mud, beard moisturiser, cologne, hand cream, facial scrub, razor, etc. The list is endless with a range of products. The list clearly shows there is a mix of conventional and non conventional products for men(Harvey Nichols, 2013). The best way for the company to sell these products is to first create a niche market for it. To make sure mindsets are changed about viewing men’s grooming product in the form of razor, cologne and aftershave, the company will have to invest substantially in brand building process through its advertising. Furthermore, advertising and promotion; feedback and reviews should be collected and analyzed by using social media networking sites and micro blogging sites like Facebook, Pinterest and Twitter(Sternquist, 1997).
Task 2 (LO 2)
a. Analyse the macro and micro environmental factors that influence the marketing decisions in your chosen organisation.
b. Examine the concept of segmentation and recommend segmentation criteria and targeting strategy to be used for the newly developed product in your chosen organisation.
c. Identify factors that will influence buyer behaviour and propose a new positing strategy for your organisation and its newly developed product.
The company and its activities are affected by its marketing environment. Marketing environment consists of macro and micro environment. Macro environment implies all those elements which form part of the larger society including economy, technology, politics and culture. Micro environment on the other hand refers to those activities which affect its ability to serve the customers(Porter, 2008). This includes suppliers, public, customer markets, competitors, etc. The company’s macro environment can be analysed using PEST analysis.
Political – All the activities of retailers are affected by the political structure of a country. In order to have a successful business, a country should have a stable government. The political environment in the UK is favorable to business operations and there are no regular cases of civil unrest.
Economic – The UK is in the stage of economic recovery post the global financial meltdown. This means that the country is showing signs of improving levels in disposable income which in turn would impact the luxury department store.
Social – Within the UK, upper class people form only 3% of the population. They include professionals, senior managers, civil servants, etc. These people reach self esteem level as proclaimed by Maslow in his theory of hierarchy. Lower class people and upper middle class people form 20% and 28% of the population. The main customers of Harvey Nichols are the upper middle class people because the purchase of clothing is tied to the ego of a customer and the image of this store is linked with luxury and better social status.
Technical – The Company is favored by good technical and business environment in the country. There is availability of high speed internet which ensures that online purchase by customers is a hassle free process. Many a research has established that online purchase is a growing trend in the country and therefore it is important that the country has no dearth of people with technical skills to provide a hassle free service to the customers.
Recently, the company has also decided to us IT services to offer differentiated services to its customers. The store deployed CRM software last year in order to get an integrated view of the customer and this has increased the sale by 25%.
It is also difficult for an organization to satisfy the wants and needs of all the customers which could derail the company of most of its resources. It, therefore, makes sense for a company to follow the process of segmentation. This process divides a market into different sections depending upon similar characteristics of customers(Masterman, 2006).
In the case of the luxury department store, the target market for would be the people of Manchester when the store is in Manchester. This will be the company’s geographic segmentation. The target customers of the store need to satisfy an income requirement. Keeping in mind the new product of men’s grooming section; the company will have to use demographic segmentation which would use variables such as income, age and occupation. It can use age as a possible target for this new product. With the new product range, it is clear that career professionals and young men would be the target market for the company. This group will have high level of disposable income and would be between 25 – 34 years of age. This age group has been labelled as “aspirer” with their ambition, innovation and affluence put in perspective(Ziethmal, 2003).
The buyer behaviour of the company will be influenced by its comprehensive marketing strategy including the apt use of the 4Ps(Whalley, 2010). Harvey Nichols has got the famous world brand which is the basis of the differentiation as compared to its competitors. The buyers of the luxury department store search international fashion and collection to search for the similar products in the store. The company provides a seasonal catalogue named EDIT which gives details of different collections from the fashion world which includes brand names like DKNY, D & G, Gucci, Marc Jacobs, etc. Being in the premium league, its prices are also of premium range where prices can go as high as 3,800 pounds. Therefore, the price set by the company limits the target market to those people only who belong to high income range. The positioning strategy of the company is to present a product as the leading edge of creativity which is glamorous and fun as well. Therefore, the same strategy should also be applied for the new product category as well.
Task 3 (LO 3)
a. Using your chosen company, explain how the new product was developed to achieve sustainable competitive advantage.
b. Evaluate a range of distribution methods for the newly developed product to provide convenience to a target group of customers in your chosen organisation.
c. Discuss and critically evaluate the various pricing methods used by businesses and recommend pricing strategy of your organisational newly developed product.
d. Explain the concept of integrated marketing communication and discuss the elements of promotional mix including extended the extended marketing mix as relevant to your organisational newly developed product.
Men’s grooming industry is fairly new one and is growing at a fast pace. The habit of males is also changing in terms of changing norms and perception of masculinity. This can be substantiated from the act that the term Metro sexual, coined by Mark Simpson, has been used to refer to a set of emerging males who pay attention to their appearance. The growing self awareness has been shaping the way grooming business is presenting itself. According to Mark Simpson, only 25% of men shopped for themselves in the year 1985 and the figure shot up to 69% in the year of 2004. This shows that men have stated to learn about their apparel and have therefore started demanding for better products as well. Harvey Nichols has grabbed the opportunity to cater to those men who are differentiated on the basis of their consumption, appearance and personal wellness. This group consists of essentially young men who have high levels of disposable income, spend freely on clothes, and take care of their appearance by using skin care and hygiene products. A recent article published in the Daily Mail even suggested that men take longer than women now to get ready before going out (Daily Mail, 2010). This article was based on a study of 3000 Britishers. By churning out the new men’s grooming product line, the company has definitely achieved a competitive advantage.
One of the marketing plans of a company is how to distribute its products so that they reach the target market in a convenient manner. This is the element of “place” in the 7ps of marketing. There are many distribution channels and all are different from each other on the basis of cost, complexity, required resources, customer relationships, etc. Therefore, it is important for a company to choose a distribution channel which matches the objectives of the overall marketing plan of the company. In this case, the luxury store department can choose direct store selling where it can fix the price and have their own target market and also it gets to keep all the revenues to itself. However, it is a very time consuming strategy. Furthermore, the company can also look at the wholesale option in case there is any difficulty establishing relationship with the retail customer. This choice will work well when the target market or consumers are dispersed. Keeping in mind the buyer behaviour and product details, the company should use the online channel to distribute its new men’s grooming range. This channel removes any intermediaries and can reach to a large number of customers.
The business management is largely dependent on how a price strategy is formed. Many companies use different pricing methods including margin based pricing, cost plus pricing, skimming, high low pricing, etc. Some companies also use psychological pricing. A cost based depends on adding a fixed percentage to the cost of the product. This is a conventional way of pricing a product. When customers are not price sensitive and look for the value of a product, this strategy works well in favour of the businesses. How high this percentage should be, is decided by the companies keeping in mind the demand of the product and competition in the market. On the other hand, contribution based margin pricing maximises the profit of a company for an individual product based on the products price and the variable costs incurred by the company. In the skimming method, products are priced at a high amount in order to break even after just a few sales. Keeping in mind the target market and brand value of the luxury store department, they should adopt the skimming method(Gregson, 2008). Since most of their customers belong to the elite class, value of a product is highly regarded. Being available in the premium league where only 20% of country’s population can afford to shop, skimming pricing strategy makes sure that they do not suffer losses even when the sale is low for a season and the company breaks even after a few units have been sold in the market across all its stores.
Integrated marketing communication makes sure that all forms of marketing communications are linked together efficiently. That is, it is a quality management process which is used to plan and develop brand’s communication programs and links them with customers. It has multiple relevant audience and demands accountability and measures outcomes of a business or marketing effort. It includes all the forms of marketing channels but instead they are lined together. On the other hand, marketing mix is a combination of different activities that a company undertakes to meet the requirements of the target market. The marketing mix is also defined by the 7Ps which is a contemporary version over the traditional 4Ps. The new 7Ps are product, price, promotion, place, people, process and physical evidence. The company uses premium pricing which implies that its products are unique and that it also enjoys substantial competitive advantage. Its channel of distribution is comprehensive where the value chain is well defined so that the customer gets what he wants(Monroe, 2004). Almost all of its products are of high range and are made for upper and upper middle class families in the country and it uses various marketing channels to promote its products. As part of its Physical evidence, the packaging, seasonal catalogues, etc are all designed to target esteemed customer. All its products and services are produced for a defined target market and the luxury departmental store make sure what the people buy from here, also like. The 7Ps are relevant to the new product line because it focuses on the first step to the last so that only fine products are delivered.
The basic theory of Maslow has been applied successfully at Harvey Nichols where they have upgraded to the highest level described by Maslow – self actualisation. Self actualisation can imbibe a feeling of being complete after an individual buys a must have product, after seeing it in top fashion magazines or at fashion shows, from the luxury departmental store. On the other hand, an individual with no interest in fashion will not be able to understand this phenomenon. Harvey Nichols has been able to build a brand image for itself where it is regarded as the international luxury departmental store. Therefore, it has been able to attract the right customer or target group. It does not only focus on the latest fashion trend but also focuses on the self image of a customer. Harvey Nichols, therefore, always use the glamorous theme to promote its varied products where its target customers have been clearly defined as young, fashion follower, rich and professionals. It is apparent from the above discussed report that the company follows its marketing strategy well.