Strategic Markeitng Managemnt(Carrefour) Essay
Strategic marketing management Company Information Carrefour Group, in the past 40 years have grown to turn out to be one of the world’s leading distribution groups. Carrefour began its journey in 1959 which was established in France by the Defforey families and Fournier. The name Carrefour came into existence as shops were located on thoroughfare, which literally means a place where it’s convenient to shop.
Carrefour hypermarket was first opened outside France in Belgium and the first in Brazil, outside Europe. The group currently operates in three major markets: Latin America, Europe and Asia, also including China, Brazil, Indonesia, Poland and Turkey. Carrefour has set its foot in 34 different countries. Carrefour Group is number 2 worldwide and number one in Europe with over 476,000 employees with four main store formats like: Hypermarket, super market, discount stores and convenience stores.
Ambition and everyday values: With one ambition, that is ‘making Carrefour the preferred retailer wherever in operates’ with three pillars which support and make it happen : Client- Oriented Culture, Transformation and innovation, which is followed by everyday values which are: Committed, Caring and Positive which in turn help Carrefour to achieve their value which is ‘ to make Carrefour a business that is recognised and loved for helping its customers and consumers enjoy a better quality of life, each and every day’. 1.
Discuss the role of strategic marketing in an organisation John Scully defined strategic marketing as ‘a series of integrated actions leading to a sustainable competitive advantage’. Another definition of Doyle (1998) defines, ‘strategic marketing as planning for the organisation to utilise the optimum resources and make tactics to achieve the overall objectives of the organisation’. The strategic marketing brings the following advantages to an organisation: 1. Brings competitive advantage to the organisation by making themselves different from the competitors (Doyle, 1998).
Carrefour group in case of pricing use ‘everyday low prices’ strategy, which ensures cheaper good with superior quality, which pulls in customers. 2. Increase the business capability by guiding the managers with the clear direction (Doyle, 1998). Carrefour knowing both their internal and external strength and weakness sets strategies which guide the employers and employees in the right direction. 3. Helps in analysing the market, competitor analysis, product/service analysis, classify the segments, target the customers, and position to the audience what they offer (Doyle, 1998).
Carrefour group uses strategic marketing to investigate not only competition but also the competitive advantage the others have and along with it analyse the market growth and potential of retail industry. 4. The best approach to increase the sale, communicate and deliver the value is strategic marketing (Doyle, 1998). Carrefour interact and communicate through their customers by getting feedback, advertising, promotions which attract new customers, which helps to increase brand value at the same time create a position for itself in the customers mindset. 2.
Explain the processes involved in strategic marketing and evaluate the links between strategic marketing and corporate strategy Marketing Planning Process Market Planning Process Market planning is the process in which the organisations monitors and control the internal and external opportunities and challenges to maximise the profit by delivering the value to the customers. This is called as situational analysis. The market planning process should be aligned with corporate strategy to achieve the corporate objectives (McDonald, 2008). Market Planning Process:
Figure 1: Market Planning Process (McDonald, 2008). Corporate strategy Carrefour group aims to satisfy every customer expectation and satisfaction with professionalism and offer best possible prices (everyday low prices) for high quality products and services and grow to become the number one hypermarket in the world. Internal analysis Strength 1. Wide market presence 2. Skilled labourers 3. Multi-format strategy 4. Strategic acquisitions 5. Presence in 34 countries 6. Expanding and growing market. 7. Strong brand in world retail industry 8. Pioneers in hypermarkets. Weaknesses . Decline in operating margin. 2. Entry of competitors with new strategies. 3. Low like-for-like sales in domestic market. 4. All countries may not accept the pricing strategies(JAPAN) 5. Strategies are same throughout different countries, which may not be acceptable by the customers. 6. Poor E-commerce performance. 7. Weak positions in Asia and Middle East countries. Opportunities 1. Rebranding the champion brand stores 2. Entry into emerging markets like China, Poland, Turkey, etc. 3. Focus to boost non-food sales 4. Strategic acquisitions and joint ventures 5.
Development in discount stores. 6. Maintain better labor relations Threats 1. Low consumer confidence (since low price, customers have a notion it may be low in quality, especially Japanese customers). 2. Fierce competition 3. Wal-mart low prices is a threat 4. Rising labor cost. 5. Terrorism and instability in Africa and Asia 6. Entry of new players. External Analysis Ansoff Matrix Ansoff matrix is tool to find the market position of the organisation in the current market. This matrix will to find about position of the organisation serving the particular target market (Hannagan, 2002). Market penetration |Product Development | |Market extension |Diversification | Existing Market New Existing New Products Source: Adapted from Hannagan (2002). According to IMAP retail report published in September 2010, it says there were around 1409 transactions which valued at $17. 1 billion. Two major transactions: Kohlberg Kravis Roberts and Lotte Shopping Co. , represented alone around $2. 7billion which is nearly 15. 8percent of total dollar volume.
In geographical terms, United Kingdom had the highest transaction volume of $3. 9billion with a total of 161 transactions in last 12 months till September 2010. United states fall second to a total value of $3. 4 billion USD. This report ultimately shows that the retail industry is growing worldwide at tremendous rate. Carrefour group along with the competiton made strategic acquisitions as below: • Acquired 4 hypermarkets in Spain(2006) • Acquired 6 hypermarkets in Taiwan. • In 2005, acquired 10 hypermarkets in Brazil and 2 Turkish retail banners, including 12 hyper nova hypermarkets in Poland.
They followed a pricing strategy called ‘everyday low price’ strategy where they provide goods at low rates each day and low when compared to other retail chains. They attract almost every new customer with ease due to their pricing strategy, but Japanese customers where the only ones who didn’t accepted the strategy and Carrefour at the same time was not able to keep up with the fashion trends of Japan. Marketing Strategy Carrefour aims at giving customers the best where ever it operates. By meaning preferred retailer it means drawing customers to shop to which they are loyal.
It also means making customers want to visit, keep visiting the stores. For this very purpose Carrefour puts a low price for their products and keeps promotion and exhibitions for their shops which attract new customers keeping in mind their social commitment and corporate social responsibility. All strategies implemented or decided are always in line with the corporate strategy which is to achieve results. Implementation, Monitoring, Control and Forecast After setting the top level strategies, they analyse the business internally and externally and set the market strategies.
They will communicate their plan to the stakeholders (agents, lecturers, staffs, etc). They will allocate their resources like finance, HR and physical resources to achieve their strategies. They monitor the progress of the plan through means of number of students, profit, and other key performance indicators. If the plan is not going in their way they make alternative plans or they try to control the situation as much as possible. With current analysis and market growth they forecast the future of their institution.
Carrefour has B2B strategy in which implementation has three different levels, which are: local approach, regional approach with global co-ordination and finally global approach which have standard processes and shared tools. Monitoring and control is done by strategic partnership, advanced collaboration and entry ticket. Forecast at Carrefour is done by analysing the financial accounts and looking into the daily achievement of targets and set goals. 3. Assess the value of models used in strategic marketing planning SWOT analysis
According to Johnson et al (2005) “SWOT analysis is used to identify the internal capability or strength and weakness of the organisation, deals with exploring and capitalising the opportunities and threat involved in the changing business environment. ” Based on the internal analysis of the organisation CAMS can plan their strategic marketing, if they are strong the make offensive strategy (expansion and penetration) if they feel that they need to improve more than they should go with defensive strategies (retention, pricing, promotions, etc).
Refer 2. 2 where the Ansoff matrix can be used a tool to identify position of the CAMS in the market. Situation analysis can be used along with market analysis to make the effective marketing planning. Carrefour strengths and weakness: Strength: 1. Largest hypermarket chain in terms of size. 2. Wide market presence 3. Ranked third in terms of profit in industry after Tesco and Wal-Mart 4. Multi-format strategy 5. Operating in 34 countries 6. Selling number of products with its own private brands. 7.
Strategic acquisitions 8. More than 50% sales of the company come from France. Weaknesses 1. Reduce operating expenses. 2. Decline in operating margin 3. Weak position in Asia and Middle east countries. 4. Low like-for-like sales in domestic market. 5. Poor E-commerce performance 6. Too much time in opening new stores. Opportunities 1. Joint venture acquisitions for more expansion. 2. Rebranding champion stores 3. Improve sale performance 4. Reduce operating cost 5. Maintain better labor relations 6.
Entering emerging markets 7. Focus to boost non-food sales 8. Develop discount stores. Threat 1. Fierce completion 2. Wal-marts low prices. 3. Low consumer confidence 4. Entry of new players 5. Slow expansion outside France. 6. Rising labor cost 4. Discuss the links between strategic positioning and marketing tactics Ansoff matrix is tool to find the market position of the organisation in the current market. This matrix will to find about position of the organisation serving the particular target market (Hannagan, 2002). Market penetration |Product Development | |Market extension |Diversification | Existing Market New Existing New Products Source: Adapted from Hannagan (2002). Carrefour group presently is running with around 495,000 employees and operating in 34 countries world wide. Carrefour offer a wide range of products like cosmetics, groceries, bakeries, every house hold items, including food items.
Strategic positioning is positioning the organisation in the target market (image of the industry or organisation to the target audience) (Kotler and Armstrong, 2010). Marketing tactics is logical actions performed to position themselves in the markets (actions or steps taken to position themselves) (Kotler and Armstrong, 2010). The marketing strategy of Carrefour is mainly to offer goods at low prices and great quality and hence attract more customers. The group also provide promotions and exhibitions for its customers at various outlets.
Now Carrefour has entered the Asian markets and also Poland, Turkey, etc. Also the B2B strategy which has been implemented gave out a positive result. 5. Analyse the merits of relationship marketing in a given strategic marketing strategy Relationship Marketing According to Payne et al (1998) the relationship is attracting, enhancing and maintain good customer relationship among the customers. The relationship is maintained between the existing customers and organisation through services and selling, by retaining the old customers they can grow in the market by getting new customers.
The merits of having relationship marketing in Carrefour are a) they can get more customers through after sales feedback, b) offer bonus points and discounts for loyal customers which is possible by providing them with loyalty cards, c) advertising and promotion costs could be reduced through word of mouth marketing which is possible through loyal customers, d) market expansion, technology implementation, maintaining corporate social responsibility all is possible retaining existing customers, e) close relationship with existing loyal customers in form of special discounts for loyalty card holders, and f) which in turn ensures more customers due to referencing from old customers which saves cost on finding new customers. 6. Use appropriate marketing techniques to ascertain growth opportunities in a market
Segmentation and targeting: According to Kotler and Armstrong (2010) segmentation is dividing the entire market according the buyer potential. Some of the types of segmentation are demographic, behaviour, psychographic, and geography. This technique is used to find out the potential users of the product or the service that we target to sell or produce. Targeting is selecting the clients to serve from the various segments selected (Kotler and Armstrong, 2010). Carrefour group can develop the existing stores located in Asia and Middle east countries which are facing problems. This may be done by having mergers or acquisitions with the retail chains established there.
This provides Carrefour an ease to enter the market as well as use the raw materials or any transport medium which the merged company used. It also help to build contacts with suppliers and customers of the merged company, which brings new customers and increase in revenue can be guaranteed. Entry in Japan was failure, but they could again study the market in Japan and re-enter with a big bang which will help them capture the market in no time, but a different pricing strategy should be adopted in order to change their notion that ‘cheaper goods are low quality goods’. 7. Plan how to use marketing strategy options in a market Cost leadership:
Porter (1985) said that when the organisation aims to provide the products or services at the minimum price, their strategy becomes cost leadership. They will compete with pricing from the other competitors. Mostly this technique is used when the clients are highly sensitive towards the price. Customers in today’s world are very price conscious as well as quality conscious. They are ready to pay higher price but without compromising on quality of the product. But Carrefour has product for all types of customers be it rich, middle class or poor. All good keep up their quality in low price too. This satisfies the middle class people’s needs to a certain level. Higher class customers may opt different or same goods at higher price.
Giving product at low price is possible due to mass production as the customer base is huge. Own production plants act as a competitive advantage for Carrefour which puts the new entrants to re-think is their entry correct or not. 8. Create appropriate strategic marketing objectives for a market Marketing strategies for 7 P’s McDaniel and Gates (1998) defined marketing mix as “the unique blend of products, price, promotions, place and distribution to meet the specific demands of the customer. ” They said the organisation or the marketing manager should focus on the 4 P’s and frame their plan according to their marketing strategies, each element should be focussed by the manager’s else entire plan will be failed.
But now as technology got advanced and also the advancement in marketing areas and emergence of new theories, the 4 basic P’s of marketing mix has become 7 P’s, which are namely: product, price, place, promotion, people, physical distribution and process. Considering the product, price, place and promotion aspect of marketing mix, Carrefour has a wide range of product line and product extension. They see that there is no compromise on the quality of the product and since they produce most of the products in their plants, they are able to produce it at cheaper rates, which make them easy to sell at lower rates. The pricing strategy of Carrefour that is everyday low price is a niche in those times which they were able to implement with ease.
Place and promotion of the stores and products are of vital importance. Access to market and customers convenience have to be checked before finalising the location and continuous promotion of stores and product should be there in order to keep up with the market. People, physical distribution and process are the latest in the marketing mix. People in general mean the, customers. Carrefour see’s that they meet their customer requirements and expectations when they do shopping. Distribution handling of Carrefour is done by themselves with the large trailers they have which they move to each stores in particular areas and delivering the products. 9.
Report on the impact of changes in the external environment on a marketing strategy Marketing strategy Carrefour group share a common dream of a business that is recognised and loved for helping its customers and consumers enjoy a better quality of life, each and every day. This is ensured by three main pillars of Carrefour which are: commitment, caring and positive nature. Rising expectations: The number of consumers, consumer’s needs and fashion too is having a changing trend. One can say this is as a result of globalisation, which increases customer expectations and their standards. Customers prefer high quality goods with reasonable price.
In case of luxury items it’s different, as potential customers go for high priced products and quality is in-compromisable. Carrefour carefully understands the customer needs and requirements with the change in trend and then produces which are in budget for them. Target market of Carrefour in general is the whole market where ever they are. Segmentation is possible in areas where its price sensitive. When we take the case of products, they avail products for different age. Let it be a baby, child, teenager or an adult, there are products that suits everyone. Customers are given suggestion box to give their feedback on products as well as the service rendered for them at time of shopping. This helps Carrefour improve its existing method of executing plans.
Keeping a close eye on competitors pricing strategy and customer retention method, boosts Carrefour to think of innovative ideas to tackle their rival. 10. Conduct an internal analysis to identify current strengths and weaknesses in a marketing strategy Marketing strategy: Carrefour sees that their service and product as well, satisfies their customer in all ways and are meeting their expectations. This is not only to increase customer base and revenue, but also maintain and achieve their corporate social responsibility. Carrefour also integrates sustainable Strength and Weakness of Carrefour based on marketing strategies: Strength • Wide market presence: presence in almost 34 countries helps them to have a wide span in the worldwide market. Multi-format strategy: means having everyday low price strategy and B2B strategy at the same time • Joint ventures/acquisitions in different countries like Taiwan, Brazil, Turkey and Poland was a part of their marketing strategy which helps to expand their market. • Employee base of approximate 495000 around the globe shows its wide network. • Being a pioneer in hypermarkets give them additional competitive advantage among the rivals. • Ranked third in terms of revenue in the retail industry after Tesco and Wal-Mart. • More than 50 percent of revenue come from France which means they have a strong market base in France which makes them a pioneer in the French market. • Strong brand in world of retail industry. Weakness One main weakness is that Carrefour takes too much time in opening new stores. • Poor performance in E-Commerce • Lack of maintaining labour relations. • Rising labour costs make it difficult for retaining all labours • Sometimes consumers may have low confidence; this is clear from failure of Carrefour in Japan market. • Low like-for-like sales in domestic market. • Weak own brand sales. 11. Propose strategic marketing responses to key emerging themes in a marketing strategy Proposal for Strategic Marketing: • Carrefour can target growing countries like India and China to set up a market base as both the countries are in growing stage with a tremendous growth rate. Rather than acquisitions, strategic alliance could be made with another company which enables Carrefour to reach a wider market. • Maintain more close relationship not only with customers but also with suppliers as the chain with suppliers should not be tangled. • Study of market, its customers in essential in order to enter a new market without fail. Failure in Japan is because of lack of market research and study. • Strength and weakness of rivals should be found out which can be overcome by making it as the opportunities. • Political and economical changes and involvement should also be noted before implementing a plan or strategic decision. References
Doyle, P (2008) Value based marketing, John Wiley and Sons, United Kingdom Hannagan, T (2002) Mastering Strategy Management, Palgrave publishers, Great Britain Johnson, G, Scholes, K, and Whittington, R (2005) Exploring Corporate Strategy, Pearson Education Limited, United Kingdom Kotler, P and Armstrong, G (2010) Principles of Marketing, Pearson Prentice Hall, USA McDaniel, CD and Gates, RH (1998) Marketing research essentials, Ohio: Thompson Publishing McDonald, M (2008) Market planning and expert systems, Marketing Intelligence and Planning 7(7-8): 16-23. Porter, ME (1985) Competitive Advantage: Generic Strategies, Free Press, New York Websites • IMAP retail report [online]. (2010) [Accessed 13/05/11].
Available from: http://www. imap. com/imap/media/resources/IMAPRetailReport8_23CB9AA9C6EBB. pdf. • finance. world of maps [online]. (2010) [Accessed 13/05/11]. Available from: . Bottom of Form • finance. world of maps [online]. (2010) [Accessed 13/05/11]. Available from: . • carrefour swot analysis [online]. (2010) [Accessed 13/05/11]. Available from: . • carrefour swot analysis [online]. (2010) [Accessed 13/05/11]. Available from: . • carrefour [online]. (2010) [Accessed 13/05/11]. Available from: . ———————– Corporate Strategy Internal Analysis External Analysis Marketing Objectives/Strategy Plan Implementation and Control