Whsmith Marketing Strategy Essay Example

where rivals are endeavouring to conquer a profit “basin” which is ever decreasing. (Kim & Mauborgne, 2005) When market share goes down, the company has three options to choose from: either to go down at the same time, to grow biting the competitors’ slice, or to create a new market space and “swim” in it by itself. This last option was called “Blue Ocean” strategy, which offers a systematic method of transforming the concurrence into an irrelevant element. Kim & Mauborgne, 2005) According to this strategy, marketers should focus on non-consumers, identify the boundaries that stop them buying and create the exact products that non-consumers would like to find. Giving up the traditional strategic way of thinking, this strategy would open a new and daring perspective for WHSmith, to stand out amongst its many current competitors. The company should determine its rivals to be irrelevant instead of competing against them.

We believe that competition in WHSmith’s case is not constructive, since there will always be specialist stores, such as HMV for CDs and DVDs or supermarkets for cheaper magazines, as a better alternative. Internet is also taking customers away, with the rapid growth in online purchases. What we see as a solution for WHSmith is offering customers a more pleasant shopping experience and emphasizing the feeling of shopping in a High Street store by introducing coffee-shops – a quiet place where people can read a book or the latest newspapers bought from WHSmith, while having a coffee in a comfortable sofa.

The cost of the High Street stores’ location is high; therefore the company should take advantage of it and make the shopping

experience different from that in a suburban supermarket. Music on the background is a critical element that has an immediate impact on the purchase decision making process, influencing the perception of the uniqueness of products and service levels (Baker, Grewal and Parasraman, 1994). A recent survey shows that 60% of the customers reckon that a carefully selected music can make them stay longer in-store.

Research shows that music in store should be slow and relaxed in order to alter customers’ perception about the elapsed time. If customers spend more time in store and travel more slowly between the aisles, they are more likely to buy more. Another issue that the company is dealing with is represented by the store layouts. Clients are complaining about the messy shelves; things are always pilled high and there’s a lack of browsing facilities, which makes it hard to find what you look for.

Price labelling is also not clear. Better trained taff should always ensure that key titles are on display and improve store navigation. There is also poor availability in shops for certain products. They should maintain stock levels at least of those products that are promoted or advertised, in order to avoid disappointing customers. WHSmith is next to the last company unlikely to be recommended by its customers; more than 50% of WHSmith’s clients would not come back to buy again. Therefore, the company ought to improve customer services and “follow” its customers’ demands with sales of newer lines.

WHSmith’s advertising strategy seems to be ineffective too. The company decided to withdraw from radio advertising and is currently spending only 1. 1% of its

total sales on advertising. We believe that special promotion events would be more efficient than every day low price and dropping leaflets through people’s doors could have a useful impact as well, since most of them are too busy to watch TV advertisements. Segmentation is a management tool which identifies subgroups of consumers within markets (Oliver, 1995) that have shared wants and needs.

Segmentation will allow WHSmith’s marketing strategies to be tailored specifically to meet the unique requirements of each of the groups A critical approach is required to identify difficulties and opportunities for the company, as well as developing individual plans and future solutions (Hill & O’Sullivan, 2004). WHSmith can be broken down into 3 market segments. Firstly, the High Street division accounts for 565 stores in prominent locations with a high footfall (WHSmith PLC). Secondly, the Travel division consists of 490 retail outlets in airports, railway stations, motorway service stations and hospitals.

Thirdly, the company operates online. Through the product range offered and the middle-range price level, WHSmith targets a wide demographic in terms of age, income level and family life cycle. Geographically, the store location catchment is relatively wide due to their prominent locations. Demographically, family gate-keepers and browsing husbands are targeted as they buy children’s books. Women, especially of middle-age, hold the buyer power in the adult book category, as the majority are of income group A or B and they buy for themselves and for others.

Women are also the group who buy the most stationery (including mothers purchasing school supplies for their children) as well as students and economic groups A and B. Again women form

the customer base for gift wrap and cards, along with the time-poor employed. This analysis of WHSmith’s customer profile in these categories should allow the marketing team to tailor their strategies to create maximum appeal among each identified demographic segment (Kotler et al, 2008). Breaking down the High Street retail division into product segments is useful in our assessment.

Newspapers, magazines and confectionery form a category where newsagents are the dominant retailer as many customers prefer to buy locally to home, so the company may consider phasing this out. Also as supermarkets diversify and become a ‘one-stop shop’, they threaten this area as many customers will purchase them along with their weekly shop. Moving focus towards selling increasingly popular magazine subscription gift packages to compete with the market leader Boots. Stationery, gift wrap and cards is a category that is split in terms of WHSmith’s market share.

The company is popular for personal stationery supplies (with a successful ‘Back to School’ range) and leads the competition in this category. However Staples dominates in office supplies such as filing/storage and computer supplies. By increasing marketing activity and advertising in business magazines WHSmith could win valuable office stationary contracts, penetrating deeper into this sector. WHSmith may be forced to eventually replace some traditional product lines with PDAs, Blackberry’s and the iPhone. WHSmith should be prepared to adapt their marketing strategy to target the younger customer profile in this segment.

Gift wrap and cards are failing to compete effectively with Clinton’s due to a limited range and low penetration of the market, as well as the negative impact of online card services, such as moonpig.

com. One solution the company should consider is to launch a rival online card design facility. Books are highly successful but as technology progresses, WHSmith must ensure that eReaders and online resources are developed, such as an online eBook centre or in-store Internet Cafes enabling customers to read digital books before buying them.

The company should break into the booming student book market with student discount, a loyalty card or a trade-in scheme for old book which WHSmith can sell second-hand. In the entertainment segment, which includes CDs and computer games, WHSmith’s performance is weak due to the dominance of specialist store HMV and online retailers. They could attempt to partner iTunes by linking with them through the website, enabling mutually beneficial customer base sharing. In the ‘other’ category, WHSmith sells art materials, games/jigsaws, lottery and gift experiences.

Since the closure of Woolworths, an opportunity has arisen in games and jigsaw puzzles. However, the future of some traditional products may uncertain due to the impact of technology and the age of children using it getting younger. It may be that some lines be introduced and monitored by market research, and withdrawn if they do not prove popular. WHSmith describes the travel division as a convenience retailer providing a tailored selection of magazines, newspapers, books and confectionery for people on the move (WHSmith PLC)

The company has identified this as a growth sector as passenger numbers are rising. The customer profile of the customers includes commuters, travellers, people on the move with not much time to browse, who want to be in and out of the shop within a few minutes as they

are time limited. They often require reading materials and may impulsively buy confectionary for their journey. Services can be provided to meet these needs, such as self-service hot drinks dispensers and self-service checkouts to cater for time-poor commuters.

Vending machines at the entrance of units would encourage hurried commuters to impulsively make purchases, without entering the shop or queuing. WHSmith already has a presence in 62 hospitals selling books, newspapers, magazines, cards, snacks and drinks but both product range and number of units could be expanded to maximise performance in this segment. A small coffee shop within the book area may be welcomed by the relatives of the long-term sick and book rentals for patients and relatives may also prove profitable and encourage customer loyalty within the hospital.

As WHSmith are historically a variety store, unsurprisingly they adopt a ‘multiple-segment specialisation’ approach (Hill & O’Sullivan, 2004) to marketing. However, as leading competitors specialise further and customise their products to meet their customer’s specific demands, WHSmith may be at risk of falling behind. In order to keep their competitive position against specialists such as Staples, Clinton Cards and Waterstones, the company needs to widen and strengthen its product range for high margin items and take focus away from some of the less successful product lines.

Despite receiving 250,000 website hits per week, the WHSmith brand has a relatively small present online, something which can be developed as a 3rd key market segment. It is crucial to observe WHSmith’s current competitive position, as well as looking to the future, to illustrate to management the core products they should continue to focus on. This raises

the question: How can WHSmith improve their competitive position through marketing communications? Firstly, competitive position is defined as the current position a business holds in comparison to its other competitors within the sector.

Figure 1 helps to establish the competitive position of a variety of WHSmith’s products, displaying to management the products they should focus on in order to enhance their market position. Figure 1 illustrates that their entertainment oriented products, like CDs and DVDs have a low market share and growth. This indicates that it is advisable for WHSmith to abandon focus on this sector and instead develop an effective marketing strategy, to promote their already successful products. It is clear from the 2008 annual report (see figure 2) that their focus has now been diverted from this ector, aiming to become the “most popular bookseller, stationer and newsagent. ” (WHSmith Annual Report for Shareholders, 2008) Figure 3 displays the ideal competitive position that WHSmith should aim to achieve. Firstly, managers should aim to completely withdraw CDs and DVDs from WHSmith stores as they have never held a dominant market position. Instead, greater attention needs to be placed on their successful products, including children’s books and stationery. Though these products have a high market growth and share, competitors are looming.

Such competitors include Staples, Amazon and Waterstones. As well as this, WHSmith needs to improve the current position of the other books available, newspapers, magazines, gift wrap and cards, within their stores. In order for WHSmith to achieve this potential competitive position, they need to look at their marketing communications, the essential element that promotes their products to the consumers. Marketing communications

is defined as “the specific blend of promotion tools that the company uses to persuasively communicate customer value and build customer relationships. (Kotler & Armstrong) It combines five crucial factors that need to be balanced in order to create an effective integrated marketing communications campaign.

These include advertising, sales promotion, personal selling, public relations and direct marketing. WHSmith needs to focus on these factors, in order to enhance their competitive position. Firstly, WHSmith can look at both paid and free forms of advertising. For instance, Facebook currently has 300 million active users and approximately 8 billion minutes are spent on Facebook each day. Facebook Statistics, 2009) This is an ideal platform for WHSmith to directly market their products, without incurring costs. Alternatively, for a small cost they can create “Facebook Ads” where WHSmith can specifically target a suitable audience, by adding parameters to the advertisements. Also, this is an efficient way of promoting new or current products. Additionally, managers also need to remember that the growth of digital media technology has caused a fundamental shift in the way in which consumer’s purchase their products.

A large majority of goods are now bought online, so it is important that WHSmith improve their online presence by further advertising. Another potential idea is placing advertisements on BBC iPlayer or ITVPlayer programmes, to highlight their internet presence, as well as being able to effectively target key, potential consumers. Television advertising is their dominant form of promotion, with their main focus being on books. WHSmith’s total book advertising spend for 2007 was ? 8. 5million, which was twice as much as the Waterstone’s spend. Neill, 2008) However, to

implement the new integrated marketing communications campaign, it would be advisable to the managers to update the current marketing strategy. Currently, the adverts feature fireworks and a book presented in a bubble, with a celebrity voiceover. In comparison to other campaigns, it is not as memorable or iconic. The ideal way to ensure that WHSmith produces a valuable television campaign is by starting from Head Office. It would be suggested that they appoint a marketing director to overlook all the streams of advertising, to ensure unification within all aspects of promotion.

Additionally, it appears that WHSmith relies heavily on advertising for books, yet they seldom advertise stationery. Though they have a historic reputation of being a stationer, it is not advisable to be solely dependent on this factor. It is important to introduce a form of promotion for this part of the business as well. They currently rely on sales promotion for the majority of their stationery products, including discounts and offers, but it would be suggested to form an advertising campaign incorporating their stationery products and books together.

Finally, good public relations are essential for WHSmith to progress into the new digital marketing era. With many companies focussing on the ethical and environmental issues, WHSmith need to show positive steps in this direction. The new advertising campaign needs to display to the consumer the attitude WHSmith has towards the environment, for example, all stationery is made from recycled plastic or paper. Achieving corporate social responsibility (CSR) and sustainability are of critical importance for organisations as the customer is considered to be the foundation of every business.

CSR and sustainability are key

topics when discussing the performance of an organisation, and embracing environmental issues such as climate change and global warming is quickly becoming an essential part of the business strategy. These topics provide crucial information in the way in which businesses, including WHSmith, are presented to both current and potential customers, as well as their other competitors within the marketplace. The aim of CSR is for businesses to increase their credibility and reputation with consumers and potential investors, as well as retaining and employing the greatest staff (Diamantopoulou, 2004).

WHSmith’s four aims are to maintain customer focus, value their people, take accountability, and to deliver results (WHSmith PLC, 2009). WHSmith tries to ensure that these aims are met through employing four executive board directors who oversee each one of these aims individually. Within the last few years, WHSmith has improved their stance on waste considerably. Charging customers a small fee of one penny for a plastic bag at the checkout, instead of receiving it for free, was one of the most recent steps companies including WHSmith and M&S made to improve its stance on CSR.

Having to pay for a plastic bag reduced the demand of them drastically, therefore reducing the impact on the environment. This includes minimising pollution and reducing the amount of litter, which threatens animal habitats. The company has also provided the option for customers to benefit from re-usable carrier bags which cost six pence, some of the funds raised from these bags go to the conservation charity; The Woodland Trust which aims to increase the amount of trees on the earth’s surface and retain existing forests (The Woodland Trust, 2009).