Strategic Marketing Planning Report For ASDA Plc

Published Date: 23 Mar 2015 Last Modified: 04 May 2017

This report has been prepared for ASDA Plc by Usman Khalliq of Business Builders Consultants. Business Builders Consultants has been commissioned to write a report that considers the theoretical and practical issues of marketing for ASDA Plc. The report investigates ASDA Plc Company's market and applies recognised theoretical marketing models.

The report addresses three key areas

A suitable strategic marketing planning process for ASDA Plc

Describing and Justifying the activities that would take place at each stage

Explanation and examples of tools and techniques that are relevant to ASDAPLC's marketing plan

Three marketing strategy options that ASDA PLC could realistically pursue

Estimation of the probable outcomes

A description of the advantages and disadvantages of each option

A marketing audit for the organisation

Carries out a marketing audit for ASDA Plc and gives details of changes occurring in the external environment.

Analyse how ASDA could respond to the changes identified and give realistic marketing objectives that consider could be achieved within 3 years.

State how areas of the organisation that are not part of the marketing department should adapt over a period of 3 years in order to meet the marketing objectives that you have specified.

Strategic Marketing Planning Process

The selected Marketing Planning Process for this report is Malcolm McDonald's marketing planning process.

2.1 McDonald's Marketing Planning

Malcolm McDonald marketing planning process has 10 steps.

Figure 1: Malcolm McDonald Marketing Planning Process

The 10 steps of McDonald Planning Process are given below:

Table 1: Malcolm McDonald's Marketing Planning Process

Stage

Description

Stage 1 Mission

To make employees motivated and give them overview about the company and its objectives and goals, mission statement is essential. It gives direction of what the company is going to do and how it will do it. The mission statement provides guideline of actions of the company, bring out its overall goal, provide a sense of direction, and guide decision-making. It also provides the frame work for company's strategic decision.

Stage 2 Corporate Objectives

Mission statement describes overall objectives of the company but corporate objectives describe the activities that could be taken to successful the mission statement. Objectives are those ends that the organization seeks to achieve by its existence and operation. Organizations are goal attainment devices.

Stage 3

Marketing Audit

To know the internal and external environment of the organization marketing audit is essential. It provides information about the internal environment; employees' wages, customer satisfaction, and external environment; market share, political situation.

Stage 4 SWOT Analysis

Company's internal strengths, weaknesses, opportunities, and threats come out by SWOT analysis. It helps the company to find out the necessary activities to compete with the competitors, increasing profit margin and available resources.

Stage 5 Assumption

Assumption is taken to find out the effectiveness of the marketing plan. It helps the company select monitoring and evaluating process about the marketing activities.

Stage 6 Marketing Objectives and Strategies

Marketing objectives makes plans for marketing activities and marketing strategies is all about how the activities are to be done in order to successful the business.

Stage 7 Estimate Expected Results

It is a monitoring and evaluating stage that applies judgement and analysis of marketing activities to achieve business success.

Stage 8 Identify Alternative Plans and Mixes

Business needs to find out the alternative plan as support to the present strategies. Alternative marketing plan and mix gives the company power to operate its business if its fail with the existence marketing plan.

Stage 9 Budget

Budget gives important information about the cost of the strategies and implementation. Budget also helps the companies find out the alternative ways if present activities go over the budget.

Stage 10 1st Year Detailed Implementation Programme

To implement the 1st year marketing activities, marketing planning processes gives one year detailed marketing plan.

2.2 Justification of Marketing Planning Process

The justification stage tells about the activities and their justification of effectiveness of marketing planning processes.

Table 2: Activities and justification of the Marketing Planning Process

Stage

Activities

Justification

Stage 1 Mission

Board of directors and executives employees make mission state for the company. It may include the objectives of the company its future mission etc.

Mission statement is very important for the company in order to make employees more clear about the company's goals and objectives. Without mission statement no one knows where they need to go and what they need to do.

Stage 2 Corporate Objectives

Corporate objectives decided the company's profit margin, increasing brand images and strategic implementation.

Mission statement gives an overview about company's objectives and goals. Corporate objectives give specific direction and overview about the company's objectives and vision; e.g. it selects the profit merging for the company.

Stage 3

Marketing Audit

Marketing audit collect information about the internal environment and external environment of the company.

It collects information about the market growth; collect information customer satisfaction, financial analysis.

Marketing audit gives information about the external environment and the factors that affect the company's activities. Such as political situation of the company provides information about government new rules and regulation and company can decide its new marketing plan.

Stage 4

SWOT Analyses

Analyse sources and business competitive advantages.

Experiment of information about new entrees.

Market research for new opportunities.

Making correction about present strategies and activities.

Without SWOT analysis company never knows its internal strengths weaknesses, opportunities, and threats.

Stage 5

Assumption

Forecasting about the result of the activities taken by marketing plan.

Fore casting about expected result.

Assumption helps the company takes budget about marketing activates. It gives information about the success of the marketing plan.

Stage 6 Marketing objectives and strategies

Selecting marketing objectives by analyse target market.

Select the ways of implementing the objectives.

Select necessary activities.

Helps to identify the suitable strategy for the present market and helps to success the business.

Stages 7

Estimate expected result

Taking market research, analysis of customer satisfaction to find out the effectiveness of the marketing strategy

Help to make changes of strategy if necessary. Helps to find out alternative strategy to minimise cost.

Stage 8

Identify Alternative Plans and mix

Make ready alternative plan to operate the activities smoothly.

Take market research and evaluate past experiences.

Analyse any failure history of marketing plan.

Alternative marketing plan and mix make the company effective it fails to operate in difficult situation. It makes the company adapt with changing environment.

Stage 9 Budget

Analysis of previous record and make correction. Find out the cost related to marketing activities.

Budget helps the company to know about its profit and loses. Helps to make changes more costly activities.

STAGE 10 1st Year Plan.

Crete clear 1st year operation plan by analysis of market condition, cost related to the activities, making proposal of activities, analysis of available resources and so on.

It is very helpful to take at least one year implementation plan and make the plan successful. Without 1st year implementation plan companies cannot find the effectiveness of their activities.

2.3 Tools and Techniques

Five tools and techniques are selected that are relevant to ASDA's marketing plan. This will be implemented under the following:

2.3.1 SWOT Analysis

SWOT analysis is a marketing tool and techniques that help the company find out its strengths, weaknesses, opportunities, and threats. Companies usually uses this tools when its need to identify the current market trends and company situation. It takes place when new decision is essential for the company. Pizza Hut uses SWOT analysis to find out new strategy to increase its sales in the recession time.

Figure 2: SWOT Analysis

2.3.2 Porter's 5 forces analysis

Porter's 5 forces analysis is another marketing tools and techniques. Companies usually takes Porter's five forces when it launching new products. The fives looks at the bargaining power of the customer, threats of new entrants, threats of substitute products, competitive rivalry within an industry, bargaining power of the suppliers. Pepsi coal company uses Porter's 5 forces models when it launching Pepsi Diet.

Figure 3: Porter's Five Forces Diagram

2.3.3 The Ansoff's Matrix

Ansoff's matrix is another marketing tool. Companies take Ansoff's matrix when it decided to expand its market. Ansoff's matrix has four aspects, market penetration, product development, market development, and diversification. It gives overview about what the company needs to do if it wants to increase its business activities. Such as, when Apple launches IPad they will use the Ansoff's matrix to help with the decision-making process.

Figure 4: Ansoff's Matrix

2.3.4 Product Life Cycle analysis

The product development life cycle is other marketing tools that help the company evaluate the present condition of an existing product. It has four steps; introduction, growth, maturity and decline. Each of the steps provides information about the profit margin, market demand, the rivalry and the decreeing market demand.

Figure 5: Product Life Cycle

2.3.5 PEST analysis

PESTEL analysis is a marketing tool that company uses in order make marketing audit and know about the external environment. PEST refers to as Political, Economical, Social, and Technological. Coca-cola uses PEST analysis when it lunches diet-coke. .

Figure 6: PESTLE Analysis Framework

Strategic Options

This part describes three marketing strategy with their advantages and disadvantages and probable out come.

3.1 Market Penetration Strategy

Table 3: Market Penetration Strategy

Strategy Option

Market penetration strategy could be useful for ASDA. As ASDA is operating with the lowest prices in market, compare to its rivals. ASDA can increase their market share and sales revenue by implementing this strategy. This strategy works on more advertising and promotion of existing products.

For example. Airtel promoting its services to penetrate in the Indian market

Probable Outcome

Probable outcome of this strategy would be that ASDA will be able to increase its market shares and will be able to increase its sales revenue.

Market penetration strategy makes customer think about alternative products as there are many option amiable and rival company may offer better products and more options.

Advantages

Increase sales revenue.

Increase profit margins.

Customers satisfaction

Customers loyalty

Would be helpful in expanding business.

Disadvantages

Needs extra expenditures.

Tighter budget for company.

Affects could be worse if rivals take the same strategy.

There is a big question mark if the market penetration strategy works or not. If not loses are significant.

Sometimes makes the company more competitive if the rival company takes same strategy.

Some customer has negative feedback and they think that penetration means low quality product.

3.2 Niche Strategy

Table 4: Niche Marketing Strategy

Strategy Option

Niche marketing strategy could be proved as useful for ASDA in a sense that ASDA has strong brand image, It can select any part of the business and specialize in that. Recently ASDA took a major step following this strategy and chose clothes industry as niche strategy while working normal on other usual products.

ASDA has launched new department known as GEORGE which includes all clothing items.

Probable Outcome

Probable outcome for this strategy is that ASDA will have high profit margin rather than having more sales revenue.

Advantages

Being specialize in one category could effectively reduce the cost.

Low cost associated with marketing process.

It is easy for the company to identify the target market and make them in touch.

Disadvantages

Niche market is very quickly full up and company need to find out alternative otherwise competitors may take the advantages to lunch new products.

The possibility of success is very low and customer may not take niche products as there are so many alternatives products available.

The target market is very small, there for the cost of the products is very because of low production.

Niche market is easily fulfill its requirement, and customers looking for another niche products.

Market Development strategy

Table 5: Market Development strategy

Strategy Option

Market development strategy can help ASDA in becoming no1 store in UK. As ASDA is operating with very big stores. This strategy would require ASDA to open convenient small stores in different parts of the country so that everyone can access easily. In a sense ASDA will increase customer's loyalty.

Probable Outcome

This strategy would lead ASDA to become most convenient store in UK working from each and every place from UK. This will help out to increase profit margins for ASDA and more job opportunities for people. Furthermore it can be implemented internationally.

Advantages

Increase customers trust

Increase profit margins due to more stores

Increase market share

Can be used globally

Company get competitive advantages that make barriers for new entrants.

Increase market share and make the company more profitable.

Create strong brand images.

Disadvantages

Needs a lot of investment

Local business could be threat

The failure of the products causes significant losses for the company.

Requires high level strategic plan and related to high risk of success.

The target market is mass and the need huge effort to attract the target market.

Marketing Audit

Marketing audit looks at both external marketing environment and internal marketing environment.

4.1 External Marketing Environment and Marketing Audit

4.1.1 Market Size/Share 2009

As of March 2009, Tesco has a 30.4% share of the UK grocery market while ASDA's share is 17.5%, followed by Sainsbury's at 16.1%, and Morrisons at 11.8%

Table 6: Market Size/Share 2009

Source: ASDA publishes financial infromatio.

The market share of ASDA shows that it is followed by the giant market leaders TESCO. But it has competitive market share as the differences are not too much. ASDA has chances to increase its market share by taking suitable strategy.

4.1.2 Market Growth

The market growth data shows the position of Alliance Boots Plc last few years. The market growth data has given below by using diagram:

Figure 7: ASDA market growth report (the times, and the Euromonitor, 2009)

The market growth data shows that ASDA Plc has increasing market growth and it has potential market advantages. If ASDA can take suitable market strategy and tries to expand its business it will do that.

4.1.3 PORTER'S Five Forces

For the factors that strongly influence the business environment are modelled by the Porter. Porter named these major factors as Porter Five Forces. These five forces are:

BARRIERS TO ENTRY:

Due to popularity and running of grocery business there is always a potential threat of entering new rivals in this business. Although ASDA has strong brand image and customers are committed so there would not be any problem.

SUPLIER POWER:

The local organisations have limited choice of purchasing their goods from the local suppliers. Therefore suppliers have an immense impact on deciding the rate for their goods. Organisations have to bargain with the suppliers, and this bargain is more in the favour of supplier rather to be neutral.

BUYER POWER:

The buyer has a high power of bargaining as compared to organization because the end product is manufactured purposefully to satisfy the buyers. Moreover buyers have more options of switching to other brands as the buyers always want to get high quality product in low price.

RIVALRY:

Organizations have to face an immense competition in markets. There is a vigorous competition in the retail industry of food, grocery, etc which is majorly because of the price cutting strategies of the organizations to attract the buyers towards them. Therefore ASDA has to always consider the price cutting strategies of its rival organizations in determining the cost for its products in order to capture the market for its product.

THREATS OF SUBSITUTES:

The threats of substitutes for ASDA are very much lesser than its rivals because ASDA always follow the trend of introducing the good quality in as much less price as it can.

4.1.4 Summary of External Audit

The external audit of ASDA plc shows that ASDA has increasing its market and it has market share text to TESCO. If it can able to take suitable business strategy it will able to make competitive advantages and become leading supermarket in UK.

4.2 PESTEL Analysis

Table 7: PESTEL Analysis

Political

Economic

The Government has provided such legislation for employment that strongly appreciates retailers to hire new employees having salaries from low and high both. Therefore by hiring new employees and by training them ASDA can give a hard time to its rivals.

According to BBC News in 2009 there are 10 more countries in European union promoted the trade between western and eastern European countries, which is could be a good sign for ASDA to make its business vast in the whole Europe.

The new increase in the Value Added Tax (VAT) will cause the prices to rise and eventually reduce the profit gains.

Increasing interest rates can also be a harmful factor for the company.

Due to the credit crunch there are large number of peoples are unemployed and it can have a negative effect on the business of ASDA.

Recession is leading to increase unemployment rate.

High inflation rate can also be an alarming factor for ASDA.

The slowdown in international food market and UK food market as well can vigorously affect the ASDA as ASDA is highly dependent on its food items.

Availability of line of products for the Asian and EU citizens.

Social

Technological

Large influx of the EU citizens in the UK requires extra accommodation, health and care.

An ageing population could lead to enhance the unwillingness to do work and to rely on pensions.

People are becoming more brand conscious and prefer to choose their trusted brands only.

Consumers are becoming more health conscious and always look for a healthy diet.

Changing trends in the consumer's demands and increase in the demand of ready to use items.

Increasing demand in self-checkout systems by consumers is highly appreciated by ASDA.

Cash machines are installed within the store premises.

Enabling of online shopping facility made life easier.

Improved efficiency in maintaining stocks by using the bar-coding or RF-ID tags.

Introduction of new product types (mobile phones, mp3 players, etc.) in ASDA.

The new technology is beneficial for both consumers and retailers as it provides ease to consumer, reliability and efficiency to retailers.

Environmental

Legal

More awareness for the environmental issues has been spread out among people.

Recycling is now become a common practical.

To save energy is more required and it is the demand for the coming future.

Reduction in the harmful carbon products affecting the environment becomes a primary goal to be achieved.

ASDA is also taking its responsibilities to take the measures against the above mentioned environmental issues.

Limitations in trade regulations can have an adverse affect on ASDA's business.

The VAT increased by the government will also be affecting both food and non-food regions of ASDA.

4.3 Internal Marketing Environment and Marketing Audit

4.3.1 Sales Data

The two years Sales data of ASDA Plc has given below:

Table 8: Sales Data

Source: Euromonitor Report, 2009

The sales data shows that ASDA plc has increase its sales comparing with 2007 and 2009. That means that ASDA's market is increasing day by day. It can improve its market more if it can able to take suitable marketing strategy and activities to success its business.

ASDA spend more money in its marketing sectors in 2009 than 2008. It shows that ASDA incising its marketing activities and making business expanded.

4.3.3 SWOT ANALYSIS:

SWOT analysis acts as a fundamental part of any marketing plan as it determines the strengths, weaknesses, opportunities and threats for the organization. An organization plan its marketing strategy by considering what advantages it have over its rivals and what should be improved to overcome its weaknesses as much as possible.

Table 10: SWOT Analysis

Strengths

Weaknesses

2nd in super markets in UK

Has strong brand image

2nd biggest market share in UK

Products are cheap

Providing healthy and fresh food

Peoples trustworthy

No small outlets where everyone can approach

Always working with bigger stores which costs a lot

No proper layout for recycling which leads to huge wastage of money

Opportunities

Threats

Have experience of international expansion, so it can use it to explore new emerging markets.

Data base of customers could be used to generate new business

Reliable to go in any business

Rivalry supermarkets are biggest threat.

Decreasing prices affects profits

Not available in all parts of country.

Others supermarkets are not so far in race of market share.

By doing the SWOT analysis it can be clearly identified that what strengths ASDA have that must be taken under consideration while designing its marketing strategies in future.

4.3.4 BOSTON CONSULTING GROUP MATRIX:

Figure 8: BCG share matrix (image taken from google images)

The Boston matrix describes the four stages of the businesses/products in terms of their revenue and the market growth potential. It defines the four stages as a function of market growth and market share.

Question Marks: This is the stage where the businesses/products have high market growth rate but having low market share. These businesses/products have the capability to capture market but do not have enough resources to promote them. The organization can adopt a promotion strategy for such products to increase their market share.

Dogs: These are the businesses/products having low market growth rate and low market share as well. If the organizations see potential to grow in such products then they arrange some promotional and marketing activities for them.

Cash Cows: These are the low-growth businesses/products having relatively high market share. These are matured products that generate major revenue for the organization and they only require relatively very small investments in order to generate massive revenue that would lead them to be a star product/business of the organization.

Stars: These are the businesses/products having high growth rate along with high market share. These are the major and revenue generators of the organization. Initially these products require heavy investments to capture the market and fulfill the consumer's demand.

The business of ASDA falls into the category of Cash Cows as it has high market share with relatively low market-growth.

4.3.5 ANSOFF MATRIX:

The ANSOFF matrix describes the ASDA's present products and how ASDA can improvise in its business using its potential products at present and in the coming future. The four growth strategies for ASDA have been discussed including the possibilities of diversifying the business of ASDA in different sectors are also discussed in the matrix below.

Table 11: Ansoff Matrix for ASDA

EXISTING PRODUCTS

NEW PRODUCTS

EXISTING MARKETS

Value chain

Insurance

Mobile phone services

Discounts brands

Cash Back (temporary loan)

Halal meat and food

Expansion in non-food segment

Mobile broad band

Club card introduction

Mobile phones

Cooked halal meat and food

NEW MARKETS

International expansion

New market segment

Restaurants

Diversifying its market in a new way

Banks

Mortgages

Cars

4.4 Key Conclusions of the Marketing Audit

The external and internal marketing audit finds out the present situation of ASDA plc. For the marketing audit it is clear for that ASDA increasing its market share as well as its business expenses. ASDA will competitive market position within three to 5 years if it operates its business in a same ways.

4.5 Analysis of potential responses to the changes identified

ASDA has stable business market at present. In case of changing environment ASDA will take the following steps:

ASDA expand its business internationally and open more stores in UK.

It will take more brand expansion to attract customer.

It will take market penetration strategy to make customer happy with various offers on their existing products.

In case of decline market share ASDA will take research and development program to find out market trends and its suitable strategies.

Government initiative of giving financial and non-financial incentives to the companies investing in the economy of UK is a great benefit for ASDA as they are putting large investments in economy of UK.

4.6 How Non-Marketing Departments should adapt over 3 years

There are three main non marketing departments that can tremendously influence marketing department are as follows:

Finance department: One of the major departments in an organization is the finance department. It is crucial to consider this department before making any strategies into action because it is the department that estimates the budget for rest of the departments.

1st year plan:

In 1st year finance department should diagnose and evaluate all the taxes, competitor's performance, inflation rate, costs, exchange rate, profit margin etc. The finance department should also tell other departments to introduce changes where it is mandatory.

2nd year plan:

After evaluating first year's performance it should generate budget for 2nd year

It should Help in setting corporate objectives for new year.

Should forecast next year sales targets and implement any strategies if needed.

3rd year plan:

Announce the results for overall performance of previous years

Evaluate and access previous strategies and reports to produce realistic budget for next year

Should evaluate previous corporate objectives to incorporate new objectives.

Examine performance for last years

Produce necessary funding if required for 3rd year.

Sales department: sales department have importance of its own. In this scenario all of the mentioned departments work closely. More efficiently sales department will be working side by side with marketing department. For the increment in the sales volume of the company both departments are responsible.

1st year plan:

Introduce better customer services and flexibility.

By improvisation with various essential techniques it can help in increasing sales.

Include talented staff in their teams to increase their sales

2nd year plan:

To improve customer service.

Efforts must be made to increase the shares in market. It could be done by attracting the customers by providing them some special offers.

Sales targets must be set.

3rd year plan:

Create environment for team working

Make environment of team challenges and try to achieve these challenges

Enhance customer service standards

HR department: It is the duty of the HR department to recruit and select the best staff for the organization and to train them afterwards.

1st year plan:

Recruit desired people focusing on their experience and motivation.

Recruit people for all the departments.

Conduct the process for the initial recruitment, select the best available persons dedicated to their works.

2nd year plan:

Motivate staff by giving them bonuses

Encourage them to work hard by putting in some targets.

Forecast the manpower/workforce required for the future.

Develop skilful employees for the organization

Organize a customer feedback form.

3rd year plan:

Give performance awards to those who achieved good grades in previous year targets.

Introduce more competitions.

Arrange activities and workshops to improve the skills required for customer services.

Design and provide management development programmes for managers.