Market strategy and business overview of boots

Market strategy and business overview of boots Boots has also introduced new services. Boots Opticians, formed in 1987 has become one of the UKs leading chains of opticians. Insurance services and initiatives in dentistry, chiropody, Boots for Men stores and Internet services were introduced in 1999. The first Health and Beauty Experience stores, offering services such as homeopathy, osteopathy and a range of beauty treatments, were opened in autumn 2000. Boots Healthcare International exports healthcare products in more than 130 countries round the world. Boots Health and Beauty stores are now established in Ireland, Thailand, Japan and Taiwan. There are eight different businesses in The Boots Company, different in size, different in type and different in their business cultures. Such diversity means that they have unrivalled career opportunities in a wide variety of disciplines for people who deliver excellent performance. Boots is a learning organization, they encourage their people to strive to improve their skills and develop throughout their careers. STRATEGY MARKETING MANAGEMENT Marketing management is a business discipline which is focused on the practical application of marketing techniques and the management of a firms marketing resources and activities. Marketing managers are often responsible for influencing the level, timing, and composition of customer demand accepted definition of the term. In part, this is because the role of a marketing manager can vary significantly based on a business size, corporate culture, and industry context. For example, in a large consumer products company, the marketing manager may act as the overall general manager of his or her assigned product. From this perspective, the scope of marketing management is quite broad. The implication of such a definition is that any activity or resource the firm uses to acquire customers and manage the companys relationships with them is within the purview of marketing management. MARKETING STRATEGY Marketing strategy is a method of focusing an organizations energies and resources on a course of action which can lead to increased sales and dominance of a targeted market niche. A marketing strategy combines product development, promotion, distribution, pricing, relationship management and other elements; identifies the firms marketing goals, and explains how they will be achieved, ideally within a stated timeframe. Marketing strategy determines the choice of target market segments, positioning,  marketing mix, and allocation of resources. It is most effective when it is an integral component of overall firm strategy, defining how the organization will successfully engage customers, prospects, and competitors in the market arena.  Corporate strategies, corporate missions, and corporate goals. As the customer constitutes the source of a companys revenue, marketing strategy is closely linked with  sales. A key component of marketing strategy is often to keep marketing in line with a companys overarching  mission statement. Once the company has obtained an adequate understanding of the customer base and its own competitive position in the industry, marketing managers are able to make key strategic decisions and develop a marketing strategy designed to maximize the revenues and profits of the firm. The selected strategy may aim for any of a variety of specific objectives, including optimizing short-term unit margins, revenue growth, market share, long-term profitability, or other goals. MARKETING STRATEGY OPTION: One of the key elements of a successful marketing strategy is the acknowledgment that your existing and potential customers will fall into particular  groups  or  segments, characterized by their needs. Identifying these groups and their needs through market research, and then addressing those needs  more successfully than your competitors, should be the focus of your strategy. You can then create a marketing strategy that makes the most of your strengths and matches them to the needs of the customers you want to target. For example, if a particular group of customers is looking for quality first and foremost, then any marketing activity aimed at them should draw attention to the high quality of your products or service. The benefits of a planned marketing strategy are numerous. Business owners often rely solely on their intuition to make business decisions. While this informal knowledge is important in the decision making process, it may not provide you with all the facts you need to achieve marketing results. A marketing strategy will help you in defining business goals and develop activities to achieve them. WILSON, GILLIGAN AND PEARSON in strategic management, readily admit that there is no standard definition on strategy but high lights three level of strategy. Corporate Level Strategy: Dealing with the allocation level resources thought out the entire organization, covering all of the various businesses or division. Business Level Strategy: This exits at the individual business or division level and is concerned with the question of competitive positioning. Function Level Strategy: Which is limited to the actions of specific functions within specific businesses. Boots is a member of Alliance Boots, an international pharmacy-led health and beauty group. Our purpose is to help our customers look and feel better than they ever thought possible. Our customers are at the heart of our business. Were committed to providing exceptional customer and patient care, be the first choice for pharmacy and healthcare, offer innovative products only at Boots, with great value our customers love. Our people are our strength and they tell us that Boots is a great place to work. We aim to always be the employer of choice, attracting and retaining the most talented and passionate people. Market matrix: The market matrix is a tool that helps businesses to decide their product and market growth strategy. http://www.franteractive.net/resources/Ansoff-Matrix.GIF The above diagram shows market matrix also known as Ansoff product which is a series of suggested growth strategies that set the direction for the business strategy. 1. MARKET PENTRATION: (Existing market, existing products) Market penetration  is one of the four growth strategies of the  Product-Market Growth Matrix  defined by Ansoff Market penetration occurs when a company enters/penetrates a market with current products. The best way to achieve this is by gaining competitors customers (part of their market share). Other ways include attracting non-users of your product or convincing current clients to use more of your product/service (by advertising etc). Ansoff developed the  Product-Market Growth Matrix  to help firms recognise if there was any advantage of entering a market. Market penetration seeks to achieve four main objectives: Maintain and increase the market share of current products- this can be achieved by a combination of competitive pricing strategies, advertising , sales, promotion and more resources dedicated to personal selling. Secure dominance of growth market. 2.MARKET DEVELOPMENT: (New Market, Existing Products) You can grow by leveraging your product knowledge to reach new customers.   More than likely, you have spent time and money developing your product and service offering. Assuming youre happy with your current offering, extending it into new markets is a logical next step. This is aptly called a  market development strategy. If you have identified potential new markets as opportunities, use these strategies to reach them.   Here are some quick considerations to make before executing a market development strategy: Is the market attractive? (To really answer this question, I recommend some form of market research to validate your gut feeling.) Are you willing to commit the required time and resources to reach this new market? Can your business be adapted to the new market? Will you maintain your current competitive advantage in this new market? 3. PRODUCT DEVELOPMENT: (Existing Market, New product) New Product Development is the term used to describe the complete process of bringing a new  product service to market. There are two parallel paths involved in the NPD process: one involves the idea generation,  product design  and detail engineering; the other involves market research and  marketing analysis. Ideas for new products can be obtained from basic research using a  SWOT analysis  (Strengths, Weaknesses, Opportunities Threats), Market and consumer trends, companys RD department, competitors, focus groups, employees, salespeople, corporate spies, trade shows, or Ethnographic discovery methods (searching for user patterns and habits) may also be used to get an insight into new product lines or product features. 4.DIVERSIFICATIONS 🙠 New Market, New Products) Diversification  is a form of corporate strategy for a company. It seeks to increase profitability through greater sales volume obtained from new products and new markets. Diversification can occur either at the business unit level or at the corporate level. At the business unit level, it is most likely to expand into a new segment of an industry which the business is already in.It is a process where a business markets new products in new markets.This is the most risky strategy because the business is moving into markets in which it has little or no experience. For a business to adopt a diversification strategy, it must have a clear idea about what it expects to gain from the strategy. SWOT analysis Strengths Price cuts are attracting customers especially in beauty and toiletries. Boots is still above high street average, despite all the short-comings being reported. Great locations, with a prime pitch on every high street. Meaning that Boots is accessible to potential customers, this is highly important when taking into account the 4 Ps. Strong labour workforce which is highly essential to every business, this could be a major tool when trying to refocus and achieve the overall objectives. The current share price is 667.0p on 8 Nov and has risen since October 28 when it was valued at 657.5p. This initiates growth in sales due to external factors such as climate change and more susceptibility to illness that this causes. Weaknesses Over diversification which has led to a loss of focus from the core operations of the business. It seems from the article in the Independent newspaper that Boots are reliant on sun cream as a star product, however the British weather is know for its instability meaning good summers are not guaranteed, this has ultimately led to a reduction in profits.  £390 million was spent on revamping the company; could this money have been spent in other areas of the business that may have been more profitable? Some customers feel that Boots is too expensive, thus suggesting price elasticity however the recent price cuts in different parts of the business might have affected the price quality reputation amongst customers, who feel this is important. 900 job cuts from head office and possibly more if finances deteriorate. This might have an adverse effect on the reputation amongst stakeholders. Opportunities Compete through head on pricing although this could be risky according to reports. Does Boots need all their chain branches? An audit and cost-benefit analysis should be conducted along with market research to identify which branches are doing the best and which areas would benefit from the store or which areas are overly concentrated with Boots stores. Therefore taking action by reducing the number of stores and focusing on improving the remainder of stores would reduce costs and provide essential capital that could be reinvested in other parts of the business. Threats Abolition of the resale price maintenance has increased competition. If internet sales of drugs continue to grow, Boots could lose a significant proportion of its market share. Changes in supply chain and systems within the company could hinder growth rate in the next 12 months. Porters 5 forces analysis Competitive rivalry The retail market is filled up with high competitors as more and more companies are trying to step into the Health Beauty industry All the other retailers have different competitive advantages. Boots reach in different stores allows it to reach large number of customers. The other factors which compete with the Boots bank is different banks and building societies Barriers for entry Barriers to entry is high due to a number of factors: Firstly, company looking to set up its business in UK requires lots of investment, brand development, which takes years to establish. Secondly, company in retail sectors are increasing, which itself means there is very less chance for any new entrances. Local knowledge is required for a new business in order to establish, which is highly difficult for new firms to replicate. Threats of Substitutes The threats for newcomers or substitutes is less, as the consumers views that as a necessity, especially in the developed world. The retail market is always trying to look around for new innovations with respect to Health Beauty products, alternative businesses. As a result of which it is difficult for substitution. The only major threat of substitute is an internal industry threat, wherein one supermarket can lap up the business of other supermarkets. Buyers power Because of the presence of too many competitors in the retail Health Beauty sector selling the same product, buyer power is high in the industry. During the time of recession consumers wants are taken into more demand, thereby increasing their power. Supplier power Suppliers in itself is huge company providing products to the supermarkets. If the products are not sold, consumer will shift loyalties, making suppliers more powerful. And also when the products do not reach the supermarket, sales do get affected hugely. C:Documents and SettingsSonyDesktopporters_five_forces_lg.gif Competitive strategy by Michael Porter PORTERS GENERIC STRATEGY: Michael Porter had argued that a companys strength depends on two headings: cost advantage and differentiation. By applying these strengths three generic strategies result: Cost leadership Differentiation Focus Cost leadership strategy: Cost leadership is a strategy built on offering a customer a lower pirce than competitors and maintaining an advantage by ensuring the cost are lower than those of competitors. Factories are built; labor is recruited and trained in all sorts of knowledge for the lowest cost of production. In the process cost advantage is the focus. However low cost not always allows low price. Producers could price at competitive parity, other than the competitors. For example, such as Toyota, are good in producing autos at a low price, but have the brand and marketing skills. Differentiation strategy: It is a strategy that involves offering a product which is different to, is differential from, those of competitors. The advantage of the product will appeal to the whole market and not in a narrow segment. The company that succeeds in differentiation strategy often follows the internal strengths Access to scientific researchHighly skilled and creative development team.Strongly sales team with the ability to successfully communicate the perceived strengths of the products. Corporate reputation for quality and innovation. Focus: The focus strategy strives on a narrow segment and within that segment tries to achieve either a cost advantage or differentiation. A company following the focus strategy often enjoys a high degree of customer loyalty, and this in turn leads to more customer lifetime value. The focus strategy has two variants.In cost focus a firm seeks a cost advantage in its target segment, while inDifferentiation focus a firm seeks differentiation in its target segment. Cost focus exploits differences in cost behavior in some segments, while differentiation focus exploits the special needs of buyers in certain segmentsA company following narrow market focus and pursuing a focus strategy, have lower volumes of bargaining power with their suppliers.A company following differentiation focused strategy may be able to pass higher costs on to customers since close substitute products would not exist.Firms that succeed in a focus strategy are able to lead a broad range of product development strengths to a relatively narrow market segmentFinally, other focusers may be able to carve out sub-segments that they can serve even better. TASK-2 PESTLE analysis is in effect an audit of an organizations environmental influences with the purpose of using this information to guide strategic decision-making. The assumption is that if the organization is able to audit its current environment and assess potential changes, it will be better placed than its competitors to respond to changes. PESTEL ANALYSIS FOR BOOtS: PEST 1. POLITICAL FACTORS: Political factor is always affected any kind of business. The government always make changes in tax policy, labour law policy and trade restrictions. Increasing globalization, gives challenges and opportunities to Boots. Using this company can enter into new markets through partnerships. 2. ECOMOMIC FACTORS: Inflation chances are really high that if inflation occurs then the prices of each pack will rise. When a country enters an inflation stage then their money would be less worth, and companies will higher the prices, consumers have less money to spend on goods, and that will be a major blow the economy. The country might put prices higher on exports, but other countries wont buy them anymore and go find a cheaper one. Exchange rates play a very big role in the marketBecause of the food crisis all over the world, can result in the purchasing cost of the company, which in turn can increase the Health Beauty Product prices which affects the purchasing power of the consumers. Because of credit crunch, the consumers purchase power would decrease, but they would still consider that as its basic necessity.Lot of incentives is given to the consumers. This affects Boots as prices have to be reduced most of the times 3. SOCIAL FACTOR: There seems to be more attention on fresh and easy style cooking. This gives Boots an opportunity to encourage new Health Beauty Product.Recently government has given more emphasis to promote healthy eating because of the increasing obesity. As a result the consumer would move on to healthy eating which in turn will be an opportunity to Boots to stock in more of healthy Health Beauty Product and as a result of which there would be an increase in consumers number. 4. TECHNOLOGY FACTOR: The internet phenomenon seems to be growing more rapidly. Boots can use internet for its advantage. Standing in the queue system for few items in the shopping market is time consuming. By installing the self checkout machines it can reduce the queue system for which the customer would not have to wait for few items which in turn will increase the sales for Boots. 5. ENVIRONMENTAL: It should be mandatory to reduce carbon footprint and increasing energy efficiency. One of the important and ethical issues is, like sales of organic food and ethical treatment of animals, this can clearly affect Boots on various levels. This is a sensitive issue. This can be done by maintaining on the public stand and environment. 6. LEGAL: As per legal the company makes sure that the product is right for the customers. They do all sorts of checks before it is brought forward to the customers.The current UK grocery market is highly regulated in many aspects, which is commonly in the developed countries. The recent inquiry by OFT could act as one example, which would potentially reduce the profitability of the supermarkets. Moreover, Trade Union would also protect employees to receive lack benefits, and this would make the grocers difficult to lay off employees. MARKET PALNNING FOR BOOTS: A  marketing plan  is a written document that details the necessary actions to achieve one or more marketing objectives. It can be for a product or  service, a  brand, or a  product line. Marketing plans cover between one and five years. A marketing plan may be part of an overall  business plan. Solid  marketing strategy  is the foundation of a well-written marketing plan. While a marketing plan contains a list of actions, a marketing plan without a sound strategic foundation is of little use. MARKETING MIX: The structure of the facts book will be designed to match the specific needs of the organization, but one simple format suggested by Malcolm McDonald may be applicable in many cases. This splits the material into three groups: Review of the marketing environment:  A study of the organizations markets, customers, competitors and the overall economic, political, cultural and technical environment; covering developing trends, as well as the current situation. Review of the detailed marketing activity:   A study of the companys  marketing mix in terms of the 7 Ps (see below) Review of the marketing system: A study of the marketing organization,  marketing research  systems and the current marketing objectives and strategies. The last of these is too frequently ignored. The marketing system itself needs to be regularly questioned, because the validity of the whole marketing plan is reliant upon the accuracy of the input from this system, and `garbage in, garbage out applies with a vengeance. 7Ps of MARKETING MIX: Once youve developed your marketing strategy, there is a Seven P Formula you should use to continually evaluate and reevaluate your business  activities. These seven are: product, price, promotion, place, packaging, positioning and people. As products, markets, customers and needs change rapidly, you must continually revisit these seven Ps to make sure youre on track and achieving the maximum results possible for you in todays marketplace. 1. PRODUCT: To begin with, develop the habit of looking at your product as though you were an outside marketing consultant brought in to help your company decide whether or not its in the right  business  at this time. Ask critical questions such as, Is your current product or service, or mix of products and services, appropriate and suitable for the market and the customers of today? 2. PRICES: The second P in the formula is price. Develop the habit of continually examining and reexamining the prices of the products and services you sell to make sure theyre still appropriate to the realities of the current market 3. PROMOTION:   The third habit in marketing and sales is to think in terms of promotion all the time. Promotion includes all the ways you tell your customers about your products or services and how you then market and sell to them. 4. PLACE: The fourth P in the marketing mix is the place where your product or service is actually sold. Develop the habit of reviewing and reflecting upon the exact location where the customer meets the salesperson. Sometimes a change in place can lead to a rapid increase in sales. 5. PACKING: The fifth element in the marketing mix is the packaging. Develop the habit of standing back and looking at every visual element in the packaging of your product or service through the eyes of a critical prospect. Remember, people form their first impression about you within the first 30 seconds of seeing you or some element of your company. Small improvements in the packaging or external appearance of your product or service can often lead to completely different reactions from your customers. 6. POSITIONING: The next P is positioning. You should develop the habit of thinking continually about how you are positioned in the hearts and minds of your customers. How do people think and talk about you when youre not present? How do people think and talk about your company? What positioning do you have in your market, in terms of the specific words people use when they describe you and your offerings to others? 7. PEOPLE: The final P of the marketing mix is people. Develop the habit of thinking in terms of the people inside and outside of your business who are responsible for every element of your sales and  marketing strategy and activities. RECOMMENDATIONS AND CONCLUSION: I think the current Boots Distribution Channel is very limited. The only place youll find their product is in a local Boots store . I think they should expand their channel like I have summed up earlier. I would have placed vending machines throughout whole UK, outside each super market. To survive in such a competitive market place, Boots must continue to build a strong brand in order to create a strong differentiation in the market, attract customers with a credible value proposition and to constantly engage customers in ways that would endear them to the brand and to the company My evaluation for this is that Boots is in a very good position, but if it needs to gain more customer they need to make more product, not as in output, but new products.