Principles and Practice of Marketing: Asda's Italy Expansion Plan

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Principles and Practice of Marketing
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Table of Contents
Introduction................................................................................................................................3
Task One....................................................................................................................................5
Task Two..................................................................................................................................12
Task Three................................................................................................................................14
Conclusion................................................................................................................................16
Reference List..........................................................................................................................17
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Introduction
Marketing denotes the process, by which a company can create a new bonding with
customers by satisfying them. Marketing is the main function of an organisation to be
successful. The aim of this study is to focus on the marketing strategies of Asda Company.
“Asda Stores Ltd” is a supermarket retailer in Britain. Headquarter of the company is in West
Yorkshire. Fred and Peter have founded the company in 1949. In the beginning of the
company, it has been owned by the Asquith Family (asda.com, 2019). The company also
offer some services to their consumers beside their supermarkets. The services, offered by the
Asda Company include electrical services and financial services as well. Since 2015, the
promotion of the company mainly depends on their prices, services of products. The brands
of the Asda Company include George Clothing, Asda Money, Asda Mobile and many others
(direct.asda.com, 2019).
In 2009, the Asda Company has 17.5% share of Grocery in UK market. The company has 1,
65,000 employees in United Kingdom (cipd.co.uk, 2019). The estimated revenue of Asda is
$26.7 billion yearly. The competitors of the company include Waitrose, which is a food
processing company and Ocado, which is a household product company and many others.
The operating income of Asda Company is £791.7 million in 2017 (asda.com, 2019). The
company achieved the second place in 2005 for their good relationship among the employees.
However, the company, in 2006 was fined £850,000, because they offered their 340 staffs to
give up collective bargaining.
The Asda Company for the last some years has been awarded for their lowest prices of
products and services. The company in 2018 has become the first retailer to ban the energy
drinks, like Red Bull (direct.asda.com, 2019). Moreover, the company supports many
charities to fulfil their social responsibilities. Those charities include “Tommy’s”,
“Everyman”, “Fields in Trust” and many others (cipd.co.uk, 2019). In this study, the Asda
Company will focus on expanding their supermarket in Italy to gain more benefits and
profits. It is a European Country and it is consist of peninsula and surrounded by many
islands. The economy of Italy has diversified features. The economy of the country is mainly
depends on the private and industrial companies. The GDP of the country is driving out by
high-quality goods and services produced by the big companies (ec.europa.eu, 2019).
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The employment rate of the country in 2006 has been 6.2%, while in 2018 it is 10.4%
(europarl.europa.eu, 2019). As a result, the Asda Company can be fruitful by expanding their
business in the country. The labour force of the country is 25.54 million in 2018 (oecd.org,
2019). However, there are some critical environmental issues, which the company can face
after expanding their business. The level of air pollution in the country is very high and as a
result, the illness of the workers of the industries is increasing gradually (isigrowth.eu, 2019).
The Asda Company in this case, can face loss due to this problem. They can ignore this
problem by applying the legal rules and by involving the advanced technologies in their
company to decrease the carbon emission.
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Task One
Building on the research you have conducted in the interim coursework, you are
required to produce a report that applies the SOSTAC model to the marketing strategy
currently being used by the high street supermarket you researched in your interim.
Figure 1: SOSTAC by PR SMITH
(Source: Smith, 2018)
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SOSTAC is a very popular marketing model invented by PR Smith, which is used for both
business planning. This strategy will be applied in case of ASDA, to open a supermarket in
Italy.
Situational analysis
Internal
The employees of Asda possess good skills to engage customers and improve their business.
There are many variations in their products and these two factors are the reason behind their
strength. Asda is suffering from delivery issues and several orders were cancelled before due
to this. Technical difficulties are a major factor of their weakness. The company has the
opportunity to expand their business to other countries and research on making better
products. The major threat is coming from its competitors like Tesco and many more
(mirror.co.uk, 2019).
External
Political
There is a political turmoil between Five Star Movement and the league in Italy right now.
The president is euro-sceptic and vetoed the decision of the finance minister. This can be a
major problem for expansion of Asda in Italy (independent.co.uk, 2018). This kind of
political instability can be a major issue for the company in future. Riots, clashes and other
issues can become a major drawback for this venture.
Economical
The government of Italy made a budget, which took down share prices of the company to a
much lower position. The government borrowed a lot from the market and the rate of interest
is rising daily. This can be a major economical problem for the country (bbc.com, 2019). The
economical condition of the country according to the GDP rate is very stable and therefore,
there is a chance for resolving these issues.
Social
The present social condition in Italy is very stable and there are opportunities for a
supermarket to expand, therefore it is ideal for Asda. The choices of Italian people are
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changing and in modern times and there is a clear sign of influence from other countries.
Therefore, it will be a major fact to consider for the company.
Technological
There are many technological advances in the country and it is ideal for expanding the
supermarket (Lucchese et al., 2016). The advance methods of checkout system and
implementation of various revenue management softwares can be a positive factor for the
company.
Environmental
The level of pollution in Italy is increasing each day and the government is setting up some
policies to restrict it. Therefore, it will take some effort from Asda to get a hold of these laws
before setting up the business. The company will have to follow their green economy law to
ensure an ethical business operation (Vandermeersch, 2017).
Legal
The rules for opening a new business in Italy are lenient and there are basic legislations to
follow. Therefore, the company will not face much challenge regarding this (Lucchese et al.,
2016).
Competitor analysis
Main competitors of this organisation are Tesco, Aldi, Lidl and Waitrose. These companies
have many stores across the world and strategic pricing to gain competitive advantage in the
market (aldi.co.uk, 2019).
Customer analysis
Asda have customers of various age groups and they have different preferences. The
information about preference of people from their buying pattern helps the company to know
about customer preference.
Market trends
Supermarkets are taking their physical stores to digital platforms and creating customized
experience for customers (forbes.com, 2019).
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Objectives
The mission of the company is to exceed the needs of customers at every situation and to
expand their business in Italy by opening up a supermarket store.
Sell
The company will have to increase the visibility of the brand. It is necessary for them to use
Google analytics to understand, the amount of customers of Italy are visiting their website for
acquisition of consumers and retain them thorough good service.
Serve
The company will have to use capable salespersons at their shop in Italy to serve customers
properly.
Sizzle
Asda can get more sales from setting up a supermarket in Italy, if they can increase the
quality of their products, as it will add value.
Speak
The company should engage their customer thorough online channels to increase their
interest regarding the brand.
Save
Asda should find methods to minimize their operational costs by managing a proper supply
chain.
Strategy
Targeting
The company will have to target various segments of the Italian population including youths,
women, men and older people. They should make products according to their demands and
necessities.
Positioning
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Asda will generate a huge profit if they sell fashionable clothes from the supermarket for the
young generation. There should be a special section for women, which will make comfortable
yet fashionable clothes for them. The company should make healthy foods for older people,
which will increase their sale.
Partnerships
It can be very beneficial if they form strategic alliance with other supermarket companies in
Italy and include old partner Sainsbury in this joint venture.
Process
The company should consider the option of marketing automation and it will enable them to
use softwares to market their products more effectively. They should integrate intelligent
software in their business to generate positive result from the supermarket.
Sequence
The company will have to focus on building trust amongst their customers and it will increase
their credibility.
Integration
Information integration should be done and it will help Asda to keep their business on track.
Tactical tools
The company should use social media platforms like Facebook and Instagram to market their
products and should keep a track on the engagement ladder option, such as like, comment and
share to convert viewers to customers.
Tactics
Price
The company should use dynamic pricing to fix their price for the products in the
supermarket. Dynamic pricing will give the company to set their prices according to the
demand in the market. The company will be able to assort prices differently for each
segments of the market. They should focus on both rich and poor sections of the country and
make products for both these economical class. Data from competitors will provide them with
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sufficient information to assort prices and it will give them a competitive edge (Grönroos,
2016).
Product
Asda will have to increase their range of products and bring products especially available in
the market of UK regarding clothes and groceries to increase their profit in this market. They
can introduce Muffuletta, Cioppino and various types of food. The quality of all the product
should be high and better than their competitors.
Place
They should place their supermarket in a major location in Italy, which will bring more
attention from customers. The place should be easily accessible for the local residents and
should be well known to visitors. Asda should try to open the supermarket in Rome because
this place has a major footfall from people from the country and other foreigners (Grönroos,
2016).
Actions
The supermarket will have to divide roles of employees according to their job designations.
Therefore, a proper structure according to operations will assist the company to perform tasks
faster. The manager should allocate tasks properly to the other employees of the supermarket
and track their performance. He or she should look after the satisfaction of customers and
come up with proper plan to increase the sale. The accountant should keep track of all
financial data and evaluate it to understand the performance of the company regarding sales.
Internal marketing will be the appropriate process for the organisation to make their
employees understand about the objective about the business. It will increase the employee
engagement and they will be able to work towards a common goal. The company should
employ people with right skills to achieve their objective and use special attributes to increase
their profit (Hsieh and Wang, 2016).
Control
The HR team is responsible for monitoring the performance of the employees and the
company. A quarterly evaluation of the business performance will help the company to
measure their performance of employees. They can use this to find out the flaws in their
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system and send employees for proper training and development. Mystery shopping can be
very effective in this case (Data and Table, 2017). A feedback from customers can be helpful
for the organisation and it will point out flaws regarding their services and products. Mystery
shopping can give away a store’s various aspects like, their method of greeting customers,
methods for displaying products, cleanliness and employee behaviour. They can test their
products through various customers to know about the usability of those products. The report
generated from these reviews should go directly to the manager, so that he or she can analyse
the situation properly.
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Task Two
An evaluation needs to be undertaken of the effectiveness of the retailer’s current
SOSTAC strategy currently used in the UK
SOSTAC is very useful is setting a concise, clear goals. The Asda Company focuses on their
organisational structure, global operations and their products range. The company can easily
cover all the issues, which they can face while marketing. There can be many impacts of this
SOSTAC. The company by this strategy can review all their process and as a result, the
number of mistakes will be decreased gradually (Adams, 2011). They can create an effective
plan to be successful in their marketing plan in United Kingdom. This SOSTAC strategy
makes the company capable to understand both their internal and external factors. As a result,
the company easily can solve any problem. Moreover, they can understand their current
digital customers and their interacting process as well. They can get the information about the
present competitors and as a result, they can remake their marketing strategy to build their
reputation in the market.
The company by this strategy can focus on the specific challenges in the organisation. Asa a
result, the performance and the management system of the company can be improved
gradually. The company can set their time-period to get more profitable outcome. They can
summarise their organisation’s objectives by considering this specific strategy. The company
can increase the visibility of their brand as well. They can find the emerging market in the
United Kingdom and can find the best paths of how to enter this market. In this case, they can
try to check their database of their existing customers. Moreover, the company will be able to
understand the interacting way of their customers with the websites.
The company can understand their own performance progress with the help of SOSTAC
strategy. Their goals are connected directly with this strategy. The company will be
successful in carrying the business successfully because of their high skilled employees in the
organisation. However, as Brexit is most important political threat in United Kingdom, “Five
Star Movement” is the vital political turmoil in Italy. It can affect the organisation largely.
The stability of the country in polity is main drawback, by which the company can face
extreme losses. The company in UK tries to decrease the pollution in air by involving
advanced technologies. The company with these technologies can be successful to maintain
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