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Heath and Heather Department Stores is one of the major department stores in Dublin having been incorporated in 1905. Dublin city is said to be one of the top ten richest in the world, which has attracted a number of companies from various industries to invest in/or evoke an active/thriving commerce environment in Dublin. Evidence of a display of middle through to wealthy income classes can be witnessed/ seen in the city of Dublin. Nevertheless, the Global recession has resulted in an inevitable decline in spending and as such, people are searching for value for their money.
Insomuch, consumers prefer to shop in a central location that caters to their every shopping need. Heath and Heather was formerly known for its high end and exquisite sense of style. Its high quality brands at its six store complex has propelled the city of Dublin to worldwide recognition for its shopping and earned a very favorable position among the wealthy of Dublin. This thus provided the opportunity for expansion, and added various departments to extend their portfolio to compliment the shopping desires of everyone in Dublin.
Interestingly, in spite of all their growth and offers Heath and Heather’s sales have been at a standstill for the past 10 years. Moreover sales have been at a steady decline which led to a net loss in January of 2012, it’s first since opening in 1905. Heath and Heather’s major competitor is another department store called Irish Cream Inc. , with four stores facilitating more floor space than Heath and Heather. Proprietor, Irish billionaire Geoff Rohan has seemingly caught the attention of the wealthy clientele. . Irish Cream Inc. has targeted the upper middle class households by offering product lines which caters to them.
Their main focus is catering for upper middle and the wealthy income households of Dublin, but they do offer an annual sale where some middle and lower income householders can purchase high quality, high end styles from the previous year at extensively reduced prices. Heath and Heather Department stores have faced multiple disadvantages due to global recession coupled with their major competitor Irish Cream Inc. The lower priced lines have only generated sales when they are placed on sales, and the music department also had a serious sales deficit with CD sales decreasing each year.
To overcome these deficiencies, Heath and Heather is considering setting up a website to promote sales. Though this may be an exciting marketing fixture for Heath and Heather, only the small younger segment of the market in Dublin is internet savvy. The marketing officer therefore, has six months to affect some turnaround in sales to prevent further decline in business or he will be replaced. S. W. O. T Key Strengths 1. Focus on very high quality, high end brands and timeless sophistication. 2. Excellent customer service. 3. Dublin’s wealthy housewives as primary clientele. 4.
The Irish prefer locally owned stores 5. Flag ship store is located in a reputable area 6. One-stop shop so everything is available at the department store Key Weaknesses 1. Expansion into many departments 2. Extensive expansions of the stores 3. Stagnant sales for the past 10 years 4. Decline in sales in January 2012 5. Trying to appeal to too many people- lack of focus Key Opportunities 1. Located in the 4th richest city in the world and 10th richest by personal income 2. Strong economic city 3. The return of the middle and upper income Irish from Britain can be catered to directly to attract this market.
4. Immigrants from Europe can be more aggressively targeted. This can be justified due to the fact the Asian quarter is growing and this market that is there is mostly attracted to this 5. Website would appeal to the youth 6. Dublin area population is growing Key Threats 1. The global economic crisis which is causing people to hold their money rather than spend it, may prevail in the future thus causing business to slow down even more. 2. Irish Creme is directly opposite H and H, therefore whatever sales promotions H and H implements, Irish Creme can easily be aware of and possibly try to mimic.
H and H should capitalize on the fact that Irish Creme only has a single annual sale and implement more periods of time to have other sales to attract consumers to their store instead. 3. Given the increased usage of the World Wide Web, consumers would be downloading their favorite music as opposed to buying the CDs instore, therefore revamping the music department is necessary in keeping up with trends in the market. Solution: H and H could look to offer products that play music and cut back on CDs for sale. This could include selling IPods, MP3 players and other similar devices that may attract consumers to their music department.
It can be assumed that people will still buy music CDs so it would not be suggested at this time to cut out this completely, but resources should be allocated differently in this market. 4. The Asian quarter is a fast growing shopping area and could take away more of H and H present clientele with the Chinese Laundry clothing line. Core Problem Heath and Heather’s marketing department has failed to execute any thorough marketing or strategic planning exercises, amidst challenging economic conditions. This has consequently resulted in negligent decisions towards the company’s progress.
Having conducted a historical trajectory of H and H business growth, careful observation shows that the absence of consistent growth coupled with unreliable marketing skills have perpetuated the decline of H and H’s competitiveness. We therefore propose that extensive planning would have assisted in H and H ability to identify and analyze the market’s size, needs and their competition, along with the different demographics at each store location. This was reflected in the decreasing operating income since 2009 and loss in 2012.
Financial Statements for Heath and Heather Department Stores (2009-2012) Period Ending01/201201/201101/201001/2009 Income Statement Operating Sales (Revenue/Sales)$113,260,000. 00$117,759,000. 00$125,556,000. 00$129,486,000. 00 Cost of Sales$97,042,000. 00$100,898,000. 00$106,722,000. 00$109,416,000. 00 Depreciation$5,251,000. 00$5,617,000. 00$5,747,000. 00$5,336,000. 00 Selling, Gen. & Admin Expense$11,412,000. 00$10,799,000. 00$10,646,000$11,571,000. 00 Operating Income($445,000. 00)$257,000$2,441,000. 00$3,163,000. 00 Satellite Problems The marketing plan and analysis were not strong:
•Opportunities and threats within the environment were not efficiently identified. •Did not identify the economic, social, political, demographic, cultural and technological trends that impacted their ability to serve customers effectively and on the ability to increase market share and profitability. •Incomplete assessment of industry profitability, expected market growth rates. •Determining whether the company has the capability to capitalize on marketing opportunities. •Poor competitor analysis to determine avenues for the company to gain competitive advantage.
•Ineffective determining of appropriate market strategies in light of corporate objectives and factors in the firm’s micro and macro environments. Lack of evolving market research over the years: H and H failed to conduct any market research, where they can make effective marketing decisions from scanning the environment, doing the risk assessment analysis and monitoring the strategies and tactics. Poor market targeting process: •No effective segmentation method was chosen •Did not use a proper positioning strategy to maintain a competitive advantage.
Alternatives –Pros and Cons Alternative 1 Conduct an extensive marketing analysis and plan for appropriate action. Pros: Identify the opportunities and threats in the environments. Identify the customers’ taste and preferences in an effort to increase the market share and increase sales. Critically analyze the competition to determine how they can develop a competitive advantage Implement a Marketing Information System Cons: Time consuming Expensive to conduct Alternative 2 Drop the departments that are making significant losses.
Pros: Open up more floor space to expand on a line which is profitable Ability to focus on departments that has the potential to increase their market share Cons: Cutting of a department which could potentially be a growth prospect. Alternative 3 Form a Target Market Plan Pros: Focus on the needs and wants of the different market segments Form and attractiveness to each segment Repositioning the company relative to the competition Cons: could result in over, under or confused positioning of the company Alternative 4 Leave everything as it is and hope for the best
Pros: Things might slowly turn around if the economy picks up Cons: Unpredictable Weighing the Alternatives on a scale of 1-5 (1-low 5-high) Alternative 1 4 – Market research would inform the company of customers’ wants/needs/desires and with this information the company can then come up with an appropriate marketing plan Alternative 2 3 – Dropping the unprofitable departments will allow the company to focus on the departments and products that are profitable or can be made profitable. Alternative 3 3 – This alternative allows the company to keep all the departments and product lines by targeting all the groups/segments
Alternative 4 1 – This provides no real solution to the challenges that the company is facing Recommendations -Action or Implementation Plan and Controls Implementation Implementation is the process where the researcher ensures that marketing plans are developed into actions, ensuring that their plans are accomplished within the set period. At this stage, they will determine WHAT needs to be done and WHY? After those strategies are identified, they then establish WHO, WHERE, WHEN and HOW they will implement their strategies. Implementation through consensus
Managers from different areas and professional levels of the firm could meet together to “brainstorm” and develop the marketing strategy. Through collective agreement, a consensus is reached to an overall direction of the firm. Advantages: •Incorporates multiple opinions and viewpoints into the marketing strategy •The leader coordinates by pulling different opinions together •Firm-wide commitment to the strategy make implementation easier •Upper- and lower-level managers work together, thus moving some of the decision making closer to the frontline of the firm •Perhaps the best choice in complex, uncertain, and unstable environments
Disadvantages: •Many upper level managers will not give up their authority •The approach can lead to groupthink •Slows tremendously the overall strategy development and implementation process •Requires ongoing and open horizontal and vertical communication throughout the firm Using primary and secondary research methods, the strategies were broken down into both short and long term implementation plans. With a time frame of the six (6) months to one (1) year for the short term plans and more than one (1) year for the long term plans.
Primary data research consists of original data collected by the researcher for their own needs, whereas secondary data already exists having been collected for another purposes. Short Term Implementation The secondary research method used is the Internet Search Engines: – Internet search engines can be used to determine the industry’s ratios. The facility of a search engine such as MSN Money can assist Heath and Heather in observing it their competitor’s financial position, thereby drawing evident comparisons as it relates to their own financial position, and so they can use industry ratio as a bench mark.
Primary research methods used are Survey Method, Focus Groups and Online Marketing Research: – With Survey Research being the best suited for collecting descriptive information, it was decided that H and H used telephone interviewing. This method happens to be inexpensive and a quick technique for obtaining knowledgeable information which benefits the company. Focus groups are generally known to have six (6) to ten (10) participants who are gathered to discuss a company’s products, service or organization as a whole with a trained moderator.
Again, Heath and Heather can benefit from this method of research, as it is inexpensive and is seen as a qualitative tool for acquiring quality feedback on information that can aid in developing a sound marketing plan. Being a quantitative research method through surveys and data collection, Online Marketing Research method can be used to cater to the younger people of Dublin. Heath and Heather can experiment with different incentives to encourage customers who complete surveys and spend money with H and H (e. g.
5% or 10% off voucher for every $50 spent in any store after completing the survey) Long Term Implementation Secondary Research method used is the Marketing Information System (MIS). MIS is the process of analyzing and assessing continuous marketing data collected from resources both in and outside of the organization. Information received in an opportune manner, provides management with a continuous flow of relevant information which assists them on making critical decisions such as product development and or improvement, distribution and promotions.
Controls Marketing control is the process which assists managers in developing their skills in order to provide sound marketing decisions. Control also monitors the progress of a company and allows management to review implementation results as well as taking corrective action to ensure that the objectives are attained. Operating controls can be used to ensure that Heath and Heather achieves the sales and profits increase needed, as well as determining the profitability of its departments; for example comparison of expected and actual sales.
However, strategic controls would be useful for H and H to examine if their basic strategies are corresponding to their opportunities. Heath and Heather should also reconsider its overall approach to the market place since marketing strategies and programs are quickly developing. Formal controls to help ensure the successful implementation of the marketing strategy Input controls – actions taken prior to implementation of the strategy •Employee selection procedures •Employee training programs •Employee manpower allocations •Allocation of financial resources •Capital outlays
•Research and development expenditures Process controls – actions taken during the implementation of the strategy •Employee evaluation and compensation systems •Employee authority and empowerment •Internal communication programs •Lines of authority/structure eg(organizational chart) •Management commitment to the marketing plan •Management commitment to employees Output controls – evaluated after implementation of the strategy •Formal performance standards (e. g sales, market share, profitability, etc) •Marketing audits Informal controls Unwritten control activities initiated by employees
Employee self-control – control based on personal expectations and goals •Job satisfaction •Organizational commitment •Commitment to the marketing plan Social control – small group control based on group norms and expectations •Shared organizational values •Social and behavioral norms in workgroups Cultural control – cultural control based on organizational norms and expectations •Organizational culture •Organizational stories, rituals, and legends •Cultural change Key Strengths 7. Focus on very high quality, high end brands and timeless sophistication. 8.
Excellent customer service. 9. Dublin’s wealthy housewives as primary clientele. 10. The Irish prefer locally owned stores 11. Flag ship store is located in a reputable area 12. One-stop shop so everything is available at the department store Key Weaknesses 6. Expansion into many departments 7. Extensive expansions of the stores 8. Stagnant sales for the past 10 years 9. Decline in sales in January 2012 10. Trying to appeal to too many people- lack of focus Key Opportunities 7. Located in the 4th richest city in the world and 10th richest by personal income 8.
Strong economic city 9. The return of the middle and upper income Irish from Britain can be catered to directly to attract this market. 10. Immigrants from Europe can be more aggressively targeted. This can be justified due to the fact the Asian quarter is growing and this market that is there is mostly attracted to this 11. Website would appeal to the youth 12. Dublin area population is growing Key Threats 5. The global economic crisis which is causing people to hold their money rather than spend it, may prevail in the future thus causing business to slow down even more. 6.
Irish Creme is directly opposite H and H, therefore whatever sales promotions H and H implements, Irish Creme can easily be aware of and possibly try to mimic. H and H should capitalize on the fact that Irish Creme only has a single annual sale and implement more periods of time to have other sales to attract consumers to their store instead. 7. Given the increased usage of the World Wide Web, consumers would be downloading their favorite music as opposed to buying the CDs instore, therefore revamping the music department is necessary in keeping up with trends in the market.
Solution: H and H could look to offer products that play music and cut back on CDs for sale. This could include selling IPods, MP3 players and other similar devices that may attract consumers to their music department. It can be assumed that people will still buy music CDs so it would not be suggested at this time to cut out this completely, but resources should be allocated differently in this market. 8. The Asian quarter is a fast growing shopping area and could take away more of H and H present clientele with the Chinese Laundry clothing line.