You are required to prepare a strategic marketing plan and present it to the client in a formal presentation.
You are required to prepare a strategic marketing plan and present it to the client in a formal presentation. The presentation will take place one week before the submission of the report which will enable you to act on feedback received from the client.
The key elements of this assessment is to identify;
Where are we now?
Where do we want to be?
How will we get there?
The Kitchen Depot – Key Points from meeting with Jim and Mark of KD
14 outlets mainly based in the central belt of Scotland.
Family owned with the mantle being passed from father to son.
KD are proud of their employees believe this is one of their strengths. I think they want to ensure that this approach applies to all of their franchise staff as well.
Removal of MFI took out a big player from the market, they were heavily reliant on Christmas sales which helped to shape customers’ perception of buying a fitted kitchen eg heavily discounted and reliant on sales. Some preliminary research into the collapse of MFI outlined escalating debts, ‘sleeker, younger rivals’ (including IKEA), increased retail costs and the recession which reduced the need for consumer spending on big ticket purchases such as a kitchen
Current competitors include B&Q, Wickes, Wren Kitchens and Howdens (who have over 700 depots in the UK). It’s obvious that KD are a small player within a specific region – but who have an approach which has seen them survive and thrive over the last few decades. It might be worthwhile taking a look at the websites of these firms to try to ascertain what their approach is.
Smaller competitors moved forward to take their share of the market. These smaller firms are more flexible and, seemingly, responsive to changing customer tastes. This was backed up by Mark who mentioned that understanding the customer is important and they had to be flexible to deal with this. MFI benefitted from the boom in council house sales which took place from 1980 onwards. Many people took advantage of buying their house from the local authority and were keen to put their own mark on it by putting in their own kitchens and bathrooms. The era of this has more of less passed.
Growth for the firm has been achieved via the franchising routes (key advice – try to watch the movie ‘The Founder’ with Michael Keaton. It’s about how Ray Kroc linked up with the MacDonald brothers who were developing their new fast food operation. They used franchising but as the movie highlights it wasn’t always easy keeping control of how the franchisees operated their business. Mark mentioned that they have already had one failure in their franchise approach
The company has a meeting of senior managers every three or four months to plan for the future. I wasn’t sure if this was a structured meeting set in stone or whether it was quasi-informal. Should they be thinking about formalising their approach to long-term planning?
I don’t think they have a mission statement (which isn’t everything) but Jim mentioned something about being a national firm with a local approach (approximately)
The geographical location of the group appears accidental rather than planned (which can be the case with franchising). Are there geographical gaps they should be looking to close or is there a danger of over-expanding?
Profit margins – we don’t have enough information to go on here but suggest that profit margins won’t be excessive but will be competitive. I would presume finance options are available from third party lenders. First time buyers might be more price sensitive than people looking for a better and more modern kitchen. As Jim pointed out you might get a customer who lives in a big house – but they might not have as much disposable income as someone living in a smaller house who might be spending money on a kitchen. Segmenting the customer base isn’t easy although the thought of a range aimed as disabled customers appears to be a possibility. The company Revive was mentioned here but they appear to provide bespoke kitchens rather than being a sole provider of kitchens for the disabled. Is this a potential area of growth? Are there other segments out there, possibly linked to changing demographics and the housing market?
They seem to like their brand logo and don’t think there’s anything wrong with it – do you? Maybe it needs refreshed rather than a total replacement?
The mention of an upmarket kitchen range – Domus (Latin for house) appears to be gaining ground within the company. How would you handle this? Would this be a separate operation from KD operating with its own premises, target customers, locations, communications etc Or is this too expensive? Would you perhaps introduce it as a sub-brand which would be available within the KD outlets? Would you allow it to be franchised or keep it within your control? Whatever your answer, make sure you justify your approach.
Are there other sub-brands available? A cheaper range perhaps or would this complicate the operation?
The average spend on a kitchen is around £8,000. It was pointed out that in the late 1970s the price of a kitchen was approximately equal to the cost of a new car - around £4,000. Now the kitchen price has doubled, but the cost of a car is even more at around £17,000. Do customers expect more for less? Controlling customer expectations can be a problem – eg they want a customised kitchen at a low price delivered immediately. The key to managing expectations takes place in the showroom when the initial conversation takes place – skilled and motivated staff are an essential element here. I didn’t gain the feeling that this was a problem for them.
Marketing budget 10% of turnover. Difficult to tell if this is an industry standard or a company approach. Nor does it indicate if it includes staffing costs as well
They appear to utilise PR to a certain extent, they gifted a kitchen to a charity and obtained free materials from suppliers which gave the impression they were giving away an expensive kitchen when in actual fact it was only a fraction of the total price. Can this be repeated? Can it be improved?
There was mention of sponsoring the half time draw at Celtic Park. The fans buy a ticket when they come in (£2) and the winner wins around £15,000. KD sponsored this draw but don’t put up the money for the total prize (which some people might assume). I don’t think this would be very expensive to sponsor but I’m not sure if they did it for one week or if it’s done over the season. In Scotland you have to be careful about being associated with one of the two football teams in Glasgow (which I think they are aware of). I thought sponsoring this seemed unusual – almost an ad hoc approach to communication – but I did discover that both Mark and Jim are Celtic fans and this might have influenced them to be involved. It highlighted to me that their marketing communication plan might not be as structured as you would think.
Recommendations from existing customers is recognised by the firm….but is it exploited in any way? Could a more formal approach be utilised which helps turn existing customers into advocates?
They have a website which appears to be fairly basic. I gather that the son, Mark, likes the visual aspect but the father, Jim, prefers there to be more factual information. They also have Twitter, FB and Instagram. Is there an integrated approach to their digital communication? Does the content across all these platforms appeal to you? Is there scope for improvement?
When asked about their strategy, they immediately latched onto to a tactical activity – spending on promotion. TV and radio, and to a lesser extent, digital, are how they communicate with their customers. The focus on franchising – which appears to have been by accident – is their strategic way forward – but is there an overall strategy for the firm?
They mentioned having 10 showrooms in the next few years. Later on they mentioned an objective of having a £20m turnover and 25 stores – I would presume there’s a three- five year plan for this. Going from 14 – 25 stores is (almost) doubling the size of the firm – can they maintain their family, high service approach at this size? Organic growth is their preferred route – but it’s all down to having the right people in charge. They don’t think having experience in the kitchen trade is essential – as was proven by the awarding of a franchise to a 20 year old. Growth in England appears to be more logical.
The firm appear to be a critical point in their history. They have been successful but realise that there is always a pressure to grow. The danger is in growing too fast, in the wrong areas with the wrong people in charge. Digital disruption hasn’t really impacted too much upon the kitchen market – not in the way that it has for banks and mainstream retail – but that’s not to say it won’t play a part in future. What digital marketing elements can you see being of use to this firm?
Key areas to be covered:
Marketing Objectives I think the general aim to have 25 outlets within 5 years is the overall objective here. You may wish to set quantifiable objectives about communications, share of a target market, number of franchises, brand awareness – where do you this firm should be within 5 years. Naturally all of the objectives will be SMART – and the word SMART will not appear anywhere in your presentation or report.
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