Target Corporation Marketing Plan
OK Grocer Jeffrey’s Bay Marketing Plan WERNER HERBST 1 FEBRUARY 2011
TABLE OF CONTENTS
I. EXECUTIVE SUMMARY
3
II. ENVIRONMENTAL ANALYSIS
3
A. The Marketing Environment - need to be specific................................................................................5 B. OK Grocer Markets.................................................................................................................................6
III. SWOT ANALYSIS
7
A. Strengths..................................................................................................................................................7 B. Weaknesses.............................................................................................................................................8 C. Opportunities...........................................................................................................................................8 D. Threats...................................................................................................................................................10
IV. MARKETING OBJECTIVES
10
V. MARKETING STRATEGIES
11
B. Marketing Mix.......................................................................................................................................11
V. MARKETING RECOMMENDATIONS
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2
OK Grocer Corporation Marketing Plan I. Executive Summary The OK Grocer is a recent entry into the market in Jeffrey’s Bay. The store offers general groceries for its customer in a bright and spacious store, conveniently located close to the centre of town. The main strengths for the store are its brand and control of the Seaview Shopping Mall. With lots of competition in the Jeffrey’s Bay area, the report aims to give a general feel for the market and to identify potential gaps in the food retail market to ultimately increase turnover. This report concludes with some ideas and recommendations that can and might be implemented by OK Grocer. II. Environmental Analysis The OK Grocer is a new entry into the market in Jeffrey’s Bay with roughly a year under its belt. Ok Grocer is a national discount grocer in South Africa and some parts of Africa. There are 67 Ok Grocer outlets in South Africa. OK Grocer forms part of Shoprite Holdings which acquired it from SA breweries for R1 in 1997. As a brand name OK grocer is well recognized through South Africa. Shoprite Holdings is South Africa’s largest food retailer and operates in more than 1800 outlets in 17 African countries. It has about 34 percent market share of the South African food retail market and comprise of food, furniture and perishable lines. OK Grocer forms part of a total of 5 retail food stores in Jeffrey’s Bay. Company Structure
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3
III. Demographics In 2001 the total population in Jeffrey’s Bay was 14 772 (StatsSA, 2002). However the current estimate is closer to 20 000. It can be seen from the table that Humansdorp got a slightly higher population compare to Jeffrey’s Bay. The ethnic groups are slightly different for the two areas with Jeffrey’s Bay having a largely white population and a similar size African and coloured population. Table 1
- Population – Source StatsSA (2001)
During the holiday season in December the population in Jeffrey’s Bay increases dramatically and almost doubles. This represents peak business times for businesses in the area. The average population per supermarket in the US is 8800 nationally. The average population per supermarket for the main supermarkets in Jeffrey bay is roughly 3000 per store. This data is based on an outdated 2001 population census of the area and also excludes holiday season traffic. If a figure of 20000 is used the amount rises to 4000, which is still fairly low compare to the US. III. Employment The following information also based on the 2001 census shows that Jeffrey’s Bay has an unemployment rate of 28.5%. The different sectors providing the employment are stated in Table 2. The construction sector was responsible for the majority in job creation from 1996 to 2001, whilst agriculture and forestry shed jobs in the same period. Table 2
- Employment Breakdown – Source StatsSA (2001)
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4
IV.
Income Levels
The income distribution can be seen for both Humansdorp and Jeffrey’s Bay. Humansdorp and Jeffrey’s Bay have a higher income on average compared to the rest of the Kouga municipality. It is clear that the majority of the income levels in Jeffrey’s Bay fall in the range R19201–R153600. Table 3 – Income Distribution – Source StatsSA (2001)
A. The Marketing Environment - need to be specific
1. Competitive Forces. The competition in the retail sector in South Africa is high with plenty of competition in various forms. Pick n Pay and the Spar Group are the 2nd and 3rd biggest retail stores after Shoprite holdings with Pick n Pay having 15% of the retail market share. Specifically to Jeffrey’s Bay the main competition for OK Grocer are the following: • Spar in Da Gama Rd • Checkers in Equinox mall • Checkers in Da Gama Rd • Pick N Pay in Fountains Mall • Fruit & Veg at Schelde Str (partial competition) Although Checkers and OK Grocer form part of the same group, Shoprite Holdings, they are in strong competition with each other due to the franchising of OK Grocer and Checkers’s very close proximity.
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2. Economic Forces. The economy place a huge role in the success of a retailer. The economic development in the Kouga area has many challenges, but encouragingly its performance is slightly better than the rest of the Cacadu District and Eastern Cape. The GDP and employment for the Kouga area and skills available to area are both higher than the provincial average. The main products for the local economy are game and tourism, fruit and dairy. Tourism forms a big part of the municipality including Jeffrey’s Bay, St Francis and Cape St Francis. Furthermore a R1.2 billion commercial and residential development is in the process of development at a 600 ha site to the entrance of Jeffrey’s Bay e.g. The Fountains Estate. 3. Political Forces. The Ok Grocer might be influenced by political forces in several ways. Current BEE legislation South Africa requires businesses to have a certain employee distribution. This might be less of an issue as the standard employee make-up of a grocery store will include different ethnic backgrounds. Another factor might also be the franchise structure of OK Grocer. Shoprite holdings have re-acquired some OK Grocers from franchise owners due to low quality control. 4. Legal and Regulatory Forces. As a standalone business OK Grocer can be affected by the type of advertising streams they follow. They would need to adhere to advertising standards. 5. Technological Forces. OK Grocer has currently very little web presence. With a growing mobile internet and internet penetration in South Africa, this can be a venue that can be leveraged. The do have a facebook page that can be advertised better in store to the less internet savvy customers. 6. Sociocultural Forces. The average South African consumers are very promotion sensitive and might be the best way to attract customers to the store. Consumers would like both quality and value for money when shopping. Due to the slightly lower income group target market for OK Grocer the brand have a slightly lower image. However, because of the franchise structure the profile of OK Grocer can be raised within the Jeffrey’s Bay area attracting customers from all different income groups. B. OK Grocer Markets Ok Grocer targets the middle to the lower-end of the consumer market with an extended focus on store branded products (e.g. OK branded products) for the more priceconscious consumers. The strap line for OK Grocer is “Shop where South Africa Shop OK”. The mission for OK Grocer is “It is our commitment to build on a tradition of caring for our customers through personal service, quality products and excellent value for money.”
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6
III. SWOT Analysis
A. Strengths Brand OK Grocer has a strong brand which is recognized by almost all South Africans. Their slogan “Shop where South Africa shops” is also well recognized. The OK brand perception targets the lower to middle class income groups. OK Grocer also carries it own private label products.
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Geographic Location OK Grocer Jeffrey’s Bay is situated in Seaview Shopping Mall. Seaview shopping is ideally located to the traditional centre of town. Recently Seaview Shopping Mall has been refurbished with retail opportunities available. The empty stores need to be leveraged to attract an additional customer base to OK Grocer. This is especially true as it is in control of the current owners to expand and select retail owners for Seaview Shopping Mall. The Seaview Shopping Mall needs to be a convenient one stop shop for the average Jeffrey’s Bay resident. Control over retail park premises OK Grocer ownership also spreads to control over the Seaview Shopping Mall and the various businesses premises situated in the mall. Empty business premises have an obvious negative effect on the perception of the mall. However, with control over type of business located in the mall it can be leverage to attract customers to the mall and to fill those empty business premises quicker. Although there is currently mostly unique type businesses situated in the retail park, this might need to be promoted to other franchise type businesses attractive to Jeffrey’s Bay residents.
B. Weaknesses Market Presence OK Grocer is a new entry in the food retail market in Jeffrey’s Bay. Awareness needs to be raised to all residents in Jeffrey’s Bay to market and advertise the store. Promotion of the store can be raised by targeting customers coming from the lower direction of Jeffrey’s Bay. Empty Premises in Retail Park The Seaview Shopping Mall has recently been refurbished and was empty for an extended period. New and relevant businesses need to be attracted to the mall to expand the customer base for OK Grocer. Empty businesses premises also give the impression of “slow” business, which might distract customers from visiting the mall. Empty businesses in a retail park will also give customers less of an incentive and reason to visit the retail park. C. Opportunities Continued growth in private label products There are several advantages of private labels e.g. OK branded products. The most important ones are listed below: • •
increased profitability through cost saving and increased margins increased store loyalty and creation of a distinct corporate identity
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8
•
•
opportunities to seize new market ventures Increased bargaining leverage with suppliers.
Lower income group customers are more brand loyal and less reluctant to buy private labels. However middle income customers are less brand and label sensitive. The OK branded private products can be used to target these customers. OK Grocer might need to position the private label as pure value for money due to the OK brand perception and target market. Packaging seems to be the determining factor in products sales. Currently the OK branded products indicate a value range. However, this can also be rebranded with better packaging as a premium product.
Key indicators which can help to position OK private label effectively.
Holiday Season The holiday season in Jeffrey’s Bay presents a significant opportunity for OK Grocer. The population of Jeffery’s Bay almost double during the December/January holidays. The holiday food shoppers have different needs compared to local residents and products need to be promoted targeting them. Tourists might not have all amenities
Werner Herbst 4/29/2011
9
available to them and the ready meal section will appeal to them and needs to be promoted. Other significant tourist influx into Jeffrey’s Bay is: • Billabong Pro Surfing in July • Easter Weekend in April • Shell Festival in September Customer Loyalty Program There is currently no loyalty program for OK Grocer. Although this might be an expenses program to implement, it might be an opportunity. As OK Grocer is a franchise store it might need to be a local venture. It would be a cheaper option if this was implemented by head office across all stores. Tapping into different Ethnic Groups The population for Jeffrey’s Bay is essentially split three ways, with roughly equal numbers of white, coloured and black people. Although OK Grocer already targets low to middle income groups, it might be advisable to also have specific products, product promotions and advertising for the three different groups. D. Threats Competition Unfortunately OK Grocer is situated very close to Checkers. Although Checkers and OK Grocer both are part of Shoprite Holdings, the franchise structure of the OK branded shops makes Checkers direct competition for OK Grocer Jeffrey’s Bay. However, Checkers does target the middle to upper customer, whilst OK grocer lowers to middle income groups. If OK Grocer is a first stop for residents coming from the lower end of town, advertising needs to be strong and clear to get people to enter Seaview Shopping Mall from that direction. The population to store ration is also fairly low in Jeffrey’s Bay. IV. Marketing Objectives The main objective would be to increase turnover for OK Grocer Jeffrey’s Bay. This can be done by increasing basket size and by increasing the number of transactions. Increase Basket Size – Measuring basket size can be tricky. There need to a measurement of current basket size, items in the basket. Basket Analysis can be used to do this. Other options to consider for increasing basket size are: • Clean friendly environment • Wide aisle spaces • Easy and visible access to Baskets and shopping trolleys e.g. baskets at entrance and baskets at high sale items e.g. milk, bread, or even a staff member handing out baskets • Positioning of products – Promotional Items close to door, also if there is promotional items, stockings other products that go with that product e.g. Beer with meat etc.
Werner Herbst 4/29/2011
10
• •
Promotion on multibuys e.g. Can of soup cost R5, 90, get two for R10 etc. Staff at tills can ask customers if they found everything they looked or are that they are aware of the current promotions for etc. As comparison the average basket size for a shop in Germiston is R40.
Increase number of transactions – The main method for increasing transactions is increasing footfall to OK Grocer and to the mall. This can be done by promoting OK Grocer, filling the businesses premises in the mall, advertising those businesses and generally be a one-stop shop for customers. As comparison an OK Grocer store in Germiston has 46 000 transactions/month. V. Marketing Strategies B. Marketing Mix 1. Products. OK Grocer offers mainly the following products: • Groceries The OK grocer also stocks their own private labels products. The products stocked by OK Grocer are generally used in South African households. OK grocer need to make sure it stock products that are applicable for the different ethnic groups. 2. Price. OK Grocer caters for the low to middle income group. It competes with Spar, Checkers and Pick n Pay in Jeffrey’s Bay, but it needs to leverage its advantage as a slightly lower cost provider. This is especially true as OK Grocer is the only one of the main supermarkets targeting this group. OK Grocer needs to have weekly promotional items and possibly sales on clearance items. 3. Distribution. Dont have much detail on how your order stock for your store. OK distribution warehouses? 4. Promotion. OK Grocer has a XX budget on advertising. The main influence for South Africans, as per chart below, is television, newspapers, pamphlets and flyers and word of mouth. Advertising needs to be done with consideration for cost and influencing effectiveness. OK Grocer needs to make sure advertising reach all ethnic groups. Some OK Grocer store sends out 50000 leaflets per month. Influence Based on Ethnic Profiles
Werner Herbst 4/29/2011
11
Influence of different media types on the South African consumer
V. Marketing Recommendations The following recommendations are based on the report above: • Ok Grocer need to check its customer base and need to target and advertise to this market. • However, OK Grocer also needs to expand advertising to all ethnic groups in Jeffrey’s Bay. • OK Grocer needs to provide and promote products for the different ethnic groups as this will limit the competition from some of their competitors. • Promotion of the store can be raised by targeting customers coming from the lower direction of Jeffrey’s Bay. • Approaching schools to buy local groceries from OK Grocer • Promotion and advertising of ready meals, including deliveries of ready meals to local businesses. o This includes meals prepared by the OK Grocer shop and also ready meals warmed at home by the customer. There is a growing trend for at home ready meals in South Africa. • Holiday season promotions of ready meals, groceries, specific tourist products etc. • Deliveries to certain customers and businesses in Jeffrey’s Bay • Price sensitive customers are becoming more aware of private labels and there is an increasing demand for such. • Although there is currently mostly unique type businesses situated in the retail park, this might need to be promoted to other franchise type businesses attractive to Jeffrey’s Bay residents.
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12
•
OK Grocer already targets low to middle income groups, it might be advisable to also have specific products, products promotions and advertising for the three different ethnic groups.
Additional Notes on Report
• •
• •
• • •
The South African consumer is becoming more health conscious, so healthy and wellness food need to be part of the product range for OK Grocer – even a health section. Convenience is very important for the customer, so the bakery, butchery and ready meal departments need to be continuously promoted and advertised. There is a general need for longer hours for grocery stores Environmental and ethical issues are becoming more important to South African consumers. OK Grocer needs to advertise their involvement with the community and community development. o OK Grocer can also see if they can source products locally. Bottled water sales are showing to be a large part of the beverage market. OK Grocer needs to stock a variety within their store. Lower income groups from townships are often more brand loyal – products that succeed in the black market are normally lower price, single service package sizes and also products that do not require refrigeration. A recent report states that products need to be constantly promoted for South African markets.
Werner Herbst 4/29/2011
13
TABLE OF CONTENTS
I. EXECUTIVE SUMMARY
3
II. ENVIRONMENTAL ANALYSIS
3
A. The Marketing Environment - need to be specific................................................................................5 B. OK Grocer Markets.................................................................................................................................6
III. SWOT ANALYSIS
7
A. Strengths..................................................................................................................................................7 B. Weaknesses.............................................................................................................................................8 C. Opportunities...........................................................................................................................................8 D. Threats...................................................................................................................................................10
IV. MARKETING OBJECTIVES
10
V. MARKETING STRATEGIES
11
B. Marketing Mix.......................................................................................................................................11
V. MARKETING RECOMMENDATIONS
Werner Herbst 4/29/2011
12
2
OK Grocer Corporation Marketing Plan I. Executive Summary The OK Grocer is a recent entry into the market in Jeffrey’s Bay. The store offers general groceries for its customer in a bright and spacious store, conveniently located close to the centre of town. The main strengths for the store are its brand and control of the Seaview Shopping Mall. With lots of competition in the Jeffrey’s Bay area, the report aims to give a general feel for the market and to identify potential gaps in the food retail market to ultimately increase turnover. This report concludes with some ideas and recommendations that can and might be implemented by OK Grocer. II. Environmental Analysis The OK Grocer is a new entry into the market in Jeffrey’s Bay with roughly a year under its belt. Ok Grocer is a national discount grocer in South Africa and some parts of Africa. There are 67 Ok Grocer outlets in South Africa. OK Grocer forms part of Shoprite Holdings which acquired it from SA breweries for R1 in 1997. As a brand name OK grocer is well recognized through South Africa. Shoprite Holdings is South Africa’s largest food retailer and operates in more than 1800 outlets in 17 African countries. It has about 34 percent market share of the South African food retail market and comprise of food, furniture and perishable lines. OK Grocer forms part of a total of 5 retail food stores in Jeffrey’s Bay. Company Structure
Werner Herbst 4/29/2011
3
III. Demographics In 2001 the total population in Jeffrey’s Bay was 14 772 (StatsSA, 2002). However the current estimate is closer to 20 000. It can be seen from the table that Humansdorp got a slightly higher population compare to Jeffrey’s Bay. The ethnic groups are slightly different for the two areas with Jeffrey’s Bay having a largely white population and a similar size African and coloured population. Table 1
- Population – Source StatsSA (2001)
During the holiday season in December the population in Jeffrey’s Bay increases dramatically and almost doubles. This represents peak business times for businesses in the area. The average population per supermarket in the US is 8800 nationally. The average population per supermarket for the main supermarkets in Jeffrey bay is roughly 3000 per store. This data is based on an outdated 2001 population census of the area and also excludes holiday season traffic. If a figure of 20000 is used the amount rises to 4000, which is still fairly low compare to the US. III. Employment The following information also based on the 2001 census shows that Jeffrey’s Bay has an unemployment rate of 28.5%. The different sectors providing the employment are stated in Table 2. The construction sector was responsible for the majority in job creation from 1996 to 2001, whilst agriculture and forestry shed jobs in the same period. Table 2
- Employment Breakdown – Source StatsSA (2001)
Werner Herbst 4/29/2011
4
IV.
Income Levels
The income distribution can be seen for both Humansdorp and Jeffrey’s Bay. Humansdorp and Jeffrey’s Bay have a higher income on average compared to the rest of the Kouga municipality. It is clear that the majority of the income levels in Jeffrey’s Bay fall in the range R19201–R153600. Table 3 – Income Distribution – Source StatsSA (2001)
A. The Marketing Environment - need to be specific
1. Competitive Forces. The competition in the retail sector in South Africa is high with plenty of competition in various forms. Pick n Pay and the Spar Group are the 2nd and 3rd biggest retail stores after Shoprite holdings with Pick n Pay having 15% of the retail market share. Specifically to Jeffrey’s Bay the main competition for OK Grocer are the following: • Spar in Da Gama Rd • Checkers in Equinox mall • Checkers in Da Gama Rd • Pick N Pay in Fountains Mall • Fruit & Veg at Schelde Str (partial competition) Although Checkers and OK Grocer form part of the same group, Shoprite Holdings, they are in strong competition with each other due to the franchising of OK Grocer and Checkers’s very close proximity.
Werner Herbst 4/29/2011
5
2. Economic Forces. The economy place a huge role in the success of a retailer. The economic development in the Kouga area has many challenges, but encouragingly its performance is slightly better than the rest of the Cacadu District and Eastern Cape. The GDP and employment for the Kouga area and skills available to area are both higher than the provincial average. The main products for the local economy are game and tourism, fruit and dairy. Tourism forms a big part of the municipality including Jeffrey’s Bay, St Francis and Cape St Francis. Furthermore a R1.2 billion commercial and residential development is in the process of development at a 600 ha site to the entrance of Jeffrey’s Bay e.g. The Fountains Estate. 3. Political Forces. The Ok Grocer might be influenced by political forces in several ways. Current BEE legislation South Africa requires businesses to have a certain employee distribution. This might be less of an issue as the standard employee make-up of a grocery store will include different ethnic backgrounds. Another factor might also be the franchise structure of OK Grocer. Shoprite holdings have re-acquired some OK Grocers from franchise owners due to low quality control. 4. Legal and Regulatory Forces. As a standalone business OK Grocer can be affected by the type of advertising streams they follow. They would need to adhere to advertising standards. 5. Technological Forces. OK Grocer has currently very little web presence. With a growing mobile internet and internet penetration in South Africa, this can be a venue that can be leveraged. The do have a facebook page that can be advertised better in store to the less internet savvy customers. 6. Sociocultural Forces. The average South African consumers are very promotion sensitive and might be the best way to attract customers to the store. Consumers would like both quality and value for money when shopping. Due to the slightly lower income group target market for OK Grocer the brand have a slightly lower image. However, because of the franchise structure the profile of OK Grocer can be raised within the Jeffrey’s Bay area attracting customers from all different income groups. B. OK Grocer Markets Ok Grocer targets the middle to the lower-end of the consumer market with an extended focus on store branded products (e.g. OK branded products) for the more priceconscious consumers. The strap line for OK Grocer is “Shop where South Africa Shop OK”. The mission for OK Grocer is “It is our commitment to build on a tradition of caring for our customers through personal service, quality products and excellent value for money.”
Werner Herbst 4/29/2011
6
III. SWOT Analysis
A. Strengths Brand OK Grocer has a strong brand which is recognized by almost all South Africans. Their slogan “Shop where South Africa shops” is also well recognized. The OK brand perception targets the lower to middle class income groups. OK Grocer also carries it own private label products.
Werner Herbst 4/29/2011
7
Geographic Location OK Grocer Jeffrey’s Bay is situated in Seaview Shopping Mall. Seaview shopping is ideally located to the traditional centre of town. Recently Seaview Shopping Mall has been refurbished with retail opportunities available. The empty stores need to be leveraged to attract an additional customer base to OK Grocer. This is especially true as it is in control of the current owners to expand and select retail owners for Seaview Shopping Mall. The Seaview Shopping Mall needs to be a convenient one stop shop for the average Jeffrey’s Bay resident. Control over retail park premises OK Grocer ownership also spreads to control over the Seaview Shopping Mall and the various businesses premises situated in the mall. Empty business premises have an obvious negative effect on the perception of the mall. However, with control over type of business located in the mall it can be leverage to attract customers to the mall and to fill those empty business premises quicker. Although there is currently mostly unique type businesses situated in the retail park, this might need to be promoted to other franchise type businesses attractive to Jeffrey’s Bay residents.
B. Weaknesses Market Presence OK Grocer is a new entry in the food retail market in Jeffrey’s Bay. Awareness needs to be raised to all residents in Jeffrey’s Bay to market and advertise the store. Promotion of the store can be raised by targeting customers coming from the lower direction of Jeffrey’s Bay. Empty Premises in Retail Park The Seaview Shopping Mall has recently been refurbished and was empty for an extended period. New and relevant businesses need to be attracted to the mall to expand the customer base for OK Grocer. Empty businesses premises also give the impression of “slow” business, which might distract customers from visiting the mall. Empty businesses in a retail park will also give customers less of an incentive and reason to visit the retail park. C. Opportunities Continued growth in private label products There are several advantages of private labels e.g. OK branded products. The most important ones are listed below: • •
increased profitability through cost saving and increased margins increased store loyalty and creation of a distinct corporate identity
Werner Herbst 4/29/2011
8
•
•
opportunities to seize new market ventures Increased bargaining leverage with suppliers.
Lower income group customers are more brand loyal and less reluctant to buy private labels. However middle income customers are less brand and label sensitive. The OK branded private products can be used to target these customers. OK Grocer might need to position the private label as pure value for money due to the OK brand perception and target market. Packaging seems to be the determining factor in products sales. Currently the OK branded products indicate a value range. However, this can also be rebranded with better packaging as a premium product.
Key indicators which can help to position OK private label effectively.
Holiday Season The holiday season in Jeffrey’s Bay presents a significant opportunity for OK Grocer. The population of Jeffery’s Bay almost double during the December/January holidays. The holiday food shoppers have different needs compared to local residents and products need to be promoted targeting them. Tourists might not have all amenities
Werner Herbst 4/29/2011
9
available to them and the ready meal section will appeal to them and needs to be promoted. Other significant tourist influx into Jeffrey’s Bay is: • Billabong Pro Surfing in July • Easter Weekend in April • Shell Festival in September Customer Loyalty Program There is currently no loyalty program for OK Grocer. Although this might be an expenses program to implement, it might be an opportunity. As OK Grocer is a franchise store it might need to be a local venture. It would be a cheaper option if this was implemented by head office across all stores. Tapping into different Ethnic Groups The population for Jeffrey’s Bay is essentially split three ways, with roughly equal numbers of white, coloured and black people. Although OK Grocer already targets low to middle income groups, it might be advisable to also have specific products, product promotions and advertising for the three different groups. D. Threats Competition Unfortunately OK Grocer is situated very close to Checkers. Although Checkers and OK Grocer both are part of Shoprite Holdings, the franchise structure of the OK branded shops makes Checkers direct competition for OK Grocer Jeffrey’s Bay. However, Checkers does target the middle to upper customer, whilst OK grocer lowers to middle income groups. If OK Grocer is a first stop for residents coming from the lower end of town, advertising needs to be strong and clear to get people to enter Seaview Shopping Mall from that direction. The population to store ration is also fairly low in Jeffrey’s Bay. IV. Marketing Objectives The main objective would be to increase turnover for OK Grocer Jeffrey’s Bay. This can be done by increasing basket size and by increasing the number of transactions. Increase Basket Size – Measuring basket size can be tricky. There need to a measurement of current basket size, items in the basket. Basket Analysis can be used to do this. Other options to consider for increasing basket size are: • Clean friendly environment • Wide aisle spaces • Easy and visible access to Baskets and shopping trolleys e.g. baskets at entrance and baskets at high sale items e.g. milk, bread, or even a staff member handing out baskets • Positioning of products – Promotional Items close to door, also if there is promotional items, stockings other products that go with that product e.g. Beer with meat etc.
Werner Herbst 4/29/2011
10
• •
Promotion on multibuys e.g. Can of soup cost R5, 90, get two for R10 etc. Staff at tills can ask customers if they found everything they looked or are that they are aware of the current promotions for etc. As comparison the average basket size for a shop in Germiston is R40.
Increase number of transactions – The main method for increasing transactions is increasing footfall to OK Grocer and to the mall. This can be done by promoting OK Grocer, filling the businesses premises in the mall, advertising those businesses and generally be a one-stop shop for customers. As comparison an OK Grocer store in Germiston has 46 000 transactions/month. V. Marketing Strategies B. Marketing Mix 1. Products. OK Grocer offers mainly the following products: • Groceries The OK grocer also stocks their own private labels products. The products stocked by OK Grocer are generally used in South African households. OK grocer need to make sure it stock products that are applicable for the different ethnic groups. 2. Price. OK Grocer caters for the low to middle income group. It competes with Spar, Checkers and Pick n Pay in Jeffrey’s Bay, but it needs to leverage its advantage as a slightly lower cost provider. This is especially true as OK Grocer is the only one of the main supermarkets targeting this group. OK Grocer needs to have weekly promotional items and possibly sales on clearance items. 3. Distribution. Dont have much detail on how your order stock for your store. OK distribution warehouses? 4. Promotion. OK Grocer has a XX budget on advertising. The main influence for South Africans, as per chart below, is television, newspapers, pamphlets and flyers and word of mouth. Advertising needs to be done with consideration for cost and influencing effectiveness. OK Grocer needs to make sure advertising reach all ethnic groups. Some OK Grocer store sends out 50000 leaflets per month. Influence Based on Ethnic Profiles
Werner Herbst 4/29/2011
11
Influence of different media types on the South African consumer
V. Marketing Recommendations The following recommendations are based on the report above: • Ok Grocer need to check its customer base and need to target and advertise to this market. • However, OK Grocer also needs to expand advertising to all ethnic groups in Jeffrey’s Bay. • OK Grocer needs to provide and promote products for the different ethnic groups as this will limit the competition from some of their competitors. • Promotion of the store can be raised by targeting customers coming from the lower direction of Jeffrey’s Bay. • Approaching schools to buy local groceries from OK Grocer • Promotion and advertising of ready meals, including deliveries of ready meals to local businesses. o This includes meals prepared by the OK Grocer shop and also ready meals warmed at home by the customer. There is a growing trend for at home ready meals in South Africa. • Holiday season promotions of ready meals, groceries, specific tourist products etc. • Deliveries to certain customers and businesses in Jeffrey’s Bay • Price sensitive customers are becoming more aware of private labels and there is an increasing demand for such. • Although there is currently mostly unique type businesses situated in the retail park, this might need to be promoted to other franchise type businesses attractive to Jeffrey’s Bay residents.
Werner Herbst 4/29/2011
12
•
OK Grocer already targets low to middle income groups, it might be advisable to also have specific products, products promotions and advertising for the three different ethnic groups.
Additional Notes on Report
• •
• •
• • •
The South African consumer is becoming more health conscious, so healthy and wellness food need to be part of the product range for OK Grocer – even a health section. Convenience is very important for the customer, so the bakery, butchery and ready meal departments need to be continuously promoted and advertised. There is a general need for longer hours for grocery stores Environmental and ethical issues are becoming more important to South African consumers. OK Grocer needs to advertise their involvement with the community and community development. o OK Grocer can also see if they can source products locally. Bottled water sales are showing to be a large part of the beverage market. OK Grocer needs to stock a variety within their store. Lower income groups from townships are often more brand loyal – products that succeed in the black market are normally lower price, single service package sizes and also products that do not require refrigeration. A recent report states that products need to be constantly promoted for South African markets.
Werner Herbst 4/29/2011
13
