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The External Environment of ASDA and Strategic Marketing Analysis

The present report was formed with an attempt to analyze the external environment of a firm from the UK to understand the marketing mix of that firm and to evaluate the overall situation of the market. For this purpose, ASDA was selected from the grocery and retail industry to analyze the external environment of the UK in the context of the ASDA was analyzed with mentioning the influential factors. Align with it, the exchange strategy was proposed for the firm. SWOT factors and Porter’s five factors were identified to analyze the situation of the Company. Based on those, the 7Ps of the marketing mix were defined for the Company. 

Introduction

The marketing orientation of a business has defined the success of the firm in the competitive market. Hence, the analysis of the market orientation of a firm is an important aspect of the market evaluation. As the industry trends have changed with time and the needs of the customer have changed, the analysis of the external market of a business has become an important aspect of analyzing. In the present report, ASDA has been selected from the retailing industry of the UK. Evaluating the change in the external environment of the UK retailing industry, the aim of the present report is to represent the internal offering of the business operation of ASDA. Along with it, the present report has also considered analyzing the strengths and weaknesses of the firm to define the STP approach of the firm. Understanding the significant relationships between the external and internal environments of the business, the aim of the present report is to consider a marketing plan for ASDA in the context of the observed scenario. To some extent, the report has also preferred to represent the recommendations for the firm.

Company background

ASDA is one of the leading supermarket giants from the British region with headquarters in Leeds, England. The ASDA is the abbreviated form of the initial name of the Company, “Associated Dairies & Farm Stores Limited.”  The Company was established in the year 1949 and later 1965, it was merged with the Asquith, and the name of the Company has been changed to Asquith and Dairies, which could also be abbreviated as the ASDA (Prospects.ac.UK. 2021). Since then, the name ASDA has been coined for the marketing purpose of the Company, and the business portfolio of the Company has been leveraged. As time changes, the Company has moved from the food retailing business and entered into the delivery of non-food items, and the business portfolio has been updated with time (corporate.asda.com. 2021). In the recent scenario, the Company also offered the grocery home shopping facility and non-food shopping business. In 1999 Walmart acquired the business of ASDA with €6.7 billion. With this initiative, ASDA has been included as a part of the Walmart family. In the year 2004, the Company was termed as the biggest retailer of clothing materials in the UK (Asda.com. 2021). in 2006, the Company launched the ‘We sell for less’ program to lower the price of the products and to offer products at a competitive price range. Finally, in 2015 the Company completed 50 years of service with a tagline, “Save Money and Live Better,” and make it a budget-friendly brand for the customers.

Image 1 ASDA Logo

(Source: Asda.com. 2021)

Along with the celebrated presence in the UK region, the Company has also diversified the business operation with an operating income of  €584.2 million (As of 2019). With an operating Revenue of €22,899.2 million, the Company has two divisions, which are namely, George and Asda Living, along with two subsidiaries, Asda Mobile and Asda money.

1. Understanding the external environment

The external environment of a business has been influenced by Political, Social, and Economic factors. Hence, to analyze the external environment of the ASDA in their operating region of the UK, the PESTEL framework has been adopted.

Elements Influencing Factors
Political Factors ●       Brexit policy and exit from the EU

●       Stable political monarchy with the governance of Elizabeth II

●       Strengthening 60 Commercial rollovers to continue the existing deals with EU countries

●       Constitutional Monarchy with parliamentary Democracy.

●       Possibility of independence of Scotland.

Economical Factors ●       The fifth-largest economy in the world in terms of the Exchange rate (OECD Data. 2021).

●       Sixth Largest economy in terms of the Purchasing power

●       5th rank in the world in terms of the nominal GDP.

●       Projected GDP growth of 6.5% for the 2021 session.

●       The inflation rate has increased from the 0.9% in 2020 to 1.5% in 2021 (OECD Data. 2021).

Social Factors ●       The hit of Covid-19 has impacted employment, and the employment rate has been increased to 6.1% in 2021 from 4.5% in the previous year (Hdr.undp.org. 2021).

●       14.7%  Youth unemployment rate as of May 2020 (Ons.gov.uk. 2021).

●       24% of the population lives under Poverty

●       The Human Development Index of the country is very high, which is nearly about 0.932 (Ons.gov.uk. 2021).

●       Stable Social structure with a high score of individualism in the social dimension as per the Six dimension model of Hofstede.

Technological Factors ●       The UK is the house of the world’s largest technology ecosystem (Great.gov.uk. 2021).

●       The UK has successfully implemented the technology in health care, education, and other fields for contextual improvement (santandertrade.com. 2021).

●       30 Significant technology clusters have been observed in the UK (Great.gov.uk. 2021).

●       As per the Global Innovation Index, the country has been placed in the 5th position in the world.

●       The country has collected $13.2 billion for the tech startup in the year 2019 (Great.gov.uk. 2021).

Environmental factors ●       The UK has implemented the Kyoto protocol.

●       Government has a strong focus on the reduction of Carbon emissions and Environmental protection.

●       Britain’s climate change action has been implemented for the commitment to cut the emission of greenhouse gases in the UK region (santandertrade.com. 2021). This policy has aimed to cut greenhouse emissions by 80% within 2050.

 

Legal factors ●       Consumer Protection Act 2015 is a safeguard to protect the customer and to maintain the quality of service of the service providers.

●        Corporate tax has been hiked to 25% from 19%.

●       The corporate policy of the UK has aimed towards “super Deduction” to spur investment (Hdr.undp.org. 2021).

 

Impact of external factors on the Organization

The business operation of the Company has been deeply influenced by the political and social environment of the country. The stable government of the UK has enabled transparency in the business operation. Minimum fluctuation in the business operation and administrative guidelines of the Company has been observed as a part of this political stability. Great.gov.uk. (2021) represented that along with it, the freedom of Scotland has ensured an opportunity for market expansion. At the same time, the 5th rank in the GDP has ensured to grab a strong customer base for the Company as well as the GDP growth has marked the economic growth of the region, which reflects the growth of the buying power of customers. So, ASDA will be benefited from it (Mooradian et al., 2014). The lower rate of unemployment has assured the firm of getting a competitive opportunity to explore a huge volume of the customer base. Along with it, the social structure of the UK, where 24% of the people live under the poverty line, played a significant role in the development of the business of ASDA. 5th rank in the global innovation index has identified that the Company has an option to innovate the product and service quality. But the economic policies of the country regarding carbon reduction have forced the Company to consider the sustainable process of business operations. Compliance with the customer protection act for the market performance is another challenge for ASDA to operate in the open Market (Hdr.undp.org. 2021). Based on the above discussion, it could be stated that the environmental factors and technological elements have offered an opportunity to explore the available market opportunities in an advanced way.

2.The Concept of The Exchange Process And Its Influence

Exchange Process

The concept of the Exchange process has identified that a business can be performed with the exchange of items, goods, or assets between two firms. Loo and Leung (2018) mentioned that the exchange concept of marketing had been widely used in marketing theory for the improvement of the conceptual understanding of the different aspects of the product value and product positioning. The consumer has a tendency to count the effectiveness of the received product considering the amount of the offering (Haydock and Smith, 2019). Hence, as per the exchange theory, the markets have to consider the products offered to them are less valuable compared to the products they have received. From the perspective of a buyer, the amount spent by him is expensive, and compared to it, the product is less valuable (Cova et al., 2002). Each party on both sides of the exchange has some perspective to receive more than what they have to offer (Blythe and Martin, 2019). If the exchange can be repeated, then both the parties on each side of the exchange receive the same utility.

Exchange Process and Marketing Toolkit

The targeted goal for the marketing of ASDA is to offer reasonable products to the customers. The approach of the Company is to offer more to the customers at a reasonable price  (Blythe and Martin, 2019). The simple situation of marketing has been used in ASDA as the Company has an approach towards When the trend of the online marketing and the online retailing trend has been improved, the Company has focussed on making a tie with Walmart for the development of the online retailing process of marketing (Haydock and Smith, 2019). The clear and consistent vision of the Company regarding reasonable product pricing has been promoted through the tagline of the Company, “Save Money, Live Better.”

3. Process of Segmentation, Targeting, And Positioning

Smith and Zook (2019) mentioned the STP is the acronymous presentation of the Segmentation, Targeting, and Positioning. After the segmentation of the market, the targeted customer base has been fixed, and then the position in the market has been identified.

Segmentation

Understanding the market context and the operational environment of ASDA, the customer base of the Company can be segmented into four parts. Those are Geographical segmentation, Behavioural Segmentation, Psychographic segmentation (Loo and Leung, 2018). But the most prominent segmentation is Demographic segmentation.

Demographic Segmentation

The diversified market approach of the Company has different demographic market segmentation. The own brands ASDA, have a demographic segmentation of middle-aged men customers or the family men. so that they can afford the products at a cheap rate from a reliable brand. To attract the young kids, i.e., the younger customer segment, ASDA has designed Jam-packed in-house products along with fun-loving activities (Smith and Zook, 2019). Along with it, the food delivery services have been designed for the Middle-aged office goers as it saves their time. Pharmacy has also been offered under the service facility of ASDA. That has been designed for the old-aged segment. Hence, to develop the service design of the Company, different demographic segments have been considered.

Behavioral Segmentation

The behavioral segmentation of the Company has targeted the customer who prefers to have low-budget shopping. Under the low budget shopping range, ASDA has innovated their product quality and performance to enhance the acceptance of the products among the customers.  Along with this, the benefit sought of the customer has also been considered in the behavioral segmentation of ASDA (Prospects.ac.UK. 2021). Where the customer’s behavior to offer entertainment to their kids has been included. That reflected in their service facility and product design (Baines et al., 2017). The arrangement for the in-house ham service and the other entertainment facility has been developed for this behavioral segment.

Geographical Segmentation

With a total of 633 retail units, ASDA has covered almost all the locations of the Uk, and the service facility has been offered to almost each of the pin codes of the country. But the geographical segmentation of the market has been observed in the locational strategy. The petrol fueling stations have been selected to set up near the highway areas, where the locational advantage can be achieved. Along with it, the ASDA living stores have been situated at the heart of cities and prime locations (Baines et al., 2017). The distribution of the Stores in the different regions has been presented below. This locational distribution of ASDA stores has considered the convenient locations and the accessible locations as preferred locations for the stores.

 

Image 2 Locations of ASDA

(Source: Asda.com. 2021)

 

Psychographic Segmentation

The social class of the population and the lifestyle interests have been selected for the Psychographic segmentation of markets of ASDA. The psychographic segmentation of the market has considered the people who prefer to have less luxurious lifestyles and what to enjoy life with medium spending have been selected as a part of the psychographic market segment (Maister, 2003). persons who have the interest to enjoy the brands and classic products under the very affordable price have been included in the psychographic segment of the market.

Targeting

based on the four segments of the markets, the targeted population for the Company has been selected. The demographic target of the Company has considered the Family man with medium earning capacity. The family elements and household products have been offered at the service facility of the ASDA that considers the middle-aged population, mainly the male population (Maister, 2003). though the female population has also been attracted and targeted towards the Company with the offering of fashion products.

The income range of the targeted people:  €500,000

Selected Gender: Male, Female

Positioning

The grocery and the retailing industry of the UK have giant players like TESCO, Sainsbury in the retail sector. So the competition between these players is very stomping. But the competitive pricing strategy has improved the market performance. The market performance can be improved with the preferential selection of the effective market segment and the utilization of the marketing approach to attract the engagement of that potential segment of the market. Where offering diversified products and services, TESCO has a 26% market share (Prospects.ac.UK. 2021). where Sainsbury’s has proved to have a 14.9% market share at the same time, ASDA has a similar market share of 14.3%.

4. Internal and External Environment

The strategic relationship between the important internal and external factors has been analyzed with Porter’s five forces analysis and the SWOT analysis of the firm.

Porter’s Five forces analysis

Forces Impact
Threats from the Newmarket entrants Medium,

As the retail industry of UK is worth $436242 Million

Threats of Substitute Medium,

As the formation of a celebrated structure like ASDA is very hard.

Power of customers Low,

As the pricing of the products is very affordable

Power of Suppliers High,

As the volume of the retailing industry is very high.

Industry Rivalry High

As Sansbury, TESCO, Morrisoions has offered a tough fight to the Company.

 

SWOT Analysis

 

Strengths Weakness
●       String market presence

●       Collaboration with Walmart

●       Diversified Product Portfolio

●       The diversified approach of Market segmentation and customer targeting

●       An increase in the demand of the e-commerce platforms

●       failed to attract customers with luxurious needs (Simanungkalit, 2018).

●       Only offers medium quality products, and no premium quality of products has not been offered.

 

Opportunities Threats
●       Collaboration with Walmart has improved the Online presence

●       launch of the ASDA money has offered a new field to explore

●       Independence of Scotland is seeing as a probable option, and it will offer an independent market to explore (Prospects.ac.UK. 2021).

●       TESCO and Sansbury are becoming more strong with the diversification of products

●       The number of Retailing firms has been increased in the UK region, and it has minimized the opportunity for the Company (Simanungkalit, 2018).

●       Lack of enough infrastructure to explore the international market, moving from the Uk region.

 

5. Marketing Plan

The Marketing Plan of the Company is to attract the potential customers towards the Company with the improved performance. Improvement of the marketing strategy can enhance customer engagement and improve the brand value of the firm.

Marketing Objectives

 

 

Objectives Specific Measurable Attainable Relevant Time Bounded
Increase in the yearly Sales Yes Yes Yes Yes Yes
Building brand engagement through the Marketing Campaign Yes Yes Yes Yes
Growth in the market share of the retail industry Yes Yes Yes Yes Yes

 

Propose Marketing Mix of 7P

The marketing strategy of an organization can be developed with a focus on the 7Ps of the marketing strategy (Ndofirepi et al., 2020). The 7Ps of the marketing strategy have been formed with the elements mentioned below.

Image 3 7Ps

(Source: Ndofirepi et al., 2020)

Product Strategy

The product range of ASDA has considered a wide range of elements. The product portfolio of ASDA has been formed with grocery delivery, clothing, home essentials, and leisure and entertainment goods (Kotler et al., 2002). The product strategy for the Grocery items is to deliver fresh vegetables to the customers. Other household things that have been offered by the ASDA should be delivered in chilled condition with maintaining the freshness of the products  (Asda.com. 2021). For other products like essential goods, price and quality control is an important approach to marketing. Along with the grocery and household goods, ASDA also has a wing for the additional product offering. As a part of the additional product offering, ASDA has delivered Pastries and handmade sushi at the ASDA store (Storelocator.asda.com. 2021). To add diversion to the product portfolio, the ASDA store has offered Panku street food.

Image 4 Products of ASDA

(Source: ASDA.com. 2021)

Place Strategy

Places are one of the prominent distribution channels for the Company, and the Company has used both the Online and offline channels for the marketing aspect of the Company. As a part of the competitive place strategy for the marketing, the Company has more than 600 stores all over the UK. Along with the 600 stores, the Company also has other facility centers at the strategic locations (Storelocator.asda.com. 2021).  As a part of the strategic location management policy, the Company has variation in the service facilities at the different locations. For this reason, ASDA has Supercentres, Filling stations and Supermarkets, and living stores as per the locational demand. In London, the Company has 43 Stores alone (corporate.asda.com. 2021).

Image 5 Different locations of ASDA

(Source: Statista. 2021)

Price Strategy

The pricing agenda of the Company is to offer quality services at reasonable prices. For this reason, all the service facilities. For this reason, pharmacy, cafe, merchandise store everything has been included in the service range of ASDA (corporate.asda.com. 2021). The quality of products is not upto the mark, compared to Sansbury and Tesco. Still, the products have their own class. Those products have been offered at a 10% cheaper rate compared to these two companies. The products are simple yet interesting and of good quality, but the price is very low, which made the Company relevant to the customers (Asda.com. 2021).

Promotion Strategy

For the promotional approach, the traditional media channels, like the newspaper advertisement, Television advertisement, have been used in the marketing of the products (Gummesson, 2008). But the collaboration with Walmart has improved the market performance of the Company and improves the promotional approach of the firm (Simanungkalit, 2018). Along with the traditional approach of marketing, Blog marketing and the social media marketing strategy have been adopted in the promotional approach of the Company.

Physical Evidence

The celebrated presence of the Company has been observed as the Company has different store locations in more than 600 places with different service facilities. These stores have impressed the customers and assured them about the brand value of the Company (Storelocator.asda.com. 2021). These 600+ stores act as the physical evidence of the brand. The logo and the brand name of the Company, along with the corporate website of the Company, have been considered as the physical evidence of the Company.

People

ASDA is the house of more than 145,000 employees, and the democratic leadership approach of the Company has improved the performance of the brand. On-site training programs at the Company have improved the performance off-the-job training program has improved the performance of the employees at the workplace (corporate.asda.com. 2021). The customer-oriented approach of the employees and the strong CRM section of the Company has improved customer engagement with the firm.

Process

Set of guidelines and Code of Conduct of the Company has improved the performance of the Company. Enabling the IT infrastructure, the Company has made the transactions are hassle-free. The exciting deals and offers ensure customer engagement (Haydock and Smith, 2019). Designing such deals and offers is an important part of the process strategy. Along with it, the scan and pay facility has been implemented at the service end for the improvement of the service quality and processing of the orders.

Conclusion

Demographic segmentation of ASDA has been performed on the basis of the age, gender, sex, and ethnic identity of the customer. As it is a retailing business, so the demographic segmentation of the product is prominent in this case. ASDA have their Own brands of household materials. Those brands of ASDA have offered household products and family needs at a very cheap rate. Along with it, the food delivery and grocery delivery to the customer has also been performed through the online portal of ASDA. The behavioral segmentation of the Market of the Company has been designed with keeping a focus on the market policies and the purchasing behavior of the customer. The prime consideration of the behavioral segmentation approach of the Company is to offer reasonable products at a very low cost. The strategy of marketing has been developed with a focus on the goals of marketing, and the goals of marketing have been improvised with the alignment to the available marketing tools. The present scenario of marketing has been deeply involved in digital technology and content marketing tools. The ASDA is a B2C market firm where the customers directly interact with the customers. Hence, the exchange process of marketing has been developed with a focus on the need of customers and an understanding of the market condition.

 

Appendix

Appendix 1

Annual report of the firm

Competitor Analysis

Image 6 Competitor analysis

(Learner’s Creation)

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