Asda Stores Ltd Is A British Supermarket Marketing Essay

In the year 1999 ASDA became a subsidiary of the American retail giant Wal-Mark the world’s largest retailer, and is now known to be the second largest chain in the UK. A survey done in December 2010 showed that 16.5% of UK grocery shoppers used ASDA for their main shopping needs, as they were attracted to ASDA’s special offers.

ASDA’s marketing promotions have most of the time been on its price. They have been known as Britain’s lowest priced supermarket for the past thirteen years. Since ASDA is a fully owned part of Wal-Mart, it does not required to declare quarterly or half-yearly earnings, and submits full accounts to Companies House each October.

Organizational Structure and Culture

Organizational Structure

ASDA’s organizational structure is a hierarchical structure. This is because it has a lot of employees working in various departments of the company. Therefore there information has to pass through many people before it can reach the store manager. For an example, a co worker has to report to the supervisor, the supervisor has to report to the assistant manager/manager, the assistant manager/manager reports to the store manager. A hierarchical structure has many levels. Each level is controlled by one person. A hierarchical company tends to be a very big company just like ASDA.

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ASDA culture

ASDA’s culture is unique from other organizations in many ways. ASDA has a team of over one hundred and seventy thousand working across the business. All employees wear a name badge, and have daily huddles to keep up to date on their performance. They strictly follow three beliefs that are, “service to our customers, respect for the individual, strive for excellence”.

ASDA believes that their customers are at the heart of everything they do and that their purpose is to make sure that all their goods and services to be as affordable as possible. They strongly believe that it is a culture to work as one team to support their stores, drawing on the strengths and experiences of individuals and sharing them with each other.

When it comes to ASDA’s attitude, they believe in commitment, where great ideas can be put into action. They like to find out ways to do things, rather than looking for reasons not to do them.

ASDA believes in huddles, and uses it to keep everyone informed about the business performance. They use huddles to communicate their key activities for the day and help them remain focused and achieve the set goal for the day. Huddles also give them the opportunity to acknowledge and celebrate team and individual success.

Every employee working at ASDA group Ltd wears a name badge. They believe that it makes it easier to be approached when wearing a name badge.

ASDA holds “The Big Bruch” which is their quarterly huddle that is held at the ASDA House in Leeds. This gives the employees the opportunity to share important information in a fun and relaxed way. Normally the Big Bruch starts with a performance in the ASDA House’s atrium.

Staffs working at ASDA are not pressurized to wear a jacket, as they believe that jackets are a barrier to be approached.

ASDA believes in something called the ‘ten foot rule’, where if someone is within ten feet from an employee, it can be anyone, either another employee or a customer or a supplier, they should always say “hello”. They believe that it helps build an atmosphere of friendliness and respect, and after all it only takes a second.

Business Model

ASDA’s business model is quite similar to any other big organization’s business model, although the online business can be a little more complex. ASDA’s e-commerce platforms support online shopping for both general merchandise (George clothing) and as well as groceries. The grocery business is operates out of one hundred and seventy five stores, and delivers to the local areas within each store, where they use nine-hundred delivery vehicles to cover up to 95% of all UK postcodes.

The ASDA Direct business trades around seven hundred and fifty thousand stocked and stockless products in partnership with other third party and carrier specialists. Currently they do home deliveries, but have plans for the future, where the customer will also have the option to place the order online and pick it up from any ASDA store. They launched their first ASDA Direct catalogue in October 2010 and plan to use this to market the proposition ongoing.

Global Visibility

ASDA Stored Ltd is a huge scale business, but may not be as big as the new “Super Stores”, where you can find other additional facilities like launderettes etc.

But ASDA is known to be a huge scale business as they provide services in many different sectors. While retailing in groceries and general merchandise, they also have a travel and insurance section, pharmacy section, opticians section and also their own mobile network provider.

ASDA has two hundred and ninety three stores operating in the UK and has over one hundred and seventeen thousand employees. They also have many stores abroad in different countries but operate under different names, but sell the same products.

Business Alliances

Major business alliance of ASDA is George Davies partnership. All the clothing section of ASDA is George’s. The partnership was started in 65 stores in February 1989. ASDA became a part of wal-mart group in the year 1999.

Business Process

ASDA’s business process is structured of four types:

Customers

Operating Model

Colleagues

Shareholders

(i) Customers

When it comes to their customers, ASDA believes in

Treating the customers happily.

Keeping the goods available to the customers at any time.

Providing best quality of goods.

Providing the products cheaply.

(ii) Operational Model

Maintain prices lower when compared to other competitors.

Maintaining lower prices at any circumstances.

(iii) Colleagues

Providing good environment at the work place.

Willing to work with others in a professional way.

(iv) Shareholders

Maintaining new formats

Enriching return on investment

Step 02

SWOT Analysis for ASDA

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Strengths

Cost advantage – Can afford to lower prices to attract new customers.

Innovation

Online growth – Online shopping becoming a lot more popular and ASDA has a good secure website.

Loyal customers – Loyal customers coming back again and again purchasing from the business

Strong brand equity

Strong financial position

Supply chain

Pricing

Affiliation to Wal-Mart

Mini Cafes (Restaurants)

Weaknesses

Quality of food substandard

Not having petrol stations(Tesco etc has)

No Express stores (Tesco etc has)

No stores abroad with same name

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Opportunities

Product and services expansion

Takeovers

Diversity to Petrol stations

Opening Express Stores

Expansion abroad by opening stores abroad with same name

Threats

Competition

Economic slowdown

External changes (government, politics, taxes, etc)

Exchange rate fluctuations

Price wars

Product substitution

Porter’s Five Forces Model

POTENTIAL ENTRANTS

(Treat of Mobility)

SUPPLIERS

(Supplier Power)

BUYERS

(Buyer Power)

SUBSTITUTES

(Treat of Substitutes)

INDUSTRY RIVALRY Industry Rivalry

Current Competitors: Tesco, Sainsbury, Marks and Spenser

Growing industry – possibility of new competitors

Customers have low switching costs

Fixed cost are high resulting huge production and reduction in prices

Exit barriers are high and rivals stay and compete

Possible Solution for ASDA to avoid competitive rivalry between their competitors (Tesco etc):

They should avoid price competition

ASDA should differentiate their products

By reducing industry over-capacity

They should focus on different segments

Also they should communicate with their competitors

New Entrants

Potential competitors with capital requirements to start a business is less

Selling of same/similar products or services

Customers can easily switch (low switching costs)

Price competition

Possible ways that ASDA may reduce the threat of new entrants

By increasing sales efficiency

Have alliances with other products and services

Create a brand image (they do have it)

By tying up with their suppliers

By typing up with their distributers

End users/buyers

Buyers purchasing in bulk quantity

No differentiation in products

Buyers can easily switch to competitors’ product

Price sensitive buyers

Very low cost (would think twice)

Possible ways for ASDA to reduce the bargaining power of their customers

ASDA should increase their customer loyalty

Use of customer relationship management

By increasing incentives and value added services for their customers

Suppliers

Suppliers being strong and well organized

Suppliers can demand when not many suppliers of that particular product is available

Suppliers can demand when they supply an effective or unique product

When the switching cost of supplier is high

When the supplier has captured the market

Possible ways for ASDA to reduce the bargaining power of their suppliers

ADSA should create partnerships with their suppliers

ASDA should use a supply chain management

Providing supply chain training

By increasing dependency of supplier on them

By building knowledge of their supplier costs and methods

By taking of a supplier

Substitutes

Customers can switch when there are many substitute products available in the market

When customers find the same product or service for a cheaper price elsewhere

Better quality products found at a competitor

Competitor earning high profits can reduce price of the substitute product to the lowest level

Possible ways for ASDA to reduce the threats of their substitutes

By increasing switching costs

Having customer surveys to learn customer preferences

Emphasize on differences

Alliances with other companies

Step 03

Bringing competitive advantage through cloud computing

What is cloud computing?

Cloud computing is an online form of computing and is closely associated with Web 2.0. It enables users to access applications using a browser, while the application is installed and stored along with the data on a server. This helps companies to reduce their capital costs, by not having the need to purchase software and hardware. Cloud computing has become a whole new form of computing where it allows thousands of users from all parts of the world to access something without the need of having to download and install them on their computers.

Advantages of cloud computing

Reduced cost. It would help ASDA Stores Ltd to receive secure, managed hosting at a very low cost. Also they are able to access it from any computer and still have the file they require. This also makes it easier for the company as they do not have to reproduce the software and ship out to all its branches. By using cloud computing it would help ASDA to reduce it cost and only pays a rent to the server space required.

When ASDA’s requirements grow they do not have to purchase any additional hardware in order to upgrade their servers, which may also help them keep the cost down.

Cloud computing automatically updates the servers for the owners. Therefore owners no longer have to hire specialists to update their servers.

Cloud computing is mobile. It lets its users at ASDA connect with any device, which means they can do their work from any part of the world as far as they have access to the internet. This could save time and also information to be up to date.

ASDA users can log onto the network without having to download anything. This saves them time and hard drive space.

An important feature of cloud computing is that companies share recourses. This means that they are allowed access to the resources via cloud computing. This also helps ASDA save time and money by placing all their resources in one place which makes it easy for its employees to access.

It benefits ASDA to keep their files safe on their servers and less likely to be lost or stolen on a hard drive.

The server will have an offsite backup in case something goes wrong. Therefore ASDA does not have to worry about losing any information.

Disadvantages of cloud computing

Additional cost of data transfer fees

Another disadvantage about cloud computing is that you do not have control over the remote servers, their software, or their security

The company’s data is with a third-party company

It may be hard to transfer large amounts of data from the provider.

Transforming competitive advantage with social media

What is social media?

Social media integrates the online technology and methods through which people can share content, give their personal opinions and swap different perspectives.

Social media website can be made up of many ways. They may include:

Text – often used to share opinions or post on blogs

Images – to share images and photos

Audio – allows you to create podcasts which users may download

Video – you may record a video and share it with everyone

Nowadays some of the most popular types of social media websites are of:

Social networking – such websites allow you to create a profile of yourself and chat, discuss and also share information with others. A few examples of popular social networking sites are FaceBook, MySpace, Bebo.

Wikis – they are websites that lets you create, edit and share information on a particular subject or topic. An example of wikis is Wikipedia.

Video Sharing – you may upload and share videos with the web community. An example of such website is YouTube.

Photo Sharing – Users may upload pictures and images from their account and can share them with other users around the world. An example of such website is Flickr.

News aggregation – Provides a list of the latest news that is published by users from a range of different websites. An example of a news aggregation website is Digg.

Social Bookmarking – users of such sites are allowed to publicly bookmark web pages that they may find valuable or interesting and share them with other users.

Online gaming – Lets users do play games online. An example of online gaming is World of Warcraft.

Presence apps – Such websites lets users to post micro blog-like posts and tell others what they are doing. An example of such website is Twitter.

Advantages of Social Media

It is said that Asda.com home shopping service serves 97% in the country. ASDA launched financial services such as providing personal loans, general insurance, life insurance and credit cards. Its aim is to take trouble out of financial planning and insurance and to offer cheap prices.

ASDA’s thinking about social media:

Issues get alerted in a brilliant way.

Informing things to head office and as well as store level.

Strategy is enough for digital world, no need of digital strategy.

Be prepared to face good or bad.

Some future ways of ASDA Communication:

ASDA may create blogs, in order to get feedback from customers etc.

They may promote themselves through social networks such as facebook etc.

They also may use multimedia or photography in order to advertise their company. And also could allow their customers to comment on their products. This way they may be able to see what their customers think about their products and services and may change it according to customer requirements.

Can mobility bring competitive advantage?

What is Mobility?

Mobility solutions gives people the opportunity to access the company’s information from anywhere in the world at anytime in a flawless and secure manner. By making information accessible from anywhere in the world, it can be guaranteed that employees would not have to wait for the data to reach them in other means when making an important decision. Another use of mobility applications is that it can be used to capture delayed or lost information.

In the past mobility once used to refer to notebooks. Although notebooks have a positive side, they have several limitations to what they can do. They can be bulky to carry around, expensive, they require a data connection in order to connect to the internet and also most of the time have a low battery life. Nowadays most of us have replaced the use of notebooks with powerful, with a much longer battery life hand held devices such as PDAs and Smartphone’s. Users can connect to the internet from their cellular networks signal or may also have the option of connecting via Wi-Fi.

In most companies Email is the most important application when it comes to mobility. Therefore in most companies’ the senior management have been equipped with Blackberry and other similar devices with push email technology, which helps easy access to their emails. Even the middle and junior level management can only benefit in mobility solutions in order to guarantee higher levels of productivity and efficiency.

Mobility applications can consist of various functionalities such as ‘Sales force autonation, customer relationship management, logistics tracking and planning, performance tracking, push alerts’ and much more. Using these types of applications can be as easy as typing SMS or as powerful as hi-tech applications running on Smartphone’s.

Before a company can go ahead with the use of mobility solutions, it first needs to consider several restrictions. The company needs to first evaluate which of its business processes require the access to information (PCs). For an example the sales function where the staff requires the latest and accurate information, while having limited access to the company’s IT network.

After evaluating what business processes require access to information (PCs), the company then has to decide what form of applications they will consider. For some business processes of the company, plain SMS-based querying might be enough. This means the application may be installed on the existing mobile phone that most of the company’s staff are having. But if the mobile phones do not have to complexity to hold such softwares, the company might have to provide complex machines such as PDA’s or smartphones in order to be able to use such softwares. But for other business process in the company may need of much high tech equipment than a PDA or smartphone.

But mobility can also sometimes have a negative side to it. Some employees would take a long time to get used to using such mobile devices, and some employees may not like using such devices, this may have a negative effect on the company.

Since the devices are mobile, there are possibilities of thefts or losing the devices. And since it may contain valuable company information, it may be a huge concern to the company of losing such equipment. But to overcome such incidents and to protect their data, companies may install a password based access into the devices, and also have firewalls to avoid hacking. These are some possible ways of protecting the company’s data.

Step 04

Our business strategy for ASDA consists of three steps

Analysis

Integration

Implementation

(i) Anaysis

In the analysis part, in order to develop a business strategy for ASDA, we are going to use the SWOT analysis we did in ‘step 2’. Using the SWOT analysis, it will help us gather, analyze and evaluate information and identify strategic options that ASDA is facing. We chose SWOT analysis to help develop a business strategy for ASDA because we believe that SWOT analysis is a very effective way of identifying the strengths and weaknesses, as well as examining the opportunities and treats that ASDA may face.

Using the SWOT analysis framework, we have put in place what we believe are the ‘Strengths, weaknesses, opportunities and threats’ of ASDA. Strengths and weaknesses are known to be internal while opportunities and threats are external.

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Strengths

Cost advantage – Can afford to lower prices to attract new customers.

Innovation

Online growth – Online shopping becoming a lot more popular and ASDA has a good secure website.

Loyal customers – Loyal customers coming back again and again purchasing from the business

Strong brand equity

Strong financial position

Supply chain

Pricing

Affiliation to Wal-Mart

Mini Cafes (Restaurants)

Weaknesses

Quality of food substandard

Not having petrol stations(Tesco etc has)

No Express stores (Tesco etc has)

No stores abroad with same name

E

X

T

E

R

N

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L

Opportunities

Product and services expansion

Takeovers

Diversity to Petrol stations

Opening Express Stores

Expansion abroad by opening stores abroad with same name

Threats

Competition

Economic slowdown

External changes (government, politics, taxes, etc)

Exchange rate fluctuations

Price wars

Product substitution

(ii) Intergration

Using this knowledge, we can now develop a plan of action by first matching the strengths and weaknesses with the opportunities in the external environment, and also oppose any possible threats that might create a danger to plans.

A weakness seen in ASDA is that they do not have any petrol stations or any affiliated petrol stations. Their competitors like Tesco has their petrol stations and also other competitors have affiliated petrol stations where they can use discount coupons to get discounts on petrol. ASDA can use change this weakness into an opportunity. Since they are in a strong financial position, they can start their own petrol stations, or get together with a petrol station and sign a contract with them, where their customers can get discounts on petrol when they shop with ASDA.

Another weakness ASDA faces is that they do not have any express stores like their competitor Tesco does. Taking into notice that they are in a strong financial position, having a good supply chain, low cost prices, and also being affiliated to wal-mart, they can use this weakness and change it into an opportunity by opening express stores. This could be a huge gain for ASDA. But by doing so, they should also take into consideration the threats they could face. Because when Tesco started their express stores they faced many issues with other shop owners and the government. Therefore ASDA first look into the external changes (government, politics, taxes etc).

Although ASDA has stores abroad with other names with different spellings, that sell the exact same products. Most people would not know that it is a part of ASDA. When you look at ASDAs competitor Tesco, they have many stores in many other countries with the same company name. This helps them build up their company name and brand. Therefore if ASDA can also do the same and open stores abroad with its name they can build a better name recognition. And since they are affiliated to Wal-mart, and also currently having stores abroad with different spellings, they already have a good supply chain and structure active already. So it would be easy for ASDA to start its branches abroad with the same name. Since they already have stores abroad with different spellings which are active, the threats of starting business abroad are to a minimum. The possible threats they could have faced is the exchange rate fluctuations, price wars as other countries would have other local competitors etc. But since they already have stores operating abroad, it would be easier to start stores with their own ASDA name.

Another possible opportunity that ASDA may consider is expansion of their products and services. Since they are an affiliation to wal-mart, which is considered to be the world’s largest retail company, this can be a positive thing for ASDA. And since they have much other strength like being in a strong financial position, affordable low cost prices, good supply chain, strong brand equity and loyal customers, it would be a good idea for them to expand the number of stores, and also introduce more services. For an example: a launderette. This would help the customers benefit more, as they can put their clothes to wash while they shop. By doing so, they would first have to look for any possible threats. For an example: Competition. They would have to first see if there is any other company specializing in this sort of business, who are offering low cost laundry services close to their stores and whether they would be any threat to ASDA.

Another opportunity for ASDA could be takeovers. Since they are in a strong financial position, and a well reputable company, they should see if they can buy over any possible companies that they see could be a possible threat in the future.

(iii ) Implementation

After matching up the strengths and weaknesses with the opportunities while taking into consideration the possible threats that can affect the plan, we now move onto the implementation part.

In this section, ASDA will have individual teams that will have respective roles in bringing the strategy to succeed, by applying specific tactics that is developed in order to support the strategy. So by appointing different teams to work on different subsections of the business strategy, this could help the implementation stage to be a success.

Since ASDA is not sure how the results would turn out to be, it is not wise for ASDA to spend a lot of money and time at once into starting something new. Therefore, as a trial, they should first start it on a small scale, and according to its progress they should then decide whether it is going to benefit the company or not.

In order to see the progress of the implementation of the new strategies, ASDA will include a measurement module. This is derived from the overall goals established to accomplish the business mission. The goals are broken down, by the new business and the time estimated to accomplish them.

The business strategy will include a module to periodically evaluate the current progress against goals. Based according on how well the business strategy has led to goal achievement, the strategic analysis process is repeated to adjust the strategy as required.

Theme we selected

In order for ASDA to achieve their goals, we believe that social media will bring the most competitive advantage out of the three themes. This is because; ASDA is already a well established company and has a well balanced infrastructure with all the necessary technology and people to operate them.

Although cloud computing and mobility also have their positive sides, for an example, in cloud computing, a company does not have keep buying new servers as their business grows, and do not have to spend a lot of money in updating the software and installing new servers etc, and with the use of mobility, according to the business process they can provide their staff with various mobile devices to carry out their tasks to cut down on time etc. But as said before ASDA is not a new company and has been in operation for many years. Therefore they have already invested in all the necessary technology and people they need. If ASDA was a new company it might have been a good option to consider either cloud computing or mobility as they would not have to spend a lot of money on servers etc and pay for only what they require.

Since ASDA already has the necessary technology and people, they have to focus on ways to improve their business. This includes what options are there to improve their business, what their customers think about their current products and services, their competitors etc.

So by using social media, they are able to achieve this. They are able to advertise their products in many different ways and also get good feedback from their customers, which will help them to know whether their customers are satisfied with their products and services and change it according to the customer requirements.

Some ways they could use social media is by having blogs where customers can write on. This is a good way to know what their customers think about their products. This way issues get alerted in a brilliant way, and they are able to cater according to the customer needs. They also may promote themselves through social networking, which also is a good and effective way. These are some of the ways they can use social media to improve on their business.

Then according to their customer feedback, they can start implementing the opportunities which they gathered in the SWOT analysis by converting the weaknesses into opportunities with the help of their strengths while taking into consideration the possible threats they may face.

Then they could also move onto having a social network within the organization, where they can have a blog where employees within the company can share their thoughts and ideas on how to improve their products and services to satisfy customer requirements.