Strategic marketing management for Boots the pharmacy

Strategic marketing management for Boots the pharmacy Boots is the largest pharmacy chain in Europe with an with an excellent reputation for differentiated health and beauty products and customer care. Our strategy is to develop Boots into the worlds leading pharmacy-led health and beauty retail brand,focused on healping people look and feel their best. Alliance Healthcare is the backbone of Alliance Boots wholesale and distributions service with twice daily deliveries to around 5,700 pharmacy shops in the UK alone. Internationally,Alliance Boots distributes drugs and cosmetics to around 150,000 outlets and operates from 360 delivery depots.In addition to supplying Alliance pharmacies ,the Alliance Healthcare distribution subsidiaries also deliver to NHS central warehouses and hospitals in the UK,alone with private hospitals, GP surgeries,local health centres and private pharmacies throughout Europe,Asia and Australia. Marketing Strategy Options. Boots is a member of Alliance Boots, an international pharmacy-led health and beauty group. Our purpose is to help our customers look and feel better than they ever thought possible. Our customers are at the heart of our business. Were committed to providing exceptional customer and patient care, be the first choice for pharmacy and healthcare, offer innovative products only at Boots, with great value our customers love. Our people are our strength and they tell us that Boots is a great place to work. We are always be the employer of choice, attracting and retaining the most talented and passionate people.The strategy is to focus on its two core business activities of pharmacy led health and beauty retailing and pharmaceutical wholesaling and distribution,while increasingly developing and intenationalising our product brands to create a third dimension.growing the core businesses in existing markets,continuing to deliver productivity improvements and other cost savings,pursuing growth opportunities in selective new high growth markets and launching our product brands in new markets. This strategy is underpinned by our continue focus on patient or customer needs and services selective partnerships and our strong financial diciplines.we are commited to providing exceptional customer and patient care be the first choice for pharmacy and healthcare offer innovative products only at Boots,with great value our customer love. Pharmacy-led health and beauty strategy : Boots is the largest pharmacy chain in Europe with an excellent reputation for differentiated health and beauty products and customer care.Our strategy is to develop Boots into the worlds leading pharmacy-led health and beauty retail brand,focused on helping people look and feel their best. The key steps we are taking in the uk to execute our strategy are:- -Making Boots more convenient and accessible for our customers. -Developing our people to be at their very best for our customer -Improving our customer in store shopping experience -creating a compelling multi-channel health and wellbeing consumer offering -Increasingly differentiating our product offering -Continuing to provide customers with excellent value -Opening new stores in markets where Boots is already well established -Developing new store in markets where Boots is already well established -Developing country specific Boots branded trading formats to meet local needs. SWOT analysis STRENGTHS Boots as being one of the bigest UK pharmacy-led health and beauty group market, its brand has been well-known and already built up its reputations over Healthy and Beauty Product retailing. Under the leadership team with Alex Gourlay, the chief executive of Health Beauty Division it is showing tremendous increase in its profit. It also keeps into account the green and environmental issues. As a result it has a positive impact on consumer brand especially the green activists consumers. Strengths Weaknesses Strong Brand Equity Low profitability Store Network Lack of International Presence Opportunities Threats Store expansions in UK Intense price competition Expanding product offerings High regulatory oversight Reference: Data monitor, 2006 WEAKNESSES Boots is only presented in UK. Therefore there can be an issue if the company wants to have growth in the retailing Health Beauty Division sector. Declining Reputation OPPORTUNITY Boots alternative business, investing in properties can have major growth in the future. Staff which works at Boots are essential buyers, administrators, systems designers, finance workers and so on all are part of the whole team that must work together to make things operate smoothly and efficiently Online sales are a great opportunity for future growth. THREATS Boots operations have become a topic on various issues like environmental, planning and other factors. As a result there needs to be investment related to environmental and green issues. Porters 5 forces analysis Competitive rivalry The retail market is filled up with high competitors as more and more companies are trying to step into the Health Beauty industry All the other retailers have different competitive advantages. Boots reach in different stores allows it to reach large number of customers. The other factors which compete with the Boots bank is different banks and building societies Barriers for entry Barriers to entry is high due to a number of factors: Firstly, company looking to set up its business in UK requires lots of investment, brand development, which takes years to establish. Secondly, company in retail sectors are increasing, which itself means there is very less chance for any new entrances. Local knowledge is required for a new business in order to establish, which is highly difficult for new firms to replicate. Threats of Substitutes The threats for newcomers or substitutes is less, as the consumers views that as a necessity, especially in the developed world. The retail market is always trying to look around for new innovations with respect to Health Beauty products, alternative businesses. As a result of which it is difficult for substitution. The only major threat of substitute is an internal industry threat, wherein one supermarket can lap up the business of other supermarkets. Buyers power Because of the presence of too many competitors in the retail Health Beauty sector selling the same product, buyer power is high in the industry. During the time of recession consumers wants are taken into more demand, thereby increasing their power. Supplier power Suppliers in itself is huge company providing products to the supermarkets. If the products are not sold, consumer will shift loyalties, making suppliers more powerful. And also when the products do not reach the supermarket, sales do get affected hugely. Competitive strategy by Michael Porter MARKETING STRATEGY TO ACHIEVE COMPETITIVE ADVANTAGES The main aim of Boots is to provide Health Beauty Product to the consumers, delivering the products of outstanding quality and great service. It always looks for profit growth through a balance of strong sales growth, reduction in cost and continuing margin improvements. There are many techniques in order to achieve its aims and goals PORTERS GENERIC STRATEGY MARKET MATRIX PORTERS GENERIC STRATEGY: Michael Porter had argued that a companys strength depends on two headings: cost advantage and differentiation. By applying these strengths three generic strategies result: Cost leadership Differentiation Focus Target scope Low cost Product uniqueness Broad (industry wide) Cost leadership Strategy Differentiation Strategy Narrow (market segment) Focus Strategy (low cost) Focus Strategy( differentiation) Cost leadership strategy: Cost leadership is a strategy built on offering a customer a lower pirce than competitors and maintaining an advantage by ensuring the cost are lower than those of competitors. Factories are built; labor is recruited and trained in all sorts of knowledge for the lowest cost of production. In the process cost advantage is the focus. However low cost not always allows low price. Producers could price at competitive parity, other than the competitors. For example, such as Toyota, are good in producing autos at a low price, but have the brand and marketing skills. Differentiation strategy: It is a strategy that involves offering a product which is different to, is differential from, those of competitors. The advantage of the product will appeal to the whole market and not in a narrow segment. The company that succeeds in differentiation strategy often follows the internal strengths Access to scientific research Highly skilled and creative development team. Strongly sales team with the ability to successfully communicate the perceived strengths of the products. Corporate reputation for quality and innovation. Focus: The focus strategy strives on a narrow segment and within that segment tries to achieve either a cost advantage or differentiation. A company following the focus strategy often enjoys a high degree of customer loyalty, and this in turn leads to more customer lifetime value. The focus strategy has two variants. In cost focus a firm seeks a cost advantage in its target segment, while in Differentiation focus a firm seeks differentiation in its target segment. Cost focus exploits differences in cost behavior in some segments, while differentiation focus exploits the special needs of buyers in certain segments A company following narrow market focus and pursuing a focus strategy, have lower volumes of bargaining power with their suppliers. A company following differentiation focused strategy may be able to pass higher costs on to customers since close substitute products would not exist. Firms that succeed in a focus strategy are able to lead a broad range of product development strengths to a relatively narrow market segment Finally, other focusers may be able to carve out sub-segments that they can serve even better. Industry Force Cost Leadership Differentiation Focus Entry Barriers Ability to cut price in retaliation deters potential entrants Customer loyalty can discourage potential entrants It develops core competencies that can act as an entry barrier Buyer Power Ability to offer lower price to powerful barriers Large buyers have less power to negotiate. Large buyers have less power to negotiate Supplier Power Better insulated from powerful suppliers Better able to pass on supplier price increases to customers Suppliers have power because of low volumes Threat of Substitutes Can use low price to defend against substitutes Customers become attached to differentiating attributes, reducing threat of substitute Specialized products and core competency protect against substitutes Rivalry Better able to compete on price Brand loyalty to keep customers from rivals Rivals cannot meet differentiation-focused customer needs TASK2 MARKETING ENVIRONMENT Using of PESTEL analysis, marketing mix elements can be produced to contribute the goals and values of Boots, after analyzing the current marketing environment. PESTEL analysis: Political factors: Increasing globalization, gives challenges and opportunities to Boots. Using this company can enter into new markets through partnerships. The ongoing investigation of price fixing among the UK retailers which can have a negative impact to the industry which can make the consumer feel cheated and my lead to a negative impact on the reputation of the company. Economic factors: Because of the food crisis all over the world, can result in the purchasing cost of the company, which in turn can increase the Health Beauty Product prices which affects the purchasing power of the consumers. Because of credit crunch, the consumers purchase power would decrease, but they would still consider that as its basic necessity. Lot of incentives is given to the consumers. This affects Boots as prices have to be reduced most of the times. Social factors: There seems to be more attention on fresh and easy style cooking. This gives Boots an opportunity to encourage new Health Beauty Product. Recently government has given more emphasis to promote healthy eating because of the increasing obesity. As a result the consumer would move on to healthy eating which in turn will be an opportunity to Boots to stock in more of healthy Health Beauty Product and as a result of which there would be an increase in consumers number. Technological factors: The internet phenomenon seems to be growing more rapidly. Boots can use internet for its advantage. Standing in the queue system for few items in the shopping market is time consuming. By installing the self checkout machines it can reduce the queue system for which the customer would not have to wait for few items which in turn will increase the sales for Boots. Environmental factors: It should be mandatory to reduce carbon footprint and increasing energy efficiency. One of the important and ethical issues is, like sales of organic food and ethical treatment of animals, this can clearly affect Boots on various levels. This is a sensitive issue. This can be done by maintaining on the public stand and environment. Legal factors: The current UK grocery market is highly regulated in many aspects, which is commonly in the developed countries. The recent inquiry by OFT could act as one example, which would potentially reduce the profitability of the supermarkets. Moreover, Trade Union would also protect employees to receive lack benefits, and this would make the grocers difficult to lay off employees. Marketing audit: Mckinseys 7-S framework can be used to design an internal appraisal of an organization. The 7-S framework of Mckinsey is a management model that describes 7 factors to organise a company in a holistic and effective way. They are Strategy Plans for the allocation of firms scare resources, overtime, to reach identified goals. Structure The way in which organisations unit relate to each other centralised, de-centralised and matrix. Systems The procedures, processes and routines that characterise how the work is to be done like financial systems, recruiting and performance appraisal systems. Staff Number and types of personnel within the organisation. Style The style of organisation and how key managers behave in achieving the organisations goals. Skills Distinctive capabilities of personnel or of the organisation as a whole. Shared values What does the organisation stand for and its central beliefs and attitudes. Conclusion To survive in such a competitive market place, Boots must continue to build a strong brand in order to create a strong differentiation in the market, attract customers with a credible value proposition and to constantly engage customers in ways that would endear them to the brand and to the company. This can help improve their market share especially during periods of recession when lower priced private brands are sought by consumers. And thereby achieve competitive advantages and long-term growth.