Marketing Analysis for JB HI-FI - Case Study Example

JB HIFI Name Class Unit Executive summary This marketing report gives analysis JB HI-FI who is a major electronics retailer in Australia. The company was started in 1974 and have been able to expand from a single store to multiple stores in Australia and New Zealand. The report starts by giving a brief overview of the company. The retailer can increase their presence in multi functioning devices segment as it presents a major growth opportunity. This involves devices such as smart phones and smart watches which have enables user to do multiple tasks on one device. The major strengths of the company lies on its brand image, reputation, intensive supply chain and their ability to deal with a wide range of products. The company weaknesses are in; few opportunities in enhancing their products market, lack of overseas presence and being in the limelight over problems in the industry. The main opportunity lies on the retailer ability to expand their multi functioning devices capability and utilisation of technology in business. The main threats lie on internet replacing traditional retail channels and price deflation. The main competitors are Kmart, Target, BigW, The Goodguys, Harvey Norman and Dick Smith. There are also high chances of new competitors entering the market due to its attractiveness. The report has noted that the retailer target market is young professionals and new families who want to purchase new generations’ gadgets and equipments. The company have positioned themselves as high end technology retailer delivering high quality products to the customers. The products are offered in all the outlets which are in New Zealand and Australia. The company have also been able to engage in corporate social responsibility through funding of charities. By increasing their multi functioning devices segment, the company can target the young professionals. The products should be positioned as premium with their pricing being set to be competitive. In case the plan fails, the contingency plan would be to change the objectives and focus on other gadgets segments while at the same time looking for untapped market segment which can be targeted. Table of Contents Executive summary 2 Table of Contents 4 Introduction 6 Firm background 7 Growth opportunity 7 Analysis 9 SWOT analysis 9 Strengths 9 Weakness 10 Opportunities 10 Threats 10 Financial analysis 11 Competitors 11 Dick Smith electronics 11 Harvey Norman 12 Target 12 BIG W 13 The Goodguys 13 Kmart 13 Potential future competitors 13 The industry 14 The firm current marketing 15 Positioning 15 Products range 16 Promotions 16 Pricing 16 Place 16 Green marketing 16 CSR programs 17 Recommendations (for the growth opportunity) 17 Goals and objectives (for three years) 17 Target market 17 Delivering Value 18 Positioning 18 Product range 18 Place 18 Pricing 18 Promotions 19 Green marketing 19 CSR programmes 19 Contingency plan 19 References 20 Introduction Market analysis is a very vital tool in marketing (Cadle, Paul & Yeates, 2010). By analysing the market, it becomes possible to identify the weak points and come up with measures on how to improve them. The analysis helps in determining the growth opportunity and capitalising on it. The analysis can also be used to come up with a marketing plan for the business. Another advantage of market analysis is the ability to come up with marketing strategy (Johri, 2010). Marketing strategy enables a firm to have a competitive advantage by making sure that the products being offered are able to suit the needs of the customer (Kotler & Armstrong, 1991). JB HI-FI is the largest Australian home entertainment equipments retailer (A.P.C. 2011). The company deals with home electronic products from the largest global brands such as Apple, Hp and Sony among others. The products category offered by the retailer is; TVs, computers, laptops, tablets, iPods, iPad, headphones, wireless speakers, cameras, printers, memory cards and music systems. The company also offers games and Game consoles in their stores. The company operate as an online and in store dealer in music and electronic goods. The company area of operation is in New Zealand and Australia. The company has their operations in 166 stores which are branded in their name. The company have 153 stores located in Australia while 13 stores are located in New Zealand. The online market has also been popular in both countries. This report analysis looks at JB HI-FI by looking at; firm background, growth opportunity, firm analysis, marketing strategy and recommendations for growth. The report will then give a contingency plan based on an alternative scenario (JB HI-FI, 2014). Firm background JB HI-FI is a well known Australian electronic store. The store was started by John Barbuto and Barbuto in 1974. The first store was opened in a Melbournian suburb in Keilor East. The business was sold in 1983 and it expanded into Melbourne and Sydney. The company range of CD was the main items that helped it achieve a high growth. The company sources most of their products from countries such as united and United States. The company was able to take Clive Anthony stores in Queensland in 2004. The company have expanded their products to include surveillance cameras, guitars, keyboards and computer hardware. At the moment, the stores have been able to be selected as the number one retailer in apple products. The company has also been operating online services known as JB HI-FI NOW where the consumers are allowed to stream unlimited music for $ 99 yearly (JB HI-FI, 2014). Growth opportunity The consumer electronic market in Australia is competitive with several players in the filed. The market is faced with several trends which are dynamic. At the moment, the consumers are more focused on multiple functioning devices (Wirtz, 2001). This has been seen as the single functioning devices have experienced a declining market. The market for smart phones, tablets and personal computers have been experiencing a market expansion. For example, the company has preferred the multiple functioning devices such as smart watches and smart phones. Another trend in the electronic industry is losing of loyalty. The consumers are not attached to any brand and are ready to switch. This implies that there is a trend where the consumers are prone to experimenting. The consumers are also in constant search for the devices which have the capability to satisfy their needs. There has been an increase in use of high technology, gadgets across all generations. The technologies have enabled the creation of applications which are based on the user needs. This has helped to boost the market for the smart phones (Deane-Pratt, 2012). Multi functioning electronic devices have been adopted in the workplaces due to their capabilities. Professionals have been improving their productivity using the applications in their Smartphone. Though the Australian consumer electronic market has remained stable, there has been an increase in four products category. The categories are smart phones, tablets, PCs and high definition televisions. This means that there is a great opportunity for JB HI-FI to focus on this area (JB HI-FI, 2014). Studies have proved that the four multifunction devices have been increasing in ownership across Australia. Study show that ownership of single functioning devices has been on decrease over the period. Manufactures have also been able to note the trend and come up with multiple functioning devices. At the moment, personal computers are the most used multiple function devices in Australia. This is followed by the Smartphone and high definition television. The trends show the rise of multifunction devices in the market presents a growth opportunity for the company. The company can increase their stock on multifunction devices in their markets in order to capture a larger market share (Sampson & British Computer Society, 2008). Analysis SWOT analysis Though JB HI-FI has a large market share in Australia, the company have to work in enhancing it. The company have to work in developing and maintaining the existing market. This is in a bid to enhance the competitive edge through capitalising on what they have and coming up with new services that can cater for the consumer needs. Conducting a SWOT analysis is an important tool that can help the company to focus on its strengths, weakness, opportunities and threats that they face. The company can use the analysis as a tool to match their strengths and weakness with external environment forces (Cadle, Paul & Yeates, 2010). Strengths JB HI-FI has been able to establish a strong brand name in Australia and New Zealand. This has enabled them to attain a good competitive advantage. The retailer enjoys having economic benefits due to its diversity in products brand which enables diversity in proposition. The company operates in a large scale which enables it to have a purchasing power enabling it to trade in the best systems, products and access to the discreet brands. The company have an entrepreneurial culture which leads to enthusiasm and competitiveness. The company have an intensive supply chain in Australia and New Zealand which enables it to have a great e commerce service. The company have been able to respond to the customer needs in a fast and efficient manner. This has made it possible to provide the customers with new models in their products (Deane-Pratt, 2012). Weakness Due to its size, the company is regarded as a major threat by the competitors and suppliers. The size of JB HI-FI has made it to be visible to the media. All the problems that happen in the industry are reflected to JB HI FI and reported by the media. The company has been leading in several markets, which have reduced its chances of expansion in those areas. The acquisitions in its leading market segments are limited. The company has no overseas presence despite buying their products overseas. The company has limited their area of operation in Australia and New Zealand (Sampson & British Computer Society, 2008). Opportunities The rise of multifunctional devices gives a great opportunity for JB HI-FI (Deane-Pratt, 2012). The company can use the opportunity to increase their stock on multifunctional devices such as smart phones, HD televisions among others. The emerging convergence of technologies presents a great opportunity to JB HI-FI. The internet telephones and the television have been involved in convergence of technology. The rise of internet has been able to help the business with ease of communication (Teece, 2009). The company can utilise this opportunity to enhance their e commerce and create new market channels. The company have thus been able to gain a competitive edge in the industry (Sampson & British Computer Society, 2008). Threats Internet can be a major threat to the company if not well utilised. The internet channel presents a threat to the traditional retail industry as the company can reach a large number of customers using the channels as opposed to other method. The channel is also lower in cost as compared to the traditional retail industry. There has been price deflation in some of the product categories. This has affected the company margin levels in a great way. There are also threats from legislation. The legislation requiring recycle of electrical waste may lead to an increase in the company costs of sales (Blais, 2012). Financial analysis In 2012, the company was able to make sales totalling $12.3 billion in their online sales for a period of 12 months. The company experienced a 31% decline in their earnings which was a bad indicator. Despite this, the company has improved in their earnings. In the 2013-14 results, the company had its share prices fall with more than a 10%. The percentage growth for the retailer is at 10.3 on the same period (JB HI-FI, 2014). Competitors JB HI-FI has several major competitors in the Australian market. The competitors are; DK Smith electronics, Harvey Norman, Target, BigW, and the Goodguys. Dick Smith electronics The company was founded in 1968 and have been able to expand and become an international dealer. The company was among the first to come up with the self serve market. The company worked to ensure that they had their catalogues in major magazines in order to communicate to the clients. The company was able to flourish early due to CB radios and later the personal computers. Apart form the electronics, the company have expanded their products to include kettles and coffee makers. After rebranding in 2008, the company has gained reputation due to their branded state of art equipments. The company have more than 100 stores spread across Australia. The company have their presence in Australia and New Zealand. Dick Smith also offers online sales through their website. The company has a strong brand name which makes them a major competitive force to JB Hi-FI. Dick smith has been a major Australian technological equipment retailer with an experience of over 40 years. The company has been able to have success in the sector due to their expertise in the latest technology. The retailer has reputation for their quality products which are sold at competitive prices. Dick Smith is thus a major competitor to JB HI-FI (Australian Trade professional listing, 2014). Harvey Norman The company is an Australian based retailer engaging in electronic goods, but also sells furniture among other household appliances. The company has more than 230 which are spread internationally in Australia, Malaysia, Slovenia, Ireland, Singapore and Croatia among others. The company was started in 1961 and have been able to expand and become an international retailer. The company have adopted a superstore mode of operation. The main markets which the company operates in are the furniture and electronics. Each of the company department operates separately despite having many stores under one roof. This is due to the fact that each section is held under franchise. The company expansion and diversity offers great competition to JB Hi-FI (Australian Trade professional listing, 2014). Target Target is a mid market department store. The company has been able to provide its customers with high quality products at fair prices. The company poses a threat to JB Hi-fi due to their string brand name and their products range (Australian Trade professional listing, 2014). BIG W BIGW is another competitor in the electronic retailing. The retailer is well known across Australia due to their ability to offer high quality products. The company have been supplying products from Apple, Samsung, and Nokia among other global brands. Despite being not having a large presence in Australia, the company still offers competition to JB HI-FI electronics (Australian Trade professional listing, 2014). The Goodguys The company has been rising as a major retailer of the electrical appliances across Australia. The company sells at low prices with their trademark being recognised by the consumers. The store has been offering their products at a reduced price as compared to other retailers which poses a major threat to JB HI-FI (Australian Trade professional listing, 2014). Kmart Kmart is another competitor to JB HI-FI due to their range of technology equipment. The retailing supermarket enjoys having a wide range of products and a strong brand name. The company have been a major competitor due to fact that their customers are able to gain all their needs under one roof (Australian Trade professional listing, 2014). Potential future competitors Due to the advances in technology, the electronic market has become popular (Deane-Pratt, 2012). There are many companies who have been able to penetrate the industry through in small scale. The barrier to entry in the electronics market can be termed as a medium. In future JB HI-FI may face competition from new entrants and also from other retailers who have been offering electronics in their products category such as Kmart and Bing Lee. The industry The electronic retailing industry is one of the most successful sectors in the retail industry. At the moment, the global electronics sector has been able to generate the greatest revenue than other sectors of production. The industry has also been termed to enable innovation in other sectors. The heavy use of the computers and other technological gadgets has been a positive indicator of the industry success. The retail of electronics and entertainment equipment has been able to generate a lot of revenue in Australia. The main segments that have been growing at a fast pace are the automotive electronics, computers and communication, high technology devices, multi functioning devices, high quality audio visual devices and the high precision electronics. The company has been engaging in these segments in their Australian and New Zealand market. The growth in the electronics and communication equipment market has made it attractive enabling many firms to enter into the market. The key success factors in the market are the capability of the retailer to capture the trends and ensure that they are able to keep up with technological changes (Deane-Pratt, 2012). The electronic market is subject to rapid changes in technology and trends. At the moment, there is a trend in adoption of the multifunctional devices such as smart phones to replace the single function devices. The retailer must keep up with the trend changes as well as technology changes. The firm current marketing JB Hi-FI has their target audience as the young, technology aware and earning professionals (Deane-Pratt, 2012). The retailer also targets new family as they shop for their new home appliances such as kettles, cooking appliances and electronics. The company have also been keen on tapping the online audiences with their online operations. JB Hi-fi has positioned themselves in the market as high quality products brand with fair prices. The company has been able to work in making sure that the consumers can reach their stores through use of mobile applications. JB HI-FI have been able to benefit from their targeting due to fact that they have avoided head competition from other retailers and have been able to come up with new offerings. The company has also been able to identify and utilise early adopters and retained their customers. The company has used behavioural and psychological segmentation. In behavioural segmentation, the company has analysed what the customers’ wants and the way in which they use their products. In technology industry, taste and preferences are dynamic. This has made JB HI-FI to be keen on analysing the changing consumer trends. The young professionals group is more technological savvy which have made the retailer to be keen on technology changes. When using psychological segmentation, the retailer has looked at what the customers perceive on value. The way of live for the target consumer is another area in this type of segmentation (JB HI-FI, 2014). Positioning JB HI-FI has positioned itself as a high end electronics and household appliances retailer. The company have been able to be consistent in providing high quality equipment in the market and keep with the changing trends in the market (JB HI-FI, 2014). Products range The retailer products range are; computers and tablets, TV & home entertainment, movies, cameras, phones, iPods, docks, headphones, musical instruments, GPS, car audio and household appliances (JB HI-FI, 2014). Other marketing mix elements Promotions The retailer engages in promotions to its customers through discounts and special offers. The company has also been active in use of advertising with mass media and displays. Pricing The company has been offering competitive prices on their products. The prices for the goods are determined by the quality and the market price. This has enabled the company to compete well with other retailers. Place JB HI-FI is located in multiple stores across Australia and New Zealand. This has made the company accessible to the consumers. The company have also been active in online retailing (JB HI-FI, 2014). Green marketing JB HI-FI has been active in ensuring that they support green marketing. The company have been engaged in environmental initiatives such as the Bush Heritage Australia. This is a project that protects the unique animals, plants and their habitat. The company have also been in support of carbon footprint reduction and recycling of electronics (JB HI-FI, 2014). CSR programs JB HI-FI has been involved in various corporate social responsibility programs. The company has been donating with an aim of giving back to the community. The company staff have been engaging in several charities which are; song room, Fred Hollows Foundation, Indspire, Redkite, Oxfarm, Medecins Sans Frontieres, Children homes and animal welfare league. The company has been engaging in these charities through the change for change initiative (JB HI-FI, 2014). Recommendations (for the growth opportunity) Goals and objectives (for three years) By adopting the opportunity to intensify the company market in multifunctional devices, JB HI-FI can have the following objectives for three years. To be the market leader in multifunctional devices. Enabling ease of adoption for the multifunctional devices. To form strategic alliances with the multifunctional devices suppliers such as Apple and Samsung electronics. Ensuring that the company have been able to expand their services to overseas market. Target market The use of multifunctional devices has been on rise by the professionals and young people (Deane-Pratt, 2012). This is due to convenience they offer and the ability to be adapted to any working environment (Espejo, 2013). JB HI-FI can target the young professionals and youth in their marketing. Delivering Value JB HI-FI should focus on getting the multifunctional gadgets from renowned brands such as Apple, Samsung and Sony among others in order to ensure they deliver value to the customers. The consumers in this market are very sensitive to the quality and any failure can reduce to market loss (Deane-Pratt, 2012). Positioning JB HI-FI should position their multifunctional devices as high end products targeting young professionals. The products should be places in the premium category as the pricing is in most cases associated with the quality. Product range The range of products in this category includes; iPad, iPhone, high definition televisions, android Smartphone and multifunctional watches among other high end technology devices. Place The products should be available in all the company outlets and the online stores. This should enable the products to have ease of access to all. Pricing The products should be priced as premium products. The price should be set according to the market forces so as to be competitive. Promotions The company can engage in promotions through mass advertising and posters. Green marketing The company can engage in electronic disposal and recycling campaigns to enhance environmental awareness. CSR programmes The company can work in increasing their support to the current charities. There is also need to engage in community support programmes such as increasing environmental awareness. Contingency plan If the observed increase in market for the multiple functioning devices ceases, the company may be affected in its growth opportunity. The company marketing strategy for the multiple functioning devices is to be affected in a great way. The company would be required to change their goals and focus on other gadgets such as single functioning devices. This is a scenario that can occur if the market for the devices becomes saturated in its areas of operation. The company would have to reduce their focus on the area or focus on changing their market mix. For example, the company can look for untapped market where the multiple functioning gadgets can be sold. References A.P.C. (2011). Economic structure and performance of the Australian retail industry. Canberra: Productivity Commission. Australian Trade professional listing (2014). Australia's Top Electronics Stores, Retrieved 25 September 2014 from, http://atpl.net.au/article/australias-top-electronics-stores.html. Blais, S. (2012). Business analysis: Best practices for success. Hoboken, N.J: Wiley. Cadle, J., Paul, D. & Yeates, D. (2010). Business analysis. Swindon: British Informatics Society. Deane-Pratt, A. (2012). Electrical gadgets. New York: PowerKids Press. Espejo, R. (2013). Smartphones. Detroit : Greenhaven Press. JB HI-FI, (2014). Homepage, JB HI-FI. Com, retrieved 25 September 2014 from, https://www.jbhifi.com.au/. Johri, A. (2010). Business analysis. 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