The Marketing Strategy Plan of Halfords

 

Module Name: Principles of Marketing Management

 

Executive summary

This report is a marketing strategy plan for Halfords, which is the United Kingdom’s leading retailer in selling bicycles. This report is a part of whole marketing plan, and this report focus on how the company should implement marketing strategies during June to September 2011 in Hull. Follow by the brief introduction, the justified SWOT analysis presents bullet points of Halfords’ current situation. According to the SWOT matrix, the company can define and adjust marketing objectives and product positioning.

 

As a member of Halfords’ marketing management team, I was arranged to conduct this marketing strategy plan for the reason of increase profits and offer strategic insights about how to position the company in a competitive place. The company aims to enhance profitability in Hull city in next year’s third quarter, thus our company should provide different products positioning in order to attract different target customers. For strategic marketing, the company should apply other ways such hold own-organized evens to stimulate purchases and enhance brand image.

 

For the reason of making the plan into an efficient way, this report covers implementation control and budget to make sure our marketing plan on the appropriate competition place.

 

  

Table of contents

Executive summary2

1. Introduction4 

2. Brief situation analysis and SWOT matrix4 

2.1 Situation analysis4

2.2 SWOT matrix6

1. Marketing Objectives6 

2. Marketing strategies8 

4.1Product strategy8

4.2 Pricing strategy9

4.3 Places for selling10

4.4 Promotion strategy11

1. Implementation and control12 

2. Budget and financial forecast13 

3. Conclusion13 

4. Appendix14 

8.1 Appendix 1: Ansoff’s Growth Matrix14

8.2 Appendix 2: Implementation plan14

8.3 Appendix 3: Budget15

1. Bibliography16 

 

 

1. Introduction

Cycling is a good method for keeping healthy. The American Journal of Public Health (2010) indicates statistically significant relationship between walking, cycling and health. According to the results, the counties those which higher levels of walking and cycling tended to have lower levels of adult obesity. Different from cars and buses, cycling has positive characters with non-polluting and sustainable. According to Cornfield (2009), cycling can create fitness, fun and self-discovery and in the United Kingdom, every inch of the National Cycle Network is supervised and maintained by a remarkable organization named Sustrans, whose group commitment to cycling is based on simple maxims: next to walking, the bicycle is the least polluting way for travelling.

In Hull, the local cycling strategy has been conducted in order to increase cycle using and reducing cycle accidents further. Learn from the transport and street regulations of City Council (Hull City Council, 2010), the Road User Hierarchy has been adopted as part of Hull’s transport plan, which states that pedestrians and cyclists are the top. This plan brings our company an opportunity as it aims to reduce private car use and encourage walking and cycling. To grasp this excellent chance, this marketing strategy plan provides marketing strategies beyond marketing mix and offers precise implementation controls to increase profitability.

 

2. Brief situation analysis and SWOT matrix

2.1 Situation analysis

SWOT analysis can be defined according to the current situation analysis which includes market background information, competition and products information (Kotler, 2009). Learn from the report of Mintel (2010), consumers’ attitudes towards cycling are concerning to health, wellbeing and environmental issues. The good news for us is the bicycle industry is profiting from the cycling boom (Mintel, 2010). Externally, Hull City Council’s cycling strategy brings us benefits, and cyclists may get a chance to deduct cost related to purchasing a new bike or cycling accessories (Wiebe, 2009). Moreover, the sales values in bicycle industry are subject to deflation in the general leisure market, for example as the current inflationary impact of weak exchange rates on sterling; and the rising fuel cost inspires consumers to find a economic way in transport (Mintel, 2010). In sales volume of bicycles in UK market, the adults to children’s bicycle sales ratio is about 72: 28 (Mintel, 2010), which means the children’s market is limited maybe due to the safety consideration.

Outside of bicycle industry, there are some other choices for people to involve leisure and fitness activities; which refers that there are some substitutes can instead of cycling. In the bicycle industry, our competitors such as Bob’s and Jobes Cycle Centre are offering different types of products aim at different customer requirement. For example, in Jobes’ store, there are more than three series in city bicycle type (Jobes Cycle, 2010).  Besides that, several supermarkets, such as Tesco and Argos also sell bicycles sometimes with low prices (Mintel, 2010). Moreover, the targeting opportunities for bicycle industry is limited as there are two thirds of the biggest group are non-cyclists (Mintel, 2010).

Internally, Halfords has 496 stores across the UK and Republic of Ireland, which is one of the largest non-food retailers in the country (Halfords, 2010a). The leading market position is a kind of strength in company profile. Halfords claims that it intends to continue opening new out-of-town superstores in low-cost SMART Arcade format as part of its store portfolio. The marketing strategy of the organization focuses on the communication of discounted product promotions to increase footfall and enhance the perception of Halfords as a price leader (Halfords, 2010b).  In addition, Halfords Limited is a leading UK provider of the Cycle2work scheme (Cycle2work, 2010) as providing top bicycle brands to organizations with beneficial prices. However, working hour reduction triggers salary decrease, result in human resource problems.

Base on the brief situation analysis of Halfords and the marketing audits from our group work (B4), the justified SWOT matrix is conducted as follow.

2.2 SWOT matrix

Strengths  

· Leading position in the market with positive brand reputation;

· Move to boost e-bike online (Mintel, 2010);

· Increase retail store numbers;

· Merger and acquisitions.

Weaknesses 

· The company covers both car and bicycle business;

· Human resources problems;

· Cycling is not popular behaved.

Opportunities  

· Cycle2work scheme;

· Hull City Council’s cycling strategy;

· Fuel price rise;

· Capable to sponsor events;

· Online shop is available to increase sales.

 

Threats  

· Uncertainty of weather;

· Other substitutes can instead of cycling;

· Competition within bicycle industry;

· Impact of inflationary;

· Tesco, Argos’s low price strategy.

 

(Justified from Group B4)

3. Marketing Objectives

According to Halfords’ current situation analysis and marketing audit, and this marketing plan aims to create strategies in order to increase profits and enhance competitive position. Therefore, Ansoff’s Growth Matrix (Ansoff, 2007) may provide a hint for us.  From Ansoff’s Growth Matrix (Appendix 1), ‘market penetration’ is the basic stage for the company to implement strategies. ‘Market penetration’ is riskless and Halfords has enough time to design campaign before next June. Consolidation before next June in Hull is the first step. The next stage to match Halfords’ situation is to ‘product development’ base on different customer segmentation. As Hull market is an existing market for Halfords and ‘diversification’ requires risk taking, Halfords should be focus on ‘market penetration’ with consolidation and ‘product development’ to meet different customer requirements.

Marketing objective: to increase sales of existing products during June to September in next year in Hull market with total sales 3,000 units; and create new products to reach 4,000 sales volume. (Number set due to the total sales volume divide 462 stores and there are two stores in Hull).

 

Target markets: As mentioned before, Halfords’ strategy should focus on ‘product development’ with different segmentation during next June to September; the new products should be designed to match various needs. According to Mintel (2010), road bicycles and folding bicycles are said to be performing well; and electric bicycles are an exciting dynamic for the industry. In addition, children’s bicycles are not sold well, but this is also an opportunity for the company. Women market will bring a margin to the Halfords. Therefore, the target markets are:

1. Children whose age above five;

2. Women

3. Cycling fanciers;

4. individuals who buy bicycle for convenience;

5. Group purchase (cycle2work scheme).

 

Product offering: provide different types of bicycles to different segmentations.

Group 1 (Children whose age above five): Children bicycles. Halfords has already offers children’s bike, such as ‘Apollo Honeybee Girls Bike’ and ‘Thomas the Tank Engine Boys Bike’ (Halfords, 2010c).

Group 2 (Women): electric bicycles which easy to handle

Group 3 (Cycling fanciers): Mountain bicycles and professional cycling accessories.

Group 4 (For convenience): Fold bicycle and hybrid bicycles.

Group 5 (Group buying): Fold bicycles and road bicycles.

Brand positioning: Halfords is the professional bicycle trader who is able to provide bicycles and related accessories in excellent quality to match everyone’s requirement for cycling.

 

4. Marketing strategies

According to previous analysis and Ansoff’s Growth Matrix, ‘marketing penetration’ and ‘product development’ are Halfords’ strategies to meet marketing objectives. In order to make this marketing plan more specific and easy to control, there are details of marketing strategies from marketing mix view.

4.1 Product strategy

Halfords’s existing products covers many types of bicycles and relate accessories, in different product categories, there are various products. The brands include Carrera, Boardman, Apollo, Halfords and Raleigh etc (Halfords, 2010d). Before June next year, consolidation with existing products is important. At the same time, product development should be implemented to support next year’s campaign.

Now Hull city is coming into winter weather, snowing is a trouble for bicycle riders. This is an opportunity to increase sales of electric bicycles for both children and adults.  Electric bicycles for children are defined more likely as a toy which children can ride it in their garden or road outside their houses. It is more safety than normal ones. For adults, electric bikes is convenience for people to select manual power or automatic power, especially for females who are less powerful than masculine. In this winter, Halfords could market new products such as ‘anti-skidding’ tyres, providing free service in changing or check tyres and customers only need to pay the new tyre costs. Simply, the related accessories such as warm hat, gloves also need to be introduced into the market.

For next June to September, as the weather turn to be warm and fresh, it is definitely the desired weather for cycling. As the Children’s Day is the first day of June, limited-edition children’s bicycle is the good idea to start our marketing plan during that period. For example, Halfords can cooperate with Disney and Apollo to produce limited-edition bicycles but only available in Halfords. As adult market is still a more profitable, this market can not be ignored. For cycling fanciers, bicycles with latest technology and flexible system will attract purchasing. In order to enlarge women customer numbers, the company can introduce ‘customised bicycles’ base on customers’ favourite colours or paintings. For customers who pursue convenience, the product design should focus on fold bicycles with digital security locks.

Besides tangible products, provide good service is same important as product quality. Marvellous purchasing experience makes customer satisfy then the repeat purchase behaviour can brings benefits to the company.

 

4.2 Pricing strategy

In the consolidation stage, the price of existing products should maintain at the same level as usual. However, in Christmas and New Year festivals there ought to be discount to attract consuming behaviours.  Boxing Day is meaningful for Western people as buying Christmas gift is a social obligation for family members. As celebration activities, Christmas and New Year holidays sometimes can inspire people on buying (Journal of consumer behaviour). It seems that discount strategy in these holidays is a traditional way, thus Halfords should follow it and never be the exception.

For new product pricing, Halfords still can offer discount policy to group purchase in order to increase sales volume since June 2011. Halfords’ products prices are from less than 100 to 2,000 pounds. The company should keep this strategy to offer different standards products with different prices, in this way to attract various customers. But the price of limited-edition bicycles and customized products should be about 20% higher than ordinary products, and latest designed bicycles with high technology are about 5% to 10% higher than past patterns. For the reason of making the price acceptable, it is smart to offer free gift when customers purchase new products, such as small lock or raincoat. As Halfords’ objective is to increase profitability, increasing price to an acceptable level for limited-edition bicycles and new products, is a good method to achieve Halfords’ goal.

 

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9. Bibliography

Asoff, H. I. (2007), Strategic management.  Classic Edition.

 

Cornfield, J. (2009). Cycling the world. Scientific American Earth. Vol. 19. EBSCO [online]. Available: http://web.ebscohost.com/ehost/detail?vid=1&hid=8&sid=17d4f75c-1200-497f-8956-dc357a751a18%40sessionmgr12&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=buh&AN=42205870 [Accessed 15 November 2010]

 

Cycle2work (2010). Cycle2work Official Website. [online]. Available: http://www.cycle2work.info/siteemployerindex [Accessed 17 Nov 2010]

 

Hull City Council (2010) Hull City Council Official Website. [online]. Available: http://www.hullcc.gov.uk/portal/page?_pageid=221,97855&_dad=portal&_schema=PORTAL [Accessed 14 Nov 2010]

 

Halfords (2010a) Halfords Limted Offical Website. [online]. [Accessed 17 Nov 2010]

 

Jobes Cycles (2010) Jobes Cycles Official Website. [online]. Available: http://www.jobescycles.co.uk/ [Accessed 17 Nov 2010]

 

Kotler, P.(2009). Marketing management. Edinburgh: Pearson/Prentice Hall

 

Mintel (2010), Bicycles-UK-June 2010 — Issues in the Market. [online]. Available: http://academic.mintel.com/sinatra/oxygen_academic/search_results/show&/display/id=479870/display/id=532962#hit1 [Accessed 15 Nov 2010]

 

Mintel (2010), Bicycles-UK-June 2010 — Market in Brief: Market performance. [online]. Available: http://academic.mintel.com/sinatra/oxygen_academic//display/&id=479870/display/id=532964  [Accessed 16 Nov 2010]

 

Mintel (2010), Bicycles-UK-June 2010—Targeting Opportunities. [online]. Available: http://academic.mintel.com/sinatra/oxygen_academic/display/id=479870/display/id=532979 [Accessed 18 Nov 2010]

 

Mintel (2010), Bicycles-UK-June 2010—Segment performance [online]. Available: http://academic.mintel.com/sinatra/oxygen_academic//display/&id=479870/display/id=532971  [Accessed 19 Nov 2010]

 

Mintel (2010), Halfords move likely to boost sales of electric bicycles. [online]. Available: http://academic.mintel.com/sinatra/oxygen_academic/display/id=479870/display/id=532964/display/id=11657&anchor=11657/list/id=11657&type=NSItem&class=MarketUpdate/display/id=497555&anchor=497555 [Accessed 17 Nov 2010]

 

Mckchnie, J and Tynan, C. (2006) Social meanings in Christmas consumption: an exploratory study of UK celebrants’ consumption rituals. Journal of Consumer Behaviour.

 

Walking and Cycling to Health: A Comparative Analysis of City, State, and International Data. American Journal of Public Health, Oct2010.

 

Wiebe, M. (2009). Fitness bill may allow tax deduction for cycling gear. Bicycle retailer & industry news. Vol. 18 Issue 8

 

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