WHSmith PLC

1. WHSmith PLC Strategic Marketing in Practice Case Study June 2006 © CMC 2005

2. Scenario • You are Gary Ross marketing consultant. • TASK: • Re – establish authority in the High Street • Establish presence online in its natural sectors • Develop new and creative approaches to retailing • Devise strategies to drive profitable business year on year © CMC 2005

3. Where are we now ? Audit of current situation © CMC 2005

4. WHS today • High Street Retailer, household name, new CEO has revived fortunes recently, faces intense competition from all sides, both traditional and online retailers • Established 212 years • 70% of U.K. population visit each year • 438m visits pa • Sells 78m magazines pa • Sells 1.1bn pads of A4 paper pa • 542 High Street shops • 200 Travel shops • Like for like sales dropped 2% in 2004-2005 • What does the future hold for WHS ? © CMC 2005

5. SUPPORT ACTIVITIES MARGIN FIRMS INFRASTRUCTURE - Customer focused, Marketing taken on and understood at every level, core function - strong internal communications .Staff.reward scheme- V.I.P. HR MANAGEMENT - Retain technical and knowledge based employees and recruit marketing and sales experts - Project/consulting expertise. 360degree feedback TECHNOLOGY DEVELOPMENT – Partnership with Fujitsu has saved money and freed up staff to concentrate on core retail issues PROCUREMENT - Combined buying power, U.K and Far East • INBOUND • LOGISTICS • Intranet • JIT for • suppliers • OPERATIONS • JIT • Efficient ethical • Product sourcing • (closely • monitored) • OUTBOUND • LOGISTICS • E- Order • handling • JIT • MARKETING • AND SALES • Investment in • CSR • Relationship • marketing • Key Account • management • SERVICE • Customer • service • paramount • Online • services • Partnerships • Alliances MARGIN PRIMARY FUN CTIONS © CMC 2005

6. Brand issues • BRAND DOMAIN (brand’s target market) • BRAND HERITAGE (how it has achieved success) • BRAND VALUES (core values and characteristics) • BRAND ASSETS (what makes brand distinctive) • BRAND PERSONALITY (character of brand) © CMC 2005

7. Strengths Established over 200 years ago Household name Has presence in 399 out of top 400 High Streets in the U.K. Brand is well known Staff are experienced Large customer base Has an online presence www.bookshop Strong ethical trading stance Highly regarded for social responsibility Generous giver to Charity (Children in Need) Strong Environmental strategy Weaknesses Less than 50% of customers recommend them Less than 50% of customers are satisfied No Online Director No co-ordinated marketing for all Stores Lack of presence on air (T.V. and Radio) Smaller stores have insufficient range and depth (SKU’s) Brand indistinct No discernible USP Opportunities To drive more business within the U.K. especially online To target potentially lucrative markets elsewhere in Europe where retail competition is less intense Educational issues – national literacy initiatives Environmental issues To rationalise store portfolio To forge strong strategic alliances (Post Office) To develop better services for customers (e.g ATM machines) To position WHS in the mind of the consumer To be first choice retailer in several key categories. Threats Growth of free newspapers Growth of online new and G3 phone news/podcasts of books Online stores – Amazon etc. Supermarkets Spiralling costs Specialist stationery stores – Staples Specialist book chains – Borders Ottakers Specialist music retailers – HMV , Virgin Specialist card retailer - Clinton Barriers to entry for core products is low WHS SWOT © CMC 2005

8. Map of competition Specialist Online Amazon Most retailers HMV, Virgin, Borders, Ottakers Waterstone Clinton cards High Street Newsagents Independents Woolworths Tesco Express Category killers Staples, Tesco, Asda/Walmart © CMC 2005

9. The Business Environment More than SLEPT! Economy Politics Legal Porter’s 5 Pollution Suppliers Organisation Product Labour Wages Capital Profit Materials MICRO Society Technology MACRO PHYSICAL © CMC 2005

10. PESTLE Political Concern over decline of the High Street Economic Healthy economy/low unemployment Social Growth of in-home entertainment Growth of education concerns Geographic changes – new housing Time shift – longer active hours Social - aging and cultural diversity Technology Growth of internet access Growth of mobile presence Change to 3G Legal Deregulation of Postal market – greater supply of cheap couriers Distribution of magazines/Newspapers by OFT – favours Independents Environment Concern over ethical trading and environmental impacts © CMC 2005

11. Consider WHS’s positioning • Use either BCG or PLC © CMC 2005

12. Brand Equity • Bonding –----How does it retain itself with me • Advantage – --Does it offer something different • Performance- -Can it deliver • Relevance – Does it offer something I want • Presence- Do people know it © CMC 2005

13. Where do we Want to be? © CMC 2005

14. Objectives • Decide • Objectives • For U.K. and International • Deliver • Outcomes © CMC 2005

15. Segmentation • Described and Profiled for each sector © CMC 2005

16. Targeting • Specific and Justified for each sector © CMC 2005

17. Positioning • Clear and defensible • Set out USP and Positioning for each sector. • Are there any commonalities or Single Brand options • Vision • Values © CMC 2005

18. How do we get there? © CMC 2005

19. Action • Decide • Objective • Deliver • Outcomes © CMC 2005

20. Strategic Development • Product • Sector Selection • Core/ Physical/Augmented Proposition • Branding • Pricing • Distribution • Promotion • People • Process © CMC 2005

21. Implementation and Control • Budgeting Areas • Metrics • Balanced Scorecard • McKinsey 7S © CMC 2005

22. Comms Strategy for WHS • Audiences –Internal and External, domestic and international, Consumers and Corporate, private and public • Media • Messages • Timing/Budget • Stakeholders • Investors • Suppliers • Partners • Customers • Media • Who else ? © CMC 2005

23. Internationalisation • Where, when and how • GE/ Harrel and Keiffer © CMC 2005

24. Implementation and Control • Budgeting Areas • Metrics • BS • McKinsey 7S © CMC 2005

25. Critical success factors • Create a sustainable brand image and position amongst competitors • Change management (PLC,BCG) • Internal marketing (stakeholder management, CRM) • Funding (Borrowing/J.V/Debt) • Constraints – Overstretching - Competitive landscape - Attempted takeover by larger company © CMC 2005

26. Vision For WHS to be the first destination for any customer who is seeking a value for money, ethical, environmentally proactive retailer with a broad product range and friendly, informative staff. © CMC 2005

27. Mission statement To become first choice for any customer who demands high quality standards and exceptional customer service from convenient locations on the High Street across the U.K. and a comparable service online. © CMC 2005

28. Critical Questions • What is WHS’s USP when targeting the vast majority of customers in the U.K. and competing with many other retailers who are offering the same products, often in a more specialised way? • Why should customers shop at WHS? © CMC 2005

29. Values • Committed to providing a wide range of products in convenient locations across the U.K. • Committed to developing staff to give superb customer service to all customers. • Committed to sourcing products ethically and maintaining a strong environmental approach in all its activities. © CMC 2005

30. Corporate objectives • To develop the online market by targeting companies and individuals • To research the European market aiming to create a niche opportunity in those countries where retailing is not so well developed © CMC 2005

31. Strategic management of marketing mix • Product Core – everyday products that are always needed – stationery, paper, greetings cards, newspapers, magazines Augmented – strong online presence needed across all product categories • Price Favourable price – value for money because of bulk purchasing power. A sophisticated pricing strategy could be introduced using micro marketing techniques © CMC 2005

32. Strategic management of marketing mix • Place UK based primarily – but needs to drive more sales online. Also needs to target European markets, especially those where retail competition is less well developed • Promotion B2B - emarketing campaigns to selected companies (use SIC lists and professional bodies) to supply bulk purchases to public bodies, large corporates etc. B2C – use promotional spend wisely and undertake market research to identify optimum target markets Web site – continually update the content and promote heavily. © CMC 2005

33. Strategic management of marketing mix • People Train and develop the existing staff. Selective recruitment of key sales/marketing/technical personnel. Recruit proven staff in overseas markets • Processes Regular internal/external communication. Long term relationship building. B2C customer involvement. Relationship marketing. Customer Lifetime Value. Branding strategy. © CMC 2005

34. Strategic management of marketing mix Physical evidence Corporate web site WHS logo and brand ROI analysis across trading sectors © CMC 2005

35. Implementation and Control McKinsey 7S Structure Single company or J.V.? U.K. Head Office and overseas subsidiary? Strategy Focus differentiated aimed at consumer and Corporate markets in U.K. and overseas © CMC 2005

36. Implementation and Control Systems Develop MKIS and control systems to regularly review and monitor effectiveness of all strategies Develop benchmarking system to monitor against key market indicators Staff Continualdevelopment of key staff. Advanced customer service and sales training. CRM development. Key account relationship building with suppliers from the U.K and Far East © CMC 2005

37. Implementation and Control Skills Ensure correct training and development programmes are established to keep WHS staff at the leading edge of technology, systems and processes Shared values Ensure company strategy shared by everyone in the organisation. Growth strategy and international expansion shared with all staff, suppliers, stakeholders. Compliance regulations (Health and Safety, ethical trading, environmental impacts) understood and accepted by all staff. © CMC 2005

38. Implementation and Control Style Commitment top down from CEO and Board. Creative, dynamic, leading edge, probity, commitment, ethical trading stance. Profit sharing scheme © CMC 2005

39. Control – Balanced Scorecard Internal Employee awareness, staff turnover, assess staff performance against benchmarks (KPI’s), participation in continuous development (training schemes), develop CRM databases for collecting consumer feedback and insights into future needs, wants, industry trends, (market intelligence) © CMC 2005

40. Control – Balanced Scorecard Innovation and learning Skills training – advanced B2C selling, customer ‘champions’, technical, online systems, training and development, critical thinking, project management © CMC 2005

41. Control – Balanced Scorecard Financial Sales vs. targets in each trading category – Corporate, consumer – U.K., Europe Profitability metrics, CLV Customer Customer satisfaction surveys – customer feedback. Customer endorsements - web based Brand recall/awareness of brand © CMC 2005

42. Possible questions 1. What branding strategy should WHS adopt to maximise sales and profitability? 2. Prepare a communications plan which will increase sales and profitability for WHS across all its target markets 3. What branding and positioning strategy should WHS adopt to improve its appeal to online customers? 4. Devise a marketing plan to make WHS a leading player in the mid sized retail market in Europe. © CMC 2005

43. Possible questions 5. Prepare a relationship marketing campaign which will effectively increase WHS customer loyalty and their lifetime value. 6. WHS is at the crossroads in its development and growth. Produce a strategic marketing plan which will ensure increased revenue from its High Street and online operations and negate the marketing strategies of domestic and European predators. © CMC 2005

44. Possible questions • Prepare a corporate social responsibility charter for WHS in the light of changing legislation regarding the ethical sourcing of products and environmental impacts. © CMC 2005