Kmart – 4 Marketing Keys to Success

1
Kmart Keys to Success Presented by Robert
ShawYasmin AnandwalaEric FindleyArdita
KalajaWinfield PollidoreSanjay Mengi
2
Kmart - Introduction

• Yasmin Anandwala

3
Kmart Keys to Success

• Industrial Analysis
• Kmart Profile
• SWOT (Strength, Weakness, Opportunity, and
  Threat)
• Kmart versus Wal-Mart
• Survey
• 3 Marketing Keys to Success
• Leverage Urban Minority Market Strengths
• Implement CRM Strategy
• Improve Supply Chain Management - IT
• Conclusion

4
Kmart - Analysis

• Robert Shaw
• Yasmin Anandwala

5
Kmarts Strength

• Clothing lines
• Exclusive Joe Boxer product line
• Route 66
• Carry a variety of products at a low cost
• Martha Stewarts products
• Home Goods
• Store Locations
• Urban areas
• Stores located in easily accessible areas
• Market in the Urban areas effectively
• Able to get a large multi-cultural consumer group
• Offered lay away plan for people who need to pay
  on installments

6
Kmarts Weakness

• Chapter 11 Bankruptcy Protection
• Low marketing budget
• Many low profit suburban stores
• Ineffective Supply Chain Management
• Negative publicity
• Marketed the suburbs like the urban areas
• Did not change the image of the company as the
  demands of the consumers changed
• Did not offer variety that appealed to the middle
  class

7
Kmarts Opportunities

• Re-position store
• Adopt Urban Strategy
• Integrate Supply Chain Management
• Sell to Carrefour (Paris based retailer)
• Need to change the negative image of K-Mart
• Improve the product line carried to keep the
  middle class
• Design the store to be more organized and
  attractive

8
Kmarts Threats

• Wal-mart and Target
• Increasing Market Share
• Having to liquidate company
• Suppliers raising prices
• Profits declining
• Martha Stewart getting bad press
• Urban areas are becoming more suburban like
• Youths rejects K-Marts Urban strategy

9
K-Mart Opportunity Threat Matrix
Probability of Occurrence

• 1 Credit can be down rated
• 2 K-mart getting bought
• 3 Supplier raise costs
• 4 Martha Stewart pulls out

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Market Share Analysis
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Kmart vs Wal-Mart

• Kmart opened 1962
• (Originally Kressege)
• In 1987, 2,200 outlets
• Market share 34
• In 1994, sales 34 billion

• Wal-Mart opened 1962
• In 1987, 980 outlets
• Market share 22
• In 1994 82 billion in sales

12
Retail Preference Survey

• Selection Criteria
• 15 Female and 5 Male
• Wayne County area
• Average age over 35
• All were frequent shoppers

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Survey Results

• 80 people preferred Kmart
• Favorable location
• 100 visited store in last six months
• 50 would not care if Kmart went out of business
• 100 never visited web site

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Marketing Key 1Leverage Urban Minority Market
Strengths

• Eric Findley

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Facts

• Kmart strongest locations are its urban clusters
  (away from Target and Wal-Mart) where Kmart is
  uniquely popular among (multicultural population)
  African Americans and Hispanic customers
• Multicultural consumers represent 39 of the
  nearly 30 million people who shop at Kmart each
  week.
• African Americans and Hispanics alone account for
  32 of Kmart's shoppers.

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Kmart Market Profile by Race
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Demographic Trends

• Hispanic population going to increase at a faster
  rate than the rest of the nation
• Multicultural consumers control 1.2 trillion in
  joint-purchasing power at a market segment growth
  rate seven times faster than the general
  population
• Urban African-American community's 560 billion
  in buying power
• Urban youth consumer has become big business
  because of their buying power (300 billion) and
  influence over the mainstream consumer market

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Market Trends and Attitudes

• Shoppers are increasingly bypassing its aging
  mall stores to shop at newer urban and suburban
  strip malls
• Emerging trend of retail development in
  inner-city districts around the United States

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Market Trends and Attitudes

• Urban youths
• Tend to be individualistic, they dont respond to
  anything outside of their reality
• Dont care about the status quo
• Urban youth consumers tend to be trend and style
  conscious

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Market Trends and Attitudes

• "What works in urban cities, works in suburbia,
  but not vice versa,"
• Generation X Y influenced by urban culture (70
  of hip-hop music sold to whites living in
  suburbs) and fashion that characterizes its
  identity
• Minority groups last year accounted for 27.3
  percent of the suburban population in the 102
  largest metropolitan areas

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Urban Minority Strategy Recommendation

• Kmart develop niche marketing strategy to
  concentrate on Urban and Minority Gen X and Gen Y
  Market
• Make Kmart the hottest place to shop trendy
  place to shop
• Eventually strategy will penetrate Suburbia
• Partner with rap/music artist and professional
  sport players to endorse and promote shopping at
  Kmart
• Youth market responds well to role models and
  celebrities (Master P and Converse)
• By capturing the urban market you can capture the
  mainstream market

22
Popular Apparel Urban Brands

• Kmart would do best to understand and promote
  brands similar to those represented by Urban
  Minorities
• Popular Urban Brands
• Phat Farm
• FUBU
• Rocawear
• Ecko
• Sean John

23
Other Popular Apparel Urban Brands

• Other Popular Brands
• Levis
• Nike
• Kangol
• Kenneth Cole
• Rockport

24
Urban Minority Strategy Recommendation

• In understanding and targeting urban minorities
• Kmart needs to tailor its products to each
  communitys ethnic mix
• Give store managers autonomy to stock merchandise
  that suits their customers tastes since urban
  trends change quickly
• To stay popular Kmart may want to change its
  image from discounter to reflect premium
  discounter (Urban discounted Marshall Fields)

25
Marketing Key 2Implement CRM Strategy

• Ardita Kalaja
• Winfield Pollidore

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K-Mart CRM

• What is CRM?
• Customer Relationship Management
• CRM Process
• Discover
• Assemble
• Deliver
• Does partnership make sense?

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K-Mart CRM
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K-Mart CRM

• How can CRM help K-Mart
• Refine the Customer Focus (Positioning)
• Create value for the Customer
• Enhanced Automated Checkout
• Personal Online Shopping (EchoMail)
• Re-Focus the Retailer approach
• Targeted Incentives vs. Visible Incentives

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CRM-Creating value for the Customer

• Recognizing the importance of creating
• unique ways to delight the customers
• - Self-Service Technology
• (NCR Self-Checkout, Pre-Cashier
  Checkout)
• - Bilingual Capability Meets Needs
• of More Shoppers
•  

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Personal Online Shopping (EchoMail)

• Link the Blue Light Special to In Store
  Incentives
• Personalization tools help customers
• with purchases and let merchants cross sell
• The product keeps track of customers' actions
  over time, building a broader base of knowledge
  about the individual and driving proactive
  marketing, such as prompting new offers at the
  site or triggering E-mail advertising

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K-Mart CRM-Recommendations

• K-Mart should recognize the importance of
  creating unique ways to delight the customers
• Targeted Incentives vs. Visible Incentives
• Effective ways to personalize Online Shopping.
• Identify every non-value-added cost from each
  element of its supply

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Marketing Key 3Improve IT Supply Chain
Management

• Sanjay Mengi

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K Mart IT Incompetence

• Five CIOs in seven years
• (One step forward, another step back)
• Incompetence SCM technology in retail industry
• In 2001, 195 million write off in H/W S/W
• Real time data not shared with suppliers

34
Wal Mart IT Facts

• Information technology matterswhen it delivers
  "everyday low prices"
• Mastery of technology by treating IT as core
  competency
• Just-in-time inventories - Best SCM in retail
  industry
• Continuous improvement in technology by
  intelligent IT spending
• Over 5 Year period invested over 600 million in
  IT
• Running technology with a vision

35
Wal-Mart IT Integration

• Real time data and mission-critical information
  shared with suppliers worldwide
• Wal-Mart use telecommunications to link directly
  from its stores to its central computer system
  and from that system to its supplier's computers.
  This allows automatic reordering and better
  coordination
• Some 3,800 vendors now get daily sales data
  directly from Wal-Mart stores
• 1,500 have the same decision and analysis
  software that Wal-Mart's own

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Trend of Weak Supply Chain Management
Customer Demand
Order Size
Time
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Local and Global Optimization in Supply Chain
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Push-Pull Supply Chains
PUSH STRATEGY
PULL STRATEGY
Push-Pull Boundary
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IT Recommendations

• Involve suppliers during system development and
  enhancement
• Share On-line data with suppliers
• Engage best CIO in retail industry and sign long
  term contract
• Adopt offshore model to reduce substantial IT
  cost

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Conclusion

• Restate Recommendations
• Urban Strategy
• Introduce clothing line which continue to appeal
  the youth
• Locate stores in newer strip malls
• CRM
• Focus on putting customers first
• Make shopping easier on line and in the stores
• IT Integration
• More involvement with suppliers
• Use a electronic system to replenish stock