Strategic Marketing Management in Organisations (Mothercare)

In the name of Allah, the most gracious, the most merciful

Introduction

Mothercare plc is a British retailer which specialises in products for expectant mothers and in general merchandise for children up to 8 years old. It is listed on the London Stock Exchange and is a constituent of the FTSE SmallCap Index. The Mothercare group is comprised principally of two iconic retail brands with international appeal; Mothercare and Early Learning Centre.

The group's brands operate through three distinct channels to market; UK stores, Direct (being the in-home and in-store internet-based businesses and catalogue mail order), and International, under which the group franchises (or participates in joint venture) operations delivering the Mothercare and Early Learning Centre brand retail operations in overseas markets.

Whilst the principal office of the group is in the United Kingdom, it has invested significant resources in its sourcing and supply chain operations in Shanghai, Hong Kong, Bangalore, Singapore and the United Arab Emirates. (Mothercare Plc, 2013)

Mothercare’s History

1961 Entrepreneur Selim Zilkha and Sir James Goldsmith open the first Mothercare store in Surrey

1962 Mail order business launched

1972 Floated on the stock market

1982 Merges with Habitat to form Habitat Mothercare

1984 Begins trading overseas through franchise partners

1986 Habitat Mothercare merges with British Home Stores to create Storehouse

2000 Bhs stores sold to Sir Philip Green and Mothercare becomes the sole brand

2007 Acquires Early Learning Centre for £85m

2011 Chief executive Ben Gordon quits. Group unveils UK store closure programme

2012 Simon Calver takes over from Gordon as CEO in April. (Independent, 2013)

7.1.1) Discuss the role of strategic marketing

Marketing Strategy

A strategy is a long-term plan to achieve certain objectives. A marketing strategy is therefore a marketing plan designed to achieve marketing objectives. For example, marketing objective may relate to becoming the market leader by delighting customers. The strategic plan therefore is the detailed planning involving marketing research, and then developing a marketing mix to delight customers. Every organisation needs to have clear marketing objectives, and the major route to achieving organisational goals will depend on strategy. It is important, therefore, to be clear about the difference between strategy and tactics. (BusinessCaseStudies, 2013)

Strategic Marketing

Strategic marketing describes marketing activities that affect corporate, business, and marketing strategic plans. Strategic marketing activities can be classified into three basic functions. First, marketers help orient everyone in the organization toward markets and customers. Thus, they are responsible for helping organizations execute a marketing philosophy throughout the strategic planning process.

Second, marketers help gather and analyze information required to examine the current situation, identify trends in the marketing environment, and assess the potential impact of these trends. This information and analysis provides input for corporate, business, and marketing strategic plans.

Third, marketers are involved in the development of corporate, business, and marketing strategic plans. Marketing’s influence varies across organizations. For organizations driven by a marketing philosophy, marketing necessarily plays a key role in strategic decision making. The trend toward pushing strategic planning responsibility further down the organization is increasing marketing’s clout in an organization’s strategic planning process (MHHE, 2013).

7.1.2) And the associated processes

The marketing planning process involves both the development of objectives and specifications for how they will be accomplished. There are five basic steps in the process in this process. (ChannelManagement, 2013)

1)      Conduct a Situational Analysis

In the first stage of the planning framework, Situational Analysis is undertaken by the application of PEST Analysis, Porter’s Five Forces and SWOT Analysis.

If an organisation wants to expand, it is of vital importance for the organisation to conduct a situational analysis in order to keep up with the changing environmental trends and to strengthen the foundation of their strategies.

A Situational or Environmental Analysis can be defined as a problem-definition framework designed for the systematic collection of past and present data to examine the trends, forces, internal factors and external factors which have a potential to influence the performance of the business (IvoryResearch, 2013).  

2)      Develop Marketing Objectives

In this stage, analysis is done to conclude where do we want to go? Where does Mothercare needs to be in future. The vision statement will be analysed to determine how it correlates with its organisational strategy. Marketing objectives are set in this stage which are related to the company’s goals and objectives. Setting the objective should be done after the SWOT analysis has been performed. This would allow achievable goals or objectives to be set for the organization. The SMART acronym is used to develop goals that are most likely to achieve results – goals that are Specific, Measurable, Attainable, Realistic and Time Framed.

3)      Determining the positioning

Positioning is the development of the image of a product directly against to the competitor products and other products produced by the company's own. (DHO.EDU.TR , 2013)

Environmental factors – competitive, political, legal, economic, technological and social – also influence marketing opportunities. The emergence of new technologies or innovations may open new opportunities for positioning under-marketed products. The marketing environment may also pose threats to marketing opportunities. (ChannelManagement, 2013)

The objective of Mothercare is to achieve favourable positioning while allocating financial, human, and production resources to markets, customers, and products as effectively and efficiently as possible.

4)      Selecting the target markets

A target market refers to a group of individuals who are inclined towards similar products and respond to similar marketing techniques and promotional schemes. Once a company decides on its target audience, it implements various promotional strategies to make a brand popular amongst them. (Management Study Guide, 2013) In this stage of the process the target markets are selected based on the opportunities.

Basis of Target Marketing

•         Age

•         Gender

•         Interests

•         Geographic location

•         Need

•         Occupation

7.1.3) Involved for Mothercare Plc. in order to evaluate the link between strategic marketing and Mothercare’s corporate strategy towards future growth.

Mothercare Corporate Strategy

According to the current Mothercare Corporate strategy, their aim is to build the Mothercare group into the world's leading specialist retailer of parenting and children's products. The acquisition of the Early Learning Centre in June 2007 was a key step in the development of this proposition. The group's aspirations will be achieved through:

•         Developing innovative and exciting own-brand products under both the Mothercare and Early Learning Centre brands;

•         The best in class expertise and specialism of our staff; and

•         The successful delivery of the growth strategy set out below. (Mothercare Plc, 2013)

Mothercare Growth Strategy

The growth strategy of the Mothercare group is focused on four key levers that will deliver the potential of the Mothercare and Early Learning Centre brands.

•         Maximising the synergies from the integration of the Early Learning Centre;

•         Restructuring the combined Mothercare and Early Learning Centre property portfolio;

•         Continuing the rapid growth of Direct; and

•         Driving the international reach of the Mothercare and Early Learning Centre brands. (Mothercare Plc, 2013)

Link between Corporate Strategy and Marketing Strategy

There is a direct correlation between the Mothercare’s corporate strategy towards future growth and its marketing strategy specifically related to the online sales and online marketing.

It’s been stipulated in their growth strategy that they need to increase the product range available online. The focus for Early Learning Centre is on web site optimisation and the introduction of web-in-store.  

The company has realised this and has articulated this into their corporate strategy that the growth will come from online sales and marketing and the company needs to take appropriate measures to ensure that the online marketing strategy is inline with its corporate strategy.

2. If you propose that Mothercare Plc should be repositioned in the market place as a “Add value” provider, assess the worthiness of the model you will use in your strategic marketing planning. (7.2.1)

PEST ANALYSIS OF MOTHERCARE

POLITICAL

UK Immigration Laws

The political environment of Britain is very stable in terms of its government affairs, however the current British government party which is the conservatives part in power have laid tough rules governing the employees and employers. Most employers are  actually pushed to hire from UK or EU which creates a potential concern to businesses which are always looking to recruit bright talent from around the world. This is one concern for the Mothercare.

UK Employment Laws

Another political concern for Mothercare is the employment laws which favours the employees and employers are forced to adhere strictly to these laws. Employers are abide by the law to offer minimum wages and other benefits to its employees. This also includes the tax rates like PAYE tax, National minimum wage, Statutory maternity, paternity and adoption pay, Statutory sick pay.

UK Trading Laws

Trading laws are also very strict in the UK and employers are subject to follow these laws. Companies are bound to pay corporation tax and VAT which is a big concern for large companies and most companies would like to keep their businesseshead quarters in companies like Ireland where these corporation and other tax rates are low.

British economy

British economy is going through tough times; companies need to move forward while keeping their eyes on the global threats that might affect them. In current times, when the global economy is in a standstill, it’s very difficult for companies to invest in new ideas and businesses.

In 2008, the global financial crisis plunged the UK into its longest and deepest recession. More than a million people lost their jobs as businesses - from shops to manufacturers and banks - either closed or laid off staff.

The credit crunch and job fears meant consumers cut spending, deciding to pay off debt and save instead (BBC, 2013)

Financial Crisis

The impact of economic and financial crisis of the Europe and the UK economy is very pertinent on Mothercare plc.

With the UK and rest of the world plunging into the global financial crisis in the second half of 2008, many high street retailers found themselves in financial difficulties.

In just last 5 years alone many high street retailers have suffered the consequences of financial crisis including:

1.      HMV, the UK's music retailer, collapsed in January 2013 after months of financial crisis. It was hit hard by tough competition from online rivals, supermarkets and digital downloads.

2.      Woolworths went into administration in January 2009 with debts of £385m. According to one researcher it couldn't offer the prices that the discount stores such as Primark, Lidl and others could actually offer.

3.      JJB Sports went into administration in September 2012. According to the news and media and researchers, the JJB lost its vision, core values and drive and it couldn’t keep up with its rival’s competition.

4.      Comet Group an electrical retail chain went into administration in November 2012.The chain struggled to cope with the drop in consumer spending in the UK since 2008. (RetailResearch, 2013)

So the threat of economy on Mothercare is continuous and real and it shadows them throughout. Mothercare would need to learn from the past experiences of the retailers who have gone out from business and to learn lessons from these companies.

Ethical Trading and Suppliers

Mothercare sources products from around the world and has a code of practice on the Ethical Trading Initiative’s Base Code. All suppliers share its values and are committed to working towards compliance with its Code. (Mothercare, 2013)

Environmental policy

Mothercare is fully committed to protecting its customers, people making its products and the environment by ensuring efficient use of raw materials, optimising the use of energy, encouraging recycling and sustainability, and engaging business partners and stakeholder groups. (Mothercare, 2013)

Corporate Social Responsibility

The European government has refused to take action on a controversial chemical (BPA), widely used in babies’ bottles, which could lead to serious health issues. Mothercare will be stopping its supply of older bottles this August. (BBC, 2013)

ECONOMICAL

UK Economic Growth

UK Economy grew by 0.6% in the three months to June 2013. Output grew in the construction, manufacturing, services and agriculture sectors according to the Office for National Statistics (ONS). (BBC, 2013)

UK Inflation Rate and Indexes

The rate of consumer prices index (CPI) inflation fell to 2.8% in July 2013, down from 2.9% in June 2013, according to the Office for National Statistics (ONS). The fall came after the cost of clothing and leisure and cultural activities decreased. The rate of retail prices index (RPI) inflation fell as well, to 3.1%, from 3.3% in June. ONS figures also revealed that house prices in the year to June rose by 3.1%, up from 2.9% in May. (BBC, 2013)

UK Unemployment Rate

UK unemployment fell by 4,000 in the three months to June 2013 leaving 2.51 million out of work, says the Office for National Statistics (ONS). The unemployment rate remains at 7.8%, still well above the 7% rate target set by the Bank of England. The ONS also released figures showing that wages grew by 1.1% over the past 12 months. When bonuses were included, wages grew by 2.1% - the highest annual growth rate since June 2011. (BBC, 2013)

International Economy

Mothercare's overseas franchise business currently operates through 358 stores in 45 countries, primarily in Europe, the Middle East and the Far East. (Mothercare, 2013)

SOCIAL

Health consciousness

The population of UK are becoming more aware of health in recent years with the governments initiates to educate about health issues. Expectant mothers now have more prior knowledge than they use to have 20 to30 years ago. The health rate of UK population is also very good. Life expectancy at birth m/f (years) is 79/82. The Probability of dying under age of five (per 1000 live births) is 5 in UK according to World Health Organisation. Total expenditure spent on health is 9.3 % of GDP (WHO, 2013).UK Population growth rate is 0.553% as of 2012.

These are good signs that a nation is conscious about its health and hence there is potential opportunity for maternity and baby care products in market.

Requirement for Baby Products

Many social and demographic factors have a strong influence on the market for baby products. These include: falling birth rates, smaller family sizes and the use of efficient mobility products for longer journeys.

UK Demographics

The UK population grew to 61.8 million in 2010. There were 791,000 babies born in 2008, an increase of 33,000 on 2007. By 2034, 23 per cent of the population is projected to be aged 65 and over. (TrueKnowledge, 2013)

According to the 2011 census, the total population of the United Kingdom is around 63 million.6.2 % of this population is between the ages of 0 to 4 years. UK is the third-largest in the European Union (behind Germany and France) and the 22nd-largest in the world. Its overall population density is one of the highest in the world at 674 people per square mile, due to the particularly high population density in England (currently over 1000 people per square mile). The United Kingdom's literacy rate is 99% (ONS.GOV.UK, 2013)

Age structure for men and women in 2011

Age group	UK Population			%
	Male (million)	Female (million)	Total (million)
0–14	5.681	5.419	11.100	17.6
15–64	20.751	20.953	41.704	66.0
65+	4.597	5.781	10.378	16.4
All ages	31.029	32.153	63.182	100

Charity and Social Responsibility

Mothercare’s principle vehicle for donations and charity is the Mothercare Group Foundation

UK Living Costs

The cost of living differs depending the person’s lifestyle and location. Some provinces and countryside areas can offer cheap and very affordable living conditions. Living in this major city is definitely expensive when compared with smaller towns in the United Kingdom. (BBC, 2013)

TECHNOLOGICAL

Research and Development

Technology has a huge impact on how Mothercare is structured and how work flows. With supply chain system across the world, companies like Mothercare face competition from their competitors who are also make use of advancements in technology.

Technology is now making it possible for small companies to compete with large companies just by making an online store. Technology can create opportunities for Mothercare and it can eliminate positions.

With more and more companies encouraging their universities to research in bio technology and bio chemistry, it is now possible for new innovative products to compete with Mothercare baby products range.

Use of laser scanners at cash tills and energy efficient products suited for the modern user.

Trade Marks and Patents

With more and more companies now becoming aware of trade marking and patenting their new research, it is becoming constantly difficult for companies to copy the products of their competitors and whoever gets the patent first leads the market. So its very critical for  Mothercare to invest in R&D areas.

Mothercare would need to constantly innovate in its products in order to keep ahead of its competitors.

Internet Shopping Convenience

Mothercare offers their consumers to shop and have their goods delivered home using information technology.

Social Networking Websites

The Mothercare group has appointed Diffusion with developing a social media strategy to target parents online and offline. The company is also on Facebook and Twitter where B2C interaction is high and the company can hear what customers have to say about their products and services.

Online Competition

Mothercare also faces tough competition from online shop stores like amazon and ebay and with other stores like Tesco and ASDA offering similar baby care products which are cheaper than Mothercare. With GAP Maternity offering clothing range for infants and expectant mothers, competition is tough for Mothercare in Online and Offline space.

SWOT ANALYSIS

After a study of the external (macro) and internal (micro) factors was undertaken, a SWOT analysis was conducted to assess Mothercare’s current situation. SWOT was used to analyse Mothercare’s environment, which aided in the process of determining its major weaknesses (internal), threats (external) and opportunities (external) and converting them into its major strengths (external).

SWOT ANALYSIS OF MOTHERCARE

STRENGTHS (Internal)

•         Established brand position (40-years experience)

•         Baby products / clothing : speciality  retailer

•         Ability to adapt itself to the needs of its customers in international markets

•         Wide variety of products and services

WEAKNESSES (Internal)

•         No product diversity

•         The cost of commission payment to sponsors and affinity groups.

•         Not targeting the teenage market

•         Fall in sales due to recession

•         Company Market share

OPPORTUNITIES (External)

•         Increased sales through an expansion of the service offerings.

•         Increasing credit options for products.

•         Many customers buy from affinity groups.

•         Can enter a new market (Diversification)

•         Increased sales through Tesco’s website

•         How much more market share they need to cover.

THREATS (External)

•         Direct insurance.

•         Fierce competition

•         Decreasing market share

•         The stagnation in affinity group membership

•         Low Market Share.

This model will aid in the formulation of Mothercare’s SMART marketing objectives.

SWOT ANALYSIS IN DETAIL

STRENGTH

Dealing in a Niche Market

If we analyse the main strengths of the company we find that the company deals with products for mothers, especially expectant mothers and offer products for infants, baby toddlers and children up to 8 years old.  This in itself is a very niche market and it’s a very lucrative market.

Considering the UK birth rate is 12.26, (12.26 births/1,000 population) which is an average annual number of births during a year per 1,000 persons in the population (CIA, 2013)

The Total Fertility Rate (TFR) of UK is 1.90 (CIA, 2013). TFR gives a figure for the average number of children that would be born per woman if all women lived to the end of their childbearing years and bore children according to a given fertility rate at each age.

So considering these statistics we know that there is market for products to be offered for expectant mothers and newborn babies and Mothercare can capitalise on that.

Global Brand

The name Mothercare is associated with mothers and babies throughout the world. Mothercare have been able to tap into all the markets associate with maternity and child care.

It now offers a wide range of maternity and children's clothing, furniture and home furnishings, bedding, feeding, bathing, travel equipment and toys through its retail operations in the United Kingdom, and also operates internationally through franchises in Europe, the Middle East, Africa and the Far East under the 'Mothercare' brand name.

Mothercare opened 115 new shops overseas this year, bringing the total number to more than 1,000. International sales rose 15.5pc in the year to March 30, despite weakness in the euro zone.

WEAKNESS

Company Market Share

Mothercare, a baby and maternity products retailer posted a 7.4pc fall in third quarter total group sales, as recent improvements to its British arm failed to pull in the Christmas sales.

Mothercare which has over 1,300 stores worldwide including 269 in the UK, said on Thursday British like-for-like sales fell 5.9pc in 13 weeks to January 12, while overseas underlying sales rose 14.8pc.

The fall in British sales compared with a 3pc decline in the same period a year earlier - its strongest showing that year due to higher levels of discounting - and also reflects the ongoing close of loss making stores in Britain. (Telegraph, 2013)

Threats from Online Retailers

Mothercare closed 56 unprofitable UK stores this year(2013), mostly Early Learning Centre outlets, as the focus shifts online and to an expanding international business, where it enjoys double-digit sales growth. It plans a further 55 closures in the next two years to shrink its UK chain to 200 stores. (Telegraph, 2013)

Poor Customer Services

Customer services plays a huge role in any company. Mothercare have been blamed to have neglected the customer services as part of their cost reduction programme. Also the management were focusing on the global expansion of the company. This created a huge downfall in its UK

The retailer is accused of chasing overseas glory – it has stores in 59 countries including Nigeria and Kazakhstan – but forgetting about shoppers at home, losing its competitive edge on pricing and letting customer service deteriorate.

OPPORTUNITIES

The Mothercare group owns the Mothercare and Early Learning Centre chains. The group's brands operate through three channels: UK stores, Direct (being the in-home and in-store internet-based businesses and catalogue mail order), and International, under which the group franchises operations delivering the Mothercare and Early Learning Centre brand retail operations in overseas markets.(DigitalLook, 2013)

There are opportunities in following sections of Mothercare:

1.      Designer Baby Products Range

There is an opportunity for Mothercare to offer the designer children wear range in posh areas of UK high streets.

Designer wear like Kid Space, Alex and Alexa.com are already in the market but there is not a fierce competition in this area.

This will ensure that Mothercare will cater the needs of the wealthy label conscious people and this would also enable Mothercare to cater the needs of those parents who cannot afford high price products but still prefer an above average product for their children.

The way this could be achieved is that if Mothercare couldstruck a deal with few designer labels and then using their name with expertise of Mothercare in the baby product range. Then using the joint venture advertising campaigns with those designers – Mothercare could promote its products along with the designers brand image.

2.      Online Advertisement

Online advertising is a huge market and with more and more people searching for their shopping needs online, advertising is the “de facto” of the marketing companies. Advertisng in search engines like Google, Facebook, Yahoo and Bing will give Mothercare Plc an edge over their competitors.  

Online advertising is huge and still growing. In the UK it has overtaken television to become the biggest advertising medium and now accounts for 20% of all advertising spend.

Whether selling a product or growing a brand, online advertising is a flexible and cost-effective way of getting the message out.

By advertising on search engines and social media platforms Mothercare can make an impression in the online space. This is an area where companies need to invest a lot considering the time most people spend their time shopping online. 

Today that target audience spends time with both online and offline media—internet, video, radio, television, magazines, newspapers, social. And the same advertising messages can be delivered on a mobile device as those viewers, listeners, visitors, and readers go on about their business.

3.      Boasting Online Sales

A survey showed that online sales in UK experienced the highest growth in 2012, recording a huge 17% jump on July 2011. This works out at an annual figure of about £6.5 billion spent online with each person spending an average of £128. Total growth for the 2012 year to date stands at approximately 13%. On average more than 95% of UK shoppers have made an online purchase (Electronic-Payments, 2013)

Mothercare is seeking to boost its online presence in the UK as it looks to reverse months of declining sales. Mothercare hired Simor Claver, an internet and brand specialist, as its new chief executive in 2012. Mr Calver left Lovefilm to join Mothercare. Mr Calver has been chief executive of DVD rental service LOVEFiLM since 2005, during which time the company was bought by online retailer Amazon.

4.      Improve Store Services

Mothercare needs to improve its stores and delivery services as well as lowering prices in a bid to wrestle back cash strapped customers from supermarkets like Morrisons Kiddicare and online retailers like Amazon and Ebay. They would need to offer better services in store in order to provide better services to its customers. This would involve offering New range and innovative products for baby care. Improved value, choice and service for customers would give an edge to Mothercare over its competitors.

5.      Mobile Apps and Advertisement on Mobile Apps

The transition to a new online platform and mobile apps is another area where Mothercare can further increases its sales. By offering new products via mobile phone and mobile phone advertisement would give them an opportunity to tap into the market as most people in UK holds a mobile phone.

6.      Making use of Data and Analytics

Supermarkets are combining their loyalty card data with social media information to detect and leverage changing buying patterns. For example, it is now possible for retailers to predict that a woman is pregnant simply based on the changing buying patterns. This allows them to target pregnant women with promotions for baby related goods.

Using Big Data combined together with social media to detect the changes in buying pattern and offering product offers before anyone else is a potential opportunity for Mothercare.

7.      Value Product Range

There is an opportunity for Mothercare to introduce cheap/value products given the current economic situation of the country. With companies like ASDA, Tesco and Morrison’s bringing their value range Mothercare should plan to sort out its basic commercial housekeeping, matching rivals' prices and, given the straitened economic climate, should introduce a value range.

This would encourage middle class parents to buy products from Mothercare rather than looking for cheaper products elsewhere.

8.      Email Marketing

Email Marketing is another media by which Mothercare can tap into the online market. By carefully defining it email marketing campaign during festive seasons and offering its products to its well targeted customers Mothercare can make use of this medium effectively.

9.      Revamping Stores

Mothercare has taken measures to revamp its remaining UK stores, adding Costa Coffee concessions and play areas, and is trying to push online sales. This is a positive change and is one needed by Mothercare to offer more services to expand and retain its customers.

10.  Involvement in Digital Media, Social Media Networks

Using Social Media, Mothercare can instantly identify emerging and important trends that are likely to impact its brand. Trace a trend’s origins, amplify what’s beneficial, curtail what’s not, and pinpoint opportunities to drive new trends favorable to the business.

Social network websites continue to aggressively positioning their sites as a link between consumers and merchants. Both fixed and mobile social networks tend to market themselves as a tool for merchants to connect with consumers and promote brands – rather than just as services for connecting friends.

Social media developments are fascinating and exciting. They show the great potential of the new communication and tools that are becoming available thanks to the Internet, Web 2.0, email and broadband infrastructure. However, for these new social media tools to succeed, they need to become fully and totally integrated into our daily communication. With 3 out of every 5 minutes spend online is on a social networking site, this is a huge phenomenon and Mothercare would need to fully make use of this medium (Buddle, 2013)

Mothercare could use social media to reach its potential new customers and engage them into interesting conversations about baby and child care products.

11.  Using Social Media to Influence Mothers

Using dedicated Social Media teams to educate women about baby care and pregnancy can also improve the chances to of winning the trust of consumers and then using this opportunity to sell them the products.

THREATS

1.      Low Market Share

Mothercare clothing sales and volumes have benefited from the launch of new ranges, especially the Value Essentials range in July last year, toys and home & travel in particular have been impacted by the increasingly promotional nature of the market,

The Company is improving product ranges and delivery services. British stores are also being revamped and unprofitable ones closed - 56 were closed in 2012-13 and 13 in the first quarter of 2013-14, taking the UK total to 242. (FashionMag, 2013)

2.      Financial Crisis

The economic conditions of the UK retail market have an imperative impact on the Mothercare. Mothercare’s net worth has dropped substantially since March 2011, while it has gone from holding substantial cash reserves to substantial borrowings (HuffingtonPost, 2013). This was also due to the fact that company has to close down many stores in the UK. According to its last financial statement, it made an operational loss in the UK of £24.7m for the year end March 2013, and sales were down 4.6%.

3.      Online Competition

There is a huge market in online sales and there are various competitors competing in the mother and baby care range which poses a great threat to Mothercare’s sale. As the online stores offer similar products at a cheaper price so they are a big concern and Mothercare have to compete strategically in this space acquiring more expertise and pushing its online reputation as a global brand in mother and baby child care.

4.      High Street Competitors

Competitors like Tesco and Morrisons pose a continuous threat to Mothercare.  Tesco have launched its own range of baby care products.

Mothercare also faces competition from Kiddicare – which is operated by Morrisons superstore as part of their strategy to compete in the baby care market.

Mothercare baby clothing range faces tough competition from Gap Maternity.

BCG Matrix of Mothercare

                

In order to perform the analysis on Mothercare to reposition it in the market we would conduct BCG matrix analysis.

When all the products/services of the company are put in four cells(thus it actually provides an opportunity reassess the entire position of the company).

Market share (Cash Generation) is the % of customers held by company in market.

Market / Industry GROWTH RATE is how much more growth a company can have. Lower Industry Growth means there is not much room for company to grow in this market. It already has ample share of that market and there is not much room to grow more. High Growth Rate means there is still room for company to grow.

The basic idea behind it is that the bigger the market share a product has or the faster the product's market grows the better it is for the company.

Cash Cows: Cash cows are units with high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business. This is the area which has Low Growth Rate but High Market Share.

The Mothercare has High market share of Baby and Maternity Departments Store, however the Industry Growth Rate is low – so there is not room left to grow now. Mothercare needs to capitalize from this area.

The cash cow areas for Mothercare are its Department stores in high streets open to public which offer wide range of consumer goods for baby care and maternity consumers like clothing, appliances, prams, pushchairs, feeding and safety etc. They could use these department stores to cash other online projects.

Star: Stars are units with a high market share in a fast-growing industry. The hope is that stars become the next cash cows. Sustaining the business unit's market leadership may require extra cash, but this is worthwhile if that's what it takes for the unit to remain a leader.

Star units means company has a decent(High) market share in this area (product or service) and there is High Growth Rate – which means there is more room for growth.

Question Marks: Low Market Share and High Market Growth. These are the opportunities that no one knows how to handle. They aren't generating much revenue right now, because you don't have a large market share. But they're in high-growth markets, so they could become Stars or even Cash Cows if you can build market share.

However, if company cannot increase market share, Question Marks could absorb a lot of effort with little return. Question Mark units have the worst cash characteristics of all, because high demands and low returns due to low market share. If nothing is done to change the market share of these Units, then question marks will simply absorb great amounts of cash and later, as the growth stops, a dog.

Question marks are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is a large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows.

If the question mark units do not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.

They are those units of Mothercare which need attention as they have High Business growth rate but low market share so the company needs to invest in this areas as they may have potential for growth.

Mothercare has low market share in UK due to its competitors and online competition, who are offering products at low prices. However market for garments retail business in UK is growing and Birth rates in UK has increased causing increasing demand of maternity and baby products (CIA, 2013). Mothercare is not generating enough profit compare to its expenses. This is a point to consider that how to capture more market share to meet expenses and make profit. Mothercare should adopt a strategy to move in star quadrant by having high market share with high market growth.

Dog: are units with low market share in a mature, slow-growing industry. These units typically "break even", generating barely enough cash to maintain the business's market share. These units should be sold or written off or be invested in a very strategic manner. The units that come in this section of matrix are Early learning Centers of Mothercare.

Business Opportunities in Question Mark which needs to be repositioned

Since Mothercare has low market share in UK due to its competitors, who are offering products at low prices. While market for garments retail business in UK is growing. Birth rate in UK has increased causing increasing demand of maternity and baby products.

Question Marks are those units of company which need attention as they have High Business growth rate but low market share so the company needs to invest in this areas as they may have potential for growth.

Online Sales

As it’s articulated in the Mothercare corporate growth strategy that there should be adequate measures taken so that Mothercare can capitalise on the growing online markets. There is a huge market in online sales and there are various competitors competing in the mother and baby care range which poses a great threat to Mothercare’s sale. As the online stores offer similar products at a cheaper price so they are a big concern and Mothercare have to compete strategically in this space acquiring more expertise and pushing its online reputation as a global brand in mother and baby child care.

Online Marketing (Google Ads, Facebook Ads)

Google AdWords is known to be the most efficient and measurable way for advertisers to promote their products or services, as it draws immediate potential clients to their site. (Optimus01, 2013)

With search engines like Google which accounts for the 80% market share of web search. More and more businesses signing up with Google Ads so that their products gets on the top search results and to increase their search results ranking on search engines, there is a huge potential area for Mothercare to invest in the Google advertising. Ads in the top position have been observed to get 10 times as many clicks as side-position ads. (Practical Ecommerce, 2013)

AdWords allows advertisers to compete against small and big industries in the same field as their own. As of Spring 2011, Google had over 1.2 million businesses advertising on its search network. (WordStream, 2013)

Businesses make an average of $2 in revenue for every $1 they spend on AdWords. (Google Economic Impact Report, 2013)

7.2.2, 7.2.3) and discuss the links between strategic positioning and proposed relationship marketing tactics.

Positioning is the development of a service and a marketing mix to occupy a specific place in the minds of customers within target markets. (DelmarLearning, 2013)

Strategic Positioning

Positioning helps establish Company’s products or services identity within the eyes of the customer. Positioning drives strategy and marketing because it creates the target audience. Positioning defines your product according to the needs and buying characteristics of people who will buy the product. It also locates the market venue where you will find your target customers.

Positioning establishes where company is and where the company want to be as a result of strategic marketing. It creates a brand concept that marketing places in the minds of the target customer.

Marketing accomplishes that using strategies based on a thorough understanding of the psychographics and demographics of the market segment identified as the target audience. (Chron, 2013)

Relationship Marketing

Relationship marketing is a strategy designed to foster customer loyalty, interaction and long-term engagement. This customer relationship management (CRM) approach focuses more on customer retention than customer acquisition.

Relationship marketing is designed to develop strong connections with customers by providing them with information directly suited to their needs and interests and by promoting open communication. This approach often results in increased word-of-mouth activity, repeat business and a willingness on the customer’s part to provide information to the organization. (TechTarget, 2013)

A various blends of marketing tactics could be deployed in relationship marketing like

•         Loyalty Cards

•         High Customer Service / Customer Satisfaction

•         Continuous customer contact / Personal Contact

•         Post purchase communication

•         Longer Time scale

Source: Prismdc

Relationship Marketing is about Placing an emphasis on building, maintaining, and enhancing long-term relationships with customers, suppliers, travel trade intermediaries, and perhaps even competitors. (DelmarLearning, 2013)

The true essence of Relationship Marketing is that:

•         Looks at each customer as an individual and tries to establish a relationship

•         Emphasis on trust, honesty, commitment and promise keeping

•         Development of an ongoing relationship with customers

•         Activities are directed towards existing customers based on interaction and dialogue.

•         Adoption of a total quality approach (Tutor2u, 2013)

The relationship with a Customer can be maintained by

•         Satisfying Customers

•         Adding Value

•         Giving Privileges

•         Customer Orientation (Focus on meeting the needs of one's customers, internal or external)

•         Customer satisfaction standards

•         Monitors client satisfaction

•         Use of a Database (CRM system)

•         Two way communication

•         Loyalty Schemes (with enhanced knowledge of customers; highly targeted promotions)

Links between Strategic Positioning and Proposed Relationship Marketing Tactics:

Determining the strategic positioning of business is a key step in developing its go-to-market strategy and placing it on the path to success. Strategic positioning involves clear choices that you will have to make for your business. Strategic choices determine the competitiveness model that your company decides to follow. (Waed, 2013)

Since Mothercare’s customers buy maternity and kids products and services so the marketing tactics could be used to position the company to target this area.

Secondly Mothercare’s products differ from those of competitors as Mothercare offers high quality products focusing just on maternity and kids section. It is a known brand around the world.

Mothercare is facing competition from its competitors online.

By focusing on Maternity and Kids products of high quality with competitive prices both online and offline, Mothercare can position its marketing tactics along these streams.

Marketing Strategy

The selection of a course of action from among several alternatives that involves specific customer groups, communication methods, distribution channels, and pricing structures. It is a combination of target markets and marketing mixes. (DelmarLearning, 2013)

7.3.1, 7.3.2) In doing so, you must ascertain the opportunities available for Mothercare Plc in the market and comment on how different strategic options 

Strategic Choice of Mothercare

In order to analyse the opportunities available to Mothercare we have concluded SWOT Analysis, PEST Analysis and BCG Matrix.

We have concluded various Opportunities that are available to Mothercare as discussed above.

We have concluded that Mothercare is strategically a Defensive Company as the company is very defender in its operations and strategies.

The key focus of most Defensive companies is to reduce cost and achieve efficiency through low-cost operations.

The Defensive companies are unlikely to innovate and focus on their existing products and services. They tend to defend their business activities and focus on keeping the company going rather than expanding. (Spursinn, 2013)

These companies will strongly defend their markets and tend to focus on efficiency in production and distribution to make it as difficult as possible for competitors to enter their space (Hamel & Prahalad 2005).

Mothercare should adopt Suitability, feasibility and acceptability. Suitability would deal with the overall rationale of the strategy and its fit with the organization’s mission that is cost reduction. Feasibility is concerned with whether the Mothercare has the resources it needs to implement the strategy. Acceptability is concerned with stakeholder expectations of Mothercare to earn more profit in future and the expected outcomes of implementing the strategy to become the market leaders.

Late on Mothercare could become a Prospector Company but for now the strategic choice applicable to Mothercare is a Defensive.

7.3.3) can be used for the new marketing objectives you propose.

Marketing Mix

The marketing mix is one of the most famous marketing terms. The marketing mix is the tactical or operational part of a marketing plan. The marketing mix is also called the 4Ps Product, Price, Place (Distribution), Promotion. (MarketingTeacher, 2013)

When marketing products a Company need to create a successful mix of:

•         The right product

•         Sold at the right price

•         In the right place

•         Using the most suitable promotion.

To create the right marketing mix, businesses have to meet the following conditions:

•         The product has to have the right features - for example, it must look good and work well.

•         The price must be right. Consumer will need to buy in large numbers to produce a healthy profit.

•         The goods must be in the right place at the right time. Making sure that the goods arrive when and where they are wanted is an important operation.

•         The target group needs to be made aware of the existence and availability of the product through promotion. Successful promotion helps a firm to spread costs over a larger output. (BusinessCaseStudies , 2013)

Marketing Mix for Mothercare

A company like Mothercare is constantly developing new baby and new mother related products - the product element is the new product itself, getting the price right involves examining customer perceptions and rival products as well as costs of manufacture, promotion involves engaging in a range of promotional activities e.g. competitions, product style etc, and place involves using the best possible channels of distribution such as their own stores, leading supermarket chains and online. The product is the central point on which marketing energy must focus. Finding out how to make the product, setting up the production line, providing the finance and manufacturing the product are not the responsibility of the marketing function. However, it is concerned with what the product means to the customer. Marketing therefore plays a key role in determining such aspects as:

•         The appearance of the product - in line with the requirements of the market

•         The function of the product - products must address the needs of customers as identified through market research.

The Product

The product range and how it is used is a function of the marketing mix. The range may be broadened or a brand may be extended for tactical reasons, such as matching competition or catering for seasonal fluctuations. Alternatively, a product may be repositioned to make it more acceptable for a new group of consumers as part of a long-term plan (BusinessCaseStudies, 2013).

Value Product Range (Product)

There is an opportunity for Mothercare to introduce cheap/value products given the current economic situation of the country. With companies like ASDA, Tesco and Morrisons bringing their value range Mothercare should plan to sort out its basic commercial housekeeping, matching rivals' prices and, given the straitened economic climate, should introduce a value range.

This would encourage middle class parents to buy products from Mothercare rather than looking for designer products elsewhere.

This will ensure that Mothercare will cater the needs of the middle class people and this would also enable Mothercare to cater the needs of those parents who cannot afford high price products but still prefer a fair quality product for their children.

The Price

Of all the aspects of the marketing mix, price is the one, which creates sales revenue - all the others are costs. The price of an item is clearly an important determinant of the value of sales made. In theory, price is really determined by the discovery of what customers perceive is the value of the item on sale. Researching consumers' opinions about pricing is important as it indicates how they value what they are looking for as well as what they want to pay. An organisation's pricing policy will vary according to time and circumstances. Crudely speaking, the value of water in the Lake District will be considerably different from the value of water in the desert. (BusinessCaseStudies, 2013)

The Place

Although figures vary widely from product to product, roughly a fifth of the cost of a product goes on getting it to the customer. 'Place' is concerned with various methods of transporting and storing goods, and then making them available for the customer. Getting the right product to the right place at the right time involves the distribution system. The choice of distribution method will depend on a variety of circumstances. It will be more convenient for some manufacturers to sell to wholesalers who then sell to retailers, while others will prefer to sell directly to retailers or customers. Selling products online also require products to be available in bulk quantity in the distribution centres. (BusinessCaseStudies, 2013)

The Promotion

Promotion is the business of communicating with customers. It will provide information that will assist them in making a decision to purchase a product or service. The razzmatazz, pace and creativity of some promotional activities are almost alien to normal business activities.

The cost associated with promotion or advertising goods and services often represents a sizeable proportion of the overall cost of producing an item. However, successful promotion increases sales so that advertising and other costs are spread over a larger output. Though increased promotional activity is often a sign of a response to a problem such as competitive activity, it enables an organisation to develop and build up a succession of messages and can be extremely cost-effective. (BusinessCaseStudies, 2013)

The recommended strategy for Mothercare is the use of Online advertising campaigns to advertise its products on search engines so that when potential customers searches for products related to infants, baby and mother care products then they should be presented with relevant ads pertaining to Mothercare products. This could have a huge ROI as online advertising have worked for many brands that suffered a back lash from fierce competition and these companies turned the table against their competitors by online advertising.

Online advertising is a huge market and with more and more people searching for their shopping needs online, advertising is the “de facto” of the marketing companies. Advertising in search engines like Google, Facebook, Yahoo and Bing will give Mothercare Plc an edge over their competitors.  

Online advertising is huge and still growing. In the UK it has overtaken television to become the biggest advertising medium and now accounts for 20% of all advertising spend.

Whether selling a product or growing a brand, online advertising is a flexible and cost-effective way of getting the message out.

By advertising on search engines and social media platforms Mothercare can make an impression in the online space. This is an area where companies need to invest a lot considering the time most people spend their time shopping online. 

Today that target audience spends time with both online and offline media—internet, video, radio, television, magazines, newspapers, social. And the same advertising messages can be delivered on a mobile device as those viewers, listeners, visitors, and readers go on about their business.

According to Nielsen’s latest Global Trust in Advertising report, which surveyed more than 28,000 Internet respondents in 56 countries, 92 percent of consumers around the world say they trust earned media, such as recommendations from friends and family, above all other forms of advertising—an increase of 18 percent since 2007. Online consumer reviews are the second most trusted source of brand information and messaging, with 70 percent of global consumers surveyed online indicating they trust messages on this platform, an increase of 15 percent in four years (Nielsen, 2013).

3. Use strategic analysis to identify the current strengths and weakness in the current marketing strategy (7.4.2)

SWOT Analysis of current Marketing Strategy

Strength of Current Marketing

Good brand image of Mothercare.

Strong High Street Presence

Demand for low priced high quality products

Weakness of Current Marketing

Poor Customer Services

Late deliveries

High Shipping/Posting/Delivering Cost

Economic Situation in UK and all over Europe.

Inflation on the rise / Purchasing power gone down.

Tough Competition from Online Retailers

High Operating Cost of Managing Existing Stores and difficult to open new stores

Opportunities in Current Marketing

Technology favouring in production of New Products and Innovation of new products.

Cheap ways to reach customers Online.

Social Media tools available to introduce new products to customers easily.

Innovation in Customer Relation Ship management system

Threats in Current Marketing

Changes in the economic environment which encourage customers to be less loyal to brands.

Changes in customer tastes and fashions.

Threats from Online Retailers.

Technology making it easy for small brands to compete with large brands.

Managing Web Stores and Online Threats to Secure Customer Details.

7.4.1) Report on the impact of change in external environment anticipated.

Mothercare is susceptible to external environmental changes especially in the online space where there are many new online ecommerce websites competing to offer products and services similar to Mothercare in low prices and at discounted rates.

This poses a concern for Mothercare from external environment and with UK economy at an all time low and people willing to compromise on big brand names in order for to save money, this is a concern for Mothercare to retain its loyal customers by offering them better value for their money.

There are changes taking place in the UK economic environment which encourage customers to be less loyal to big brands and people are willing to sacrifice brand name for other cheaper products.

7.4.3) And propose how you will lead Mothercare Plc into the future.

There are various strategies that Mothercare should adopt in order to lead the company into the future.

1.      Promote Brand

Mothercare should use Social Media Marketing with tracking down the conversations relevant to the Mothercare brand. With the Social Media Inbox, Mothercare has everything they need to listen and respond to messages from Twitter, Facebook, News sites, Blogs, Review sites, Wikis, Q&A sites, Forums, Google+, LinkedIn, Foursquare, Instagram, Pinterest, etc. (Engagor, 2013)

2.      By engaging with existing and potential customers could help Mothercare to secure its customer base.

This will help them in better understand their customer preferences and be able to respond to them which could lead the company forward.

3.      Providing Quality Customer Services

4.      Offer Workshops on Mother and child care at the public places.

5.      Hire Business advisors from various fields to help Mothercare advise on pertinent issues.

6.      Listen and implement feedback from Customers

Finally, by integrating the following five best practices, retailers are paving the way to establishing emotional connections between shoppers and their brands.

1.      Leveraging Social Media to Drive Brand Advocacy

2.      Delivering Better Customer Service with Mobile Tools

3.      Collecting Customer Feedback and Shopping Data

4.      Labour Management/Employee Engagement

5.      Cross-Channel Opportunities (Empathica, 2013)

Mothercare should also adopt these best practices to establish connection with their customer. Customers are happy when service provider improves services and delivers a great experience at the end.

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