Discuss about the Marketing Strategy of Harvey Norman.
Strategic management is an effective approach that can be used by each and every organization to stay competitive in today’s business environment. Under this process, development of an effective and successful marketing strategy is an important step for an organization. This strategy enables the organization to go beyond word-of-mouth recommendations and implement different marketing tactics to attract new customers to the offerings of organization. Organizations need to adopt some specific steps to develop an effective marketing strategy. This report describes different strategic aspects in context of an Australian Organization, i.e. Harvey Norman. It includes its strategic orientation to marketing process and strategies. In order to analyze Harvey Norman strategically, SWOT and PEST analyses will be included in the paper. Furthermore, the report includes various aspects related to company’s target market, social media marketing and strategic plan about new product of Harvey Norman.
Company Description and strategies
Harvey Norman is one of the largest retailers in Australia, which is dealing in a diverse range of products, i.e. furniture, electrical products, furniture, consumer electronics, communications, fun and entertainment products and small appliances. Harvey Norman is a public company that is listed on Australian Stock Exchange. Primarily, it operates its business operations as a franchise under its main brand, i.e. Harvey Norman Holdings Limited (Harvey Norman, 2017). Till the year 2016, the company owns and franchises 280 stores in Australia, Europe, New Zealand, and South-East Asia. This organization was founded in the year 1987 and it has acquired different stores in 2010, i.e. Rick Hart and Clive Peeters.
The organization is running its business operations in retail industry. However, the organization is leading Australian retail industry as a market leader, but still it is facing intense competition here. There are so many competitors in Australian retail industry, which are creating competition for Harvey Norman, i.e. Action, Flemings, Safeway, Target Australia, David Jones, JB Hi-Fi, IGA etc. Among these players, Harvey Norman is one of the largest retailers in Australia. In retail industry of Australia, this firm offers both online and offline experiences to its shoppers. It has attained a great success due to its dedication to ensuring a strong strategic management. In 2016, the company has won the Best Multi-Channel Retailer Award at Online Retail Industry Awards. This award was given to Harvey Norman, because it demonstrates better processes in combining offline retail with online retail via implementing innovative and effective strategies.
Currently, Harvey Norma runs its operations under Business to Consumer model, in which products are sold to customers directly (Anderson, Narus & Narayandas, 2009). There are different products lines, which are offered by the company, are stated below;
- Portable consumer electronics: Video and audio, cameras, mobile phones
- Computer systems: Computers, Laptops, accessories, software and hard drives
- Home appliances: Air conditioners, heaters, washing machines, kitchen sets
- TV and Gaming: Television, Home theatre system, gaming system, DVD player.
- Bedding and Furniture: decorations, office, bed room furniture etc.
- Other services: Installation, finance options, photo centre services, redemption and cash back services.
As a leading retailer in Australia, Harvey Norman is adopting and implementing various effective strategies to retain its existing customers and create new customers. As its marketing strategy, it is using an effective business model, which includes various important characteristics, like; large and diversified product category, competitive prices, strong advertising and promotional activities, franchise ownership system etc.
Under its marketing mix, the company is using an effective pricing strategy. Harvey Norman is refurbishing its pricing strategies because it is executing price skimming before starting its discount series. Its pricing strategy includes some additional features, like; extended warranty schemes and easy loans to enhance the margin on sales (Baker, 2014). In today’s high tech world, the people are ready to pay high prices for the products with new and latest technology.
In addition, the company is executing an operative distribution strategy, in which it is positioning new stores in growing regional areas. Moreover, it is adopting a strong distribution network, though which it distributes its products via its distribution centers and direct product delivery to customers. It offers products supplies via its online websites, where people can order products according to their needs (David & David, 2015).
Promotion and advertising activities form a major part of marketing strategy of an organization. Harvey Norman is promoting their products by the use of different social networking sites, like; Youtube, Facebook, Instagram etc. Promotional strategies of Harvey Norman are working effectively and thus the stores are identified as reliable, which offer products with high quality and service. Along with this, it is making efforts to expand its business through market segmentation and fulfilling the needs and expectations in diversified target market (Dibb & Simkin, 2013).
SWOT Analysis: Strengths
The marketing strategy of Harvey Norman is very innovative and effective. Under this strategy, it is offering innovative and high quality products and services. It assisted in establishing its brand name and reputation in Australian states. The organization is continuously adjusting its products and strategies according to the trends and changes in market. The company has made exclusive partnerships with its suppliers and vendors (Hill, Jones & Schilling, 2014). The current marketing strategy of the company includes an attractive appearance of retail stores. Under its pricing strategy, the company consists of various promotional offers to entice more and more customers. It is widespread in several nations, like; Singapore, New Zealand, Malaysia etc.
Harvey Norman has limited stores than its other competitors in Australia. It is confronting intense competition in Australia retail industry, which is limiting its market share and coverage in the industry. Furthermore, it lacks in developing strategic relationships. During past few years, it has faced various issues and controversies due to its illegal practices. It has affected the brand image of Harvey Norman adversely (Kim, Shin & Min, 2016).
Current marketing strategy of Harvey Norman can develop several opportunities for its growth in international markets. Offering products and services at comparatively lower prices is a significant marketing tactic that it can execute for winning the consumers’ mind. Through its effective promotional strategies, it can increase its customer base inside and outside of the country (Lam and Harker, 2015). Along with this, it can expand its business operations in lifestyle product section by using its own brand name.
There are some factors, which may challenge the marketing strategy of Harvey Norman. As the company is dealing in the consumer durable division and this segment is very concerned about the brand name and quality. At Harvey Norman, the prices of electronic products are declining every year that can impact the profits and revenues of company (McKeever, 2016). The expenses on promotional and advertising activities are very high at Harvey Norman.
Macro environmental Factors: Political factors
Harvey Norman is taking the advantages of an economic stimulus scheme, organized by Australian Federal Government to enhance the buyer purchasing under economic recession. In the country, the tax rates are increased by government from 23% to 29% that has negative effect on net profit of company.
Economic factors have both positive and negative impact on the growth of Harvey Norman in Australia. The company had flat sales due to customers cut back on their spending. Customers spending cuts had made the sales of computer and electronic products weaker and furniture and bedding covered a considerable market share. During last few years, the sales of company were adversely influenced because of downturn in foreign currency (O'Guinn, Allen & Semenik, 2011).
Harvey Norman prides itself on developing a positive culture in the organization. It extends its hand towards the community and its people by giving a percentage of its sales to the population of Australia. It is the major reason that people supports Harvey Norman (Peppard and Ward, 20). The people are very much concerned about new and latest technology; it is beneficial for the organization. It positively affects the lives and lifestyle of the population of country.
Harvey Norman is offering the products and services with new and innovative technology. In addition, it attempts to become social media and technologically savvy. It is contacting the customers through social media platforms, like; Facebook, Twitter, Instagram etc. Harvey is the best example of a retail store utilizing internet to communicate with the users and shoppers.
Demographics of Target Market
In analyzing the demographic of target market, the company collect the demographic information to consist of in the marketing plan that is used at the time of introduction of products are services. Demographic includes age, income, gender, race and geographic level in context of target market. Harvey Norman is considering some of these factors, like; it is targeting the people, who are very concerned about the costs of products. Moreover, it is emphasizing on upper middle level and middle class people (Ryan, 2016). This organization offers a product range for an entire family.
For its online business, the company is targeting online customers using digital marketing software. It is offering the products with comparatively lower prices, so it will make focus on lower and middle income level people. For its household and kitchen appliances, it is targeting women segment. Moreover, it is targeting school going children for computers. Thus, the demographic of target market at Harvey Norman include family, as it fulfills the needs and wants of entire family.
Use of Social Media
Social media marketing is a new and innovative way that is used by each and every organization for the promotion of products and services. At Harvey Norman, social media networking sites, like; Twitter, Facebook and Instagram has altered the way of communication with the customers and followers. As most of the population is engaged in using internet and its applications, so it is beneficial for company to promote the products on social media (Luttrell, 2016).
In this context, Harvey Norman is involved in developing and conceptualizing contests on Facebook application with the goal of enhancing people engagement and increasing their Facebook community. The company is posting its products on its official Facebook and Instagram page, so that people can see the pop-ups and order the products online. Along with this, Harvey Norman can adopt e-mail marketing, through which it can connect with its regular shoppers and take their feedback about their products and services. It is creating a number of interactive Flash Display Ads for the promotion of its product category. Thus, Harvey Norman is using the social media in an effective and influential way (Scarborough, 2015).
Product Value Creation
The company is using different ways to create product value to its customers. Harvey Norman is creating value to its customers by focusing on its production and distribution processes. Harvey Norman is considering the perception of customers towards its product lines. It is constantly working on enhancing the customer satisfaction by offering high quality services. Customer value creation enhances customer experience and customer satisfaction. In addition, Harvey Norman is offering the products and services at competitive prices, which are lower than its competitors (Mahajan, 2016). This product value creation for customer is beneficial for the organization as it enhances the customer loyalty.
New Product and New Service
Currently, Harvey Norman is dealing in the retail industry and offering various product categories. Now, the company should expand its business in clothing section by targeting the female segment. For introducing this new segment, the company will focus on needs, personalities and demographics, when making market segmentation. It will allow Harvey Norman in reaching to the non-buying customers via marketing and advertising efforts. In retail cloth marketing, the company will target the market on the basis of age, gender, geographic, behavior, lifestyle etc. By targeting this new product, the organization can increase its customer base. Before launching this new segment, the company should make a marketing research for understanding the needs and wants of customers for clothing (Scarborough, 2015).
Product: The entity has been operating the business in retail sector of consumer electronics. The products are designed and developed as per the expectations of the consumers so as to offer a high level of satisfaction.
Price: The prices of the products vary as per the products range and features. As business entity has been offering consumer’s electronics so the prices are also kept at an affordable range .i.e. low cost leadership strategy can be adopted by the business entity.
Place: The business corporation should make use of contemporary platforms of distribution. Local vendors, retailers and authorized outlets of brand.
Promotion: Harvey Norman has been making use of local means of promotion so as to advertise the goods locally (West, Ford & Ibrahim, 2015).
People: The business organization has been making use of the local human resource as the workforce. Skilled and potential labor is the main criteria for recruiting the workforce for the firm.
Process: As the business entity is operating in the retail business, the main process comprises of getting the products from the manufacturers and makes the same available for the ultimate consumers.
Physical evidence: The entity has been operating the business through the authorized outlets, local retailer stores and distribution centers (Mahajan, 2016).
Thus, the above report concludes that Harvey Norman is a well-established retailer in Australia and international markets. The organization is dealing in different product lines. It is implementing various marketing strategies, which are successful in Australian retail industry. These strategies of the company will grow the business of company and make it more successful in the future. The SWOT analysis of marketing strategy indicates that company will achieve its predetermined objectives by adopting these strategies and tactics. Furthermore, the company can expand its business in clothing segment, which will assist the organization in increasing its revenues and profits in future.
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