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How marketing managers use market segmentation: An exploratory study.

Ethical evaluation of audience segmentation in social marketing European Journal of Marketing.

Comparing retailer purchase patterns and brand metrics for in-store and online grocery purchasing.

Decomposition procedures for distributional analysis a unified framework based on the Shapley value. 

Background of Big Basket

In today’s world, the number of business organizations in the same sector is increasing rapidly that is leading to fierce and tough competition. Thus, attracting new customers as well as making loyal customers is extremely difficult for the business organizations, as they have to stand out from their competitors. The business organizations need to implement unique and innovative business strategies to create an image in the eye of the target customers. Thus, effective management of marketing is crucial for the business organization to penetrate the target market and expand their business. Effective marketing management provides an opportunity for the business organizations to create and develop interest about their products and services among the customers by building strong customer relationships along with creating values for the customers and themselves (Armstrong et al., 2015).  The modern world has completely digitalized due to the extensive use of technology in daily life. Thus, communicating with the target customers digitally ensures effective results for the business organizations. Communicating with the target customers provides an opportunity for the business organizations to keep them updated and ensure constant communication thereby, keeping track of the customer needs and demands and aiming towards fulfilling them (Hollensen, 2015).

This report introduces about marketing management and digital communication about Big Basket, an online grocery store that aims towards preparing a marketing promotion plan including digital communications in order to deliver and communicate better values to the target customers. The report also discusses the current value of Big Basket along with designing the future value propositions of the service provided by the company.

The aim of the assessment is to develop and deliver a better value for the online grocery store for Big Basket. Big Basket is considered as one of the largest online grocery stores that aim towards delivery the grocery items at the doorsteps of the customers. Big Basket has been able to attract the market by providing the opportunity for on-demand delivery for the target customers. It has been seen that the grocery segment is still unexplored in spite of having huge scope. Several e-commerce organizations such as Amazon and Flip kart have established them in electronics and garments but not in the grocery segment. The aim of this assessment is to shed light on the key points of the marketing plan that will help Big Basket to deliver and develop better brand value to the target customers. The report suggests that online grocery shopping is not prevalent among the general populations, as individuals prefer to touch and smell prior grocery shopping. The target customers have average experience with Big Basket that has restricted the sale of the online grocery. Thus, the company aim towards adding value to their brand by enhancing their home delivery service of the grocery items. This is because home delivery in grocery business plays a significant role in maximizing the sales.

Target Customers of Big Basket

Big Basket is one of the largest online grocery store in India that is aiming towards developing their home delivery service of the grocery items. The company believes that delivery grocery products at the doorsteps of the target customers highlight high quality service on time. Grofers, Pepper Tap and Local Banya are the new entrants in the online grocery shopping that are considered as major competitors for Big Basket (Dawes & Nenycz-Thiel, 2014). The new entrants are using the business models like sourcing from the local grocery stores and delivering it to the customers. This provides an opportunity for business expansion, as both time and money are saved. However, Pepper Tap and Grofers are losing business and customer, as they are highly dependent on their local partners to deliver the products to the customers. As a result, Grofers and Pepper Tap have lost control over product delivery, as they have to rely on local partners for delivering the products (Pozzi, 2013). According to report, it has been seen that the sales of Big basket has jumped 231% from Rs. 170 Crore to Rs. 563 Crore in financial year. The company has also raised the funding of US $150 million by from an UAE based group. However, on the contrary, the company has encountered loss due to increased mobile investments and corporate costs ("ETtech.com", 2018). Thus, digital communication and marketing needs to be used by Big Basket for overcoming the loss.

Big Basket has targeted the customers wisely and carefully. The online grocery store has selected the population of the metropolitan cities as their target customers (Cross, Belich & Ruelius, 2015). This is because the individuals in the metropolitan city live a fast-paced life that has less or no time to visit grocery stores. Additionally, visiting the grocery store physically comes with additional issues such as parking, roaming in the grocery store with trolleys and standing in the long queue for payment and checkout (Canhoto, Clark & Fennemore, 2013). Thus, Big Basket aims towards providing convenient online grocery shopping to the populations in metropolitan cities such as Pune, Delhi, Chennai, Mumbai and Bangalore. This is because the aforementioned cities are crowded with working population and online grocery shopping will provide them the option of convenient shopping.

The value position of Big Basket highlights them as the major competitor in the online grocery store. This is because the company emphasizes on fulfilling the needs and demands of the customers by implementing technological advancements along with strong inventory. The use of strong inventory has provided an opportunity for Big Basket to gain competitive advantage from its competitors and sustain in the market (D. Newton et al., 2013). However, on the contrary, in spite of holding the top position in the market, Big Basket is encountering issues in conducting efficient home delivery of the online groceries.

Value Position of Big Basket

Big Basket needs to ensure and add better value to its brand as it is operating in a highly fierce and competitive market that is dominated by previously existing online shops. Big Basket needs to consider that its key competitor Amazon is also entering the online grocery shopping, develop, and deliver efficient methods of providing grocery elements to the customers in the metropolitan cities.

In order to ensure sales maximizations, it is essential for the business organizations to group the potential buyers within a market and profile them. According to Wilkinson (2013), the range of variables determines the concept of market segmentation that influences the market tendencies and characteristics. Segmentation, targeting and positioning help in analysing and gathering relevant information about the target market. Market segmentation will provide an opportunity to Big Basket to divide the entire market into different customer segments based on their needs and demands. On the other hand, targeting will allow Big Basket to determine the potential customers the company will emphasize on in order to sell their products. As a result, Big Basket will be able to develop online grocery shopping facilities based on the target customers in the market (Li et al., 2013). Thus, both market segmentation and targeting are equally important and most effective in gathering and analysing information about the target market thereby, positioning the brand value of Big Basket in the mind of the target customers.

Desired and perceived values of the customers combine to form customer values. As commented by Chiu et al. (2014), the desired value is defined as the desire of the customers from the product whereas perceived value is defined as the benefit that the customer received after purchasing the product of availing the service. Thus, Big Basket can determine the desired and perceived value of the customers by considering the feedback of the customers as well as considering the results of the survey. Big Basket can conduct surveys for the customers in order to know the needs and expectations of the company as well as considering the benefit the customers have received after using the service. Thus, both surveys and customer feedback will help Big Basket to gather and analyse information about the customer value of the target market.

As mentioned by He, Zha and Li (2013), the continuous competitive analysis is essential for the business organization in order to identify and analyse the strategies used by the competitors in the same market sector. This provides an opportunity for the business organizations to determine their own strengths and weakness compared to the competitors in the market. Thus, competitive analysis is one of the most crucial parts of the marketing plan of the company. As the online grocery shopping has previously existing companies such as Pepper Tap and Grofers and Amazon entering the same market, it is essential for Big Basket to conduct competitive analysis in order to identify the potential competitors and analyse their marketing strategies thereby, determining their strengths and weakness. This will provide an opportunity for Big Basket to develop strategies accordingly and ensure effective marketing plan (Fleisher & Bensoussan, 2015).

Market Segmentation and Targeting

The value proposition is the key factor that determines the unique and innovative way the business organization implements to attract their target customers. As commented by Osterwalder et al. (2014), the value proposition of the business organizations provides an opportunity to create a unique image in the eye of the customers by solving their current problems in terms of the service or the product.

The value proposition for Big Basket includes:

“Big Basket – The smartest and fastest way to get deliveries at doorsteps”

The motto of the company will be “Tap the app and get the delivery at doorstep”

Big Basket tends to highlight everything that customers do not prefer about grocery shopping thereby, pointing out their superiority in the market. The key features of the value proposition include:

  • One tap and the customer selects the items and the delivery address
  • The driver knows exactly where to go
  • Payment is both with cash and cashless.

Figure 1: Big Basket’s value proposition model

(Source: Author)

 The uniqueness of Big Basket's value proposition model is that the company has not collaborated with the local partners in order to deliver the grocery at the doorsteps of the customers. Rather, Big Basket takes the order and delivers them directly to the doorsteps of the customers thereby, making their service more reliable and on time (Bocken et al., 2013).

Currently, Big Basket has a high customer perceived value, as the company has successfully addressed the issue of the target customers and aim towards solving it. According to the perceived value of the target customers of Big Basket, the target customers are extremely satisfied with the range of products and services (Shorrocks, 2013).

This is because Big Basket provides the opportunity for convenient shopping for the target customers, as the company saves time and harassment of the customers while shopping. The target customers of Big Basket in the metropolitan city lead a fast-paced life that makes it difficult for them to take out the tie for grocery shopping. With the service and wide range of products provided by Big Basket, the target customers are able to avoid stress such as parking, carrying heavy loads and standing in the long queue. Big Basket provides the opportunity for the target customers shop the wide range of grocery products with just one tap. Additionally, Big Basket provides an opportunity for the target customers to free delivery of the products at the doorsteps along with the flexible timing of delivery (Box et al., 2015).

Big Basket has positioned their products and services widely in the mind of the customers. This is due to the effective and uninterrupted service provided by the company for the target customers. The wide range of products and online shopping service has positioned Big Basket in the mind of the target customers. Thus, whenever the customers think of grocery shopping, Big Basket is the first thing that comes to their mind, as the company has been able t solve different issues encountered by the customers while grocery shopping.

Customer Value of Big Basket

However, one of the major disadvantages of Big Basket is the quality of the product upon delivery. As the products ordered by the customers are delivered to the customers directly from the warehouse, there are instances when the products are damaged. As a result, the customers have to return it and wait for the fresh product. The competitors use this disadvantage of Big Basket wisely, as they deliver undamaged products at the first time.

Marketing promotional plan is an essential aspect that provides an opportunity for the business organization to attract the customers and stand out from the competitors.

Product or Service: Big Basket will provide the wide range of products in their online grocery service for the target customer (Supovitz, 2013). The products offered by Big Basket include grocery, branded food products, fruit, vegetables, personal care, beverages, meat, bread, dairy and egg. The services provided by Big Basket on the wide range of products provides an opportunity for online shopping according to the convenience at their doorsteps without being troubled due to car parking, standing in the check out queue and carrying heavy shopping bags.

Price: Big Basket plans to implement the bundle-pricing strategy for their online grocery shopping. According to this pricing strategy, the business organizations sell a set of products at a comparatively lower price than they would charge if the product were brought separately (Letham, Sun & Sheopuri, 2014). As Big Basket is an online grocery store that offers the wide range of products that individuals need in bulk amount for their daily use, the bundle pricing strategy is the most appropriate one implemented by them. Thus, the potential customers of Big Basket will be able to buy their grocery items at the comparatively lower price if they would buy the products separately. Additionally, the bundle-pricing strategy will also allow Big Basket to sell their less preferred products along with their preferred products easily thereby, increasing the sales.  

Place: In order to stand out in terms of the products and services, Big Basket has ensured uninterrupted online grocery shopping for the target customers. The target customers would look for the product online, as Big Basket will operate only online. Therefore, the target customers will have to access the official website and place orders for home delivery. Big Basket plans to develop a user-friendly website that will guide the target customers to the appropriate places for grocery shopping (Armstrong et al., 2014). Once the order is placed, Big Basket will receive the order and collect the order of the customers from the warehouse. Then from the warehouse, the products ordered by the customers online are delivered at the doorsteps on time.

Competitive Analysis

Promotion: In order to attract, engage and inform more customers, Big Basket implements unique promotional plans for the target customers. The company aims to implement 10% cash back on their first three online purchases for the customers along with additional 10% cash back if the customers' shop by Paytm. On the other hand, Big Basket offers free exchange offers for the first three months where the customers can return their products if the products are damaged or destroyed over the course of delivery. Keeping in mind the metropolitan customers, the company will implement discount offers on various credit cards thereby, making grocery shopping cheaper and more convenient for the target customers (Gangwar, Kumar & Rao, 2013). Moreover, considering the working hours of the target customers, the company will provide flexible home delivery for the customers.

Conclusion

In this report, it can be concluded that Big Basket is one of the largest online grocery store in India that works on demand home delivery service. The report discusses the significance of marketing and digital communication for the business organizations in order to gain competitive advantage and survive in the competitive market. Considering the significance of digital communication, Big Basket provides the opportunity for online grocery shopping for the target customers. The company has targeted the population of the metropolitan cities such as Mumbai, Delhi, NCR and Bangalore due to the fast-paced life lead by them.

Big Basket provides the wide range of products and online shopping for the target customers that made grocery shopping convenient and fun for them. The company provides flexible home delivery and on-time delivery for the customers. The company has designed a user-friendly website that makes it easier and convenient for the target customers for grocery shopping. As a result, the target customers are extremely satisfied with the products and services provided by Big Basket that has helped in successful value positioning. Thus, when the customers think of grocery shopping, they think of Big Basket automatically, as the company believes in delivering superior customer shopping experience in terms of delivery time and delivery quality.

References

Armstrong, G., Adam, S., Denize, S., & Kotler, P. (2014). Principles of marketing. Pearson Australia.

Armstrong, G., Kotler, P., Harker, M., & Brennan, R. (2015). Marketing: an introduction. Pearson Education.

Bocken, N., Short, S., Rana, P., & Evans, S. (2013). A value mapping tool for sustainable business modelling. Corporate Governance13(5), 482-497.

Box, G. E., Jenkins, G. M., Reinsel, G. C., & Ljung, G. M. (2015). Time series analysis: forecasting and control. John Wiley & Sons.

Canhoto, A. I., Clark, M., & Fennemore, P. (2013). Emerging segmentation practices in the age of the social customer. Journal of Strategic Marketing21(5), 413-428.

Chiu, C. M., Wang, E. T., Fang, Y. H., & Huang, H. Y. (2014). Understanding customers' repeat purchase intentions in B2C e?commerce: the roles of utilitarian value, hedonic value and perceived risk. Information Systems Journal24(1), 85-114.

Cross, J. C., Belich, T. J., & Rudelius, W. (2015). How marketing managers use market segmentation: An exploratory study. In Proceedings of the 1990 Academy of Marketing Science (AMS) Annual Conference (pp. 531-536). Springer, Cham.

Newton, J., J. Newton, F., Turk, T., & T. Ewing, M. (2013). Ethical evaluation of audience segmentation in social marketing. European Journal of Marketing47(9), 1421-1438.

Dawes, J., & Nenycz-Thiel, M. (2014). Comparing retailer purchase patterns and brand metrics for in-store and online grocery purchasing. Journal of Marketing Management30(3-4), 364-382.

ETtech.com. (2018). BigBasket sales jump 3x to Rs 563 crore in FY16; Losses up 4x - ETtech. Retrieved 23 January 2018, from https://tech.economictimes.indiatimes.com/news/internet/bigbasket-sales-jump-3x-to-rs-563-crore-in-fy16-losses-up-4x/56342508

Fleisher, C. S., & Bensoussan, B. E. (2015). Business and competitive analysis: effective application of new and classic methods. FT Press.

Gangwar, M., Kumar, N., & Rao, R. C. (2013). Consumer stockpiling and competitive promotional strategies. Marketing Science33(1), 94-113.

He, W., Zha, S., & Li, L. (2013). Social media competitive analysis and text mining: A case study in the pizza industry. International Journal of Information Management33(3), 464-472.

Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education.

Letham, B., Sun, W., & Sheopuri, A. (2014). Latent variable copula inference for bundle pricing from retail transaction data. In Proceedings of the 31st International Conference on Machine Learning (ICML-14) (pp. 217-225).

Li, X. R., Meng, F., Uysal, M., & Mihalik, B. (2013). Understanding China's long-haul outbound travel market: An overlapped segmentation approach. Journal of Business Research66(6), 786-793.

Osterwalder, A., Pigneur, Y., Bernarda, G., & Smith, A. (2014). Value proposition design: How to create products and services customers want. John Wiley & Sons.

Pozzi, A. (2013). The effect of Internet distribution on brick?and?mortar sales. The RAND Journal of Economics44(3), 569-583.

Shorrocks, A. F. (2013). Decomposition procedures for distributional analysis: a unified framework based on the Shapley value. Journal of Economic Inequality, 1-28.

Supovitz, F. (2013). The sports event management and marketing playbook (Vol. 72). John Wiley & Sons.

Wilkinson, F. (Ed.). (2013). The dynamics of labour market segmentation. Elsevier.

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