1.0 INTRODUCTION

Giant is a subsidiary of Dairy Farm International Holdings (DFI). It offers a huge range of consumer products which includes groceries, household products, clothes, foods and beverages and others. It is major supermarket and retailer chain in Malaysia and has been operated over 60 years.

Giant provides a wide range of products including groceries, household products, clothes, foods and beverages, electrical appliances and others. Giant has a reputation of value for money and provide same products with lower price compare to its competitors. Giant’s unique selling proposition is their ability to provide cheaper and fresher groceries compare to its competitors. Its mission is to provide great value by offering wide variety of products at the lowest price and comfortable shopping environment (Giant, 2009).

This report will aim at discovering a new stream of revenue for Giant Hypermarket. It starts with analysis of Giant’s current situation to identify opportunities and weaknesses to overcome, proposed marketing strategies, predicted performance and end with control strategies for all proposed strategies.

2.0 CURRENT SITUATION

For the assessment and analysis, 7-domains framework will be used and divided into micro and macro level.

2.1 MACRO LEVEL

Market Attractiveness

Giant offers a wide range of products to the market which includes apparel, beauty care, personal care, consumer appliances, fresh food, home care, housewares, home furnishing and packaged foods. According to Euromonitor (2011), the total retail value of these products has been increasing constantly every year regardless of the economic condition of Malaysia. These trends have shown stable and continuous growth in the market which leads to high attractiveness. Details of total retail value for each sectors are included in Appendix.

Based on PEST analysis, Malaysia government has significant influence over businesses in Malaysia but political environment is considered as stable based on researches. Central bank has also successfully limited Malaysia’s exposure to risky financial instruments and global financial crisis. For Malaysia’s social environment, urbanization, development or rural areas and improving standard of living will lead to increase in consumption of consumer goods. Finally, technology advancement in information systems for corporates has allowed businesses to improve business processes and increase efficiency and productivity .Details on PEST analysis is available at Appendix 1.

Industry Attractiveness

Industry attractiveness is analysed and evaluated based on Porter’s 5 forces model as shown in Appendix 2. Other than bargaining power of suppliers, other four forces have indicated Giant is operating in an unattractive industry. Currently, Giant is facing intense competition with its direct competitors and high threats from substitute and new entrants. Furthermore, the bargaining power of customers is low due to low customer loyalty in the market.

2.2 MICRO LEVEL

Target Segment Attractiveness (Market- Micro Level)

Target segments’ need for quality and low price consumer products can be satisfied at a profitable level. The target segment which is low income group, students and middle income group are huge and growing. Giant’s ability to offer branded consumer products at a low price also satisfies consumers’ needs. However, store accessibility is low due to the store location of Giant.

Sustainable Advantage ((Industry- Micro Level))

Giant’s sustainable advantage is its ability to maintain low fixed and variable costs. Giant’s variable costs are reduced through economies of scales and good relationships with suppliers. Fixed costs are lowered through outsourcing its IT department to Pakistan, providing low salary, reducing store maintenance costs, purchasing low value properties and others. These advantages are hard to imitate by its competitors.

Mission, aspirations and risk propensity

Based on Giant’s official website (2009), Giant’s mission is to provide great value by offering wide variety of products at the lowest price and comfortable shopping environment. Aspiration is to be the market leader in Malaysia and probably Asia. It has high risk propensity due to the financial background and support from its parent company.

Ability to execute on CSFs

Since the industry is highly competitive, critical success factors in this industry includes low price, quality products, convenience, comfortable shopping environment, quality service and reputable brand. Giant is able to execute on most of its critical success factors.

Connectedness up and down the value chain

Giant is well connected with some of the suppliers through supply chain management systems but might not be well connected with customers due to the lack of existing strategy to communicate and interact with customers. Giant is currently relying on website, Facebook and customer care to communicate with customers.

3.0 OPPORTUNITY AND SITUATION ANALYSIS

3.1 SWOT ANALYSIS

Strengths

Giant has huge market coverage for being one of the biggest supermarkets in Malaysia with 80 shops. It has high bargaining power of supplier due to its sales and order quantity. With its bargaining power, it has the ability to offer same merchandises at a lower price compare to its competitors. ‘Giant’ itself is also a strong brand in Malaysia and ranked as Malaysia’s 12th most valuable brand (Giant, 2009).

Weaknesses

Giant’s customer service is at the low end which might result in long queue, transaction errors, hygiene issues and customers’ dissatisfaction. Giant’s hypermarkets are also located at areas which might not be convenient to potential customers’ especially low-income group which might rely on public transportations.

Opportunities

There’s a rising trend of Internet and social media users in Malaysia. There’re approximately 16.5million Internet users (Euromonitor, 2011), 5million Facebook users (Lim, 2010). There’s also an increase in radio audiences in Malaysia. There’re approximately 15.5million radio listeners and the listening duration has increased to 22 hours per week (Neilson, 2010).

Threats

Giant is facing intense competition with its direct competitors including Tesco, Carrefour, Econsave and Mydin (Euromonitor, 2011). These hypermarkets are also positioning itself as cost leaders in the market. Indirect competitors such as local groceries, convenient stores, wet market and online grocery websites are also competing with Giant in the same market. Details will be mentioned in Appendix.

The full model of the SWOT analysis can be seen in Appendix 3.

3.2 SUMMARY FOR OPPORTUNITY AND ISSUE ANALYSIS

Unfavourable Industry:

Based on the analysis with seven-domain framework, Giant’s industry is less attractive due to intense competition.

Therefore, it is important for Giant to create and communicate compelling customer benefits and its sustainable

advantage to trump the unfavorable industry structure.

Accessibility:

Based on SWOT analysis on Giant, accessibility of Giant’s store is one of the main weaknesses especially for rural

areas which heavily rely on public transports and two-wheelers. This weakness might be caused due to Giant’s

selection criteria for its store location. Giant might not be able reach its target segments effectively.

Increasing popularity in various media:

The increasing trend in the usage of traditional media such as radio and various social media such as social

networks, blogs and others is another opportunity identified in SWOT. Giant could utilise these media to reduce the

cost per target audience and efficiency of advertising.

4.0 OBJECTIVES

Since Giant is a profit organisation and its corporate strategy is to be the cost leader in the market, the key performance indicators (KPI) of Giant are strongly related to costs and revenue. Therefore, KPIs of Giant might include market share, sales revenue, fixed and variable costs.

Based on Giant’s current situation, the following are the proposed objectives of the marketing plan.1. To create brand relativity in the minds 50 % of consumer as the cheapest brand of the target audience by

the end of 2012.2. Increase Giants position in the current market share of hypermarkets from 24% to 35% within the next 5

years. 3. Increase the number of customers and average expenditure per customer by 15% within the next 2 years. 4. Increase in the total sales revenue of Giant by 15% in the next 2 years.5. Increase in advertising efficiency cost by 15% within the next 2 years.

5.0 MARKETING STRATEGIES

The marketing strategies that are to be outlined will not be that on improving the service quality that is provided Giant. There are three justifications as to why this is not seen as an issue with Giant. Those justifications are:

1. Service quality in a business such as Giant, can be perceived as the ‘tangibles’ of the supermarket by most consumers and not so much the customer service offered by the store (Sirohi, McLaughlin & Wittink, 1998).

2. High quality of service might lead to inconsistency with the projected store image. The store environment has to reflect the type of business the store deals with, in Giants case goods sold at low prices (Mehta, Lalwani & Soon, 2000).

5.1 MARKET SEGMENTATION

Based on some research done on the background of Giant we have identified 3 segment groups of consumers that are of interest to Giant. Below are a brief outline of the segmented groups however for a more detailed table on the

targeted segments, a Segmentation table can be found in Appendix 4. We have picked these 3 segments as it matches with Giants current positioning strategy and are a group of consumers who seek the value of what Giant have to offer.

1) Lower income consumers - Lower income consumers as they go for cheaper bargains and looks less at the exterior qualities like service and such. Giant is currently positioned itself more in rural areas hence, making a huge portion of their consumer pool from the lower income level consumers.

2) Middle income consumers – Middle income consumers will be a secondary target as they have more of an option on where to shop for their goods (cold storage, etc).

3) Students – Majority living on their own therefore, need to do own shopping for basic necessities (short on budget). Will look to be a potential market for Giant to venture into (eg: Sunway Pyramid outlet).

The lower and middle income consumers are already a targeted segment of Giant at the moment; hence the marketing strategy will aim at strengthening Giants position in the minds of these consumers. It is also suggested that Giant broaden the targeted segment market to the students group as well.

5.2 BRAND IMAGE BOOSTER

The proposed marketing strategy will be focused on strengthening Giant’s position and increasing awareness which will leads to high sales revenue and profits.

The first strategy called ‘brand image booster, which is proposed to strengthen Giant’s position as the cost leader in the hypermarket. This strategy is used to trump an unfavourable industry structure which is highly competitive with compelling customer benefits and sustainable advantages. This is to better sell the position and strength of Giants ability to offer low prices in the minds of consumers.

For this strategy, a new tag line aimed at creating a marketing gimmick to attract consumers will be used. A “Lowest Price Guaranteed!” tagline will be used in a campaign that will make bold claims such as ‘200% refund if you find lower price for the items in a specific pamphlet. The advertising cost of this program will not require a lot of extra cost in getting the word around as this tagline will simply replace the existing tagline.

Step by step plan for implementation:

Step 1: Market research – Comparing prices with competitors on a weekly basis before producing catalogue in order to reduce compensation made. It is recommended that a team of about 10 researchers were to be working on this.

Step 2: Drafting legal documents and terms – This is to protect the organization from being exploited by unethical businesses or consumers. Not much additional cost as Giant already has an own legal department team.

Step 3: Training and in store implementation – Train employees at customer care to handle refund issues and create formal business procedures to refund customers who found product has lower price than the on sale products. The formal procedures and legal terms must be documented.

Step 5: Refunds - To allocate a small portion of fund that is to be replenished to a certain amount on a monthly basis (Provided researches are doing a good job, “refunds” cost will be at a minimal.

Step 6: Advertising - Giant’s marketing team will redesign the tagline from ‘Wah! So fresh For Less!’ to ‘Lowest Price Guaranteed’. The new tagline will be included in the latest newspaper advertisement.

A timeline for the implementation and financial budget table can be seen in the Appendix 5 and 6.

5.3 WILD FIRE STRATEGY

5.3.1 INTERNET

Online PR with blogs

According to Falkow (2009) who is in public relation for 30 years, mentioned online media is the future and reaching out to the right bloggers for business should be an integral part of media relations work.

Step 1: Start identifying influential blogs which have huge amount of Malaysian audiences. These blogs must be sharing views and opinions about topics which are relevant to the industry such as shopping, life in general and others. These blogs should have a minimum 10,000 visitors per month and consistent in providing credible and authentic voice from the owner.

Step 2: Getting to know them and building relationship with the bloggers is an important step before pitching them. Most bloggers are not familiar and inexperienced in dealing with PR staffs. Reading their blog, commenting and following their blog for weeks are important. The key staffs who are accountable for the work are the PR staffs and interactions should be done in person and not representing Giant as a whole.

Step 3: Pitching them with great stories or interesting contents is the final step to get the story to them. Giant could offer them a reward to write a blog posts about its store, promotions or contests with a fee. The fee will depends on the popularity of the blog. The blog posts should be an authentic voice from the blogger but not damaging to Giant’s PR and brand image.

A timeline for the implementation of online PR as well as estimated cost for online PR blogs can be seen in Apendix 7 and 8.

Word of mouth marketing with Facebook

Since Facebook is the most popular social networking sites according to Alexa (2011) with more than 5million users (Lim, 2010), Giant could spread its desired message by approaching popular Facebook users and rewarding them for spreading the word. Unlike blogs, Facebook has a ‘Like’ function which allows users to share messages with friends. While blog is used as an online PR tool, Facebook is used as a tool for word-of-mouth marketing.

Step 1: Identify popular and influential users. Similar to the online PR strategy with blog, users with the most friends will be identified. These users must have at least 5,000 friends and actively post message on their ‘Wall’.

Step 2: Following the users, understanding them and building relationship with them can increase the rate of success for pitching them the offer. This process might last for one month.

Step 3: Pitching the offer is the last step to get them spreading the message about Giant’s promotion and contests. Giant could offer RM500 for one message posted on the ‘Wall’.

A timeline for the word of mouth marketing on Facebook as well as estimated cost table can be found on Appendix 9 and 10 respectively.

Radio advertising

Radio advertising is chosen due to its cost effectiveness and reach ability. Apart from that since each radio has their loyal listeners, some form of trust to the radio station is present, therefore it will benefit Giant in terms of creating brand awareness among audiences (Ephron, 2008). The 3 radio station that have been selected are MY fm, Sinar fm, and Raaga fm to target the 3 different main races in Malaysia. These stations are picked due to a match in the type of listeners that they have to the targeted market segment of Giant in both urban and suburban areas (Nielsen Media Research, 2010).

Step 1: To create a good radio advertisement that will deliver the focus and message of Giant and mainly to increase awareness of the Giant brand name and its offers. A 30 second commercial will suffice.

Step 2: Arrange booking of time slots with the 3 suggested radio stations.

Step 3: Revise marketing message on a periodic basis (monthly) but maintain the essence of the advertisement. Creating a jingle in it that is catchy is encouraged.

A timeline for implementation of plan can be seen in the appendix 11 as well as a scorecard table for the rates in Appendix 12. TABLES NOT FOUND

5.4 GIANTS GOLDEN CARRIAGE

The Giant Golden Carriage Campaign is basically to implement a bus system in order to ferry customers to and fro from Giant Hypermarkets directly from designated bus stops. This will in turn help connect this pool of consumers that might find it difficult to access the Giant outlets that might not be easily accessible.

5.4.1 TESTING NEW CAMPAIGN

As this is a rather new and large project, it is to first be implemented in Seri Manjung Malysia which is a small rural community with a population of roughly 198,576 people (Department of Statistic’s Malaysia 2009). Manjung District has the second highest Average Annual Growth Rate after Kinta, which records a 2.0% growth rate. Implementing this to cater for the hard to reach area’s and further make Giant supermarkets easily available to its customers. The area according to Asia explores (2010) at large consists of farming communities with most of the areas hard to access directly most importantly access to Giant is not made easy, with an agricultural area of 833.75 square kilometres or about 71.20% of Manjung District. Forest reserves account for another 168.81 km2 (14.42%), while residential area is about 29.32 km2 (2.50%), and the rest is a swampy area (Travel asia.com 2009). Making it hard for Giants precious customers to gain access to an outlet which brings us to the roll out of our Golden Carriage Campaign

5.4.2 MAKING CAMPAIGN COME TO LIFE

1. Giant will have to run this in accordance to the Malaysian law, whereby the fleet would have to be inspected and given permission to operate by the local government of Seri Manjung to be operated.

2. Further agreements and negotiations need to be made with the government about the tax reductions for the Corporate Social Responsibility program as mentioned by the crown prince Perak Darul Ridzuan (2010) at a CSR conference.

3. The leasing of a small fleet of buses (about 5) and the hiring of bus drivers of which two of them will run on weekdays and five of them on weekends. Busses will operate from 10am to 6pm.

4. Established bus routes will be covering a 29.32km radius of the residential areas and also a daily farm land route (5 pickup points).

5. The Individuals responsible for the running and monitoring of this programme are going to be the HR department in dealing with the drivers and customer care centre will be in charge of logistics and the running of the bus fleet.

This Initiative would break any bond or hold that Giants competitors had on the customers, it would help deliver never before delivered value to its customers in this farming community, building strong bonds with Giants brand name and while the busses move around advertise and create awareness in the community and it being a small or rather more integrated community, word of mouth will spread rapidly about Giants new free service. This service provided in Sri Manjung will be carried out for three months, and the success of it will decide upon a larger scale

expansion to other outlets and the continuation of this plan (break even analysis shown in Appendix 14). A financial plan out for this campaign can be found in Appendix 13.

A summary of the total cost of the wild fire strategy can be seen in Appendix 15.

6.0 PRODUCTIVITY AND PROFITABILITY

Tesco implemented its Lowest-Price Guarantee strategy in U.K. during September, 1996 (Mañez, 2006) and its strategy has resulted in 19.7% increase in sales on 1996 from previous year (Tesco, 1997). If Giant’s sales in 2010 is approximately RM3.9billion and estimated to reach RM4.2billion in 2011 based on Euromonitor, Giant’s total sale revenue might reach RM5.03billion in 2012 and RM6.02billion in 2013. Therefore, the return of investment (ROI) of this strategy is approximately 902,173% based on the estimated implementation costs at RM92,000.

Based on the ‘Wild Fire’ strategy, radio advertising is able to reach approximately 9.5million target audiences, 71,672 people from blogs and 240,000 people from Facebook. With around RM18,000, Giant is able to reach around 9.5 million per month. With the estimation of 10% of the reached target audience will visit Giant and spend RM187.99, there will be an increase in total sales revenue around RM178.6million per month and RM2.1billion per year.

9200*379.8= MYR 3 ,494 ,988.00 come from the golden carriage passengers and of which 10% of that would be profit which is MYR 349 416. This figure is set to increase as the popularity of the golden carriage increases along with the increasing growth rate.

29.02% of the Malaysian’s monthly expenses are used towards buying food, clothing and other miscellaneous household goods. (Euromonitor 2011)

Which means of the MYR 1301, spent by rural retail consumers MYR 379.89 per month is spent on products that can be purchased in Giant and the aim is to increase this figure by 10%.

7.0 CONTROLS

Break-even analysis for Wild Fire Strategy

To break-even for ‘Wild Fire’ strategy by assuming each customer will spend RM187.99, Giant must convert at least 136 target audiences (0.000014% of the target audiences) into customers for January and February and approximately 96 customers every month.

Break-even analysis for Giant Golden Carriage

Based on the assumption customers spend average RM187.99 on Giant per month, Giant requires an increase of 477 customers per month to break even on February, March and April from the Sri Manjung branch. After April which is the month which Giant implements the strategy to all the branches in Malaysia, Giant requires 74,472 extra customers in May and 10,639 customers for the following month to break-even for all the branches.

Break-even analysis for Brand Image Booster strategy is based on the assumption of customers spend RM187.99 per month in Giant, the strategy must convert at least 80 customers in the first month and 38 customers for all the following month.

8.0 SUMMARY AND CONCLUSION

References

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