Frances Guastalegname MARKETING COMMUNICATIONS STRATEGY FOLIO MY BUNNINGS LOYALTY CARD PROGRAM

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Transcription:

Frances Guastalegname 698669 MARKETING COMMUNICATIONS STRATEGY FOLIO MY BUNNINGS LOYALTY CARD PROGRAM JUNE 2017

TABLE OF CONTENTS Executive Summary 3 The Bunnings Brand Today 5 Online Presence 7 Buying Incentives 9 Problems and Opportunities Statement 10 Objectives 11 Situation Analysis 12 Integrated Marketing Communications (IMC) 13 Communications Plan 14 Conclusion 16 Appendices 17 References 22 2

EXECUTIVE SUMMARY Bunnings Group, trading as Bunnings Warehouse (Bunnings) is the leading retailer in home improvement and outdoor living products across Australia and New Zealand, and a major supplier to both commercial and everyday customers (Bunnings Warehouse 2017). Founded in Western Australia in 1886 by brothers Arthur and Robert Bunning (appendix figure 1), the business first emerged as an operational timber yard, and overtime developed into the trade and do-it-yourself (DIY) supplier it is today (Bunnings Warehouse 2017). The first Victorian warehouse opened in Sunshine in 1994, the same year the company was bought by Wesfarmers, who remains to exist as Bunnings parent company, whilst expansion into the New Zealand market occurred in 2001 through the acquisition of the BBC Hardware network (Bunnings Warehouse 2017). As of 31 December 2016, the Bunnings brand is operational across Australia and New Zealand throughout 248 warehouses, 73 small format stores, 33 trade centres and three frame and truss centres, and is the employer of over 40,000 team members (Bunnings Warehouse 2017). Accounting for 20 per cent of Australia s $40 billion home improvement market, prior to the collapse of Masters, revenue for the Bunnings brand, across both Australia and New Zealand, totalled $9.5 billion at the end of the 2015 financial year (Dagge 2016; Bunnings Warehouse 2017). Undoubtedly, Bunnings exists as a market leader and a successful brand. Yet, maintaining this status ultimately relies on the adoption of an integrated marketing communications (IMC) campaign, so as to increase consumer spending and organisation revenue, whilst meeting the wants and needs to current target segments. With a predominant focus on the brand s three strategic pillars of lowest prices, widest range and best service, this folio aims to introduce an IMC campaign that will allow Bunnings to further meets its visions, values and guiding principles, whilst further prompting high brand equity and consumer interactions. The establishment of My Bunnings, a loyalty card program offered to the target market of the everyday DIY consumer of Bunnings, ultimately encompasses the brand s three strategic pillars and meets its visions and values, allowing the brand to introduce an IMC campaign 3

that will benefit both the brand and its consumers not simply today, but in the future as well. My Bunnings is the most promising IMC campaign Bunnings can launch today, as it takes its foundations from Bunnings highly successful PowerPass trade program, and expands on these to meet the needs of each of Bunnings target segments. Ultimately, My Bunnings will extend on the brand s three strategic pillars, simply through consumers own interactions with the brand, and will in turn allow Bunnings to operate as an organisation that consistently meets the needs and wants of its consumers, through its promised visions and values. 4

THE BUNNINGS BRAND TODAY To assess limitations in Bunnings current marketing and communications strategy, and to suggest recommendations for the future, it is important acknowledge the brand s visions and values, as well as the advantages of its current brand equity strategy. Fundamentally, the Bunnings brand vision, we re building the best, our team make it happen, and its guiding principles and values of integrity, respect, teamwork, achievement and innovation, suggest an emphasis on employee involvement in the business, beyond simply generating sales and revenue, and further imply the importance of community involvement (Bunnings Warehouse 2015). An emphasis on building team networks, in order to provide friendly and helpful service, and a commitment to sincere, meaningful and active participation in local communities helps Bunnings to identify itself as a team-led and community-driven brand, and ultimately further enhances brand equity as a whole. Additionally, with a specific focus on price, range and service, the Bunnings brand is ultimately foundered and built on the use of three strategic pillars: lowest prices, widest range and best service (Bunnings Warehouse 2017). Encompassing the brand s guiding principles mentioned above, the three strategic pillars aim to provide customers with the best service and widest selection of products at the lowest prices every day, and thus remain integral to the operation of the brand as a whole (Bunnings Warehouse 2017). A breakdown of these three strategic pillars will further demonstrate the ways in which Bunnings successfully communicates with its current consumer market. Lowest prices exists within the strategic pillars fundamentally due to the brand s price beat policy guarantee, If you find a competitor s lower price on the same stocked item, we ll beat it by 10%. That s our policy. (Bunnings Warehouse 2017). Lowest prices are delivered to consumers through the use of warehouse-based pricing departments, who analyse competitor pricing and further reprice products, so that Bunnings prices remain the lowest. Products are never placed on sale, and promotional specials are not offered across warehouses, format stores or trade centres 5

and sites, as prices are always ticketed at the lowest cost. Although the price beat guarantee excludes quotes, stock liquidations and commercial quantities, it ensures the lowest prices possible for the everyday DIY consumer and local tradespeople and businesses, and further reinforces the brand s own visions, values and guiding principles. Similarly, stocking the widest range is crucial to the existence of the Bunnings brand, as it reinforces the notion of the brand as the leading provider of materials and supplies for both consumer and commercial customers. Both large warehouses and small format stores stock up to 45,000 product lines, including a variety of indoor and outdoor building materials, hand and power tools, and interior home decors (Bunnings Warehouse 2017). Furthermore, over 400,000 additional products can be ordered through the Bunnings Special Orders service, providing customers with an expanded range, impossible to range in even the largest of warehouses (Bunnings Warehouse 2017). Not just stocking the widest range, but Bunnings also stocks the deepest range, so customers are able to access the stock they need, exactly when they need it. Ensuring the widest and deepest range means that the Bunnings brand as a whole can uphold its promise to its target consumers, and thus increase brand equity. Most importantly however, is the pillar of best service, as it emphasises the importance of meeting the needs of the customer, as vital to success of the brand. With over 40,000 team members, Bunnings aims to provide a high level of service that is friendly, helpful and knowledgeable across all warehouses and stores, and that ultimately goes the extra mile for consumers (Bunnings Warehouse 2017). Combining the pillars of lowest prices and widest range, as well as ensuring the presence of a knowledgeable and reliable team, that can offer expert advice, is what the Bunnings brand promises to set itself apart from its competitors (Bunnings Warehouse 2015). Providing best service for all consumers means an increase in brand resonance, as well as the building of a loyal consumer base, to result in the increase of brand equity. Currently, Bunnings target markets are tradespeople, commercial businesses and DIY enthusiasts (Bunnings Warehouse 2017), and are therefore the target segments for the brand s promotions and campaigns. At the present time, Bunnings has a weak online presence, and predominately makes use of traditional forms of advertising 6

including television adverts and print catalogues for its campaigns. Furthermore, Bunnings does not specifically launch new campaigns regularly, but more readily maintains the marketing campaigns the brand already has in place, perhaps as an attempt to promote consistent brand identity. Most recognisable of these campaigns is the current television adverts (appendix figure 2), featuring team members praising Bunnings range and available services, and quoting the lowest prices catchphrase of Lowest prices are just the beginning. That s our policy. Similarly, current Bunnings catalogues feature line illustrations (appendix figure 3), a unique selling proposition that allows Bunnings to stand out from other industry competitors, and again reinforces brand identity. Most importantly however, current campaigns and communication platforms all resonate with the brand s three strategic pillars, and further drive brand integrity through current communications. ONLINE PRESENCE Despite the influence and success of consistent campaigns, there are issues that need to be considered in relation to Bunnings current marketing communications. One of the most fundamental issues within the brand s current communications strategy is the lack of an online presence, and the reliance on traditional forms of advertising (appendix figures 4-7; appendix table 1). Without a focus on the use of social media platforms, Bunnings ultimately relies on traditional methods of advertising, particularly in the form of television adverts and print media catalogues. As mentioned previously, Bunnings current television adverts feature working team members filmed in their home store. Bunnings adverts include actual employees of the brand as a means of upholding the brand s values, whilst also allowing employees featured on the adverts to write their own scripts for their individual segments. Additionally, both the television adverts and print catalogues feature line illustrations of products a unique selling proposition that again reaffirms brand identity and reinforces brand resonance. As considered by Purvis, language and effects of advertisements, although they can seem intimate, ultimately remain impersonal, as they are created with the intention of achieving product sales (Purvis 2013, p. 23). Furthermore, Purvis considers that advertisements, particularly in the traditional 7

sense, convince publics that lacking a certain product equates the lacking of a culture or lifestyle, and thus purchasing that product makes one whole again (Purvis 2013, p. 24). The use of active team members in conjunction with the artistic line illustrations allow the Bunnings brand to meet the brand s visions, values and guiding principles throughout their marketing strategy, whilst also resonating with their target market on a more intimate level, in attempts to make their adverts somewhat personal and individual to the consumer. Easily identified, Bunnings target segments include tradespeople, commercial business and DIY enthusiasts many of which have, for the most part, responded amicably to the use of traditional forms of advertising in the past (Keller 2009, p. 141). However, it is important to acknowledge these segments in the market today. Effectively, younger generations of tradespeople are emerging as Bunnings primary consumers, alongside DIY enthusiasts turning to apps including Instagram and Pintrest for project inspiration. Typically aged 15 to 34, these segments account for approximately 32 per cent of subdivision revenue in consumer goods retailing (IBISWorld 2017, p. 14). Similarly, businesses are more often than not making use of social media, and thus becoming more familiar with these digital technologies. Ultimately, it is difficult to deny the growing popularity of social media marketing, with 90 per cent of marketers stating social media is important to their business (Stelzner 2016, p. 7). As an industry leader, it is almost surprising that Bunnings has such little presence on social media, both in relation to advertising as well as customer service and support. The notion of the online shopping experience is another issue the Bunnings brand needs to consider, particularly in relation to meeting the brand s vision and values. Although Bunnings does currently have its own website (appendix figure 8), where consumers can access product information and view currently ranged products, Bunnings does not offer its consumers the opportunity to shop online, or the possibility of a click and collect shopping experience. As of October 2016, Bunnings have not shown any intention of entering the online shopping market in Australia (IBISWorld 2016, p. 8). Yet, research conducted by IBISWorld demonstrates a high demand for online shopping platforms, as a way for customers to browse and purchase products (IBISWorld 2016, p. 8). Online shopping is deemed to 8

be an added convenience, as timeliness and price transparency are factors desired by consumers, and are aiming to specifically meet the needs of an older demographic a market that remains a target segment for Bunnings today (IBISWorld 2016, p. 8). Furthermore, as online technologies continue to advance, and the day-to-day use of smartphones and tablets continues to rise, there is potential to form a larger customer base within the online market, and thus drive revenue growth (IBISWorld 2016, p. 8). Without harnessing digital media technologies, particularly through the use of an online store, Bunnings is effectively prohibiting itself from influencing and communicating with its consumers, and ultimately reduces the brand s ability to meet its three strategic pillars, as well as its visions and values. BUYING INCENTIVES Buying incentives for DIY consumers remains a crucial issue for the Bunnings, as the brand struggles to engage with its consumers across all available channels. Fundamentally, Bunnings does not provide all of its target segments with buying incentives, and thus does not adequately communicate the brand s values to its full potential. Gómez et al. consider the easiest strategy a business can use to prompt buying incentive is a loyalty program (Gómez et al. 2006). Loyalty programs are defined as a marketing strategy based on offering an incentive with the aim of securing customer loyalty to a retailer, and are most commonly linked to purchasing frequency and reward programs (Gómez et al. 2006, p. 387). Currently, Bunnings offers trade customers the PowerPass scheme; a loyalty program that provides trade customers with product discounts, as well as the opportunity to create a credit account for business transactions (Bunnings Trade 2017). However, no such program is offered to everyday and DIY consumers, therefore diminishing Bunnings ability to effectively communicate its promise of lowest prices and best service to all its target segments. As loyalty programs generate loyal customers, business can experience added profitability, as an individual s customer profitability constantly grows during their relationship with a brand (Woolf 1996). Furthermore, customers increased individual profitability occurs due to a decrease in price sensitivity towards the brand s products, and by requiring a smaller 9

investment in communication with pre-existing consumers (Sharp and Sharp 1997; Rowley 2000). Thus, Bunnings is currently missing the opportunity to increase profitability through customer loyalty and retention, particularly amongst their DIY target segment. PROBLEMS AND OPPORTUNITIES STATEMENT Although a market leader and a company featuring high brand equity, the above analysis highlights two major weaknesses for the Bunnings brand: a significantly weak online presence, through both social media and e-commerce opportunities, and a lack of buying incentive for all target segments. This analysis has considered Bunnings current marketing communications strategy as rather successful for the brand in the past, but in need of advancing amendments to continue to succeed in the near future. Communications delivery and management of the Bunnings brand across emerging media spaces requires specific remodelling, as well as the extent to which consumers are involved in brand promotion. Although Bunnings does succeed in reaching their target segments of tradespeople, commercial business and everyday, DIY consumers, there is significant opportunities for improvement, to help the brand ultimately fulfil its three strategic pillars of lowest prices, widest range and best service, to the brand s greatest ability. As a result of this analysis, the most strategic integrated marketing communications plan I can propose aims to target one major weakness of Bunnings current communications strategy. The following communications plan will suggest a key development to aid in buyer retention and customer loyalty that being the development of a loyalty card program known as the My Bunnings scheme. I believe the implementation of the My Bunnings program will only further aid Bunnings in successfully meeting their three strategic pillars, whilst continuing to address the brand s visions, values and guiding principles. 10

The My Bunnings scheme will be modelled off the current PowerPass program (appendix figure 9) implemented throughout Bunnings warehouses, stores and trade centres. Differing from the PowerPass program, the My Bunnings scheme will allow everyday DIY customers to earn points every time they shop. These points, calculated on a every dollar spent equals one point basis, will be accumulated every 3 months, and then issued to the customer through a voucher to spend in-store. Issued on a seasonal basis, these vouchers will aim to encourage buyer retention and customer loyalty, whilst further meeting Bunnings three strategic pillars of lowest prices, widest range and best service. OBJECTIVES Ultimately, the implementation of the My Bunnings scheme for the Bunnings brand will aim to meet communications objectives in the following five categories: Specific: My Bunnings fills a void in Bunnings current customer offerings, and provides an opportunity for improvement of brand equity by meeting the three strategic pillars of lowest prices, widest range and best service. Measurable: My Bunnings will be measurable through the monitoring of customer sign-ups to the program, the number of vouchers issued seasonally, and the monetary value of accumulated points corresponding to these vouchers. Attainable: My Bunnings will be promoted online and in-store by team members, who will be responsible for encouraging customers to sign up to the program. Customers will then be responsible for the accumulation of points, done only through the presentation of their loyalty card through each purchase. Realistic: My Bunnings proves realistic for the Bunnings brand, following the successful implementation of the PowerPass program, designed 11

specifically to meet the target market of tradespeople and commercial businesses. Time bound: The timely success of My Bunnings will predominately rely on sign-up rates, as well as consumer behaviours in presenting their loyalty card when shopping, so as to accumulate points. Most importantly, My Bunnings aims to achieve an increase in buyer retention and customer loyalty, through an increase in consumer buying incentives. Sharp and Sharp consider that loyalty programs have the potential to alter normal market patterns of repeat-purchase behaviour, particularly within a competitive market (Sharp and Sharp 1997, p. 473). Encouraging the idea of excess loyalty, large scale loyalty programs such as the My Bunnings scheme prompt a shift in buying behaviours and consumer purchasing patterns, and therefore provide an opportunity to increase brand equity through maintaining the brand s visions and values, whilst also meeting the needs of all target segments. SITUATION ANALYSIS Prior to expanding on the situation analysis of the prospective market segment the My Bunnings scheme will target, it is important to acknowledge that this communications plan does not have intentions to introduce a new target market. Instead, the proposed campaign will be aimed at fulfilling the needs of a pre-existing target segment of the Bunnings brand that being, the everyday DIY consumer. As Bunnings is currently positioned as a high brand equity organisation, the introduction of the My Bunnings program provides an opportunity to further built on this status as a leading hardware and DIY retailer, and further specifically address the intentions and goals of the three strategic pillars. My Bunnings will ultimately extend the benefits of the PowerPass trade card to the everyday consumer, making Bunnings unique selling proposition available to all target segments of the brand. In relation to segmentation and targeting, Hunt and Arnett explain the importance of identifying segments of demand and then targeting these specific segments, in order 12

to successfully market a brand (Hunt and Arnett 2004, p. 7). It is evident that Bunnings have clearly defined their target segments of tradespeople, commercial business and everyday DIY enthusiasts, however, the inability to create a specific marketing mix for each distinctive segment highlights a weakness in the brand s current marketing communications plan. Furthermore, Hunt and Arnett consider the benefits of developing a marketing mix specific to each segment, in attempts to maintain brand identity, and reinforce the brand s visions and values (Hunt and Arnett 2004, p. 9). Thus, expanding the concept of a loyalty program to include all target segments of the Bunnings brand will further encourage brand resonance, and prompt an increase in buyer retention and customer loyalty in future market analyses. INTEGRATED MARKETING COMMUNICATIONS (IMC) Duncan and Mulhern define integrated marketing communication (IMC) as an ongoing, interactive, cross-functional process of brand communication planning, execution and evaluation that integrates all parties in the exchange process in order to maximise mutual satisfaction of each other s wants and needs (Duncan and Mulhern 2004 in Reid et al. 2005, p. 12). Aiming to enhance marketing strategies through the creation of relationships between consumers and relevant stakeholders, IMC is driven by results, and promotes the use of one-way and two-way communication, so as to enhance more than just advertising and sales promotion (Reid et al. 2005, p. 12). IMC differs from traditional forms of marketing communications, as it strategically enforces two-way communication between the brand and the consumer. Ultimately, it is the consumer, as opposed to the brand, that determines how marketing communications are integrated, and therefore a more desirable outcome emerges as a result of using communication system synergistically, rather than on a case-by-case basis (Ewing 2009, p. 103). Additionally, IMC provides for a decline in the use of traditional mass media a medium Bunnings current marketing communications plan relies heavily on and prompts the advancement of fusing mass media methods with rather personal modes of communication, such as interactive marketing and 13

personal selling (Keller 2009, p. 141). This in turn diminishes the effectiveness of television advertising again, a strategy fundamental to Bunnings current communications plan and encourages the growth of consumer-controlled media, thus requiring the use of IMC to promote brand stability and resonance in the future (Keller 2009, p. 141). Fundamentally, the use of IMC is crucial to the implementation of the My Bunnings program, both in relation to the brand s consumer market as a whole, as well as to future sales and revenue. Implementing the My Bunnings scheme through the use of IMC will ultimately allow Bunnings to maintain its position as a market and industry leader, but to also meet the needs of all its current target segments. As previously stated, the reliance Bunnings has on the use of old media, through television and print media advertising, proves dangerous for the brand, based on declining popularity. Thus, the implementation of this program, through the use of IMC and the encoding of the strategic pillars of lowest prices, widest range and best service will allow Bunnings to progress as a high consumer-driven, and in turn high sales-driven brand, that continues to meet its visions and values for all target segments (Bunnings Warehouse 2017). COMMUNICATIONS PLAN As Madhavaram et al. consider, IMC is fundamental to the formation and stability of brand equity, and subsequently note that effective communication provides a foundation on which to form brand awareness and positive brand image (Madhavaram et al. 2005, p. 70). Furthermore, a fluid IMC strategy is necessary to a brand s strategic brand management, and through the implementation of such a strategy, can ultimately develop an interface between the brand identity strategy and brand awareness and image, in turn forming the notion of customer-based brand equity (Madhavaram et al. 2005, p. 70). Ideally, it is this cohesive IMC strategy that the My Bunnings loyalty scheme will aim to implement for the Bunnings brand both today, and in the near future. By introducing a discount loyalty card program to the everyday DIY consumer a target 14

segment that cannot currently access this form of promotion through Bunnings Bunnings will ultimately increase its brand equity, through the integration of the brand identity formed by the three strategic pillars. Furthermore, a loyalty program such as My Bunnings will allow consumers the opportunity to make direct contact with the brand through predominately marketer-controlled communication, including personal selling and promotions, interactive advertising, and point-of-purchase advertising, further boosting brand equity and maintaining Bunnings status as a market leader (Madhavaram et al. 2005, p. 72). To maintain its status as a leading brand, Bunnings needs to have a purpose informing everything it does in relation to its marketing communications, and this needs to be easily identifiable for target consumers (Tilley 1999, p. 182). Undoubtedly, Bunnings does warrant its status as a leading brand, as all aspects of the brand are built on the three strategic pillars of lowest prices, widest range and best service. These three core pillars ultimately provide the value foundations for which the Bunnings brand is built, both in relation to brand image and brand identity, as demonstrated through previous strategies including the 10% price beat guarantee, extensive product ranges and expertly trained team members (Bunnings Warehouse 2017). Based on this literature, it is reasonable to suggest that the My Bunnings program can result in the future success of the Bunnings brand, as it will continue to meet the brand s three strategic pillars. Addressing the pillar of lowest prices, My Bunnings will give everyday DIY consumers the opportunity to earn points based on the dollars they spend in-store, from which they will then receive monetary vouchers on a fourmonthly basis, effectively reducing product cost when the reward is used. Issuing vouchers on a seasonal basis will prompt the sales of promotional products, such as heating and cooling appliances, as buyers purchasing habits vary based on seasons and climate conditions (IBISWorld 2017). This stems into meeting the pillar of widest range, where customers will be able to reserve products and stock, to ensure everyday consumers are promised access to the products they desire, when they need them most. In turn, the combination of these two pillars will ultimately provide for best service, as the establishment of a loyalty card will allow Bunnings as a brand to monitor and assess consumer-spending habits, repeat-purchase behaviours, and 15

popularity of products and trends, to subsequently implement strategies to meet the predominant need of the consumer. Ideally, the My Bunnings program will be implemented over the course of one year (appendix figure 10). Piloting through the Bunnings website and larger warehouse stores, the program will expand to all warehouses and small format stores over the duration of the year. As Bunnings current social media presence is relatively weak, team members will be responsible for prompting customer sign-ups. Thus, the campaign will rely significantly on in-store sign ups during the face-to-face shopping experience, so as to account for approximately 70% of all sign ups. The remaining 30% of sign ups will be prompted through the Bunnings website. Lastly, success of the campaign will be monitored on a seasonal basis, so as to coincide with the distribution of vouchers, and will be determined through the number of vouchers issued, as well as the number of in-store and online sign ups. CONCLUSION Fundamentally, the My Bunnings campaign helps the Bunnings brand achieve its goals, as it holistically meets each of the three strategic pillars of lowest prices, widest range and best service, and thus promotes the sustainability of brand equity. Addressing the target segment of the everyday DIY consumer, My Bunnings allows Bunnings to provide buying incentives, and to promote customer retention and loyalty amongst its entire current target segments, ultimately expanding on the brand s highly successful PowerPass program, so as to provide each and every consumer with the most ideal shopping experience at Bunnings. 16

APPENDICES Figure 1: A timeline history of Bunnings Warehouse (Bunnings Warehouse 2017). Figure 2: A screenshot from Bunnings' current television adverts (YouTube 2017). 17

Figure 3: Bunnings' line illustration used in television adverts and print media catalogues (Bunnings Warehouse 2017). Figure 4: Bunnings' current Facebook presence (Facebook 2017). 18

Figure 5: Bunnings' current Twitter presence (Twitter 2017). Figure 6: Bunnings' current Instagram presence (Instagram 2017). 19

Figure 7: Bunnings' current YouTube presence (YouTube 2017). Table 1: Social media platform statistics for Bunnings Warehouse, as of Monday 5 June 2017 Social media platform Number of posts Number of followers Number of followings Average interactions per post Facebook N/A 63,904 N/A N/A Twitter 1 3,238 0 30 replies 13 retweets 25 likes Instagram 183 9,814 35 127 likes 7 comments YouTube 1,026 78,889 N/A < 1,000 views (Facebook 2017; Twitter 2017; Instagram 2017; YouTube 2017). 20

Figure 8: Homepage of the Bunnings Warehouse website (Bunnings Warehouse 2017). Figure 9: 'PowerPass' trade discount card (Bunnings Trade 2017). Figure 10: Proposed design for 'My Bunnings' loyalty card. 21

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