Answered: Porter Generic Strategy Model using the…

Principles Of Marketing

17th Edition

ISBN:9780134492513

Author:Kotler, Philip, Armstrong, Gary (gary M.)

Publisher:Kotler, Philip, Armstrong, Gary (gary M.)

Chapter1: Marketing: Creating Customer Value And Engagement

Section: Chapter Questions

Problem 1.1DQ

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Apply the Porter Generic Strategy Model using the facts given in the case below: The Case There are two leading Australian specialty retail department stores, namely Myer and David Jones. Both are well-established in the major Australian cities and both have good quality branded clothing ranges. The future looks bright for both from a demographic perspective, with rising population and per capita income levels in Australia. The market for such specialty department stores has been growing at around 7% per annum, which has exceed the growth of standard department stores, which was just 2%. David Jones was acquired in 2014 by South Africa’s Woolworths group for A$2.1billion. Woolworths also acquired the Country Road brand. David Jones’s differentiation strategy has since been fine-tuned. Iain Nairn, who was CEO at the time of the take-over, claimed that change was necessary to take advantage of the huge potential market because David Jones was perceived to have ‘lost its way’. He introduced a few strategic initiatives in an effort to set David Jones apart from its biggest rival in Australia, Myer. Those included: Using credit card data to improve promotions and sales Offering incentives to staff Focusing more on Asian consumers Upgrading the stores décor and functionality (a A$400million investment) Including Country Road inside the David Jones stores Including more specialty brands within David Jones locations, including Witchery and Mimco. (private label brands carry a higher profit margin) Better service at more attractive shops will most-likely attract more customers. But Myer is doingthe same, so the race is on. Nairn has been succeeded by John Dixon, a veteran of British retailer, Marks and Spencer. Dixon set about improving David Jones’s food business, believing it would encourage customers to remain in-store across lunch time if he made food halls more exciting, with different aromas to attract people like a magnet. He sees David Jones as being the quintessential Australian specialty department store.

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