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BSB126 Marketing Plan

DAVID JONES MARKETING PLAN

1.0 SITUATION ANALYSIS The retail giant, David Jones, was first established in Australia in 1838 making it Australia’s first department store, and one of the oldest worldwide with over 180 years of experience within the industry (David Jones, 2020). The David Jones company currently has 47 locations around Australia and New Zealand, and sells over 500 individual brands in store, ranging from books, to fashion, to technology to furniture (David Jones, 2020). Due to this wide array of high-quality brands, and products, the target market for David Jones has mainly consisted of individuals 50 years and older, who comprise an estimated 45.9% of David Jones’ total customer base within Australia whereas individuals under 25 years old only comprise 12% of the customer base (Roy Morgan, 2015). At present David Jones’ main competitor in terms of high-end department stores is Myer, however mid-market department stores such as Big W, Target and Kmart are also increasingly proving to be favourable amongst the target market (Do, 2019). David Jones currently has 11.7% market share within the $18.8 billion department store industry, whilst Myer maintains 16.1% (Do, 2019). David Jones has maintained success in the retail sector for many years due to loyal customers, but in recent times have fallen short and are now currently struggling with financial loss. According to Roy Morgan (2019) only 4.7% (or 760,000) Australians are purchasing items from David Jones in an average four weeks, compared to 10% (or 1.6 million) Australians purchasing from Myer within the same time period. Even after being acquired by Woolworths Holding Group in South Africa for an estimated $2.1 billion in 2014, David Jones has still experienced a loss in demand, retail sales and overall profit (LaFrenz, 2020). After being written down in value by approximately $437 million in August 2019, this year alone has also proven difficult and has seen David Jones lose more than 35% of its sales (LaFrenz, 2020).

This is largely due to the evolving retail sector, and introduction of specialised stores for homeware, fashion, make-up, technology etc. Both local and international stores, such as Zara, UNIQLO, IKEA and Harvey Norman are presenting significant challenges in David Jones maintaining relevancy for Australian consumers (Mortimer, 2014). In addition to this, changing customer demands have influenced the loss in revenue experienced by David Jones. Customers no longer feel the need to purchase in store, rather opting to browse and buy online as it is more convenient and could be easier (Neto, 2017). Whilst David Jones has 2

DAVID JONES MARKETING PLAN

established an online store and experienced a growth in online sales of 46.8%, online penetration currently sits at only 8 per cent (Blake, 2019 & Powell, 2019).

1.1 Macro-environmental Factors Because of this shift in shopping attitudes it is evident that the most important macroenvironmental factors for David Jones to consider in moving forward in the market are demographics and technology. Given the potential for increased profit online it is imperative that David Jones seize the opportunity to improve its online presence and experience for customers. According to Roy Morgan (2018) over 9.46 million (or 46.4%) of Australians aged over 14 were engaging in online shopping in 2018; an increase of 2.3 million since 2014. The most commonly sought-after items were within fashion (27%), followed by variety stores (35.6%), health and beauty (29.4%) and homewares and appliances (11.7%) – all categories that David Jones specialise in (Australia Post, 2019). Regarding demographics, whilst David Jones attempts to appeal to a wide range of ages, genders etc., it is evident that there might be a limitation in financial demographic appeal. As the products and brands are understood to be high-quality, and thus more expensive, it could be discouraging to people from lower-incomes, who instead could shop at more affordable department stores like Kmart, Big W or Target (Roy Morgan, 2016). Household discretionary income is expected to continue to reduce, which greatly impacts how much customers are able to spend, and so it is important for stores to reflect this (IBISWorld, 2019). The tables in Appendix 1 and 2 provide further SWOT and CDSTEP analyses of David Jones. 2.0 MARKETING GOAL Through the establishment of an exclusively online, affordable private fashion label, the goal is to increase David Jones’ total sales and profits by at least 20% by September 2021 (one year). Referring to the Ansoff Matrix, this could be considered product development as the company is attempting to modify the brand in order to appeal to existing customers and could even entice new customers.

Figure 1: Ansoff Matrix (Wright, 2017)

3.0 MARKETING STRATEGY – Segmenting, Targeting and Positioning 3

DAVID JONES MARKETING PLAN

3.1 Target Customers Tables 1 and 2 describe the segmentation analysis to be considered by David Jones in establishing the online, affordable fashion label. Table 1 – Adults aged 45+ Segmentation Method Demographic Factors

-

Description Aged 50+ All genders Middle to high income bracket

Geographic Factors

-

Located in Australia

Behavioural Factors

-

Loyal to David Jones

Psychographic Factors

-

Prefer in store shopping Not as comfortable online

Demographic Factors

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Description Aged 25 to 44 All genders Low to middle income bracket

Geographic Factors

-

Located in Australia

Behavioural Factors

-

Occasional shoppers at David Jones

Psychographic Factors

-

Prefer online shopping to going instore

Table 2 – Adults aged between 18 to 35 Segmentation Method

The ideal target market for this private label would be individuals of all genders, aged between 25 to 44, within the low to middle income bracket who are occasional shoppers at David Jones but prefer shopping online. This age group are more likely to be comfortable to shop online with 52% of those between 25 – 34 and 54% of those between 35 – 44 choosing to shop online due to ease and convenience as they tend to have busy lifestyles (Hughes, 2017). As well as this, individuals within this market tend to have a lower average yearly

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DAVID JONES MARKETING PLAN

income compared to individuals older than 45 years old, where gross income, net worth and assets are expected to peak (McCrindle, 2020 & Markham, n.d.).

3.2 Value Proposition David Jones has long established itself as one of the most iconic premium Australian retail stores, even after 180 years. With its extensive experience within the retail and department store industries, the company has a great reputation - Australian consumers know they can trust David Jones and the high-quality products that it sells. With this new venture it will appeal to the evolving customer demands, especially regarding affordability and convenience and will hopefully encourage occasional shoppers of David Jones to consider purchasing more frequently. Customers will be able to expect the same high-quality products and service that is expected, but with a much more affordable price point, making it more accessible for the everyday Australian. This venture will also allow David Jones to cement itself as a better competitor in the department store industry, still competing with Myer, but also appealing to customers who may only have financial ability to shop at lower-end department stores like Target, Big W and Kmart. David Jones prides itself on ensuring that customers are always beyond satisfied and this new online exclusive fashion label will definitely live up to expectations.

3.2.1 Positioning Statement An online, affordable fashion line exclusive to David Jones will appeal to a large number of customers – particularly those who are already aware of David Jones’ high-quality products but who may be limited financially. The line takes the best aspect of David Jones (the high quality expected) but at a much more affordable price and combines this with the ease and convenience of online shopping, therefore meeting everyone’s needs and expectations.

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DAVID JONES MARKETING PLAN

4.0 MARKETING TACTICS 4.1 Product David Jones currently does not have its own fashion brand line established, but like all the brands that are sold online and in store, it has to align with David Jones’ already established brand identity and culture. Since its founding, the mission of the company has been to sell “the best and most exclusive goods” and to carry “stock that embraces the everyday wants of mankind at large” – it is apparent that in today’s evolving society these ‘wants’ are adapting, and so the company must too (David Jones, 2020).

David Jones currently has a number of clothing brands for sale, with numerous products in their range, ranging from casual wear to activewear, to undergarments to formal wear etc. and so the main gap that has to be filled in the market with this new line is the affordability aspect. David Jones already publicly aims to ensure all products are ethically sourced and produced, in order to reduce negative social and environmental impact, and so it is imperative that the development of this product also meets these requirements (David Jones, 2020). Additionally, the product should contain unique and distinctive pieces to help it stand out amongst competitors.

4.2 Price The 5Cs are a method often utilised when deciding product pricing. These ‘C’s to be considered include the company’s objectives, customers, costs, competitors and channel members. These factors are analysed in Table 3.

Table 3 – Analysis of the 5Cs -

sell “the best and most exclusive goods” and to carry “stock that embraces the everyday wants of mankind at large”

Company Objectives

Customers

(David Jones, 2020) -

reinvigorate David Jones brand and

-

increase sales Fashionably conscious and occasional shoppers at David Jones

-

All around Australia, aged between 25 6

DAVID JONES MARKETING PLAN

and 44 -

People within the low to middle income

-

bracket The main costs associated include wages of staff and developers for new line, manufacturing costs including machines and warehouse locations

Cost -

The variable costs incorporate distribution and production costs that

Competitors Channel Members

-

may change depending on demand Myer is the main competitor

-

Target, Big W and Kmart

-

Specialised fashion stores

-

David Jones itself

Competition based pricing will be the most effective pricing strategy in this instance. As David Jones is slowly losing its customer base to other stores, the pricing of the items should be somewhat similar, but slightly less – so as to attract the target market.

4.3 Distribution Currently David Jones’ main distribution is its own stores, both physical locations and the online distribution; these are relatively effective channels for distribution. The new product line will be delivered using David Jones’ online store. This ensures that people all around Australia are afforded access and are not merely limited to places where physical stores are present.

4.4 Promotion David Jones will have to establish a national marketing campaign in order to make people aware of the new product and capture the attention of the target market. Table 4 will breakdown the $100,000 budget by analysing the objectives and task method against the associated media costs.

Table 4 – Breakdown of Marketing Campaign

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DAVID JONES MARKETING PLAN

Objective

Task -

Media Cost / Justification As this is an online product being introduced it makes sense to utilise majority online channels to promote the brand

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79% of individuals aged between 18 to 29 and 30 to 49 are active on Facebook

Advertisements on social media sites

(SMPerth, 2020) -

67% of individuals aged between 18 to 29 and 47% of individuals aged between

(Facebook &

30 to 49 are active on Instagram

Instagram)

(SMPerth, 2020) -

Sponsored advertisements on Facebook and Instagram vary depending on how

Reach target

many interactions the posts get – set

market through

aside $30,000 for each site (approx.

advertisements

$5000 per month for 1 year) Cost = $60,000 - Customers actively engage with and trust influencers when they promote products (Matthew, 2018) Brand deal with influencer

The cost of brand deals with influencers will depend on the individual promoting the product; the average cost for an Instagram influencer with 50,000 – 100,000 followers is approximately $700 per post (WINK, 2020)

Cost = $700 x 48 posts (4 a month for a year) = $33, 600 Total Budget Cost: $93, 600

REFERENCES Blake, D. (2019). David Jones profit almost halves in FY19. Inside Retail https://insideretail.com.au/news/david-jones-profit-almost-halves-in-fy19-201908 8

DAVID JONES MARKETING PLAN

David Jones. (2020). Our Brands. Retrieved from https://www.davidjones.com/brand David Jones. (2020). Social Responsibility & Sustainability. Retrieved from https://www.davidjones.com/gbj David Jones. (2020). The Story Of David Jones. Retrieved from https://www.davidjones.com/about-us/the-story-of-davidjones#:~:text=Jones'%20mission%20was%20to%20sell,wants%20of%20mankind %20at%20large.%E2%80%9D Do, K. (2019). Myer & David Jones To Prioritise Private Labels. IBISWorld. Retrieved from https://www.ibisworld.com/industry-insider/press-releases/myer-david-jones-toprioritise-private-labels/ Hughes, C. (2018). Participation in online buying and selling in Australia in the financial year 2017, by age. Statista. Retrieved from https://www.statista.com/statistics/878666/australia-online-buying-and-selling-by-age/ IBISWorld. (2019). Department Stores in Australia: Market Size 2007–2026. Retrieved from https://www.ibisworld.com/au/market-size/department-stores/ LaFrenz, C. (2020). How David Jones lost its sparkle. Financial Review. Retrieved from https://www.afr.com/companies/retail/how-david-jones-lost-its-sparkle-20200528p54x71 Markham, K. (n.d.). Lifestyle & Spending Habits of Older Australians – 10 Key Findings. Evergreen Advertising and Marketing. Retrieved from https://evergreenam.com.au/lifestyle-spending-habits-of-older-australians-10-keyfindings/ Matthew, J. (2018). Understanding Influencer Marketing And Why It Is So Effective. Forbes. Retrieved from https://www.forbes.com/sites/theyec/2018/07/30/understandinginfluencer-marketing-and-why-it-is-so-effective/#30b5ceb871a9 McCrindle. (2020). Australia’s household income and wealth distribution. Retrieved from https://mccrindle.com.au/insights/blog/australias-household-income-wealthdistribution/ Mortimer, G. (2014). What does the future hold for our traditional department stores? The Conversation. Retrieved from https://theconversation.com/what-does-the-future-holdfor-our-traditional-department-stores-22626

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Neto. (2017). The State of Ecommerce Report: The Changing Face of Retail in Australia: 2017 Year In Review. Retrieved from https://gopages.neto.com.au/rs/618-SCT255/images/The%20State%20of%20Ecommerce%20Guide%202017.pdf Powell, D. (2019). David Jones to 'aggressively' close stores as profit plunges. Sydney Morning Herald. Retrieved from https://www.smh.com.au/business/companies/davidjones-to-aggressively-close-stores-as-profit-plunges-20190829-p52m49.html SMHPerth. (2020). 2020 Facts & Figures // Facebook Statistics. Retrieved from https://www.smperth.com/resources/facebook/2020-facebook-statistics/ SMHPerth. (2020). 2020 Facts & Figures // Instagram Statistics. Retrieved from https://www.smperth.com/resources/instagram/2020-instagram-statistics/ Roy Morgan. (2015). Goode choice, David Jones! Retrieved from http://www.roymorgan.com/findings/6516-goode-choice-david-jones-201510220412 Roy Morgan. (2016). Image conscious: how Australians view different department stores. Retrieved from http://www.roymorgan.com/findings/7059-image-conscious-howaustralians-view-different-department-stores-201611220946 Roy Morgan. (2018). Who's Shopping Online? Nearly 9.5 million Australians. Retrieved from http://www.roymorgan.com/findings/7612-whos-shopping-online-nearly9point5-million-australians-201806080733 WINK. (2020). How Much Does It Cost to Book an Influencer? Retrieved from https://winkmodels.com.au/much-cost-book-influencer/#:~:text=Here%20are %20some%20of%20the,post%2C%20per %2050%2C000%20%E2%80%93%20100%2C000%20followers

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DAVID JONES MARKETING PLAN

APPENDIX 1 SWOT Analysis

    

 



Strengths The first department store established in Australia Over 180 years of experience in retail industry Many locations around Australia (47 stores total) Large variety of high-quality products / brands available Strong community presence/values – environmentally and socially conscious, committed to ethical sourcing of products, Reconciliation Action Plan (for bridging the gap between Indigenous and non-indigenous Australians), work with many charities Opportunities Better online presence to cater to evolving consumer demands New ‘David Jones’ fashion label targeted towards different / new target markets (increase interest in company and brand) Appeal more to global markets

  

 

Weaknesses Low consumer loyalty as retail sector has evolved Limited global reach and appeal Limited target market – mostly appeal to older Australians with higher income

Threats Continuing threats in the retail sector as specialised domestic and international brands are being established Competing department stores, such as Myer

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DAVID JONES MARKETING PLAN

APPENDIX 2 CDSTEP Analysis -

Retail culture is continuously evolving Convenience of department stores as customers are able to find a wide range of products (fashion, books, furniture, technology, makeup etc)

-

Individuals aged 50 and over comprise approximately 45.9% of the David Jones’ total customer base within Australia, whilst only 12% of the customer base is comprised of individuals aged under 25 (Roy Morgan , 2015) Income influences how much is able to be spent in store

Culture

Demographics -

Social Trends

-

Technology

-

-

Economic

-

-

Political / Legal

More demand for online shopping rather than in store Demand for more affordable products to reflect increasing living costs

Introduction of online store has shown growth in online sales of 46.8%, David Jones' online penetration currently sits at 8 per cent (Powell, 2019) Department stores’ (including Myer and David Jones) revenue expected to fall by 0.2% over the next five years (IBISWorld, 2019) In 2019 the value of David Jones was written down by $437 million (LaFrenz, 2020) Unstable economic conditions given current environment Australian laws / regulations regarding trade and consumerism (including online trading)

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