Halfords Sample

Table of Contents

Page No

Executive summary 1.0 2.0

-Introduction

2

--Situational analysis

2

2.1

--Target Market

3

2.2

---Market Needs

4

2.3

-- Market Trends

4

2.4

--SWOT Analysis

5

3.0

--Marketing Position

6

3.1

-- Key Product Offerings

6

3.2

--Key Competitors

6

3.3

--Competitive Edge

6

4.0

- Marketing Objectives

4.1 5.0

--Marketing Strategy --Implementation and Control

7 8 9

5.1

--Sales Forecast

10

5.2

-- Marketing Budget

11

6.0

--Conclusion

11

-Bibliography -Appendices

1. Executive Summary

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Halfords is UK’s leading seller in car maintenance and car development market. It also has its operations in UK’s retail cycling market, comprising of new cycles sales and sales of cycle accessories. Its national store portfolio, wide product range, competitive pricing(achieved through scale of purchasing power to compete with small independent stores, Oscar & Maria ,2010), customer service offerings and strong brands distinguish Halfords from competition. Although Halfords already has the highest turnover in the car maintenance and enhancement market, the company has to deal with strong external influences – competition, economic recession, etc., which may threaten its market position. This business strategy plan is aimed at positioning Halfords and its products as being competitive during June-September 2011, in Hull.

2. Situational Analysis In recent years, the bicycle industry in Britain has experienced a remarkable change that has allowed them cash-in on the latest economic trends. Allegra Strategies reported that UK’s consumer value for cycles and cycling goods will increase by more than £2.1bn in 2010. It has also reported that there will be an increase by 15% for the same year. An estimate was made that it will cross the £3bn mark by 2015. The managing consultants state that the 6% of adult bikes bought in last 1 year costs more than £1,000 while the average cost of a cycle (excluding children’s cycle) is more than £300 in UK. Allegra's Project Vélo study reports that sales of cycles will touch four million units this year. A 2010 Mintel report shows that 12% of adults in Britain cycle regularly whereas 6% cycle most days. An increase in the number of members in cycling clubs has also been noticed. A good upturn has been experienced by the cycling industry due to the shift in the culture. The retail industry has also benefited largely as people have become more aware about the positive effects related to a healthy lifestyle. Cycling is considered to be an affective stress reliever and an excellent cardiovascular exercise. A recent industry trade publication shows that 94.5% of people cycle for fitness. There is a tremendous growth in the sport as a large number of people are becoming aware of its health benefits. The British cycling industry and in particularly Halford is in a unique position to take advantage of the trend. The interest has risen across strata. 2012 Olympic Games and programmes encouraged young people to take up cycling, organised by Cycling England. In 1999, the Labour government initiated The Cycle to Work Scheme. It allows the employees to purchase cycles tax-efficiently and has played a big role in getting people on their cycles.

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It should be noted that Hull has various bicycle associations such as, the City Road Club (Hull) which has approximately 200 serious trail riders who take the advantage of Hull’s miles of trails and Hull Cycle Speedway Club in Hessle which provides a huge range of fun activities like training and coaching sessions for regional and national competition in the sport of Cycle Speedway. Hull’s Thursday Road Club also another major association.

2.1. Target Market While Halfords hopes to cater to population in Hull, it aims to target 2 buying types, the segment that is budget conscious and the cycling aficionados who want to keep abreast of with the most recent cycling trends. Shapiro notes; "grouping potential customers into fairly homogeneous segments enables you to do your marketing with a carefully targeted rifle rather than with a shotgun scattering pellets every which way”. Using Bicycles as a means of transport is not only economical, but also saves time and space in Hull, especially in the business district. White collar employees find it easier to cycle to work rather than use public transport. Apart from business employees, there are university students who comprise of Halfords target group. Halfords customer profile can be categorized into 2 distinct markets: White collar employees UK government’s Cycle2Work Scheme has enjoyed huge popularity since 1999. This governmental scheme was introduced to encourage the employees to cycle to work by providing them tax benefits like employees can make huge savings on a new cycle and its safety items. The policy offers tax benefits for cycling to work. According to Mintel, 2010 Bicycle retailers have experience 50% rise in sales on account of this scheme. Halfords is a major promoter for cycle2work scheme. Employees require a stable as well as a comfortable cycle which comes with a full range of accessories. Drop off and pick up facilities convenience are vital when the cycle require maintenance servicing,. Their families ride bicycles as well, and they will patronise a shop that gives personal service University students

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University students use bicycles as an inexpensive alternative to public transport. They are also attracted by athletic pursuits, and are enthusiastic about riding their bikes in mountain trails. students are the main market for leisure equipments They are health conscious and would ride to keep fit They are brand conscious yet look out for something that is affordable/economical they look out for expediency of sales and service

2.2.

Market Needs

Our market niche has a number of specific needs that form the main focus of our strategy: Various cycles at different prices. Various styles of bicycles, available in every size A good collection of bicycle accessories such as locks, fenders, lights, tires, seats, etc. A great deal of replacement components and service parts. Friendly and healthy bond linking cyclists and shop staff. Good customer and maintenance services from fixing flat tires to drop in repairs, to scheduled maintenance plans and support. Convenience offerings where the cyclist can leave their cycle behind, go for class or work, and be assured that their bike will be ready for the ride home.

2.3.

Market Trends

In the past six to nine years, the market trend has been on a low for bicycles sales. Earnings are recaptured through elevated sales in accessories and service departments. The bicycle shops must always bank on accessories and service to produce earnings. For local shops it is even more difficult to wrangle with the large mail order houses. Currently, 10-15 different wholesalers serve the whole industry. Each wholesaler has their own niche market to some degree, but generally they have an equitably wide product range. A cycle retailer would contact a distributor, in need of parts and eventually the retailer would purchase their products. It is very well acknowledged that the cycle trade has small limits, 30% for the bikes, 75% for gears, and 100% for garments (The Independent,2009). Closeouts can expand retail traffic exponentially and considerably increase the store’s bottom line with decent limits.

2.4.

SWOT Analysis for Halfords

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Strengths

Weaknesses Relatively higher price

Cycling is an easy and low-impact means of exercising which can be Seasonal challenges of the business enjoyed by people of all ages. Excellent customer services are Access to Capital provided such as: bike fittings, training, safety tips, instructions on proper use and repair and many more. A huge range of cycle parts and accessories are also sold. 642 stores across Nation including 403 super stores. Available within 20 minutes’ drive 0f 90% of the UK population Owners are experience in retail sales and bicycle industry

Opportunities Encouraging lifestyle

the

trend

Population growth experienced by the area.

Threats of is

active Online cycle selling as well as web catalogue selling and service. being Price pressure is generated wholesale/mass suppliers

by

Government support and funding Effect on the power of spending due through schemes like Cycle2Work to fluctuations in the economy. An alternate means of transport due to increase in fuel price and less parking place.

3.

Market Positioning

Halfords is in a cash cow position in the BCG growth share matrix as it receives high relative market share but a low market growth rate. It wants to continue to position itself as the premier bicycle retailer that offers regular closeouts, specials and other deals, and by offering bigger margins. The company will take advantage of its competitive strengths to ensure the proper positioning in summer (june-september) 2011.

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The company will continue to exploit its large portfolio of stores, to offer unmatched product line and a full range of maintenance and convenience services to customers. Customers will be able to find products at very nice margins, uncharacteristic of the bicycle industry. It will try and cash in on the government’s tax relief policy and other economic, social, environmental and health benefits of cycling to promote its products and services in Hull.

3.1.

Key Product Offerings

Apart from its huge share in the car maintenance and car enhancement market, Halfords Cycles product range in the Bicycle market includes: 

Bicycles: Chiefly in the mountain bike style, retro-cruiser is a close second, and sport/touring/racing road bikes a distant third.



Accessories and Clothing: Locks, computer speedometers, fenders, cargo racks, comfortable seats, headlights, helmets, water bottles, panniers/back packs/messenger bags, child seats and trailers, bike storage racks, and auto roof rack systems all fall in this category. Since its is nearly impossible to carry all accessories, the range is thoughtfully chosen basis the target market.



Parts: Cranksets, pedals, tires, derailleurs or brakes, are both vital parts and upgrading trimmings. Others, such as headsets, bottom brackets, spokes, chains, cables, and cable housings are firmly maintenance.

3.2.

Key Competitors

Halfords current local competition can be categorized into two major groups: Motorworld: Motor World is the only other national bicycle retailer that operates in the same product categories as Halfords. Latest published accounts have quoted Halford’s turnover as being as much as 12% larger than that of Motorworld. While Motorworld has operations limited to high street locations, Halfords has stores located conveniently at out-of-town locations as well. The out-of-town locations allow Halfords to offer its customers large professional stores, big parking areas and longer working hours – a business model that competitors have not yet been able to replicate(Annual Report 2010)

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Independent cycle shops located in Hull: Independent bicycle shops located 15 miles surrounding Hull provide staunch competition as they find it easy to attract the local population. However these small operations stock no more than 30 bicycles and have limited selection of bicycle accessories; giving Halfords an edge over independent cycle shops.

3.3.

Competitive Edge

Halfords is positioned well to take advantage of current and future market opportunities. Its competitive power comprises of:      

4.

a good assortment of defensive strategies and expansion markets; market leadership position; distinguished brands recognized nationally and with extensive mass appeal; a nation-wide portfolio of superstores that will be hard to duplicate; a well built track record of earnings growth and cash generation; powerful negotiating opportunity with supplier due to its market position and hold

Marketing Objectives

The objectives for Halfords are to:

4.1



Maintain and expand our reputation for high quality service and sales, creating an internal training and skills development program for staff



To achieve additional sales growth and operational margins



To extend its range and service advantage



Maintain a financially healthy business and control costs



To leverage the Halfords brand in multi-channel



To take complete advantage of current and future market opportunities

Marketing Strategy

Halfords marketing strategy is based on remaining the resource of choice for local bicycle users especially the working and the university student population in Hull region. Based on Ansoff’s growth strategies, Halfords marketing penetration strategies allow it to maintain leading position in the cycle retail market in Hull. By maintaining its cash cow position, the company will continue to experience profits. In Page 7 of 12 | 5 January 2011

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addition, our product range offers something for all types of bikers – The casual cyclist who cycles occasionaly for enjoyment, children of every age group and enthusiastic cyclist. Great performance in areas of product selection, product quality, and customer service (including repairs and tune-ups) would be the base of our marketing Our marketing mix will use advertising and promotions as key elements in promoting our products and services. See Appendix 1 Product Strategy- Kotler defined product as "anything that can be offered to a market to satisfy a need”.For the months of June till September 2011, Halfords will focus on sales of five categories of quality and high performance cycles comprising front, full suspension, and no suspension mountain bikes; road bikes to facilitate office goers; comfort bikes focused towards recreational user; hybrid bikes for on and off road performance; and youth bikes for kids above the age of 6 years. Additionally, Halfords will also focus on selling bike parts and accessories like helmets, back seats, locks, lights, clothing, shoes, tires, tubes, wheels, saddles, gloves, hydration, pedals, pumps, tools and lubricants. To add to this superior quality product range, Halfords will provide first-rate, individualized, matchless customer service… including, proper bike fittings, instruction on safety and proper use, and repairs. Pricing Strategy- Since Halfords enjoys a good position in the market, it also enjoys a strong bargaining position with it suppliers. In turn, this allows the company to offer high value product and service pricing to its customers. The price range for maintenance will vary, but the five types of bicycles will be offered within the following price range Mountain -

$200 to $1200

Road -

$200 to $1200

Hybrid -

$150 to $1200

Comfort -

$150 to $600

Youth -

$125 to $400

Halfords wants to be a popular choice not only for white collar professional and cycling enthusiasts, but also wants to appeal to the cost-conscious university students Thus the pricing orientation of our products will vary from being inexpensive ($200 to $599) to the expensive range ($600 to $1200). Place/Location Strategy- All our products will be distributed through our out-of-town super stores. Repairs and service will also be provided on location. For the working population, we will offer bike deliver facilities free of cost within the Hull area. We will also promote our products and services through our business website that will allow users to contact the store and view our complete list of products and services, as

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well as keep account of latest deals, promotions and events. Currently 6% of Halfords sales are online and by integrating our business website with our store operations, we want to increase this share (Halfords Annual Report, 2010). Promotion Strategy- Chandler,1991, believes that the pre-requisites to promotion are knowing who one is aiming at and making sure that one's service really answers their needs. Television, radio, and newspaper advertisements will be used to promote products amongst Halfords target audience. Our business website, printed promotional materials, and promotional events will offer additional advantage. Radio and TV advertisements will be aired regularly. Visibility for Halfords cycles will be generated using a multi-channel advertising campaign. Newspaper advertisements will be placed in popular business papers for working population of Hull and also the local university’s paper. Our website will be the most up-to-date source of product information and availability. All activity on the web and participation in trade shows will be highlighted on the business website making it a unique source of information. In addition, Halfords will tie up with the two local biking clubs to host and sponsor the Mountain Bike Race held every August. Promotional flyers, Halfords jerseys etc will be used to promote the brand among Hull population. Halfords will also sponsor business community events and government environment protection schemes to raise awareness of cycling a healthy/environmentally friendly medium. The student population will be lured through lucrative back to school discounts, coupons, and spring specials. Above all, customers will be surprised at the level of customer service that they will receive at Halfords.

5. Implementation and Control

The financial plan is being developed basis available marketing and sales data for previous years, and keeping in account the changing market trends, planned marketing and promotional activities, revenue and expenses. Following assumptions are made in building the plan: The discretionary purchasing power of the Hull population will either remain stable or increase. • The lack of parking area will continue to grow. • Inflation in gas prices will increasingly support substitute transportation means among local population, like using cycles for daily commuting. •

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Government will continue to offer tax benefits to bicyclers with schemes such as cycle2work • The cycling industry will continue to grow •

5.1. Sales Forecast

The following information supports our belief that there is sufficient demand for a bicycle, like accessories and maintenance services in Hull area: Halfords will be the only specialty bike retailer in this part of the state, giving us a great opportunity to capitalize on this market; Hull has a strong family presence, and families are fairly large consumers of bicycles; Hull also has a local university whose students will not only take advantage of the many recreational trails in the city, but also use bicycles for transportation; Hull is a biker friendly city with many trails for all different skill levels that attract bicycle enthusiasts from all over the state; Halfords provide a full line of bicycle parts and accessories, providing items that no other bicycle specialty store or mass market retailer in the state can match; it also offer bicycle repair services, including tune-ups, which again is a service that is hard to find in Hull or the surrounding communities; Hull is home to two bicycle associations; and finally the strong performance of the state and local economy was also considered when forecasting sales revenue. Forecasting sales from 2007 to 2008 and 2008 to 2009, we assumed a 5% increase in sales, knowing that sales of bicycles nationwide increased by approximately 6% in 2008 Starting April 2011, Halfords superstores will see a large demand for repair and tuneup services as people take their bikes out of the garage and get them ready for the warm weather months. People will also shop for the latest line of bicycle accessories and apparel. Sales revenues will grow in June and July as our advertising campaign starts to take shape. Sales revenues will peak in the month of August. As the summer nears to a close in September sales start to slightly decrease and dramatically tail off October. See Appendix 2.

5.2. Marketing Expense Budget

Expenditure on marketing is to be planned at just about 1.76% of total sales (Retail Sports Goods rate found in Financial Studies of Small Business, 13th Edition). We will spend an additional £2,000 to pay for the production and filming of our television commercial and pay for the air time on local cable television, which is

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approximately£ 2,000 again. £2,900 will also be spent as cost towards management of our business website. For the period of June –September 2011, our marketing expense budget returns to 1.76% of sales. See Appendix 3

6.

Conclusion

The bottom line for Bicycle sales by detailed analysis of all possible marketing strategies and views will be reflected in the sales volume of Halfords during summers(June-September) 2011 in Hull. Examining trends in market and market behaviour may at times result in a vaguely different depiction from the real outcome. The understanding of the circumstances that are possible through the study will assist in understanding the market positioning of Halfords Cycles during summers 2011.

Bibliography



Oscar González Benito, María Pilar (2010) ‘Retail pricing decision and product category competitive structure’ Decision Support Systems, Volume 49, Issue 1, Page 110-119 Retrieved 22 November 2010



http://www.bike-eu.com/news/4456/uk-survey-sales-4-million-bikes-but-halfords-reportsdecline.html. Retrieved 24 November 2010

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

Allegra Strategies Limited Project Vélo 2010 Report ‘UK Cycling Market Study’ 2010. Retrieved 22 November 2010



Mintel (2007) ‘Wireless cycle equipment launched’ . http://oxygen.mintel.com/sinatra/oxygen/rps/#1_0_201012_1_0. Retrieved 29 November 2010



Mintel (2010) ‘Broader Market Environment’ http://oxygen.mintel.com/sinatra/oxygen/index/letter=1. Retrieved 4 December 2010



Mintel (2010) ‘Social Media is becoming nations top passtime’ http://oxygen.mintel.com/sinatra/oxygen/search_results/show&/display/id=479870/display/id= 227734. Retrieved 4 December 2010



Philip Kotler in Darlene E. Weingand.(1987) ‘Marketing-Planning Library Information Services’ Libraries Unlimited, p.62. Retrieved 6 December 2010



Benson P. Shapiro. 1973. "Marketing for Nonprofit Organizations", in Harvard Business Review, 51(5), p.124.



Karen Chandler. 1991. "Practical Promotional Strategies for Your Information Service", in Aslib Information, 19(2), p.48. Retrieved 4 December 2010



Retail Sports Goods rate found in Financial Studies of Small Business, 13th Edition. Retrieved 4 December 2010



Halford Group Plc (2010), Halfords Annual Report, www.halforscompany.com. Retrieved 6 December 2010



Council RC, Why Cycle (2010), http://www.hullcc.gov.uk/portal/page? _pageid=221,97821&_dad=portal&_schema=PORTAL Retrieved 29 November 2010



The Independent (2009) ‘Cycle market: Moving into the fast lane’ http://www.independent.co.uk/news/business/analysis-and-features/cycle-market-movinginto-the-fast-lane-1702191.html. 29 November 2010

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

Great Britain Parliament. Transport (2009), ‘Cycle to work scheme implementation guidance’ London: Crown. . Retrieved 6 December 2010

Appendix 1 – Marketing Plan Roll Out (June-September 2011)

2011 Marketing Communication Tools

Frequency

June 4 11

18

July 25

1 8 15

22

1 Advertising 1.1 Print: magazines

1 full-page, 4/c

1.1.1 Cycling News

1 / month

1.1.2 The Gaurdian

1 / month

1.1.3 Cycling Weekly 1.2 TV

1 / month 20 sec. commercial

1.3.1 British TV

2 / day

1.3.2 BBC

2 / day

1.3.3 MTV 1.3 Radio

2 / day 15 sec. commercial

1.4.1 Planet Rock

1 / day

1.4.2 BBC Radio 1

1 / day

1.4.3 Choice FM

1 / day

2. Public Relations 4

2.1 Media relations: press release 3. Direct marketing 3.1 E-mail marketing

1 / week

3.2 Internet marketing 3.2.1 Online advertising

During the whole term

3.2.2 Promotion on Facebook, MySpace and Twitter

During the whole term

4. Sales promotion 4.1 Cash discounts

---

5. Campaign research

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August 29

6 7 13

September 20

3 10

17

24

Appendix 2 – Marketing Plan Roll Out (June-September 2011)

Sales Bicycles Parts/Accessories Repair Total Sales

June 193,875 144,787 48,025 385,687

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July 203,569 152,026 49,376 404,971

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August 213,747 159,627 51,844 425,220

September 220,485 166,258 53,496 466,330

Appendix 3 – Marketing Expense (June-September 2011) June - Sep 2011 Television Ads Radio Newspaper Ads Web Marketing Promotional Events Printed Promotional Materials

2000 1,250 1,000 2,900 2,000 250

Total Sales and Marketing Expenses

7,500

Percent of Sales

1.76%

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