Welcome to the the Ivey HBA Retail Marketing Management blog. Retail marketing is an exciting, dynamic, important, and very visible aspect of the overall field of marketing. Throughout the year, students will be posting comments regarding contemporary retailing issues. Although this is intended to be used by Bus 4411 students, industry marketing professionals are also invited to join in if they like.
Tuesday, March 31, 2009
Bet on a soccer team: Media World, an electronic retailer.
At the time of the foundation the philosophy of electronic retailers was based on a limited amount of space, a limited range of products and generous profit of margins. Mediamarkt establish the first European consumer electronic superstore based on the new business idea of generous floor space, a wide range of products, narrow profit margin, but greater turnover.
Media world can be fully considered a category killer having 100 stores in Italy (mostly in the north) with an average of 2500 square meters per stores located in huge mall. It has got a high specialization in electronics, informatics, technology and white goods and an assortment characterized by a huge merchandise variety and assortment (good selection), prices are lower that the concurrent.
Media World based his competitive advantage on skills (employers specialized for each section to give suggest and opinion), supply (vast in terms of number of products and prices), placement (numerous store all over Italy), selling on different channel (pioneer in the e-commerce), innovation and prices.
About the value preposition they found on price and selection.
It usually have a very aggressive promotion campaign, based on periodical strong cut on prices usually made on the 20% of the products (growing to 30-40% on items like TV, digital cameras, white goods) pushed by different channel.
In late spring of 2006 they develop a massive campaign for the happening of soccer world cup. It was called ‘Media World word cup 2006, support Italy and win’. Anyone who has bought a LCD or plasma TV size at least 32” (only items on promotion), in case on win of the Italian team, was going to be repaid. More than 10000 TV were sold on this promotion, meaning a total value of 18 million € (an average of 1560€ per TV).
Italy won the world cup.
Were the creators of this campaign fired? Not at all!
First of all the campaign, fully approved by the shareholders, was covered. The refund was made by coupon of the same value of the TV purchased to be spent in the shop where the TV was bought and obviously the cost for the retail store is not the same as the value for the client because we have to consider the revenue for the retailer (so the hypothetical loss is less substantial). Moreover was done a partnership agreement with the supplier TV companies, guaranteeing them higher sales if joining this promotion, to share the risk or reduce the supply price.
As a matter of fact this idea was very successful: increasing of selling by 30% during that period (people that went in the store to buy a TV purchased also different items not on promotion captivated by the store) about the TV their selling were doubled in this period, increase of market share by 300%.
Looking at this data we can say that their concurrent suffered a big damage from this operation.
In the end Media World, considering that this promotion was offering the hugest jackpot ever, gained a lot of publicity because all the media where talking about that for several days, and moreover there was a large word of mouth that increase the awareness of the brand.
A very innovative and courageous campaign ended in what was supposed to be the worst result for the company, but even that very successful so that Media World conceived a similar one for the 2008 European Cup.