Executive Summary

We are looking at a company located in the suburbs of Brisbane for the marketing assignment. The company is named Houzit Pty by two business founders, and it is registered with Australia Securities and Investment Commission. The marketing assignment devise strategies and plan marketing tactics of Houzit company.

Introduction

Houzit Pty Ltd company provides a range of items ranging from decorative figures, mirrors, lighting scheme, bedroom and bathroom fittings, positioning the company as Australia’s leading homeware stores. The company specializes in kitting out high-level service for renovated and new residences. The assignment starts with organisational overview and strategic direction. We evaluate the risks and benefits of each potential marketing opportunities, and call forth the best suited concept. Then we develop the analysis tools and metric tro monitor and manage marketing performance. Finally, we suggest tactics to implement the marketing strategy.

Organisational overview

Houzit Pty Ltd company provides a range of items ranging from decorative figures, mirrors, lighting scheme, bedroom and bathroom fittings, positioning the company as Australia’s leading homeware stores. The company specializes in kitting out high-level service for renovated and new residences. Target customers of Houzit include home renovators, home builders, and shoppers.

Strategic Direction

Strategic direction refers to a course of plans and actions that are put in place to attain the company’s vision and mission statement. The vision of company states the ideal market position, and products while the mission statement expresses the goal of company to round out the vision. In order to achieve set targets, the strategic direction shed the light for business to pursue and commit to business’s goal. It starts to build a clear vision for a market, thus cumulative its competitive advantage.

The strategic directions of Houzit company could be defined as the action to achieve the vision and mission of the organization. Houzit envisions to become a leading retail homewares that serves the needs of home residences by offering them high-quality service and homeware items with a simple payment process. The mission of company aims to expanding its market and conduct mass coverage across Australia national wide. The company plans to start with 15 stores at Brisbane areas and rising to over 100 stores in different places in Australia by 2020. There are three parameters including unique products, quality of product, and diverse selection in way that the strategic goal could be accomplished efficiently. Houzit company recognizes the sustainability trend, thus Houzit prioritizes green design without the high electric usage. The main objectives of Houzit company include (i) the sale at $20 million per year in the next three years, (ii) the loyal customers base is at 15,000, and (iii) embedding Houzit brand into customers’ mind with at least 1 in 3 people be aware of Houzit brand through random surveys. In other words, the objective of Houzit is the sustainable growth and the expansion in business.

The current resources of company includes 15 stores distributed throughout the Brisbane area under the management of head center at Milton. The average size of each store is ranged from 1000 m2 to 1500 m2, and the main concept design of Houzit stores are bright and functional. In average 15-20 full-time employees are required to operate one store. Business transactions include 60% cash and 40% on long-term repayment plan. The sale shares shows business performance by business segments of Houzit stores. Bedroom furnishings contribute 35% of total sales of Houzit stores that is followed by bathroom fittings’ sale with 30%. Apparently, bedroom furnishings and bathroom fittings are key products of Houzit Pty business. The sales of mirrors and decorative items account for 20% of total revenue while that of lighting fixtures constitutes only 15% and is considered as a new additional revenue.

Along with above analyses, we could recognize the gap between the current capabilities and resource of Houzit and its objective. The objective of growing in the store numbers is 100 stores Australian wide, yet currently only still 15 stores in Brisbane. The objective of loyal customer numbers reach by 15,000, yet currently 10,000. Houzit has not yet conducted any surveys related to brand recognition.

Opportunities

In order to achieve the business’s objective, we apply the Ansoff Matrix (1965) into the analysis of marketing opportunity of Houzit (see Figure 1)

Figure 1: Ansoff Matrix

The objective of company is to develop and grow the market. In order to meet the objective, diversification and market development are suitable marketing opportunities for Houzit. Market development is that the company sell existing products to new market, while diversification is to focus on broadening in term of both product types and market segments. We identify the benefits and risks of each market opportunities.

After reviewing the risks and benefits of two opportunities, market development is the most suited marketing strategy with the objective and current capacities of company. Moreover, franchising is recommended to apply as market development concept.

Recommend the opportunity that best addresses organizational objectives

Marketing development strategy involve expanding market with existing products, and franchising concept is recommended as the best addresses organizational objectives. Houzit adopt marketing mix implementation that suited with marketing development concept.  We apply 4P Marketing mix which comprise four elements: Product, Price, Place, and Promotion. 4P Marketing mix would be illustrated below:

• Product: Product marketing refers to physical goods and/or services that are developed or distributed by a company to target customers in the market (Muala, 2012). The important part in product marketing mix program is to ensure that the products are sold to target customers since each product is designed with functions to meet the needs of specific customer groups (Gordon, 2012). The product categories of Houzit include various product types such as bedroom and bathroom fitting, mirror items, and lighting products.
• Price: Price marketing is defined that customers need to pay an amount of money to take ownership of a product (Kotler, Armstrong, Harris, & Piercy, 2002). Kotler et al. (2002) choose a more intuitive approach, suggest that firms should take into account customers’ perception and demand, costs and expenses, as well as competitors’ strategies in order to design a suitable pricing method. Thus, Houzit should take a quick survey to provide an affordable price for the majority of customers. Houzit could combine Price and Promotion marketing to gain understanding about the wishes and needs of target customers.
• Place: Place marketing refers to the channels used by the companies in distributing products to the customers (Kotler, Armstrong, Harris, & Piercy, 2002). A product success is determined by how the companies ensure the product is within customers’ reach and it is translated to the need of diversifying distribution channels (Palmatier & Crecelius, 2019). Along with franchising concept, Houzit should take into consideration the appropriate channels or route to rivet customers’ attentions and facilitate for customers visiting stores.
• Promotion: Promotion marketing is perceived as the companies’ efforts to ensure the customers keep update and purchase their products (Bayer, 2010). When the companies develop a new product or penetrate new market, the promotion marketing must be conducted to timely inform customers (Broniarczyk, Hoyer, & McAlister, 1998). Houzit should implement appealing promotion program such as discount programs or voucher for loyal members. The promotion programs offer incentives for customers to experience products and service of Houzit.

The “Place” and “Promotion” elements of the marketing mix seem to play more important role in the success of franchising concept as marketing opportunities. Houzit should take into account new target segments to select distribution channels and promotion programs.

Review the performance of the organisation against marketing objectives

In order to assess the performance of the organisation according to marketing objectives, we adopt the below analysis tools to gain insight into the business context and marketing performance.

Competitive analysis: Porter’s Five Forces Model is considered as a competitive analysis tool and its output contributes the knowledge about the interaction within industry (Johnson, Scholes, & Whittington, 2008). This model was presented by Porter (How competitive forces shape strategy, 1979) and the industry evaluation takes into account five elements, including customers, suppliers, substitutes, industry competitors and potential entrants. It depends what market that Houzit select to penetrate to identify the bargaining power of customers, substitutes, local competitors, and potential entrants. Houzit have a diverse long-term supplier base, thus the bargaining power of suppliers is medium.

SWOT analysis: The objective of SWOT analysis is to assess the strategic position of business by identifying Strengths, Weaknesses, Opportunities, and Threats (Pickton & Wright, 1998). Strengths and Weaknesses are internal factors, they exist inside the organization (or within the partnership, if relevant to the project being analysed). Opportunities and Threats are external factors affecting the organization. The strength of Houzit are the diverse assortments of products, and the reputation for high quality of service. The reputation of Houzit is built over the years in the homewares fields, as a result, Houzit maintains high customer loyalty. The weakness of Houzit business is the limitation of budget allocations. The opportunity of Houzit is to expand market through franchising concept. However, the threat of franchising concept should be taken into account.

Value chain analysis: A value chain is a course of internal activities needed to provide a full product or service. The purpose of value chain analysis is to better manage the linkages of activities from raw materials, suppliers to end-users (Shank, 1989). As Houzit specializes in fittings for the bathroom, fittings for the bedroom, mirrors and decorative products. Before it is marketed to customers, the company need to identify what the raw materials are used to manufacture the goods and what processes are applied into them so that we can provide the consumer with the best value. Sourcing, manufacturing, controlling the quality, and commercializing the products are important tasks before handing to end-users.

Metrics to be used in measuring marketing performance

According to the marketing objectives, Houzit identify metrics to be used in measuring marketing performance of Houzit in term of sale performance, customer satisfaction, and brand equity. In order to monitor and gain insight into marketing performance, return on marketing investment (ROI), marketing qualified leads (MQL), and sales qualified leads (SQL) are common metrics to calculate the efficiency of marketing implementation. In order to identify customer satisfaction and loyalty, Houzit should actively collect feedbacks of customers, analyse customers’ behaviour through the results of feedbacks, or even surveys. The online traffic of customers also reflect customers loyalty, and marketing performance. Besides, it is also important to identify the determinants of in-store experience combined brand factors contribute customer satisfaction, hence indirectly impact on customer loyalty. Furthermore, Houzit need assess the effect of marketing mix element on branding activities, for instance, advertising factor and brand image impact on the brand equity of firms, and lead to the increase in customers’ intention. Houzit should analyse the strengths and weaknesses of brand activities, and consider to allocate resources to each element in marketing mix.

Tactics

In order to ensure the consistency and relevancy of the marketing strategy, there are four tactics aiming to direct and correct strategic marketing activities. Firstly, we need ascertain the schedule and detailed timeline of marketing activities. There are marketing activities that Houzit need implement such as: advertising programs, discount programs, public relation, market research, and customer service. Secondly, with each activity of marketing plan, we need assign the appropriate departments or staffs, and assignees have full responsibility to carry out the required tasks and report to Board of Director weekly. Thirdly, we need estimate the marketing cost to implement the plan. We allocate more resource to market research to figure out the suitable new market segments and promotion programs. Fourthly, we establish KPI indicators and metrics in order to keep up with the marketing progress. KPI metrics could include ROI, MQL, SQL, new customer numbers, new store numbers, and so on.

The legal and regulations should also be taken into consideration before manufacturing products. We need identify the products or materials are legally allowed to be in Australia market. Some materials will have special requirements, and even be banned in Australia market. Houzit has to follow product safety rules and standards under Australian consumer law. Besides, consumer Protection Notice No. 6 of 2005 sets out the mandatory requirements for household cots. The required specification requires that cots comply with the impact, endurance, load, and stability requirements. It is recommended that manufacturers coordinate product testing with the right expertise, and equipment through specialist testing laboratories to ensure that cots meet the required norm. Moreover, the government encourage the sustainability development in businesses, thus, Houzit should take green procedure adoption, and also promote green products to customers. Houzit should list and consider materials used in the making of products in order to have proper treatments.

Conclusion

Houzit company should conduct the comprehensive marketing analysis and detailed marketing plans. Based on the gap between the current capacities and the business objective, franchising concept is recommended to apply.