Maxx Company -- Strategic Marketing Plan Tk Essay

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Maxx Company -- Strategic Marketing Plan

TK Maxx Strategic Marketing Plan

TK Maxx is expanding beyond the brick and mortar footprint that helped it rise to the top of retail operations in the United Kingdom. As with its competitors, TK Maxx has entered the mobile digital market and is implementing multiple distribution channels (McVey, 1960). The company has a clear target market that transcends the various channels over which its goods are marketed. This is the case because the market segment targeted by TK Maxx is made up of digital natives or consumers who have discovered the benefits of being technologically savvy -- particularly for shopping.

The marketing objectives for TK Maxx were identified as follows:

To increase market share for kid's shoes by 25% by September 2018.

To increase market share in home textiles by 15% by September 2018.

To increase e-commerce sales of designer bags and accessories by 15% by 2015.

To increase brand awareness on social networking sites by 30% by 2015.

5. To quadruple the rate of purchases in the UK and Ireland by 2015.

A range of marketing strategies have been assigned to address the marketing objectives, including positioning through product differentiation, place with regard to distribution channels, and promotions for brand awareness. The main thrust of the strategic marketing analysis is customer-centric, followed by channel considerations, and competition. Pressures from competitors and increasingly brand-engaged consumers are key drivers for TK Maxx's ventures into online markets and social media networking sites. The impact of the TK Maxx business model on the brand equity of products from suppliers is discussed.

Introduction

The TK Maxx Company presence in Europe includes stores in Germany, Poland, the United Kingdom and Ireland. The company was begun in 1994 with the idea of providing off-price retailing in brand-name and designer fashion for family apparel, footwear, accessories, luggage, home furnishings, and home textiles. With 307 European stores at the end of 2010, TK Maxx intends to respond to the European market with up to a total of 725 stores over the long-term. This marketing plan provides an overview of the company, including its mission and vision, and a discussion and evaluation of the firm's marketing objectives. Recommendations for marketing strategies are provided and tied to the overarching evaluation strategy for the proposed marketing plan.

Corporate Mission/Vision

The corporate vision of T.K. Maxx is to grow a global off-price and value company. The mission is to deliver to the market every day a rapidly changing assortment of quality brand name merchandise priced 20 to 60% less than the regular prices of specialty stores and department stores (Corporate Governance Documents, 2012).

Briefly, off-price retailing entails offering brand-name merchandise at discounted prices that encourage buyers to take advantage of the great values. Unlike most retailers that buy from vendors just four times each year, the opportunistic behavior of TK Maxx buyers enables them to conduct daily transactions with over 10,000 vendors in 60 countries, thereby assuring the churn of inventory for which the company is known. This opportunistic buying strategy ensures that merchandise is in-season -- and close to customer need -- enabling TK Maxx to consistently offer same-season apparel, with only a single-digit percent of their inventory sold out-of-season. Off-price retailing is characterized by substantially lower prices than the regular merchandise prices of department stores and specialty stores. Low cost structures, aggressive inventory management, and rapidly churning assortments of apparel are the foundation of the off-price retailing business model (McGoldrick, 2002). Competitors include the Federated Department Stores, Inc., The May Department Stores Company, Target Corporation, J.C. Penney Corporation, Inc., Sears, Roebuck and Co., The Gap, Inc., Kohl's Corporation, Wal-Mart Stores, Inc., Kmart Corporation, Limited Brands, Inc., Ross Stores, Inc., and Value City Department Stores, Inc. (Burt & Sparks, 2003).

T.K. Maxx has established an operating foundation based on their socially responsible values. In addition to fulfilling their mission of delivering value to customers, the company is focused on returning value to shareholders, ensuring the company's vendors meet specific standards in the way that they conduct business, and adding value to the communities in which the company does business. TK Maxx is a strong proponent of green strategies and earns money for its corporate giving program by charging customers for plastic bags (Lamb, 2005).

Marketing Objectives

1. To increase market share for kid's shoes by 25% by September 2018.

2. To increase market share in home textiles by 15% by September 2018.

3. To increase e-commerce sales of designer bags and accessories by 15% by 2015.

4. To increase brand awareness on social networking sites by 30% by 2015.

5. To quadruple the rate of purchases in the UK and Ireland by 2015.

Justification of Marketing Objectives and Associated Marketing Strategies

1. To increase market share for kid's shoes by 25% by September 2018.

This marketing objective aim is increased market share in the kid's shoes market. The target market for TK Maxx is a shopper who is: female, between the ages of 25 to 54 years of age, earns or has access to middle to upper-middle income, shops at high-end department stores and specialty stores, and is both value conscious and fashion conscious. The TK Maxx customer base is 65% from the ABC1 socio-economic demographic (Thompson, 2009). The ABC1 nomenclature breaks down as follows: A equals customers who are in higher managerial, administrative or professional roles; B. equals customers who are in intermediate managerial, administrative or professional roles, and C1 equals customers who are in supervisory or clerical, and junior managerial, administrative or professional roles (Mintel, n.d.).

Marketing strategies. The marketing strategy for the TK Maxx kid's line of shoes and clothing is focused on product positioning. Applying the TK Maxx overall target market information to the new line of kid's shoes at T.K. Maxx means marketing primarily to women with school ages children and grandparents of school age children. Since this market segment makes up a good portion of the regular customers in the bricks and mortar stores, the marketing strategy will focus on promoting the new line of kid's shoes as a continuation of the TK Maxx strategy to bring value to its customers. The children's shoe line is one of several inroads being made by the company that do not follow the prescriptive off-price model (home textiles is another new stand-alone product line).

TK Maxx is gearing up to be a one-stop-shop like many department stores, a number of which are competitors of TK Maxx. The addition of the home fashion, home textiles, kid's toys, and kid's apparel is a strong indicator of movement in this direction. Five retailers accounted for 60% of the sales in the general merchandize category over the past several decades. These retailers were K-Mart, Target, Costco, Sears, and Wal-Mart. Much of their productivity was attributed to the use of information technology (Johnson, 2002), and general merchandizers tend to use information technology at higher rates than do retailers. TK Maxx is beginning to employ information technology in a manner similar to its big box competitors in order to learn more about its customers (Cavazza, 2004). TK Maxx will rely increasingly on data mining as it moves away from a Feline's Basement footprint to the new ecommerce configurations.

2. To increase market share in home textiles by 15% by September 2018.

This marketing objective aims to increase TK Maxx's market share in the their home textiles industry. The marketing strategies that will address this marketing objective are based on company strengths. The key strengths of TK Maxx are the extensive expertise in off-price buying and inventory management, their substantial buying power resting on solid relationships with manufacturers and merchandise suppliers, their sophisticated supply-chain and distribution networks, and their deep organization built over decades of off-price retailing experience.

Marketing strategies. The core competencies of TK Maxx can be brought to bear on this new product line which will be marketed primarily to existing customers. The stand-alone home product and home textiles products are sold in the stores and are not yet available online, but if the increase in the number of products now sold on the online store is an indicator, it appears that it won't be long until the home fashion and home textiles lines are also available online.(Spriggs, 1994).

In the mid-1990s, consumers began to be more attracted to items that were of higher quality. As a result, the productivity of labor rose because, theoretically, it takes the same amount of effort to sell a $30 blouse as it does to sell a $20 blouse in the same store by the same employee (Hristov, 2004: Hristov & Reynolds, 2007). According to retail experts, the shift to prefer higher-value goods can be attributed to increased wealth and higher incomes more than to any effort by retailers to change the quality of the goods they sold (Hristov, 2004: Hristov & Reynolds, 2007). The same set of dynamics appear to be in play in the market today as consumers demand higher-value goods and retailers are focused on how to meet…[continue]

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