Internet Marketing Strategy of Argos

Internet Marketing Strategy of Argos

The purpose of this essay is to examine the Internet marketing strategy of Argos. Argos is a home retail group and market leader in retail sales of home and general merchandise. Argos reports that it is a "unique multi-channel retailer recognized for choice, value, and convenience." (Argos Website, 2011)

Argos and the Online Market: Size and Growth

Argos customer base is approximately 130 million and reports state that 26% of Argos sales are via the internet channel with approximately 4 million customers placing orders by phone or online. The Argos website is touted as the website visited the most among high street retail websites in the United Kingdom in 2008. (Argos, Website, paraphrased) Argos is environmental conscious and caters to customers with disabilities. Argos was named the 'Online Toy Retailer of the Year 2009' by the British Toys & Hobbies Association (BTHA). (Argos Website, 2011) In addition Argos received 'The Oracle Retail Week Awards 2009', Hitwise Top 10 Online Performance Award 2008', 'Institute of Sales Promotion Award 2008', 'Precision Marketing Response Awards 2008', 'Hitwise Top Ten Website 2007', 'Retail Week Awards 2006', and 'Retail Week Awards 2004'. (Argos Website, 2011) It was reported in April 2011 that Argos online and mobile application-based sales in combination with customer TV orders, "hit nearly half of the company's total revenue, delivering £1.9 billion in the last year." (CIO, 2011) Argos was reported to be the second largest Internet retailer in the UK after Amazon and to have had "400 million website visits in the past year." (CIO, 2011)

II. Use of the Internet for Research, e-Service, and Purchasing

Argos appears to stay abreast of the latest needs for optimization of their website functionality. It is reported that the Argos Retail Group required a search-marketing agency that was able to understand the traditional Argos catalogue business in addition to the complex nature of the Argos business-to-business division. The specific issue was the need of Argos "to improve conversion rates from visits to leads, across its Rewards and Procurement businesses." (iVantage, 2011) Argos sought to understand who the website visitors were and who it was that was purchasing vouchers and those leaving and failing to make an enquiry as well as needing to more effectively track its campaigns. (iVantage, 2011, paraphrased)

Web analytics were used and specifically 'Urchin' from Google across the Argos website for improving management of information. It is reported that the results included problems of conversion with PfP as well a lack of crawling search engine traffic that assisted the team in setting out objectives that were clear and making decisions about the short- and medium-term focus. The solutions utilized by Argos are reported to have increased visits from 3,500 to 5,000 each month with a 10% improvement in web site leads. (iVantage, 2011)

III. Forecast of the Future Development of the Online Market Segmentation

John Burnett writes in the work entitled "Core Concepts of Marketing" published in 2008 makes the important observation that marketing is and will remain "the pivotal function in any business" as the determination and satisfaction of the customer's need "is the general purpose of any business. It is also a fundamental definition of marketing." (2008) Burnett notes the following which are held to light and reexamined in the present study in order to better understand the theoretical framework that marketing principles rest upon: (1) First, Burnett states that the overall directive for the organization is"…the mission statement or some equivalent statement of organizational goals. It reflects the inherent business~ philosophy of the organization." (2008) (2) Secondly, Burnett states that there are a "set of functional areas [in] every organization." (2008) He notes that within these functional areas are performed tasks that are critical for the organization and these must be effectively managed to realize optimum performance. (3) Next, Burnett notes that each of these functional areas are "…guided by a philosophy (derived from the mission statement or company goals) that governs its approach toward its ultimate set of tasks." (2008) (4) Fourth, Burnett notes that marketing differs from the other "functional areas in that its primary concern is with exchanges that take place in markets, outside the organization (called a transaction)." (2008) (5) Burnett concludes finally with the statement that marketing is at its very highest level of excellence when "the philosophy, tasks, and manner of implementing available technology are coordinated and complementary." (2008) There are reported as little doubt among marketing professionals that key to the success of the marketing relationship is quite simply 'communication' where the parties attitudes are often

"…skeptical, the nature of the contact is hardly intimate, and the message delivery system tends to be impersonal and imprecise. It's because of these factors that communication plays such an important role in a marketing organization. Marketers know that consumers are constantly picking up cues put out by the organization, or about the organization, that they use to form attitudes and beliefs about the organization. Many of these message-laden cues are controlled by the organization, including factors such as product design, product quality, price, packaging, outlet selection, advertising, and the availability of coupons." (Burnett, 2008)

It is important to understand according to Burnett that there are "message-laden cues" that are strongly imprinted in the customer's mind that the marketer is often unaware of however, marketers in the know realize that the sources most prominently delivering this information are: (1) employees; (2) competitors; and (3) the media. (Burnett, 2008) Included in this grouping is the media, including editors and reporters and advertising celebrities or representatives who communicate to and with the media. Added to this is the new media including the Internet in the form of "chat rooms, websites, and propaganda campaigns?" (Burnett, 2008) It is important to note that high value customers are identified through 'relationship marketing' which is stated to create a bond between the individual and the brand through personal attention or customization such as demonstrated in the case study reports on Argos and its interaction and communication strategy with its online customers.

IV. Analysis of Online Competitors and Argos Website Design and Usability

It is reported in a 2010 report that at that time online retailers only represented a small but growing share of the non-food, non-clothing market." (Charlton, 2010) Amazon is one of the biggest competitors of Argos. (Scribd, 2010) Argos is reported to beat its competition however, with its user-friendly web design. (Real Eyes, 2011)

V. Use of Social Media for Marketing Purposes

It is reported by MarketingWeek (2011), that Facebook Europe "has invited a select group of journalists to an event on Monday when it is likely to reveal when Deals will be available in the UK." (O'Reilly, 2011) Facebook is reported to have launched its Deals platform which provides brands a method of offering various types of deals including one-time discounts, free merchandise, loyalty deals rewarding regular customers, friends deals when two friends check in together and charity deals which allow businesses to donate to an organization when customers check in." (Baker, 2011) Argos is reported to be among the Facebook Deals launch partners. (Baker, 2011, paraphrased) Baker (2011) states that Argos plans to donate "1 to its national charity partner Teenage Cancer Trust for the first 10,000 customers that check in this week." (Baker, 2011)

VI. Integration of the Internet with the Overall Marketing Strategy of the Firm

Integration f the Internet with the overall marketing strategy at Argos has been approached through customization of Internet shopping for its customers. A case study is reported in the work entitled "Argos Boost Sales with Award-Winning User Generated Content" reports that Argos desired to "introduce a new product review section on their website and identified email as the key channel to help them achieve this goal." (eCircle, 2011) Customers of Argos making online purchases for home delivery or reserved online to pick up in the store are reported to have been sent "a branded email thanking them for their purchase and asking them if they wanted to review the products they recently purchased." (eCircle, 2011)

Response rates were maximized and each email sent approximately two weeks following purchase, which allowed the customers the necessary time to use the product and its use to still be fresh in the customer's mind. Rather than sending one email that was generic to each customer each generated email was unique to the individuals based upon the products purchased by the customer. Following the product review, the email was uploaded within 72 hours, which made it possibly for Argos to directly engage with customers through sue of "highly targeted, personalized content, providing communication on an individual level with the objective of boosting response rates, generating customer reviews for multiple products and driving sales of reviewed products." (eCircle, 2011)

Argos is reported to use "a mixture of different channels such as television, radio, newspapers, magazines, and posters, depending on which is the most effective and efficient from time to time. The method of buying goods seems to be very appreciated by the English." (European e-Business Market Watch Case Study, 2011) Argos has been known since the 1970s for innovative use of technology with computer systems affecting Argos retail functioning since that time. ICT has been used in monitoring Argos stock levels and in recognizing market trends early on for avoiding "stock out situations." (European e-Business Market Watch Case Study, 2011)

Argo has an electronic point-of-sale system, which have resulted in higher levels of accuracy in financial transactions. Communication has been impacted greatly by new technologies at Argos affecting how Argos communicates with its suppliers and its customers. Argos collects feedback through various channels of communication and is reported to have "implemented an innovative system of regular customer feedback sessions in which customers are invited to attend 'open evenings' to make suggestions of how services could be further improved." (European e-Business Market Watch Case Study, 2011) In addition the systematic use of Intranets and email in all of its stores and distribution centers and head offices since September 2000 has increased the speed and the volume of two-way communication." (European e-Business Market Watch Case Study, 2011)

Argos business model is such that offers customers a multi-channel approach as well as various types of shopping outlets. It is reported that before the new e-channels were introduced that customers were only able to browse offers on their mobile phone or on the Argos website or television. Customers who had access to the Vodafone service were able to select Argos from the Shopping Menu and the main menu, or browse the catalogue or check availability reserve in the tore and pay for home delivery. Since that time customers of Argos are able to place orders and purchase goods through digital television. (European e-Business Market Watch Case Study, 2011)

The combined use of channels is reported to have been possible from catalogues and use of the 'click and collect' service at Argos website. The website is used widely by Argos customers as the Argos website is user friendly and offers real practical value for customers. Examples stated include that the Argos site displays the delivery time for each product it offers and products are able to be delivered to any address in England and Ireland. As well, Argos is concerned about online security and only accepts orders placed through the Secure Socket Layer (SSL) standard to "prevent customers from inadvertently revealing personal information by using insecure connection." (European e-Business Market Watch Case Study, 2011)

It is reported that during the payment that the company requests the card billing address as a form of added security and that the company does not store credit or debit card details after the order is processed. Online customers are reported to be able to register to receive the Argos electronic newsletter that serves to inform them about special offers and promotions. In addition, customers are able to check availability of stock and to reserve goods through Argos 'Ring and Reserve' call center and the 'Text and Take Home' (SMS) services through use of their fixed or mobile telephone. Stated as a primary challenge for Argos in setting up this strategy was the efficient management of merchandising flow forming an extensive base of more than 750 suppliers." (European e-Business Market Watch Case Study, 2011)

The European e-Business Market Watch Case Study that Argos had difficult in managing merchandise flows from such an extensive supplier-base to its distribution center throughout the United Kingdom. UPS Supply Chain Solutions was selected and specifically reported is a solution known as the Nominated Carrier Scheme" which is a system that assist Argos in making sure that its merchandise arrives at the proper destination and the right time. Before the use of the Nominated Carrier Scheme the system was unsure and complex since each of the suppliers had their own individual system for transportation and the method of documentation as well as lead times.

The decision was made by Argos to adopt a single system for assembling all the merchandise from suppliers and have them presented in only one deliver. The system is such that is reported to work through direct computer links checking the merchandise electronically in comparison to the Argos orders and providing confirmation that the merchandise has been ordered and then ensuring proper deliver times and locations. (European e-Business Market Watch Case Study, 2011) Benefits to Argos of using the UPS scheme are stated to include those as follows:

(1) Enhanced control of the Argos supply chain. All information about the goods is entered into the system from pickup until the delivery is made. Customers can track the goods virtually live. (European e-Business Market Watch Case Study, 2011)

(2) The system reduces the number of Argos trucks on the road, increasing the fill rate by 9% in 2003 as compared to 2001. (European e-Business Market Watch Case Study, 2011)

(3) Consolidation of the delivery logistics by ensuring full loads. In cooperation with UPS, Argos logistics manages to deliver its goods in approximately 15,000 (full) vehicle loads per year. The same goods could easily require up to 55,000 loads if a less sophisticated logistics system was used. (European e-Business Market Watch Case Study, 2011)

(4) Significant reduction of traffic in the Argos logistics and warehouse areas. This system has been such a success that the Nominated Carrier Scheme now takes care of 35% of all inbound goods Argos in the UK. Moreover, the percentage of inbound goods carried increased from 20% to 25% between 2002 and 2003. (European e-Business Market Watch Case Study, 2011)

Supply chain management is an important aspect of online marketing as it is necessary that when customers place orders that the guarantees provided by Argos are kept. Toward this end it is reported that Argos, in August 2003, made a decision to "…delegate the management of the warehouses to Retek Inc. Retek's "Advanced Inventory Planning" solution was expected to optimize the supply chain of Argos. This should improve the in-stock availability and sales while reducing total inventory levels." (European e-Business Market Watch Case Study, 2011) Stated as the goal of the 'Advanced Inventory Planning' is accomplishing the optimization of order plans and synchronization of supplies with demands of customers "across multiple channels for improving and maximizing the performance of inventories." (European e-Business Market Watch Case Study, 2011)

A recent report on supply chain management located in the journal of Supply Chain Management Concepts, Techniques and Practices reports that virtual integration is "a step ahead of integrated supply chains…" and that the trending toward "mass-customization forces many companies to focus on their core competences, and outsource a wide range of functions including design, manufacturing, and distribution. This trend drives the need for a virtually integrated supply chain." (Li, 2007)

A supply chain that is responsive is one with a design matching "competitive priority emphasizing on quick reaction time, development speed, fast delivery times, customization, and volume flexibility. The design features of responsive supply chains include flexible or intermediate flows, high-capacity cushions, low inventory levels, and short cycle time. " ( Li, 2007)

It is necessary to understand the nature of the efficient supply chain, which is such that effectively coordinates the flow of material and services thereby minimizing the organization's inventory and maximizing the products and services in the supply chain. The report states that there are some issues in regards to timelines that have emerged however "the difference in the value system forces manufacturers to focus on customization at the local level" virtual integration on the supplier end has to be coordinated by Argos with the market segmentation on the consumer or customer end of the supply chain.

VII. Channel Strategy

According to a 2010 report, multichannel accounts for 43% of sales at Argos. The company results states that the percentage of multichannel sales "justifies the company's investments in services such as reserve and collect." (Charlton: Econsultancy Digital Marketers United TM, 2010) Argos reports 22% of the total retail sales in 2009 to be accredited to the Check and Reserve feature on its website, which enables customers to check stock at their convenience before traveling to the store via the website feature. Argos retail sales are driven by online, in-store, and catalogue options for customers. Internet research and purchase is reported as a trend that growing increasing 13% from the 2005 30% to the 2009 43% reported. The range of products available for customer purchase is extended through multichannel retailing strategies and Argos reports plans to place an additional 10,000 products online available for purchase. (Charlton, 2010, paraphrased) It is reported that the second biggest online retailer in the UK is 'Apple" stated to have leapfrogged Argos to take the second most visited website. The article specifically states that the "top two spots have always been held by Amazon UK and Argos, whilst the likes of Play.com, Tesco and Next have constantly battled for third spot." (Sawers, 2012) The work of Lacy (2011) entitled "Interactive Marketing Practices -- Synergy vs. Segmentation' reports that a company actually needs marketing experts for each online marketing channel since "each channel has a different tone, not a different voice." (Lacy, 2011) According to Lacy "Leveraging social channels for email or vice versa can have incredibly positive effects. We've heard things like: "Email marketing is the "43-to-1 ROI channel," 40% of consumers who 'Liked' a brand on Facebook said they did so to receive discounts and promotions," "58% of consumers start their day by reading their emails," and "63% of mobile email users check the account a minimum of once per day." (Lacy, 2011 citing: the website at: http://www.emailstatcenter.com)