Argos Internet Marketing Strategy: Multi-Channel Retail Analysis

Argos and the Online Market: Size and Growth

Argos has a customer base of approximately 130 million, and reports indicate that 26% of its sales are made via the internet channel, with approximately 4 million customers placing orders by phone or online. The Argos website was recognized as the most visited high-street retail website in the United Kingdom in 2008. (Argos Website, 2011, paraphrased) Argos is environmentally conscious and caters to customers with disabilities. It was named "Online Toy Retailer of the Year 2009" by the British Toys & Hobbies Association (BTHA). (Argos Website, 2011)

In addition, Argos received numerous awards including 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, combined 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, having recorded "400 million website visits in the past year." (CIO, 2011)

Use of the Internet for Research, E-Service, and Purchasing

Argos consistently works to optimize its website functionality. It is reported that the Argos Retail Group required a search-marketing agency capable of understanding both the traditional Argos catalogue business and the complex nature of its business-to-business division. The specific challenge was the need to "improve conversion rates from visits to leads, across its Rewards and Procurement businesses." (iVantage, 2011) Argos sought to understand who its website visitors were, who was purchasing vouchers, and who was leaving without making an enquiry. It also needed to track its campaigns more effectively. (iVantage, 2011, paraphrased)

Web analytics were used — specifically Google's "Urchin" tool — across the Argos website to improve information management. The results revealed problems with pay-for-performance (PfP) conversion as well as a lack of crawling search engine traffic, which helped the team set clear objectives and make decisions about short- and medium-term focus. The solutions implemented by Argos are reported to have increased monthly visits from 3,500 to 5,000, along with a 10% improvement in website leads. (iVantage, 2011)

Forecast of Future Online Market Segmentation

John Burnett, in his 2008 work Core Concepts of Marketing, observes that marketing is and will remain "the pivotal function in any business," as the determination and satisfaction of the customer's needs "is the general purpose of any business. It is also a fundamental definition of marketing." (Burnett, 2008) Burnett outlines several key principles relevant to this analysis:

First, he states that the overall directive for any organization is the mission statement, which "reflects the inherent business philosophy of the organization." (Burnett, 2008) Second, every organization has a set of functional areas in which critical tasks are performed, and these must be effectively managed to realize optimum performance. Third, each of these functional areas is "guided by a philosophy (derived from the mission statement or company goals) that governs its approach toward its ultimate set of tasks." (Burnett, 2008) Fourth, marketing differs from other functional areas in that "its primary concern is with exchanges that take place in markets, outside the organization (called a transaction)." (Burnett, 2008) Finally, Burnett concludes that marketing reaches its highest level of excellence when "the philosophy, tasks, and manner of implementing available technology are coordinated and complementary." (Burnett, 2008)

There is little doubt among marketing professionals that the key to a successful marketing relationship is communication. As Burnett notes, consumer attitudes are often skeptical, the nature of contact is rarely intimate, and message delivery systems tend to be impersonal and imprecise. These factors make communication central to any marketing organization. Marketers know that consumers are constantly picking up cues from or about the organization and using them to form attitudes and beliefs. Many of these message-laden cues are controlled by the organization and include factors such as product design, product quality, price, packaging, outlet selection, advertising, and the availability of coupons. (Burnett, 2008)

It is important to understand, however, that there are "message-laden cues" strongly imprinted in the customer's mind that the marketer may be unaware of. The sources most prominently delivering such information are: (1) employees; (2) competitors; and (3) the media. (Burnett, 2008) The media category includes editors, reporters, advertising celebrities, and representatives who communicate with the public. Added to this is the new media, including the internet in the form of "chat rooms, websites, and propaganda campaigns." (Burnett, 2008)

It is also 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 — as demonstrated by Argos's interaction and communication strategy with its online customers.

The three environmental factors predicted to drive market segmentation growth are as follows. First, the advance of the consumerism movement will foster market segmentation, since critics have highlighted segments they believe are neglected, prompting managers to become more attentive to previously unrecognized consumer needs. Second, intensified competition — both domestic and global — will encourage businesses to seek untapped segments to gain an advantage over rivals. Third, a growing awareness of non-business applications of segmentation techniques will lead to their increased use in nontraditional areas such as politics, religion, and public issues. (Business to Community Social Media, 2011)