Primary Customer Base For K Mart example essay topic

K-mart's upper management is attempting to bring K-mart "upmarket" without losing the chain's discount image. The goal is to change the store's image from a no-frills discount store to a retailer of quality, brand-name merchandise offered in modern, attractive displays. K-mart is attempting to change with its typical customers, who are now more educated and sophisticated than earlier in the store's history. K-mart assembled a senior management team to evaluate the impacts that emerging social, economic and political changes in the United States would have on the future of the business. This team was called the F-Team. Once the F-Team completed it's report, K-mart management asked for specific marketing strategies to address each scenario from the F-Team's report.

Of all items in the report, America's changing social class and income structure is of particular importance. The primary customer base for K-mart has been the middle class group. This group comprises about 32 percent of the population. Members of this group often buy products that are popular and trendy. They tend to be very concerned with fashion. Middle class size is in decline due to the influences of international competition.

There is increased competition between countries for the labor pool. Third world workers are willing to accept wages that are up to a third less than United States workers will accept for the same tasks. American labor premium is disappearing, causing a significant downward mobility and an associated diminution of living standards and purchasing power. The group affected is K-mart's predominate customer base. This is cause of great concern to the upper management. b. Review of Mission, Vision, and Objectives K-mart Corporation is committed to growth and delivering superior returns to their shareholders.

Some of its main objectives are providing better quality and prices compared to competitors, creating a fun and inviting variety of products, and developing guest-friendly, convenient stores. K-mart claims that it provides better quality than some of its competitors, but it is more difficult to compete on price. Within several decades K-mart has created a hospitable and inviting atmosphere for its customers with the help of strategic planning and marketing. K-mart Corporations stores are convenient for its customers, but it needs to continue to focus on consumers changing wants and needs.

The principle objective of the company, which is to deliver annual earnings per share growth of 15% or more over time, has stayed the same for years. K-mart Corporation focuses on trend leadership, excellent guest service, exciting team member opportunities, and community outreach, to create long-term shareholder value. It plans to continue to reach multiple market segments with its many operating divisions. Each division is specifically geared toward American consumers with stores ranging from upscale discount, to full service department stores.

K-mart tries to focus on specific markets with stores strategically located in regional malls, neighborhood shopping centers, or freestanding buildings. c. TOWS Matrix I feel that the biggest potential threat out of the five forces would have to be the rivalry among the established firms. We can already see this happening between Wal-Mart, Kmart and Target. Constantly putting items on sale to bring in the flow of customers.

Fighting for location space to set up a new store. I strongly believe that Kmart has two weaknesses in their value chain stage. One is the production of the products by the manufacturers that they buy from. As mentioned before, Kmart has had troubles with the recall rate in the products they sell. This actually takes away value from the Kmart name and products they sell. Another potential weakness in the value chain is the inventory system that Kmart has.

Previously I briefly mentioned that Kmart restocks merchandise every two weeks while Wal-Mart restocks twice a week using the JIT inventory system. The cost involved for Kmart not using JIT is enormous. These threats and weaknesses can impact the future success of Kmart greatly. Wal-Mart can gain more market share or even take away some of Kmart.

Another entry into the market can seriously impact future success of the company by doing the same. The end result can either be Kmart selling off some stores, Kmart having high customer defection rates, or even putting Kmart out of business all together. The bargaining power of Kmart, the buyer, can be an opportunity. The more locations Kmart opens, the more they have to purchase from suppliers, which in turn leads to more bargaining power in their favor. Customer service is a big strength that Kmart can capitalize on as it is already doing. By providing superior customer service, Kmart can keep existing customers and obtain new customers through word of mouth.

This can also lead to customers defecting from one of their competitors if the competitor did not treat the customer the way they wanted to be treated.