Marketing Research Assignment
Secondary analysis is the re-analysis of data for the purpose of answering the original research techniques, or answering new questions with old data. Secondary analysis is an important feature of the research and evaluation enterprise. Secondary information consists of sources of data and other information collected by others and archived in some form. These sources include government reports, industry studies, archived data sets, and syndicated information services as well as the traditional books and journals found in libraries. Secondary information offers relatively quick and inexpensive answers to many questions and is almost always the reason to complete primary research.
We have based our report on the office supplier company Staples and its products produced by the brand ‘Oxo’. Firstly, Staples is a successful office products company that is committed to making easy to use office products, including supplies, technology, furniture and business services. Staples invented the office superstore concept in 1986. It has become a successful international company that is still thriving to this day that sells to both the individual consumer and to small and large businesses. They are famous for being environmentally friendly and very ethnically correct.
OXO is a design company who’s motive is “OXO is dedicated to providing innovative consumer products that make everyday living easier.” Their offices are based in New York City in the United States of America. OXO was established by Sam Farber in 1990 to develop the Good Grips range of comfortable, easy-to-use kitchen utensils. Today, OXO manufactures over 500 innovative products and has brought the principles of universal design to the global marketplace, proving that design for all can be innovative, appealing and profitable.
Inspiration and Take off
Farber’s inspiration to establish OXO was due to his wife. Sam, who had recently retired as the founder of a successful housewares company, began to question the effectiveness of kitchen utensils when he observed his wife’s difficulty in gripping and using ordinary kitchen tools, due to her slight case of arthritis in her hands. Seeing an opportunity to help not only people with arthritis but also to create more comfortable kitchen tools for everyone to use, Farber came out of retirement and approached the design firm Smart Design with that challenge. As part of the initial research that included talking with consumers, chefs and retailers, Patricia Moore, who is a noted gerontologist, was brought on board to help understand the needs of the users with special needs.
After hundreds of models, dozens of design iterations, and extensive manufacturing research, OXO was born. Farber, chose the name OXO because whether it’s horizontal, vertical, upside down or backwards, it always reads OXO. In 1990, the first group of 15 OXO Good Grips kitchen tools was introduced to the U.S. market. These ergonomically designed kitchen utensils set a new standard for the industry and raised the bar of consumer expectation for comfort and performance.
Staples and OXO Join Forces
Staples began looking for new products to attract more customers into its stores and Web site in 2006. Firstly they conducted internal research into brands that had extremely loyal fans. OXO was an obvious choice, due to the cult-like following of its kitchen and household devices that are known for their ergonomic design. Staples were also aware of how OXO have Unique Selling Point due to their high quality.
Staples hoped to attract customers willing to pay premium prices for the redesigned staplers, hole punchers and other devices. Andrew Schneider, Director of Global Brand Management; Staples, states that they are offering their customers a stronger designed product using a very strongly trusted household brand (OXO) that their competitors are unable to offer. The plan is to use the strong following that OXO have and to bring their market into “Staples” stores country wide.
OXO began its design process as it always does, by observing people using the products. Alex Lee, President of OXO, states that the process is always the same, they identify user needs which is they feel is the most important. He also mentions that they do not waste huge amounts of money on conducting user research they observe friends and family, and people in their work space.
After many observations Lee and his co-workers recognised that many people struggle with the amount of force needed to use a generic office stapler. They decided to redesign the stapler which operates using a different motion, parallel opposed to a hinge motion, this requires less force.
Twenty five OXO products went on sale in Staples in May of 2009. They cost more then average office supplies but sales have been matching expectations according to Staples. The company will not disclose any figures but they state that customer response has been enthusiastic and is mainly driven by the loyal following of OXO. Staples were fully aware of how highly admired the OXO brand is as the customers trust and are aware of the high quality and feel that durability is important which OXO provides.
Profile of Customers
Geographic
Staples serve businesses of all sizes in 27 countries throughout North and South America, Europe, Asia and Australia. Altogether it has 2,200 stores open with delivery services in operation. Staples invented the office superstore concept in 1986 and is headquartered outside boston. They have recently opened over 100 new stores in North America. With this broad horizon of stores, the company can reach a vast amount of customers. The delivery service also heightens the extent of customers that they can converse with. This is a big advantage to the company and allows them to be superior to other similar companies.
Cultural and Ethnic
Staples has expanded the global reach of their ethics program. The feel that it is import to be able to connect with the customer and so have put special measures in place to ensure this happens. The company continually build a global culture of integrity by holding live interactive workshops with hundreds of managers in Argentina and India. Also, in addition to this, they implement customised online ethics training in ten languages, reaching associates in thirteen countries across europe. Also, their website is universal, it is designed to suit all different languages, at a click of the mouse any one can understand it.
Staples serve different countries all over the world but have businesses set up in these countries. This means that the there is no culture difference. The customer purchases a product from the company based nearest to his/her area. This is an appealing facet to a customer as they will be dealing with someone locally, without a time difference or cultural change which can be off putting for some.
The following are more Ethnic actions that staples have incredibly preformed;
They are increasing the community giving globally by 2% to nearly $17 million, providing support to hundreds of nonprofit organisations around the world through Staples Foundation for learning, charitable giving programs and cause marketing efforts.
They provide hometown support. They increased community engagement in Greater Boston by becoming continuing their role as the sole supporter of the Early Words literacy campaign. In order to increase public awareness of this campaign they conducted a series of workshops tha taught parents how to foster communication skills and distribute information about the impact of the program through the local and national media outlets.
Staples have also mastered the Ethnic aspect. One of the main reason that the company Staples has become so successful is because of its dedication to being environmentally friendly. This prospect appeals to almost everyone as being green has become a popular trend in recent years. Using eco-friendly products in the work place is something that the staff and owners can be proud of and can show off to their customers. It shows that they are being ethically correct, that they care about the planet they live in and are honest good-will people. This is a good sense to emit in the work place when having customers visit. We are being constantly encouraged to be green by the media, through television, radio, newspaper articles, advertisements. It is everywhere. Staples has made an excellent job at differentiating themselves from others by being so eco-friendly.
Staples is committed to making a difference and is their belief that doing the right thing will make the company stronger. They have called this action Staples Soul. It recognises the close combination between Staples’ success and the ability to make a positive impact on their customers and the planet. They believe that it will help them be an employer and neighbour of choice.
With being an employer and neighbour of choice being their slogan, the following are only some of the following actions they put into practice;
They collected over five million pounds of technology waste from customers in the U.S for responsible recycling in 2008. The company launched a first-ever trade-in event in India, with special discounts on new technology items when recycling old technology products.
Staples built green buildings. They have three facilities that are LEED Gold certified in the U.S and will be pursuing LEED certification for several other facilities, including retail stores and fulfillment centres. In Australia, the new Corporation Express headquarters was designes to the Green Building Council of Australia’s Green Star Standards. Also, The business has solar power arrays on 25 facilities in the U.S and one facility in Germany.
It achieved ISO certification for environmental management. Business sites in France, Germany, Ireland, the Netherlands, Sweden and the U.K have achieved ISO 14000 certification for their environmental management processes.
Size of Market
Staples target market ranges from individual consumers to large enterprises. New technology has been driving demand for office supplies and when Staples first started the rate of new business formation was the highest it had been in years. Many new jobs were in the service sector, which was also the biggest consumer of office supplies. The smaller firms were being ignored by the big companies and were receiving minimal discounts, if at all for purchasing their supplies.
Knowledge and Awareness
Staples bought a spot during the super bowl advertising section in 2004. The company spent $2.3 million, about 5% of the company’s entire advertising budget on one advertisement to air during the popular game. Shira Goodman, executive vice president of marketing at Staples claims, in a statement, “Staples’ customers are busy and highly selective television viewers who respond to destination television events…..For the first time in nearly a decade, we have new brand positioning and a new tagline. The Super Bowl is a terrific vehicle to communicate our ‘easy brand”.
Staples adverts uses a sense of humor and empathy to feature a new customer program, the aim is to reflect a customer-centric evolution. They want to prove that with Staples, it is an easy shopping experience. Staples also use their catalogues to create the awareness of their products. The company spent $667.7 million for advertising and marketing in 2008 to create awareness. An interesting fact about one of Staples product is the ‘Oxo’ brand using a push method instead of advertising. ‘Oxo’ prefer their existence and presence in the Staples store to create a curiosity about their product by the customer. We would not see an advertisement of Oxo for staples on a billboard. Oxo use the strategy of a well functioning product. The un-commonly shaped product will catch the eye of the consumer whom will then pick it up, feel it and realise how easy it is to use. It is their unique style that creates this awareness.
In 2008 Staples engaged with Facebook, Twitter, YouTube and other social networking sites.
Key Players
The main competitors of staples products are Office Depot and OfficeMax. Both Staples and Office Depot opened their first store in the same year, 1986. However, Staples products are obviously the top sellers. This is clearly shown by their figures. The gross profit for Staples 2008 was $5,550,671 while the gross profit in 2008 for Office Depot was $1,024,441.
Office Depot file folders cost $1.95 in Orlando, Florida, where it competes with Staples and Office Max, and $4.17 in Leesburg, Florida, some 50 miles away, where it is the only office supply superstore. Similar differences can be found for scores of products in cities across the country.
Size of Market
Staples targeted market range from individuals to small and large business including. The Office Supply stores industry can be a lucrative sector, although there are a large number of varied businesses that partake in the stocking and selling of office supplies. The three main competitors in this industry however are, Office Depot Inc and OfficeMax Inc.
Staples Inc is ahead of its closest competitors in revenue, for example, in 2009 it generated $19.4 billion in sales, whereas Office Depot generated $15.5 billion, and OfficeMax generated $9.1 billion. Its operating margin was 8.0%, compared to OfficeMax’s 4.0% and Office Depots 3.1%.
Staples profitability is largely due to its intense usage of its own brand merchandise (accounting for 22% of all sales in 2009). Despite Staples larger market share and profitability, it continues to expand and consider new options for smaller stores in less populated areas. This is linked directly to their cultural and ethnic goals, as they are continually including minorities in their business plans, and attempting to make minorities feel more at ease and comfortable in their stores.
Collectively, Staples Inc, Office Depot Inc and OfficeMax own about 10% of the estimated $300billion global market for office supplies. The rest is held by supermarkets, discount stores etc. However stores like these are increasing their stocks of office supplies, and aiming to get involved in this lucrative market. The more stores like these get involved in the sale of general office supplies, the bigger the threat to stores like Staples as the price of office goods will have to decrease, in turn decreasing their overall profit.
Overall Staples has 1,773 stores in North America, and in its international sector, it has stores in 22 different countries in Europe, South America and Asia. In 2009, the North American retail sector generated $10billion in sales, which accounted for 52% of total company revenue, and its international sector generated up to $2.7billion in sales.
The following are Staples’ Revenues from 2004-2008 in $B:
� 2004 – $14.4 billion
� 2005 – $16.1 billion
� 2006 – $18.2 billion
� 2007 – $19.4 billion
� 2008 – $23.1 billion
The following pie chart (See fig 1) shows the segment sales in 2007. It is clear from the chart that its North American retails are the gross earner in Staples profits, with its delivery business coming in close second.
The following pie chart (See fig 2) shows the sales by category in 2007. Staples main product lines are its office supplies and services, which turn out to be the main runner holding 41% of sales. Its sales of business machines i.e. photocopiers, printers, phones etc is steadily increasing coming up at 31% of overall sales. The remaining 28% goes to the sales of computers and office furniture.
Recommendations
Advertising is one of Staples most successful promoting tools. In the past Staples was known and recognised by its slogan, “We’ve got that”, which was changed in 2003 with “That was easy”. Another popular advertising tool was the Easy Button, which was used in commercials as well as magazine and newspaper spreads. Fun and catchy advertising tools such as those were the key in staples becoming as popular as it is today.
We would recommend that management introduce a mascot to their stores image. They previously had a Christmas character of a robotic snowman which was used in Christmas advert campaigns and proved to be very popular. If a Staples mascot was introduced, it would mean a very recognisable feature to the face of the business, both in America and in its international stores. A mascot would be neutral in terms of ethnic and cultural diversities, and therefore would prove welcome worldwide.
Mascots are used in business to create a familiarity for the customers to remember the business, and recognise it again if they didn’t catch the name. For a business which is already established and highly popular, a mascot is still very useful for memorable purposes. Just like Staples was easily remembered for its “Easy Button”, a new friendly mascot would certainly separate it from the crowd.
With technology constantly changing, businesses are continually trying to keep up so they don’t fall behind in efficiency stakes. Therefore we would also recommend that Staple introduce a new campaign directed at its Delivery sector, set up solely around new products. The campaign could be called “FIRST”, and it would state that Staples is the only company with the newest in office technology, therefore making it the first choice for businesses looking to renew their image, popularity and technology.
Other Trends and Issues
Staples has a superior track record of good customer service, operational excellence, superior financial performance and strong capital discipline. Because of this great success over the past few years they have been able to purchase the Corporate Express, an $8 billion global delivery business.
However, this company was not always at the top. In 2001 they experienced a prolonged economic decline. They re-analysed their position. They refocused their strategy to pursue growth of the company, improve their profitability, enhance customer service and drive cash flow. This proved a success and they began their rise as a leader in the market.
Now and in the recent past few years they are seeing similarities to the events that took place in 2001. The broad economic decline has resulted in a weak demand for the products. In 2008, they saw that their customers focused more on value and reduced their spending on expensive items such as their furniture and technology products. However, they have been committed in making the company a continuos success and have been hard at work to achieve this. They have focused on the aspects that are in their control. They have expanded their product range and service offering in new and existing markets. New team members have been taken on to bring fresh ideas and talent. They generated record free cash flow of over $1.3 billion, achieved the highest customer service metrics in their record, and improved the efficiency of their supply chain. They also continued investing in new growth ideas, entered new markets in the U.S with retail operations and opened over 100 stores in North America.
Further response to the economic downturn was made. Some members of staff were let go, expenses we very closely monitored, salaries were frozen for senior management and corporate staff were not given bonuses. Even though these changes were made, the company remain motivated and optimistic for the future as they work through the difficult times. Looking towards the future the company plan to maximise their cash flow by applying the lessons they have leaned in the previous downturn. They will manage the business for the long term and reduce capital expenditures. They want to expand and grow their brand assortment which will drive their value message. The company plan to improve the quality of the copy and print offering, drive productivity by being superior in selling technology and services. They expect that they will strengthen the team in Europe which will lead to growth and increase in profits. The business will work to build a stronger foundation in China, India and South America. They will take advantage of the opportunities ahead.
Conclusion
Staples has managed to hold its position as the most successful office supplies retailer, and owns most of its market share in this sector. During the current economic downturn, its sales have only fallen by a few percent compared to many retail industries who are selling goods of a higher necessity. It is a large and growing corporation, which simply started as an innovative new idea, and become a leader in the office supplies sector.
References
http://www.oppapers.com/essays/Staples-Case-Study/176117
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http://thomson.mobular.net/thomson/7/2967/3973/
http://thomson.mobular.net/thomson/7/2967/3973/document_0/SPLS_AR08.pdf
http://investor.staples.com/phoenix.zhtml?c=96244&p=irol-reportsAnnual
http://findarticles.com/p/articles/mi_m0EIN/is_2003_Feb_27/ai_98126510/
http://www.ftc.gov/opa/1997/04/stapdep.shtm
http://www.wikinvest.com/stock/Staples_(SPLS)