A Marketing Study
E-commerce or Electronic Commerce, is simply the business of buying and selling products in the electronic market, in other words known as the Internet. It provides a new medium for consumers to interact and find their needed and desired goods. Today there are already a number of E-commerce business types such as Business to Consumer (BBC) where companies offer a variety of products through catalogs using the shopping cart software, and Consumer to Consumer (ICC) where a site offering free classified ads and forums serves as a third party between meeting buyers and sellers.
This Marketing Study illustrates a proposed business venture, E-commerce in nature, to one of the most popular brands in 7-Eleven. The first part of the study will focus on the proponent company and the industry it Eleven would be determined on the basis of its hold of the market and its major monitors. The internal attributes of the company are also presented using the SOOT Analysis tool. All of these information regarding 7-Eleven will be used to arrive at the proposed new product: 1 Connect.
The marketing plan for the 11-Connect brand would be discussed through its benefits and unique selling position, as well as the steps on how the service works. Here, it would be shown that the number and distribution of 7-Eleven stores throughout Luzon plays a major role in the success of 11-connect. Finally, a financial analysis is conducted on this venture in order to determine its reparability. Using a price lower than all of its competitors would still produce a higher margin of profit because of the minimal costs that would be needed to fund the project. 4 page II.
SITUATION ANALYSIS A. Company Background & Introduction 7-Eleven is a multinational company that franchises and licenses convenience stores. Currently, it has more than 46,000 outlets, which is a thousand more than the next leading franchiser in McDonald’s. Its primary headquarters is located in Dallas, Texas USA, while having large markets in Canada, Japan, Taiwan, Thailand, Malaysia, and the Philippines. The company’s establishment in the Philippines was on December 13, 1982 when the Philippine Seven Corporation (SC) acquired the license from Seven Eleven, Inc. Then Southland Corporation) to operate 7-Eleven stores in the country. Its main office is situated along Artists Avenue in Manhandling City, as more than 700 stores are distributed throughout Metro Manila, while maintaining presence in the whole of Luzon. In the year 2009, the company launched the Philippines Foundation which stands as its corporate social responsibility arm. Its main function is to benefit the communities eyeing served by each 7-Eleven store by giving priority to education, health and nutrition for preschool aged students belonging to poorer families.
With its success in brand recognition and financial productivity owing to the rapid multiplication of stores, along with its socio-profitability, it is no surprise that 7-Eleven has been ranked consistently in Entrepreneur’s Franchise 500, recently becoming the top franchise. It was also the 38th fastest-growing franchise while gaining the 2nd rank in Low Cost Franchises. These accomplishments by 7-Eleven are achieved as the many keeps up with its vision, maintains its corporate values, and pursues its goals (Table 1) while the summary of the background information on 7-Eleven is shown in Appendix A.
Table 1: Core of 7-Eleven 7-ELEVEN CORE Our Vision is to be the best retailer of convenience for emerging markets. Customer- focused Team work convenience Vision Corporate Values Goals 5 Page B. Market and Industry Analysis The products that 7-Eleven offers differ widely from actual items to services. Items are either non-edible such as cosmetics and school supplies, or food varieties from snacks, to drinks, to rice meals. The services meanwhile include bills and online purchases payment. A store would really offer convenience by providing all of the necessary and wanted products that a customer would need. ) Market Trends The market for this industry is practically every consumer of food and beverage as these are the main products that 7-Eleven provides. In narrowing this down, the consumers involved are those who prefer easy, quick and urgent transactions that could be found in nearby convenience stores. The market is less cost conscious and isn’t as geared into Health & Wellness since products offered by Hess stores are going to be more expensive and processed in nature. 2) Market Needs & Wants The needs and wants of the market are presented in the following table (Table 2).
Table 2: Needs and Wants of the Market MARKET NEEDS & WANTS Food options Beverage options Needs Secured dining places Cosmetic options Medicine Availability of products Wants Proximity of products Ease of buying Speed of transactions Consumers clearly need food and drinks and various options for each in order to sustain their bodies. A secured and well-ventilated area for the consumption of these odds is also essential for the consumer. Cosmetics such as shampoos, soaps, and lotions as well as medicine are the other needs of the market.
The wants meanwhile pertain to desires such as being close to the wanted products, having many options 6 | Page a certain item, and the ease and speed of buying. The convenience stores industry is designed to be able to provide these necessities and desires to customers. 3) Target Market and Market Size On a broad scale, the target market of 7-Eleven is practically everyone, especially since every person, at least in Metro Manila, could loud yield customers who want to easily access their needed and wanted products and services due to their time constraints.
Mostly, these are businessmen, students or laborers who only buy when they need a certain product. The target market could also consist of those with buying impulses. These can be people who stay up late at night suddenly deciding to buy food and refreshments, or employees seeking a quick break to buy snacks or treats from the nearby 7-Eleven. The market also includes households abruptly running out of stock of cosmetic products and those holding parties in need of drinking supplies. Basically, 7-Eleven has a wide and diverse market to cater.
The only ones not belonging to this market pie are most mothers who typically would want and find more time to go to supermarkets, compare prices, and choose the better options. C. Competitive Analysis The major competitors of 7-Eleven are the other convenience stores which are operating and open to customers for 24 hours. These include Mini Stop, Mercury Drugstore and San Miguel Food shop. 1) Marketing Mix The marketing mix comprises of the product range of each of the competitors, their pricing, the placement or channels of reaching the target market, ND the promotions which are ways to communicate with the customers (Table 3). 1 page Table 3: Marketing Mix MARKETING MIX Competitors Established Date Mini Stop August 2000 Ready-to-eat food, Packed food, Beverages, Health & beauty care, School supplies Similar to 7-Eleven Franchising Mall posters Mercury Drug Store March 1945 Packed food, Health & beauty care, Medicine Similar to 7-Eleven Franchising Mercury Suzuki Card, Freebies San Miguel Food shop May 2001 Product Range San Miguel food and beverage products Pricing Placement Promotion Similar to 7-Eleven Franchising Gasoline station posters The variety of products differs from one company to another.
San Miguel Food shop has the least product range as it is limited to its manufactured goods only. Mercury Drugstore has an edge on each of its competitors with its medicinal product lines, while Mini Stop is the most at par with 7-Eleven in terms of product variety. The pricing and placement of all the competitors listed doesn’t deviate much from 7- Eleven’s while promotional strategies are mostly limited to poster advertisements. Convenience stores in the Philippines. According to Zinnia Deal Penn, 7-Eleven has an estimated market share of 50%.
Figurer shows the market share (in percentage) of four dominant 24-hour convenience stores. 8 | Page Market Share % of 24-Hrs Convenience Stores in the Philippines 2% 23% 25% 7-Eleven Mercury Self-Serve Ministry San Miguel Foods Figure 1: Market Share of 7-Eleven and its Competitors It could be seen that the closest competitors of 7-Eleven are Mini Stop and Mercury Drugstore as both have a significant share of the market. Moreover, Mini Stop offers very similar products with 7-Eleven and has established itself in the consumers’ minds as the primary competitor of 7-Eleven.
Table 4 summarizes the business performances of each of the competitors. Table 4: Competitor Business Performance Market share Size Value to customers strengths BUSINESS PERFORMANCE SUMMARY 23% 25% 250 outlets 700 outlets Convenient, High quality, High service High standards in food, Wide product lines, Len- store prepared products New entrant Convenient, Reliable Wide product lines, Availability of almost all kinds of medicine Slow service 2% 50 outlets Convenient Near gasoline stations Limited to San Miguel products Weaknesses 3) Industry Attractiveness Porter’s 5-Force Model: 1.
Supplier Power: Since 7-Eleven offers a wide variety of products and is not limited to a specific brand of any item, the power of supplier is low because it can choose the 9 | Page most affordable company that can provide high quality items at the same time. The suppliers cannot mark its items with high prices because 7-eleven can easily switch to their competitors. 1. 2 Buyer Power: Buyers can slightly affect the pricing of 7-eleven items but only compared to the pricing of its competitors such as Mini Stop.
However, despite of the much higher price of goods compared in supermarkets, buyers cannot drive eleven’s pricing due to the additional service it offers, which is convenience. 1. 3 Competitive Rivalry: Currently, Mini Stop is 7-eleven’s major competitor because they one would offer new product or service, the other makes sure it will be available in their store in the next day. There are only few products which are only available in 7- eleven and some of them are Moonshine milk tea and the very famous Slurped. 1. 4 Threat of Substitution: Customers may opt to buy in supermarkets where there is a wider range and much lower cost of products.
However, these are open only for a retain period of time and a little far from residential houses. They can also choose to buy in sari-sari stores which are much near their houses but only with few choices and also, on limited period of time only. Unlike in 7-eleven, stores are open for 24 hours and 7 days a week and can provide almost all kinds of food and beverages and other items. Therefore, the said substitutions are not a big threat to 7-eleven. 1. 5 Threat of New Entry: Entrance to convenience store industry will be difficult because this requires good distribution system which cannot be easily learned and implemented.
It will cost long period of time to negotiate with good suppliers, put up several number of stores which can be easily accessed anywhere, run a store for 24 hours and properly distribute its items in its stores. 101 page Ill. SOOT ANALYSIS As the target consumers and the competitive field have been analyzed, it is important now to consider how 7-Eleven could utilize its strengths and opportunities while improving on its weaknesses and threats in order to reach its market and keep prospering in its industry. A.
Strengths Being around for more than 28 years while also being visible at every art of Luzon with more than 700 stores, 7-Eleven has established for itself a well- known and credible brand name. It has gained trust in the consumers’ minds with the convenience it brings and products it offers. The attributes that elevate the company over its rivals include having consistent store layouts and product displays that also changes at certain periods. This is achieved through the “company bible” called the Plano-gram.
It also features the Convenience Distribution Inc. (CDC) which is 7-Eleven’s modern distribution center that facilitates efficiently the warehousing and delivery of all its products. In addition, the company has also ventured the E-commerce industry through its bills payment services. B. Weaknesses With more focus allocated to the rapid expansion of 7-Eleven stores, the development of innovative products and services has become a weakness of 7- Eleven. They lack promo or bulk packages which are popular to customers of consumable goods.
Though they have already launched their E-commerce branch, it is still a quite limited platform as it is only restricted to vouchers and online C. Opportunities Various trends and lifestyle changes have led to the emergence of opportunities for eleven. For one, E-commerce has become a thriving industry with a vast market. Specifically, the Consumer to Consumer sites have attracted many customers as people have geared towards cheaper prices. There is also an unfulfilled need in the mode of payment for these online transactions as online shoppers without credit cards would want to be able to buy online through cash. 1 Page D. Threats The obstacles brought mostly by competitors bring the greatest threats against 7-Eleven. Its leading competitor, Mini Stop, has constantly been expanding as well which could lead to a decrease in market shares for 7-Eleven. A specific example here is the further growth of their already-successful “Dine-in” menu. Besides this, changing technology may lead customers to buy things through the internet instead of dropping by a store. These factors that have an effect on the operations of 7-Eleven are summarized in the table below (Table 5).
Table 5: SOOT Analysts SOOT ANALYSIS strengths well- known and credible brand name Good reputation amongst customers Most number of stores (more than 700) E-commerce venture in bills payment Opportunities E- commerce is a growing industry with a vast market Consumer to Consumer Sites eave gained more customers through the years People have geared towards cheaper prices Paying online-purchased items through cash (for those without credit cards) Weaknesses Deficient in innovative products Lack of promo/bulk packages Cash is the only mode of payment Limited E-commerce platform Threats Emergence of more competitors, thus a decrease in market share Innovations in the “dine-in” menu of Mini Stop Significance of online shopping and buying of goods thus leading people from 7-Eleven to the internet Now that the threats to and weaknesses of 7-Eleven have been identified, it should e determined how the company could deal with each (Table 6).
Table 6: Improvement Activities SOOT Weakness / Threat Lack of promo / bulk packages Expansion and improved “Dine in” menu variety of Ministry Deficient in innovative products / services More competitors resulting to less market share Consumers turning to E-commerce more than going out of the house Cash is the only mode of payment for the Commerce side Activities to address Weakness / Threat Group more demanded products with less popular ones in a package to boost the sales of the latter Develop a different product or service to nullify the competitor’s gained advantage Venture other trendy fields which have a large market base Expand the E- commerce side and get partnerships from online sites which have different customers Find ways to include debit and/or credit payment; Allow an easy procedure for cash transactions ‘V.
CURRENT SITUATION & PROBLEM STATEMENT With the discussion of 7-Eleven’s situation in the convenience stores industry, together with its SOOT, it could be inferred that the company is the current leader in the convenience store industry. It has a wide range of products and is incrementally improving its services for the convenience of their customers. Also, they have a superb and efficient distribution system (CDC) as stated previously which helps them in their everyday business flow. Due to its success, 7-Eleven has been imitated and followed by its competitors, from the variety of products to aggressive franchising. The challenge now is how the company would strive to do everything differently through continuous innovations.
E-commerce (Electronic-Commerce), or doing business online, has been mentioned to be the current trend because of the wide range of products that could be dealt to a wide range of buyers. Presently, 7-Eleven has maximized its strengths as they have also launched an E-commerce service in the line of Business to Consumer transactions. In light of this trend, with the looming competition and the improvement activities surfaced by the SOOT, 7-eleven will now try to penetrate the E-commerce market further by being a means of Consumer to Consumer transactions which can be implemented with the help of their existing distribution system. 131 page V. THE FUTURE A.
Vision Statement The company envisions itself to be the leading provider of convenience and accessibility in the consumer goods industry as it expands E- commercially. It seeks to be the primary means for online transactions and cash aments. B. Mission Statement The company aims to build partnerships with various E- commerce businesses from Voucher deals, to Online retailing, and to Buy & Sell sites. The company would utilize its efficient distribution center in delivering bought items and paid cash to respective Commerce users. C. Goals/ Objectives The goals of the company are to be the top mode of payment and delivery choice for retailers and to establish a high benchmark for servicing online consumers.
These could be achieved through the implementation of: 0 Cheaper shipping costs 0 Fast and serviceable delivery 0 Accessibility and nonviolence (open 24/7) D. Key Strategies & Programs In order to be the leading provider of E-commerce Expanding the market beyond BBC (Business to Business) consumers 0 Gaining a competitive advantage by yielding a service none has yet to offer This marketing plan serves to illustrate the proposed product for the company as it deals with its current situation and problem. The recommendation here has taken into consideration all the previous discussions regarding the industry that the company stands at, the current market it has, the positioning of its competitors, its torrents, weaknesses, opportunities, and threats.
This plan also follows from the vision, mission, goals, and strategies set in the previous section. For 7-Eleven, the leading convenience store franchise in the country, the product offered is a service. This resulted chiefly from the opportunities, as well as threats, that were raised in the field of Electronic-Commerce. The product to be offered by 7- Eleven in this marketing plan is the 11-connect. A. The Product Offered 11-Connect is a medium of transaction between the customers of ICC (Consumer-touchstone) electronic commercial companies, mainly Slit. Com. PH. Here, sellers and buyers doing transactions would have the option of paying for and delivering the product through the 11-connect.
The service occurs in 2 stages, the Confirmation stage simply laying out the would-be terms of the next stage through the online website, while the Delivery stage would deal with the actual transaction itself through 7-Eleven’s distribution system (CDC). The steps of the 1st stage of the service are as follows: 0 A seller posts his or her item for sale on the online store, like Slit. Com. PH, with the corresponding price (exclusive of delivery).