Staples Inc. was founded by Tom Stemberg in 1986. In fact, it wouldn’t be wrong to mention that he indeed invented the concept of an ‘office superstore’, to be precise, under the name of Staples. With around 7000 different product ranges and more than 2000 stores worldwide, in 27 countries, Staples is one of the biggest and competent players in the office products industry. Plus, the acquisition of Corporate Express, an equally well-established firm and a competitor, in late 2008, definitely makes it a world leader now. The last recorded turnover figures touched the $25 billion mark for the financial year 2009-2010. (www.staples.com) Such an upward inclined growth chart of Staples, in just over two decades can be attributed to certain core factors mentioned below:
Staples offers diverse and wide product/service range (office furniture, computer/IT supplies, ink & cartridges, documents supply, filing & accessories, copy & print center, in-store recycling, kitchen & catering supplies, customer bound delivery service etc.) that makes it a ‘one-stop shop’ for small, medium and big businesses as well as individual consumers alike. (www.staples.com)
It has developed four major channels, namely, ‘contracts/associates’, ‘retail’, ‘catalogue’ and ‘e-commerce’ via which it is able to satisfactorily reach to various market segments. (eg: corporate, institutions, SME’s and individuals.) (www.staples.com)
Reasonable pricing. (www.staples.com)
A number of projects taken under the CSR program, like the ‘Staples Soul’ or the promotion of ‘eco-friendly technologies/products’, portrays a clean, favorable and loyal brand image of the company in front of the public. (www.staples.com)
Joint Ventures/Mergers & Acquisitions.
However, Staples Inc. is not able to exquisitely utilize its strengths/resources to ground a base in international markets. Approximately 95% of its outlets are in the North American countries of U.S.A. and Canada itself, that generates more than three-quarters of its revenues. In today’s volatile times, such a dynamic presence only in the home country increases the risk and challenges the sustainability of the business. (www.staples.com) Let us consider the recent financial crises that hit the U.S.A in 2008-09. It led to global recession where demand collapsed all over, thereby decreasing intra and inter country trade by not less than 10%.(The Economist, 19/09/2009) Being active internationally, especially in the emerging markets, could have resisted the crises impact on Staple’s sales, which went down by 8.3%, and balanced its losses. (www.staples.com) Moreover, competitors who have their presence throughout the world will get an upper hand against Staples.
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In general terms, it has been a known fact that the global business environment will frankly be the most uncertain and complex in the 21st century, considering the rapid changes in technology, consumer preferences, policies and competition. (Scarborough, N., et al, 2009) Product/Organization Life Cycles have shortened. Due to this, the firms, today, are being substantially pressurized to follow the straightforward principle of “Grow & Globalize or Die”. Corporates, including Staples, have to constantly renew, reengineer and expand their operations via different innovative strategies. (The Economist, 26/03/2009)
Though, we have seen Staples getting into the European and Asian continents in the last few years, by following an excellent strategy of collaborating with bigwigs of the target countries. It tied up with leading players like ‘OA 365’ and ‘PeiPei’ helping them to enter China in 2004, while their joint venture with ‘UB Express’ enabled its functioning in Taiwan in 2006. Staples now have its huge retail outlet in one of the metro cities of India (Bangalore) by shaking hands with Pantaloons Group that are one of the biggest retail chains in the country. Its recent collaboration with ‘Corporate Express’, as mentioned in the start, has led to their invasion in Australia and New Zealand in early 2010. Also, its efforts are consistent in around 14 European countries as well as in South America to continuously introduce their long list of product ranges, delivery and after-sales services, one after the other. (www.staples.com) But now, penetrating the market, after its successful entry, is what lies as a challenge for Staples. Staples Inc., thus, needs to take strategic steps to adapt and replicate its home success, in the international arena. Aggressive marketing in terms of product, pricing & promotion, in-depth distribution, customer service plan etc., in precise, exquisite nurturing will facilitate ROI and support sustainability of the business. It will also bring about an increase in its overall productivity, lengthen its ‘maturity phase’ and help it maintain its leadership position.
Thus, considering the above implications, as well as theoretically referring to The Ansoff’s Growth Matrix, ‘market penetration’ seems to be the appropriate growth option for Staples. To start off with, it can specifically target the main metro cities of the India. The reasons being:
The Indian ‘office supplies’ market is worth $10 billion. (www.staples.com)
It is one of the most promising growth economies along with China. (Central Intelligence Agency, The World Fact book: India, 06/04/2011)
The middle class sect, that forms the major part of India’s 1.2 billion population, is emerging into highly disposable income holders. (Central Intelligence Agency, The World Fact book: India, 06/04/2011)
Being such a receptive economy having favorable business environment and government policies, innumerable businesses are being set up in India from individuals & institutions within the country as well as outside it. Thus, the need/gap of companies like Staples to fulfill the high demands of office supplies to such establishments. (Central Intelligence Agency, The World Fact book: India, 06/04/2011)
The oligopolistic nature of this industry due to limited players within the Indian market, adds on to the gap.
With low production and operational costs, unlike the nations in the west, extensive part of Staple’s allocated funds can be invested in marketing, logistics and branding.
A Joint Venture with Pantaloons Group works in the advantage of Staples in terms of Indian consumer acceptance and strengthening base.
As per the Bowman’s Strategic Clock, the strategic market positioning of Staples falls into bracket 3, showcasing the brand being high on ‘perceived added value’ and low on ‘price’. (Hollensen, S., 2007) This works in the favor of the Indian audiences as far as acceptance is considered.
While going international, organizations must decide on its global marketing program, especially the level of standardization or adaptation of each of its marketing tools. (Hollensen, S., 2007)
Aims & Objectives –
Envisage a proper marketing strategy that interprets and showcases exactly what are predefined i.e. high brand awareness and a positive word of mouth across the target market. (www.mplans.com)
Set up a road map for the creation of a strong brand through integrated performance. (Griffin, R.W., 2005)
Certain Marketing Considerations –
A number of factors related to the target consumer’s profile, their awareness and preferences, their sensitivity towards price and brand loyalty, their consumption and repeat purchase levels, the industry trend in the country as well as certain political, legal and socio-economic implications of the brand in the country has to be considered before enumerating any alternative marketing programs for Staples. (Kotler, P. & Keller, K. L. 2006)
One of the competitive advantages of Staples is its wide variety of product/service range. That advantage should be fully utilized by making all its standard offerings, available to the public. Also, the Indian targets are very particular about the after-sales services provided. Introducing the standard after-sale facilities of the company can thus help them win over their customers.
Branding projects a distinguished company identity and attaches a level of class & credibility to its offerings, thereby, playing a catalytic role in widening the impact of awareness generated via promotions. (Kotler, P. & Keller, K. L. 2006) Staples, Inc. is an international brand. It is known for its affordable product prices, quality and customer service. Also, consumers in India do have a preconceived notion that international brands are relatively durable and good. Staples, therefore, can plan to communicate its wide portfolio of products under its single company/corporate name. (Hollensen, S., 2007) Moreover, Staples as a name is simple to recall. Also, single branding is relatively low cost. (Bhatt, A., 2007)
BRANDING DECISION FOR STAPLES
Company’s own Products
Source: Hollensen, S., 2007. Global Marketing. Chp 14: Product Decisions. Pp. 441, 4th ed, Financial Times/Prentice Hall, Harlow)
This can, however, be further complemented by equally eye-catching tag-lines and logos. (Kotler, P. & Keller, K. L. 2006) The company can also indulge in associating the company name with its joint venture partner, ‘The Pantaloons Group’. (Bhatt, A., 2007) Pantaloons have a wide consumer base and are reputed in India. This will, thus, create an opportunity for Staples to gain a much distinct acceptance, a much stronger loyalty/relationship and a much better price, in the long run. (Ghauri, P. and Cateora, P., 2006) (Hollensen, S., 2007)
Pricing is, indeed, a strategic decision to be made by small, big, local, global and new-entrants alike, as it is the only element of the marketing mix that brings in hardcore income, and finally profits. (Kotler, P. & Keller, K. L. 2006) Considering, the nature of the market, comparatively low consumer disposable income as against the U.S.A, buyer readiness towards paying a decent price, but within the limited bracket rates, for a good payoff value at the end, expensive logistics and distribution, low and fluctuating currency convertibility of Indian Rupee into U.S.A. dollars and competition of the brand with locals, suggests that Staples should not standardize its home pricing strategy, but, adapt the ‘cost-plus’ mode of pricing and comparatively fix a still lower price than what it has now, at least in the start. It can, however, gradually raise its prices, once the company starts registering stable sales. (Ghauri, P. and Cateora, P., 2006) (Hollensen, S., 2007)
Promotion is one of the most important aspects of the entire marketing plan, especially during the initial stages. Various communication tools and mediums can be used by Staples.
Print Ads in Newspapers and Business Magazines
Television and Radio Ads
Press Conferences and releases
The Indian masses have still not indulged into the practice of online shopping. Retail buying and selling is majorly done by visiting physically present outlets. So it would be inappropriate to use the e-commerce medium. However a website can always be designed for informational purpose.
Staples deals in goods and that too of vast range with innumerable shapes, sizes and weights. Also, it is difficult to geographically segment or categorize Indian markets and focus on a particular region. These are the major reasons due to which distribution and logistics becomes tedious. Strategic planning and investment will be required to set up a channel that facilitates in-bound and out-bound logistics so that goods reach at the right place in the right time.
Expanding in a new country and implementing predefined strategies is bound to bring in numerous commercial, markets, financial and political barriers, thereby, imposing a need of developing risk-contingency strategies to resist those barriers. (Tayeb, M., 2000) There are problems regarding the generating visibility. There is another problem of finding appropriate vendors and human resource. There is also problem with regard to following proper taxation policies, import/export laws and government regulations. The worst case includes the problems regarding determining the unique lifestyle and preferences of host countries. Also liquidation problem in terms of assets and Intellectual rights are big liabilities. However such external barriers cannot be totally eradicated and steps such as, maintaining monthly and annual revenue records, employee training, indulging into mergers and acquisitions, generating revenue from repeat customers, focusing on acquiring cost leadership etc. can be taken to minimize it. (www.mplans.com) Overcoming these limitations, Staples, combined with its penetrative marketing strategy, will be fruitful in replicating its success in India as well as other countries.
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