bunnings warehouse brand analysis · 2018-06-05 · a customer based brand equity analysis is...
TRANSCRIPT
BUNNINGS WAREHOUSE
BRAND ANALYSIS
MAY 2018
FRANCES GUASTALEGNAME 698669
The University of Melbourne MKTG90006 Brand Management
3,174 words
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TABLE OF CONTENTS
Executive Summary 3
Introduction 4
Brand Analysis
Lowest Prices
Widest Range
Best Service
6
6
7
8
Identification of Key Issues,
Challenges and Opportunities
9
Recommendations 10
Conclusion 12
References 14
Appendix 16
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EXECUTIVE SUMMARY
This report analyses current sources of brand equity for Bunnings Warehouse, and
provides recommendations in relation to building and managing equity for the brand.
A customer based brand equity analysis is conducted for Bunnings Warehouse,
considering key strategies in relation to the brand’s three strategic pillars: lowest
prices, widest range and best service. Strategies discussed include the brand’s price-
beat guarantee, PowerPass trade loyalty program, in store merchandising and Special
Orders service, and team member training to provide high quality customer service.
Key issues, challenges and opportunities highlighted in this report find an inability to
target all customer segments through loyalty programs, a lack of an online store and
engagement in e-commerce, and poor online presence in social media marketing
communications.
Based on the customer based brand equity analysis conducted, and the key findings of
issues, challenges and opportunities, this report proposes three holistic strategies for
the Bunnings brand to source brand equity. Firstly, the introduction of a universal
loyalty program for all customer segments. Next, the formation of an online store and
shopping experience to build on the service experience delivered in store. To
conclude, I recommend the development of a unique marketing mix for each customer
segment, which is then addressed and communicated through integrated marketing
communications campaigns in the digital space.
The report finds that although Bunnings Warehouse exists as an industry and market
leader with high brand equity, there is opportunity for improvement in the
recommended areas, to aim to further increase brand equity for all consumers.
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INTRODUCTION
Bunnings Group Limited, trading as Bunnings Warehouse (Bunnings) is the market-
leading retailer in home improvement and outdoor living products in Australia and
New Zealand, and exists as a major supplier to commercial and do-it-yourself (DIY)
customers (Bunnings Warehouse 2018). First established as an operational timber
yard in Western Australia in 1886, Bunnings has developed into the trade and DIY
supplier it is today throughout changes in brand management and ownership
(Bunnings Warehouse 2018). In 1994, Wesfarmers Limited (Wesfarmers) bought the
Bunnings brand, and continues to exist as the organisation’s parent company in
Australia today (Bunnings Warehouse 2018). Acquisition of the BBC Hardware
network occurred in 2001, allowing the Bunnings brand to expand into the New
Zealand market (Bunnings Warehouse 2018). As of 31 December 2017, the Bunnings
brand operates from 253 warehouses, 77 smaller format stores, 33 trade centres and
three fame and truss centres throughout Australia and New Zealand, employing more
than 40,000 team members (Bunnings Warehouse 2018).
In recent years, Bunnings has expanded into the United Kingdom (UK) and Ireland
(known as Bunnings United Kingdom and Ireland or BUKI) through the acquisition
of Homebase in February 2016 (Bunnings Warehouse 2018). In the last two years, 15
BUKI stores have piloted, with a further 234 Homebase stores continuing to operate
across the UK and Ireland (Bunnings Warehouse 2018). However, Wesfarmers
announced in late May 2018 that they have since sold BUKI to the restructuring firm
Hilco Capital, after failed attempts to maintain relationships with Homebase’s
existing customers and poor market research led to significant financial loss for the
Bunnings brand (Hatch 2018).
Considered within the hardware and building supplies industry in Australia and under
its parent company Wesfarmers, Bunnings possesses a market share of 35.2% as of
February 2018 (IBISWorld 2018, p. 23). Major competitors of the brand within the
industry include; Metcash Limited, operating through its Mitre 10, True Value
Hardware and Home Timber and Hardware brands and possessing less than 5% of the
total market share, and Bowen & Pomeroy Proprietary Limited, operating as Bowens
Timber and Hardware stores and possessing 0.9% market share (IBISWorld 2018, p.
24). Woolworths Limited, who operated as Masters Home Improvement from
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September 2011, existed as Bunnings’ primary competitor due to its similarity as a
big-box retail warehouse, exited the market in December 2016 with the closure of all
stores (IBISWorld 2018, p. 24).
Acknowledging the brand’s vision of “we’re building the best, our team make it
happen”, as well as its guiding principles of integrity, achievement, respect,
innovation and teamwork, it is evident the Bunnings brand places value on employee
participation and growth, as well as the importance of community involvement
(Bunnings Warehouse 2015, p. 7). Bunnings aims to emphasise the importance of
building team networks to provide outstanding customer service in store, while
engaging with local communities through sincere and active participation in
community group initiatives. This in turn allows Bunnings to identify as a team-led
and community-driven brand, encompassing the brand’s visions and values to
establish a positive and resonate brand identity.
The Bunnings brand is positioned as a one-stop, big-box hardware store, providing its
customers the opportunity to purchase all their DIY and hardware essentials at the
lowest prices, conveniently located in one store. The Bunnings brand ultimately
provides its consumers with strong, favourable and unique associations that define the
meaning and purpose of the brand, and in turn reflect on the positioning of the brand
as a whole. A positioning statement for Bunnings is featured below.
Positioning statement for Bunnings Warehouse
To tradespeople, commercial businesses and DIY enthusiasts who want convenient
access to all their hardware and DIY supplies to complete their tasks at hand,
Bunnings is the brand of big-box hardware retailing that offers its customers everyday
lowest prices, widest range and best service because of its price-beat guarantee and
leading market share. The brand character is trustworthy, reliable and popular,
existing as the top-of-mind choice for hardware and building supplies retailers.
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BRAND ANALYSIS
Bunnings sources its brand equity through the use of what the brand calls its ‘three
strategic pillars’. All efforts to build brand equity for Bunnings are developed based
on the pillars of lowest prices, widest range and best service (Bunnings Warehouse
2018). Considering the brand’s vision and guiding principles and values previously
listed, the three strategic pillars ultimately aim to provide customers with “the best
service and widest selection of products at the lowest prices every day”, and therefore
remain crucial in determining how adequately Bunnings is able to build brand equity
for its consumers (Bunnings Warehouse 2018). It is through the use of these three
strategic pillars that Bunnings creates brand-building strategies that aim to reinforce
brand identity, while also addressing brand meaning and consumer judgements and
feelings to foster desirable brand relationships. To best understand Bunnings’ efforts
in achieving brand equity for its consumers, key strategies will be considered in
relation to each of the brand’s strategic pillars.
Lowest Prices
Lowest prices remains a core foundation for the Bunnings brand, primarily due to the
brand’s price-beat guarantee policy, delivered through the brand’s slogan, “If you find
a competitor’s lower price on the same stocked item, we’ll beat it by 10%. That’s our
policy.” (Bunnings Warehouse 2018). The use of a slogan to deliver the price-beat
guarantee to consumers helps to reinforce brand awareness, as repeated exposure to
the slogan through television advertising campaigns increases familiarity of the
brand’s identity (Holt 2003, p. 10). Bunnings predominately delivers lowest prices to
its consumers through store-based pricing departments, who are able to monitor
competitor pricing and in turn temporarily reduce product prices, to ensure customers
are delivered the lowest possible price through Bunnings (Bunnings Warehouse 2015,
p. 48). The price-beat guarantee policy is used as a contingency to maintain lowest
prices; as product pricing can fluctuate throughout the market at a rate faster than
what pricing teams can monitor, the price-beat guarantee policy provides consumers
with the opportunity to continuously shop hardware supplies at the lowest possible
price. Although the policy excludes trade quotes, commercial quantities and stock
liquidations, its provides Bunnings’ customers with the ability to develop brand
meaning through performance, as consumers can rely on the brand to effectively meet
their needs in obtaining hardware supplies for a low cost.
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Furthermore, commercial businesses and trade customers are offered access to the
PowerPass program, a loyalty scheme that provides pricing discounts and additional
exclusive services, such as a waived deposits on hired tools (Bunnings Trade 2018).
PowerPass customers are granted discounts of up to 5% off products, with greater
discounts given to products relating to their specialty trade – for example, a painter
would receive greater discount on paint-related products (Bunnings Trade 2018).
Most importantly, these customers are able to develop a personal relationship at no
cost with their preferred store’s Trade Specialist, who they are able to contact directly
to request trade quantity orders and organise business events sponsored by Bunnings.
Widest Range
Widest range remains an integral part of the formation of the Bunnings brand, as it
reinforces the brand’s positioning as a market leader in supplying hardware essentials
to both the DIY enthusiast and commercial tradespeople and businesses. Operating
from large warehouses and small format stores, Bunnings provides consumers with up
to 45,000 product lines in store, ranging from a variety of outdoor and indoor building
materials, to hand and power tools, and interior decors (Bunnings Warehouse 2018).
Bunnings encourages consumers to shop the widest range in store, providing product
features and benefits tickets (see Figure 1) on all display items to aid customers in
making informed purchasing decisions within a wide array of products (Bunnings
Warehouse 2015, p. 41). Similarly, the display of simple and easy to follow ‘how-to’
banners (see Figure 2) in store helps to inspire and motivate customers to try new
products within the in store range. Providing functional information and experiential
project ideas to consumers based on ranged products allows Bunnings to address
functional and experiential benefits of brand imagery, as consumers are made aware
of the brand’s ability to provide products that can address consumer concerns, while
also encouraging consumers to engage in different experiential projects based on their
purchase decisions in store (Keller 2001, p. 11).
Additionally, a Special Orders service offers customers the opportunity to shop an
extended 400,000 product lines that are not ranged in store (Bunnings Warehouse
2018). As of 2018, customers are able to shop a large number of Special Order items
online, as well as placing orders for these products in store through the designated
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Special Orders department. Existing as a big-box retailer that provides its consumers
with extensive products both in store and through ordering services, Bunnings is able
to enhance customer based brand equity by promising brand credibility, quality and
superiority to its consumers.
Best Service
Best service arguably exists as the most fundamental strategic pillar to building
customer based brand equity for Bunnings, as it emphasises the importance of
addressing and meeting consumer needs in successfully building strong relationships
between the brand and the consumer. Bunnings aims to provide the highest possible
level of customer service, training over 40,000 team members to approach customers
in a helpful, friendly and knowledgeable manner (Bunnings Warehouse 2018).
Outstanding in store communication between team members and customers
essentially forms the basis for the best service pillar, and is outlined by the following
five ‘keys to outstanding customer service’, as quoted from the Bunnings and You
team training booklet (Bunnings Warehouse 2015, p. 18):
• Greeting customers with a friendly smile and making them feel welcomes as
they enter your store.
• Consistently approaching and acknowledging customers; smiling and saying
hi so they know you are there for them.
• Having a chat, asking the customer questions and giving helpful, accurate
advice about their project or product.
• Ensuring the customer gets what they came for by being in stock.
• Delivering a fast, efficient and friendly checkout process and thanking the
customer as they leave.
Customer based brand equity is developed through this pillar as it considers consumer
judgements and feelings of the brand, highlighting the quality and credibility of
Bunnings, while allowing consumers to determine their overall feelings of the brand
through their in store service experiences. Most importantly, the best service strategy
taps into brand relationships, encouraging consumer loyalty and engagement by
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providing the best possible customer service, holistically effecting brand resonance
(Keller 2001, p. 15).
IDENTIFICATION OF KEY ISSUES, CHALLENGES AND
OPPORTUNITIES
Undoubtedly, Bunnings exists as the market leader in hardware supplies retailing
primarily due to their ability to create customer based brand equity across all facets of
the brand. The brand fundamentally considers each of its main consumer segments –
that being, tradespeople, commercial businesses and DIY enthusiasts, across all
elements of branding, communication and customer relationship building. Yet, there
are key issues that need to be addressed for the brand to maintain its position as the
market leader, as well as opportunities that can be taken to help further increase
customer based brand equity for Bunnings.
First considering Bunnings’ use of the exclusive PowerPass program, available only
to those who possess an ABN number, ultimately excludes the DIY enthusiast target
segment from creating loyal relationships with the brand (Bunnings Trade 2018). At
the present time, there is no available loyalty program or scheme for DIY enthusiast
and everyday shoppers, who in turn are not able to access the same discounted prices
and services as tradespeople and commercial businesses shopping in Bunnings.
Preventing a specific target segment from building relationships with the brand based
on customer loyalty ultimately depicts Bunnings to favour their trade and commercial
business customers, despite positioning themselves as equally available to all three
primary target segments. Additionally, there is a missed opportunity for the brand to
increase profitability through customer retention, as customers who develop a sense
of loyalty to a brand will continue to build their relationship with said brand (Rowley
2000). From this, it is evident that there is opportunity for Bunnings to establish a
means of building and further maintaining relationships with their loyal DIY
shoppers, who make up a large percentage of daily in store sales, particularly in
suburban areas.
Secondly, Bunnings currently provides their customers with an in store shopping
experience, where they are able to make instant purchases as well as order products
sought that are not ranged in stores. In 2018, Bunnings branched into e-commerce,
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giving customers the opportunity to purchase a limited number of Special Order items
online via the brand’s website, which can then be delivered to the customer’s home,
or picked up from their chosen store (Fernyhough 2017). However this is the first and
foreseeably only step Bunnings has taken towards an online shopping platform for its
consumers, with no intentions to further extend the brand’s online shopping
experience (IBISWorld 2016, p. 8). This ultimately reduces consumer’s buying
incentives, as a Bunnings’ shopping experience is only available within a brick and
mortar store, or through limited product availability online.
Lastly, Bunnings’ marketing communications strategies exist as an issue that the
brand has been working to address in recent years. Currently, Bunnings’ online
presence is relatively weak (see Table 1), as the brand makes use of traditional forms
of advertising such as television adverts and print catalogues to communicate with its
consumers. In attempts to maintain brand identity and image, Bunnings avoids
launching new campaigns and continues to use its most recognisable campaigns,
despite the significant growth of social media marketing in recent years. Bunnings’
most recognisable campaigns include their television adverts featuring team members
quoting the brand’s slogan, as well as their line-illustrated catalogues distributed in
store (see Figures 3 and 4). These campaigns are relatively favourable among
Bunnings’ key target segments, as they are easily identifiable and aid in brand recall
for consumers (Keller 2009, p. 141). Although these campaigns exist as a point of
difference and a unique selling proposition for Bunnings in relation to its competitors
to reinforce brand identity, opportunity is missed in holistically reaching each target
segment across all available communications channels. In recent years the brand has
moved towards communicating with its consumers online, although Bunnings
struggles to identify and create targeted marketing mixes for each customer segment,
and therefore cannot effectively reinforce their visions and values in a digital space
(Hunt and Arnett 2004, p. 7).
RECOMMENDATIONS
Based on the key issues, challenges and opportunities addressed above, this report
provides three recommendations to help the Bunnings brand improve on its customer
based brand equity.
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First, aiming to improve customer loyalty and retention for all key target segments, I
recommend the introduction of a holistic loyalty program. Gómez et al. (2006) note
that loyalty programs are one of the simplest yet effective strategies a brand can
introduce to prompt consumers’ buying incentives, and to increase customer
retention. As loyalty programs are designed to offer incentives to the customer in
attempts to secure loyalty to the brand, creating a program that considers rewarding
purchasing frequency will aid in increasing buyer incentive (Gómez et al. 2006, p.
387). As mentioned above, Bunnings currently offers the PowerPass program to trade
and commercial business customers; yet, no program is available to everyday and
DIY consumers, effectively restricting this key consumer segment’s access to the
brand’s pillars of lowest prices and best service. I recommend that Bunnings establish
a loyalty program that is accessible by all target segments, where points can be
collected through each shopping experience, and then translated to vouchers issued
with each change of season, when there is generally both a clearance of older stock,
and an influx of current seasonal products (IBISWorld 2017). Introducing a program
that allows DIY customers to receive discounts on a seasonal basis will effectively
allow the brand to increase customer based brand equity through customer retention
and increased loyalty, while further encouraging the brand to better meet their three
strategic pillars.
Additionally, to increase product range and availability for consumers, I recommend
for the Bunnings brand to extend on their current attempts of e-commerce, and
introduce an online store for all products. Without intentions to expand into the online
shopping market, Bunnings is not addressing its guiding value of innovation, and
further restricts the ability for consumers to access the widest possible range of
products outside of the warehouse environment. Research by IBISWorld denotes an
increasingly high demand for online shopping platforms, both as a way for consumers
to browse products, and in turn make timely and efficient purchases (IBISWorld
2016, p. 8). Furthermore, IBISWorld considers that online shopping experiences
promote timeliness and price transparency, two factors highly desired by a middle age
demographic, and one of the brand’s largest target segments (IBISWorld 2016, p. 8).
Creating an online store would allow Bunnings to engage with their consumers in a
shopping experience outside of the warehouse environment, meeting the strategic
pillars of widest range and best service without customers having to shop in store. In
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relation to building customer based brand equity, an online shopping platform would
enhance brand performance through service effectiveness and efficiency, in turn
influencing consumer judgements of the brand to build increased resonance through
effective engagement.
Lastly, to address Bunnings’ limited online presence, I recommend that the brand
develop a unique marketing mix for each of its target segments, and create integrated
marketing communications campaigns that reflect current and traditional campaigns.
Building campaigns for the digital space that reflect the brand’s current favourable
campaigns will aid in maintaining brand recall for consumers and cementing brand
identity, and further help Bunnings to begin fostering two-way communication with
their consumers (Keller 2009, p. 141). As the popularity of social media marketing
continues to grow, Bunnings needs to encourage engagement and communication
with each of their consumer segments online, so as to remain a market leader and
continue to provide best service to all consumers (Stelzner 2016, p. 7). Most
importantly, it is evident that tradespeople typically aged 15 to 34 are emerging as the
brand’s largest consumer segment, contributing to approximately 32 per cent of
subdivision revenue in consumer goods retailing (IBISWorld 2017, p. 14). These
consumers, as well as DIY enthusiasts, largely turn to social media platforms
including Pintrest and Instagram for project ideas and inspiration; thus to begin
fostering effective communications strategies with their consumers in a digital space,
Bunnings needs to increase their online social presence, and develop cross-platform
campaigns that aim to uniquely target each segment, so as to prompt resonance
through community engagement.
CONCLUSION
Ultimately, Bunnings holds its position as a market and industry leader primarily
through its ability to build its brand through its strategic pillars of lowest prices,
widest range and best service. All aspects of the Bunnings brand are developed on the
foundations of these pillars, and thus aim to consistently address the needs of the
consumer to build and maintain customer based brand equity. Despite its position as a
market leader, the Bunnings brand does highlight key issues, challenges and
opportunities that the brand needs to address, so as to remain an industry leader, and
further its position of high brand equity. Taking into consideration the introduction of
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a loyalty program, an online shopping experience and increased efforts of online
communication with their consumers, Bunnings will be able to continue to prosper
and grow as a strategically pillared brand, enhancing consumer resonance to facilitate
increased customer based brand equity.
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REFERENCES Bunnings Trade 2018, Bunnings Commercial: PowerPass, viewed 22 April 2018, <https://www.bunningspowerpass.com.au/> Bunnings Warehouse 2015, Bunnings and You – Book 1, Bunnings Warehouse. Bunnings Warehouse 2018, About Us, viewed 22 April 2018, <https://www.bunnings.com.au/about-us> Fernyhough, J 2017, Bunnings unveils online shopping – but there’s a catch, viewed 6 May 2018, <https://www.smartcompany.com.au/industries/retail/bunnings-unveils-online-shopping/> Gómez, B G, Arranz, A G and Cillán, J G 2006, “The role of loyalty programs in behavioural and affective loyalty” in Journal of Consumer Marketing, vol. 23, no. 7, Emerald Group Publishing Limited, p. 387. Facebook 2018, Bunnings Warehouse Australia, viewed 31 May 2018, < https://www.facebook.com/BunningsWarehouseAustralia/> Hatch, P 2018, In for $705m, out for £1: Wesfarmers abandons UK Bunnings disaster, viewed 26 May 2018, < https://www.smh.com.au/business/companies/wesfarmers-decides-to-pull-out-of-uk-bunnings-disaster-20180525-p4zhg4.html> Holt, D B 2003, Brands and Branding, Harvard Business School Publishing, p. 10. Hunt, S D and Arnett, D B 2004, “Market Segmentation Strategy, Competitive Advantage, and Public Policy: Grounding Segmentation Strategy in Resource-Advantage Theory” in Australasian Marketing Journal, vol. 12, no. 1, Texas Tech University, p. 7. IBISWorld 2016, October, Online Hardware and Tool Sales in Australia, retrieved from <http://clients1.ibisworld.com.au.ezp.lib.unimelb.edu.au/reports/au/industry/default.aspx?entid=5118> IBISWorld 2017, February, Consumer Goods Retailing in Australia, retrieved from <http://clients1.ibisworld.com.au.ezp.lib.unimelb.edu.au/reports/au/industry/default.aspx?entid=1720> IBISWorld 2018, February, Hardware and Building Supplies Retailing in Australia, retrieve from <http://clients1.ibisworld.com.au.ezp.lib.unimelb.edu.au/reports/au/industry/default.aspx?entid=1877> Instagram 2018, Bunnings, viewed 31 May 2018, < https://www.instagram.com/bunnings/>
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Keller, K L 2001, Building Customer-Based Brand Equity: A Blueprint for Creating Strong Brands, Marketing Science Institute, pp. 11, 15. Keller, K L 2009, “Building strong brands in a modern marketing communications environment” in Journal of Marketing Communications, vol. 15, no. 2-3, Routledge, p. 141. Rowley, J 2000, “Loyalty kiosks making loyalty cards work” in British Food Journal, vol. 102, no. 5-6. Stelzner, M A 2016, 2016 Social Media Marketing Industry Report: How Marketers Are Using Social Media to Grow Their Businesses, Social Media Examiner, p. 7. Twitter 2018, Bunnings Warehouse, viewed 31 May 2018, < https://twitter.com/Bunnings> Youtube 2018, Bunnings Warehouse, viewed 31 May 2018, < https://www.youtube.com/user/bunningswarehouse>
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APPENDIX
Figure 1 Figure 1: A sample features and benefits ticket included on all display products in store (Bunnings Warehouse 2015). Figure 2: A sample ‘how to’ banner displayed in store (Bunnings Warehouse 2015).
Figure 3: A screenshot from Bunnings’ current television advert campaign (YouTube 2018).
Figure 2
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Figure 4: An example of a product line illustration used in television and print catalogues (Bunnings Warehouse 2018). Table 1: Social media platform statistics for Bunnings Warehouse, as of Thursday 31 May 2018 Social media platform
Number of posts
Number of followers
Number of followings
Average interactions per post
Facebook N/A 21, 621 N/A N/A Twitter 1 3,626 0 34 replies
14 retweets 30 likes
Instagram 451 49k 42 ~500 likes ~20-25 comments
YouTube 1,048 136,284 N/A < 1,000 views (Facebook 2018; Twitter 2018; Instagram 2018; YouTube 2018).