1.

List the identified key characteristics of the product at each level and
describe the significance of each characteristic to the target market.
A key component of the success of Kmart is the optimization of supply chain
and inventory management stems. While products are stored in the inventory
and thus accumulating costs, Kmart can organize the system such that
inventory arrives only when it is needed to reduce significant inventory costs
for retailers and also the cost of losing customers to competitors. Every item
in Kmart purchased is scanned and stored in a database, which directs the
store to replenish the items and to purchase more stock from the supplier.
Through the database system, suppliers are able to see when to increase or
decrease production to meet retailers needs.
In relation to achieving the target market conducted by Kmart, an efficient
supply chain leads to a more satisfying customer service. The stories are
rarely under stocked, and thus customers are more satisfied with items that
are advertised as discounts, for example, and are available at the store when
they go to purchase them.
Another key characteristics to Kmart success is pricing. Kmart is able to offer
general merchandise and extensive range of home brand products at lowest
prices possible because Kmart relies on other brands instead of marketing its
own brands. This reduced the marketing and maintenance costs significantly,
and thus Kmart is able to sell with lowest prices possible. At the same time,
Kmart is able to maintain a high brand loyalty from the private brands
marketed in Kmart. By offering lowest prices possible, Kmart can reach a
further level in achieving its potential target market.

2. How will you price the product? Explain your pricing policy in full and give
reasons for your decision.
Depending on the total costs incurred from each supplier to the retail store (Kmart),
each product is priced to cover these costs plus a profit margin. Again, maintenance
costs are significantly reduced as Kmart does not sell own brands. Thus, Kmart does
not have to maintain the quality or any other attributes of each product as it is the
responsibility of each private label.
The catch phrase that Kmart is very famous for its lowest prices possible phrase.
Basically, Kmart is guaranteeing the customers that there are no other identical
stocked items that can be sold at a cheaper prices possible other than Kmart. One
of the pricing policy in Kmart is that if customers are able to find a cheaper price of
any identical items, the store will sell the product at a cheaper price instead of the
advertised price. The reason to this is to help convincing customers that Kmart sells
product at lowest prices possible. However, there are some terms and conditions,
such as Kmart only match the price with any retail outlets in Australia, but not
match online retailers.

3. Identify the most appropriate promotional methods for you product and
explain your choices. Which promotional method would be best for your
product during the product launch? Given reasons for your answer.
As Kmart is one of the largest discount retail stores in Australia, Kmart needs a
promotional method that may reach a national scale (broad scope of potential
target markets). Furthermore, Kmart sells general merchandises that customers are
largely dependent on for their basic necessities. Thus, one of the most appropriate
promotional methods is advertising through radio or television. Even though the
marketing costs might require significant amount of marketing costs, it is believed
that these promotional methods can convey information to customers at a very
short period of time and especially if the advertisement is attentive or creative.
Rather than spending marketing costs on delivering brochures or flyers, these types
of promotional methods are only suitable for a small to medium company where
target markets are not largely defined (only small scope of target markets).

4. How will you bring the product to market? Describe your placement strategy
in terms of channels distribution and the place of sale. Give reasons for your
proposed strategy.
To increase customers attention especially in a very competitive market where
Kmart is operating in, the store can increase the recognition of its advertisement on
commercial communication consisting of the inclusion of the product. This example
has been done by Kmart previously where the web-series called First Day funded
entirely by Kmart includes many Kmart products such as the wardrobe, top billing,
etc. in the video.
Kmart has an efficient supply chain system such that every item scanned is
recorded in the system. Thus, the store is able to know whether more or less stocks
are needed for purchase from the supplier. This is essential especially that Kmart
only sells private brands but not own brand products to maintain respect of its
suppliers. In addition, Kmart pairs with Sears in 2005 to leverage the strengths of
both chains by making their products, brands and services available through more
locations and more distribution channels.
5. How important are people to your marketing mix?
People are the most important element of any service. An excellent customer
service is essential to meet individual needs of the person consuming it. For
example, the way in which a complaint is handled can determine in retaining or
losing a customer and thus improving or ruining the companys reputation.
Customer service can be done via face to face, telephone or online. Aside from
customer service, people are also be trained to be a product deliver salesperson.
The main task is to deliver the product and record the order. This can be done via
telephone, email or over a counter. Without training and development, the labour
cannot optimize their skills in delivering their tasks.

Aside from labour or workers, customers are also an important aspect in the
marketing mix. Without customers, there are no sales and thus no profits can be
recorded. The number of customer buying the products from the stores define the
success of the store. The more customers buying in products from, the more
successful the store is.

6. Identify potential customer base for your product and describe key pressure
points for success.
The potential customer base for Kmart is the low to middle income level persons.
Key pressure points for success include having a clear vision and mission statement
so goals of the company are correctly aligned with the steps taken in achieving
these goals. Another example would be defining an appropriate working culture to
build a positive working environment.

7. Test market your newly established marketing mix in a simulated environment

with colleagues to establish the relative importance of each component to the
customer base. Report on your findings.
8. Identify the environmental factors relevant to your organization and product and
assess the potential impact of each on your marketing mix.
Several environmental factors would include child labour law violation or poor
working conditions for labours. Therefore Kmart can form a environmental
sustainability effort by promoting go green products or promoting a social event
such as childcare charity to help portray the store as being a responsible company.
In relation to potential impact on each of the marketing mix defined, a less
sustainable product is cheaper than sustainable or organic products because these
products are more refined before being marketed. This will affect the marketing
campaign of the company as customers are often concern with environmental
issues. Social events or organic products are often included as part of the
advertisement to help portray the company being sustainable and responsible to
the environment. Environmental issues will also affect the channel of distribution of
Kmart. Choosing the right location is very vital as to reduce environmental issues
from happening (ie. water pollution, air pollution, landfill sites, etc.). Finally, in
facing issues to child labour violation, Kmart has a policy to hire workers from a
certain age only or otherwise considered as anti-discrimination or child abuse.

9. Describe the priorities, needs and preferences of your consumers that affect the
marketing mix for your product.
As consumer demands are dynamic or changing over times, it is important for
Kmart to constantly update its performance to follow the market trends. The goal or
main priority of the company is to maintain an excellent customer service and
maintain a high brand customers loyalty. Thus, in order to cater the changing

customer needs, the marketing mix proposed by Kmart also needs to be adjusted
accordingly.

10. List the marketing objectives for your product.

Few marketing objectives for the product by Kmart are to maintain low prices
offered and to ensure that the products offered by Kmart are easily accessible and
readily on stock to satisfy customer needs.
11. Describe in detail the characteristic of your target market.
Kmarts target market is aimed onto families and individuals with low to middle
incomes. The targeted audience are mainly interested in the value of the product
offered, and less interested in product branding (price oriented rather than quality
oriented). As a company that offers general merchandise at low prices, Kmart
focuses their target market onto students or low to middle income family rather
than a high income family. This is achieved to maintain lowest prices possible and
differentiate its market segmentation from other competitors (ie. Target focused on
a more upscale customer segment with median household income of $43,000).
Meanwhile, based on Kmarts latest annual report, Kmart has a customer base with
median household income of approximately $25,000 which is lower than target
market of Target Co.
12. Who are your competitors and how will you position your product in the market
place?
Few major competitors of Kmart is Target and Walmart. In order to differentiate the
products offered by Kmart to other competitors, Kmart needs to break down their
mass market segmentation and focus offering products in the segmented market.
As Kmart focuses on maintaining lowest prices possible, Kmart can aim products
onto lower income family rather than high income family. The lower income family is
defined as Kmarts target market. In answering how to deliver the products to the
target market in an optimal way, market research can be conducted to find
consumer tastes and preferences. As customers defined are more price oriented
than quality oriented, the store can offer huge discounts on several occasions to
increase further the sales and replenish old stocks in their inventory. Aside from
discounts, several promotional campaign may include making a loyalty card which
can be converted into cash or free items for regular customers to increase brand
loyalty and customer loyalty.
13. Evaluate your marketing mix against your marketing objectives, target market
and position strategy for your product. Is this the best marketing mix plan for your
target market, marketing objectives and desired positioning in the market place?
Yes, this is the best marketing mix plan in achieving the marketing objectives. A
defined target market such as low to middle aged income followed with a suitable
pricing strategy (ie. lowest prices possible) will differentiate Kmart products from
other competitors. Mass advertising such as television can be implemented to bring
customer awareness in a national scale and to help customers updated with

information of recent products (ie. clearance stocks, end of financial year discounts,
etc). The marketing mix is implemented in order to achieve Kmart marketing
objectives in meeting changing consumer demands and maintaining lowest prices
possible in each product offered.
14. How do your marketing mix decisions meet the organizational, strategic and
operational marketing objectives of the organization?
Marketing mix defined needs to suit each of the organizational, strategic and
operational marketing objectives of the organization. For example, Kmart
operational marketing objective is to improve the operations of the production
process. Improving production includes decreasing costs and raising quality while
maintain lowest prices possible compared to other firms selling identical items. In
order to do so, workers are trained in depth to improve time management or
efficiency in carrying their tasks. Recently, the use of information technology has
allow stores to improve their supply chain system and improve efficiency in
production process. The strategic marketing objectives of the organization is to
constantly innovate products in meeting changing consumer demands. In Kmart,
labors are allowed to engage and participate on decision making process. As a
result, the company has
15. How would you monitor the performance of each component of your Marketing
Mix? Give reasons for your choices.
It is important for Kmart to regularly monitor the marketing activities and compare
the current performance against the marketing objectives. This is carried in order to
identify performance gaps and determine why they exist. After determining the
cause of performance gaps, actions or steps can be taken to improve current
performance against marketing objectives. Questionnaires or surveys can be
conducted to analyze consumer reaction to the aspects of marketing mix. For
example, if the labors are underperforming, training and development can be
further carried to improve their customer service. If the products offered are not
selling much against the expected number of sales, Kmart can adjust the target
market and product placement to improve sales of the products. If there are
identical items that are sold at cheaper prices in other stores, Kmart can adjust the
price to a lower rate to maintain its lowest prices possible slogan. Each
component of the marketing mix is carefully monitored to align with Kmarts
marketing objectives.
16. How does marketing performance compare with the marketing objectives you
set previously?
A well-developed marketing strategy will help Kmart in realizing the company goals
and build a strong reputation in the products. Thus, an excellent marketing
performance is aligned with a clear and concise marketing objectives. The
marketing objective in Kmart is to maintain lowest prices possible. The evident that
Kmart is one of the largest discount retail store means that Kmart has successfully
done so to maintain lowest prices possible. This competitive advantage is used by
Kmart to focus their products onto a more segmented / niche market thus allowing
product differentiation to occur compared to other competitors. Marketing

performances such as offering heavy discounts and rewards onto loyal customers
are aligned to achieve Kmarts marketing objective.
17. What components of marketing mix need to be tested further? Give reasons for
your choices.
Kmart might need to focus further on the placement of their products. Target has a
more defined target market (ie. high income family) by stocking more furniture,
clothing and exclusive merchandise than Kmart. Even though Kmart defined its
target market to a lower income family, this can also be rephrased as a mass
merchandising company as everyone including the high income family can
purchase the products sold in Kmart. In other words, Kmart has a lack of clear
concept in reaching the market.
18. Evaluate the implications of altering components of marketing mix in relation to
consumer response and external market factors.
External market factors may include introduction of Information Technology in
tracking daily sales order. Technology improves the supply chain system of Kmart by
ensuring each order in and out from the inventory is recorded in the system.
Furthermore, introduction of technology also means less labors are needed as
everything is done through automated system. While the product placement will still
be the same, the implications of technology to the marketing mix is less labors
(people) needed and less costs (price) incurred in the production process (ie. labour
costs, maintenance costs).
19. How much will these changes cost? Detail the effect these changes have on the
budget.
The purchase of technology equipment (ie. IT software, machinery, computers, etc.)
require significant amount of budgeting. Not only installation costs to be considered,
but also the maintenance costs that incur annually. In fact, these costs might only
be recovered after several years after the operation of these equipment. These
costs definitely have significant effect in the balance sheet and income statement of
Kmart. Through the introduction of online shopping, there will be increasing sales
generated. However, it does not mean the company might increase profit compared
to the previous year reflecting upon the purchase of equipment now. In addition,
with significant amount of budgeting in purchasing equipment now, means that
there will be less budget available in the next financial year to improve or recover
the financial performance of Kmart that might fall due to the significant purchase
now.
20. Explain how these changes continue to meet the organizational, strategic and
operational marketing objectives, including the desired positioning strategy.
While Kmart has a clearly defined marketing objective, the company has to act in a
way that must be able to cater the changing needs of consumer tastes and
preferences (demands). Kmart has to regularly monitor and review their
performance to identify performance gaps on every action taken. For example, the
introduction to technology brings a significant change in meeting the organizational,

strategic and operational marketing objectives. Technology improves the accuracy

and efficiency in managing the stores supply chain system as part to maintain the
stores operational marketing objectives (to improve production process). In
addition, Kmart has a strategic marketing objective of maintaining lowest prices
possible in the long term and improve its market segmentation in targeting lower
household income family. Technology reduces costs in production process and
therefore Kmart can offer products at a lower price compared to production process
without use of technology.