This management report is entitled, Strategic Evaluation Document for Boots. The main purpose of this report is to investigate the impact of IT/IS system on the culture and productivity of the organization and identifies the new system that will result in advantage and disadvantages using methodology tools with organization competitive advantage. In the management summery, I would like to describe the procedure. The case study about Boots is studied and the Introduction from the given case study is written. Introduction includes Boots' background, historic information on the Boots' formation, financial performance, current technology used and services provided in Boots. In the strategic evaluation, analyzing the organization's current position is used both SWOT and PEST analytical process which are used to collect data. Next, using new IT/IS system to examine the impacts of IS on the culture and productivity of the Boots' organization. I would also like to advise one of the appropriate e-marketing strategies to adopt in the organization and its effect on the value proposition and differential advantage on Boots. And Boots uses Customer Data Analysis technology and processing whether the data are legal, illegal or involves ethical issues in Laws. By using SWOT analysis, Boots will come to know its strengths, weaknesses, opportunity and threats. Only after that, Boots can take it into consideration whether to use new strategy such as campaign management system. The system can compare the weaknesses and strengths. If Boots adopts campaign management system, Boots can realize legal and ethical issues that can have effect on the organization.
2. Introduction
Boots UK Limited operates a pharmacy led health and beauty retailer in the UK and Republic of Ireland. It offers skin care and cosmetic products, and drugs prescribed, such as tablets, liquids, creams and inhalers. The company also operates a health and beauty retail side. Boots also develops and sells its own brand in health and beauty products. Boots is the first major retailers and they want to leap loyalty bandwagon for the customer.
In the case study, management report entitled, "Strategic Evaluation Document for Boots". We have been invited as an experienced consultant by Boots Senior Management.
The majority of boots' customers are obviously women. In Boots, toiletries and over-the-counter pharmacy market is very competitive. Boots wants to make different schemes to get their customers different advantages as well- hence the focus on 'treats' giving a personal benefit to the customer. Boots want to offer "treats" that has customers can have the other products that they would not normally buy for themselves as well as customers' already teased out the new products. In September 1997, Boots launched its advantage card scheme according to two years research program at the Norwich and Plymouth areas.
In the first year, using advantage card in Boots' total investment, it puts money around 25 million pounds to obtain significant sales growth. Hope for the longer benefit, Boots wants to make monitoring of buying patterns with the help of sophisticated data management and analysis tools and see consumer behaviors. Boots' marketing department and Boots' IS team proceed researching the available options for using IBM. After that, for the new customer's analysis system, Boots joins with IBM because IBM was able to offer a complete solution and the retail experience of their support team. Besides, with more than 2years of individual card holders and non-card holders, Boots makes comparison with card holder behaviors so they want to get rapid real time access to all of the data and also database which is supported the analytical process. After that, using "Customer Data analysis System (CDAS)", the database has reached 1,200 GB but most queries only take a few minutes to run. Using IBM database, researched advantage card and also "Customer Data analysis System (CDAS)" with IBM's Intelligent Miner for data, Boots' IS department wants to use more advanced data mining such as segmentation and predictive modeling.
According to the Electronic Point of Sales (EPoS) and advantage card, boots' analysts knew what was being sold, where and when' and can determine different groups of customers what they are buying and monitor customer' behavior over time such as impact of promotional offers on buying patterns. Adding more valuable input to decisions about layout ranges and promotes by using market basket analysis and to provide the product purchasing repertories. Boots identifies customer groups from promotion because Boots' analysts want to make their new market and want to know Boots' customers' loyalty. Using advantage card, Boots has been able to identify four groups of promotional buyers; the deal seekers, the stockpilers, the loyalists and the new market.
Boots also wants to make customers buy more and more of their products and enable to get the extra points to their individual advantage card. To make all this happen, Boots needs campaign management system that produces predictive modeling from the advantage card and Electronic point of sales (EPoS). Using campaign management system including customers in relationship marketing programme, Boots intends to perform sophisticated response analysis and to estimate market trends. The campaign management system will give more profitability that includes automatically matching up with mailing lists of card holders and analytical process for purchasing pattern and automating the measurement of basic campaign response analysis.
3. Strategic Evaluation
SWOT analysis is a tool for inspection organization and its environment. It is a first stage of planning and helps marketers to focus on key issues. SWOT analysis includes strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors.
SWOT analysis for Boots
Strengths:
Boots has popular image, differentiation on price, service and brand name.
Boots want to offer "treats", different from other competitors, such as incentive customers with a personal items that they would not normally buy for themselves. It is one of the strengths in Boots.
Boots joined hands with IBM in 1997. Boots used IBM database so Boots' commercial analysts' makes data mining and they estimate predictive modeling and segmentation from advantage card and point of sales system. Since it depends on the loyalty of customers to identify buying patterns and purchasing behavior, their brand of Boots prediction, it is one of the strengths of the Boots. For example, some customers if the mother needs diapers' are buying their children from the Boots in the store twice a week probably.
To become a real-time access (CDAS) is assembled on the SP / 2 platform Boots is running on DB / 2 UDB database of IBM AIX system in customer data analysis. So, the database Boots achieved 1200 gigabytes, after 18 months are most queries take only a few minutes before it is executed. Boots has a very good technique; I will convince customers from using this technology. It is one of the strengths of the Boots.
One of the strength of the Boots is a promotional offer. Promotion can be designed to stimulate the demand as "two for the price of one" and "three for the price of 2" Boots' promotion scheme to support short-term cost reduction. The product can be exposition, demonstration rather than have a variety of temporary sales efforts in the normal routine, Promotion, it can be linked to other communication is easy.
Because they provide the most valuable service to customers coming to the shop, it is one of the strengths of the Boots on the right has been providing global customers Boots.
Weaknesses:
While providing a "treat" in Boots but some customers may not prefer it. Because some customers want to get the discount and coupons, some customers may not like it. Some customers do not want to obtain the same gift over and over again when purchasing a product from Boots, they are customers or some, it may not accept these treat. It is one of the weaknesses of Boots.
Spring of 1997, the Boots have been started on the database project, in Boots, one of the weaknesses; the Boots were not ready for stat of technology.
One of the weaknesses of the Boots, there is a possibility that a time delay occurs at the time of sales due to the update of the card preferably point.
One of the weaknesses in the Boots is cannibalizing into existing product lines from the result of promotion activities. Because promotion risks may induce brand-loyal customers to stock up while not influencing others: the impact may be limited to short term; price-related sales promotion may hurt brand image as "three for the price of two" and "two for the price of one" in Boots and easy for competitors to copy.
It does not have any store loyalty in Boots so it does not have a geographical segmentation.
Boots does not outsource with the Third Party because their data in the database must not leak to others in anyways so it is very important.
In Boots, the more size of the database grow, the better the challenges, however it can cause physical time delay. It is one of the weaknesses in Boots.
Toiletries are personal items when Boots monitoring on the buying products which are personal items and customers may not like it. It is one of the weaknesses in Boots.
Boots sell pharmacy that is over-the-counter medication, it is available in Boots. These products are very easily taken to the counter and one of the customers made this pharmacy like a bogus pharmacy instead of real pharmacy. This fact is one of the weakness facts and Boots must be considerable fact.
If Boots have not trained, because it provides a facility patiently that how they choose the treat for a customer, points of Boots sales system of the staff are stress. It is one of the weaknesses of boots.
Opportunity
Boots lunched at Advantage Card Boots research phase and the long trial in September 1997 to start using the test program two years in the field Norwich, Plymouth. Scheme in the first year ', it Boots with card holder is over 8 million, but to sign up with an estimate of the initial ten million card holders. Sales growth of 4% as a result of the successful Boots to use the Advantage card came out in the second year of operation quantitative growth. It is one of the opportunities of the Boots.
The request for the flexibility of a database of commercial analyst, in Boots, Boots made ​​customer data analysis system (CDAS). System can be fully integrated with the CDAS enters the CDAS in terms of the demand analysis of sales system. Also the fact is one of the opportunities to use the CDAS to Boots.
Boots can make new market expansion not only domestic market potential but also oversea market potential.
Boots can make predictive modeling from CDAS so Boots can predict customer behavior. Boots have many business opportunities to persuade customers from using predictive modeling.
Threats
Boots 'commercial analysts want to become a real-time database that provides maximum flexibility and quick access to all data. Demanding for the flexibility of Boots' commercial analysts, system will be complicated or lose effectiveness whether IBM' database can meet Boots' requirements. It is one of the threats in Boots.
Boots don't have any store loyalty so they have to think about in a particular geographical area has led to a greatly improved understanding of the role different stores play within that area and the repertories of goods that should be offered across the stores. For example, how can Boots' large stores compete Boots' smaller stores for trade in the same area?
In boots, how they can record their treats products that the customers have treats products at previous times?
When Boots make campaign management system, Boots hire analysts if these analysts have low level of professional skills. So, if analysts make wrong predictive modeling and it can be wrong to automated mailing list. This is one of the threats when making campaign management system and Boots must be considered this fact.
Boots company invest so many dollars if Boots' choose invest technology is wrong, they will lose
According to the Boots' technology, other competitors may easy use to copy. It is also one of the threats in Boots.
PEST Analysis for Boots
Political
It is possible for Boots to provide access to a larger feasible European countries and new markets.
In the UK' Electronic Communication Act 2000, the data from UK is not permitted to get outside the country, and the law of other country should also be aware. Boots should consider about these laws when it makes expansion to foreign countries.
Boots can able make not only domestic market expansion but also overseas market expansion.
Economic
Globalization should continue to increase the traffic in the long term.
Boots sell basic necessity products so even if there is economic crisis, Boots' business can not be affected by the crisis.
According to the Boots' case study, Boots invested 25 million pounds for using advantage card scheme. So, Boots can be considered as financially strong.
Social
There is a possibility that people in Europe would be reluctant to use a credit card on the Internet or telephone, on the point of view that it could cause problems.
Peoples' behavior depends on culture.
In the UK, everyone can use internet and make online shopping so Boots have to make not only online marketing but also offline marketing.
Technology
Boots have to choose the right technology because they have to invest millions of pounds in the technology.
From Boots' Customer Data Analysis System (CDAS), it can detect customer' purchasing trends and customer behavior. It can also gain different knowledge and acquire business opportunity using this Technology.
4. Impact of IS
4.1 Investigate the impact of the new IT/IS system on the culture and productivity of the organization
Information system is very important in organizations because this 21st century based on the information and if we don't know up-to-date information, we can late other competitors' organizations and we can't make creation ideas from user' favorites.
Information system and information technology are related each other. The business organizations need to develop information system because business needs to be competitive in order to survive. The information system should aim at sustainable competitive advantage.
In the trial of advantage cards, initially boots hoped to sign up eight millions card holders during the scheme' first year and also unexpectedly exceeded 10 millions card holders by December 1998 and continuing healthy level of new customers. This is positive impact of using information technology on the productivity of the organization.
Impact of Information system analysis, Boots makes market research to collect their data with secondary data, offline market research. This secondary data can get from their advantage card. So, Boots can analysis the customer information. But, Boots want to make different scheme- hence focus on 'treats'. And more valuable in longer term, Boots make customer behavior which Monitoring buying patterns, and make analytical process. This is the positive impact of information system on the culture of the organization.
So, many companies rent third parties provider as Information systems consultant to outsource for their company' information. Boots sign a bond database project with IBM but Boots chose not to contract the analysis out to a third party because their data is so valued. And Boots' Information system project manager said that there were other companies who can offer better individual components but IBM were able to make complete solution and retail experience. In order to see these facts, firstly, Boots make information analysis with there IS project manager and choose IBM with adequate facts. This is the positive impact of information system on the culture of the organization.
In spring 1997, the database project started 6 months before the national card launch. It is very much state of art technology in boots. No one wants to use first with information technology. But if they do not use it, they can lose out competitive advantage. I assume that Boots' staff resistance new system on human attitudes. But they accept it. Also, this is concerning with the culture of the organization. Culture is important in the organization and will affect the way the system is developed and must be appropriate with the organization. So, Boots had positive impact of Information technology using IBM infrastructure and also affect negative impact on the culture of the organization.
Boot' database has challenge for performance because of the card holders and non-card holders' sales records to make a comparison with card holder behavior. So, the database is larger and data are very important. And, commercial analysts want to make rapid real time access all data without having to make special requests on IS support. Database must support the analytical process and more effectiveness positive impact on their culture organizations using information systems analysis.
Boots' analysts use Customer Data Analysis System (CDAS) and they produce buying pattern and consumer behavior. And they can produce predictive modeling according to their advantage card plus point of sales system and finally Boots understand that they needed to make a campaign management system. When Boots go to the campaign management system, data can be large. If the analysts' professional skills is lower and analysts produce wrong predictive modeling and it can be affect on automated mailing list and result out with wrong mailing list. It can be negative impact on the productivity of the organization. It is one of the considerable facts when Boots make campaign management system.
5. e-Marketing Strategy
5.1 What e-Marketing strategy would you advise the organization to adopt?
In my opinion, I would like to advise Boots to adopt Internet e-Marketing strategy and marketing mix. Not only internet marketing(online marketing) can attract more people to own website and increase customers for Boots' business, but also offline marketing enhance branding of Boots' company and products. I would like to advise online marketing strategy so Boots will make a plan that involves internet marketing plan.
Situation Analysis
Situation analysis is used to identify "Strategic Evaluation" with SWOT (strengths, weaknesses, opportunities and threats) and PEST analysis.
Market Analysis
Position in the market characteristics and needs market analysis, market trends, market conditions, the current product, service, market size and customer Web site should be determined.
In online marketing strategy for Boots, Boots need to make the process of market segmentation. Boots have Customer Data Analysis System (CDAS) and it can be identified buying patterns for marketing effort. Boots' marketers need to use CDAS and they can combine customer demographic data (such as Age, Sex, family size, income, occupation, education and postcode). In the online marketing strategy, Boots' customers enter to the Boots website and fine out the Boots' store locator services entering their postcode. One of the Boots' customers is from the Sunbelt states and he or she wants to buy the suntan lotion from the Boots. Boots need to make one of the marketing strategy geographical segmentation (such as region, county size, and climate, City or SMSA, Density). Demographics are often combined with geographic segmentation to select target markets for advertising. In online marketing strategy, Boots can be advertised advantage card. Some of the Boots' customers want to add into the advantage card, these customers can be signed up to advantage card and get more treats that spend more points in the Boots' website. As soon as customers have enough points that customers can treat self it own to almost anything in store or online, from a fabulous moisturizer to customer' favorite fine fragrance.
Boots need to make web site and application development following:
I want to start a Web design and development strategy planning and effective Web Promotion.
To get higher rank in the major search engines, Boots have to practice the techniques of good search optimization
Boots have to learn using email marketing effectively.
Dominate the niche affiliate Boots marketing with resellers, and program level.
Boots also have to require analysis of coaches and internet marketing consultant internet marketing.
To build opt-in email list response.
And published an article, please get listed in the news article.
Has issued a press release writing and online.
To facilitate, Boots have to run a premium via the web site of contest and boots.
To interact with the Boots' visitors or blog.
By following the above tips, Boots will be created a concrete internet marketing strategy that could boost Boots' business substantially.
5.2What is the value proposition and differential advantage of this strategy?
The elements of marketing mix
Product
Promotion
Price
Place
People
Firstly for Boots, I would like to advise that Boots should adopt customer relationship management (CRM) strategy. And business organizations need to make customer relationship management because customers have the option to buy and they have many choices to buy the products. Using customer relationship management strategy, Boots will understand the needs of the customer, customers' likes and dislikes, finding out customer' requirements and value system. Boots make RFM (Recency, Frequency, and Monetary value) analysis and identify customer value with life stage analysis and attitudinal insight. If Boots can use customer relationship management strategy, they can have opportunities that include identifying customer needs and identifying fields requiring new technology and development. CRM helps Boots consumer' behavior and can be classified based on their thinking, their value system, income and spending pattern. Using CRM strategy, Boots can create quality, image, branding and customer services.
Next, positioning is very important in ecommerce strategy because it show what people are really buying into when they choose your offering what kind of service provide. Boots need to make position about their products in the new market. So, Boots' investors always think and research about e- marketing plan. In the Boots' shop, Suntan lotion and films, photograph frames with new baby products that can be very likely for new parents can be organized along product category lines. And also Boots can be organized tooth brushes with toothpaste and dental floss that can be affected on the customers' new vision with attract new ones in the shoppers range.
And Boots should think about how we can persuade customers that buying their products again and again. So, branding is one of e- marketing strategy and it is to attract the group of customers who are brand loyalty. Market research is a vital part of e-marketing planning and strategic decision making. Marketing research involves data collection
Secondary data (Desk research)
Primary data (Field survey)
Boots use primary data market research data collection type and they collect directly collect from sources because these sources are available to their advantage card database. Chances of failure or misrepresentation in filed survey are negligible. Different customers buy different kinds of value. Boots have to make these facts create awareness, build positive images identify prospects, build channel relationships, and retain customers.
Timing is another factor to consider in the development of e-marketing promotional strategy. Promotional strategy has become increasingly important to business enterprises both large and small. It certainly attests to produce additional sales in the ability of promotional offer. Boots, I want to advise identifying promotion time type getting differential advantage e-marketing strategy. The schedules of promotion time-
New Brand Promotion
Seasonal Promotion (e.g. Spring, Summer, Autumn and Winter in UK)
So, in the summer season in UK, people go to the Beach so Boots have to make summer seasonal promotion and arrange the products to be together with sun block lotion, camera, films and sun protection hats.
Old products Promotion
Events Promotion (e.g. Halloween Event, Birthday of the Queen, Slough Christmas Lights & Fireworks, Thanks Giving Day, Independence Day, etc)
Sales promotion make customer to paying inducement like a Boots 'three for the price of two' and 'two for the price of one'. Using their advantage card, Boots can identify four groups of promotion buyers that can reflect on e-marketing strategy. Using internet, Boots can inform promotion time with email to the customers. Boots' staff has to be good training.
6. Legal and ethical issues
Ethics can be defined as a set of principles or standards that determine whether an action is right (good) or wrong (bad) and which therefore inform us what we ought and ought not to do. That means generally assume that humans are responsible for their actions.
Information Gathering
Boots need to strictly protect customer's biography that can be permitted only Boots' commercial analysts
In Boots, Boots make customer data gathering and analysis because of their increasing selling products. Most privacy advocates believe that the opt-in approach is preferable because it gives the customer privacy protection unless that customer specifically elects to give up those rights. Legal environment of privacy regulations to be clear, in the e-commerce Web site, privacy advocates, it is recommended if use the customer data to be conservative and to their collections. This is one of the negative impacts.
Boots need to let consumers to know that collecting customer' demographic data from advantage cards and it need to submit for Boots' policy.
Boots want to gather data from toiletries and over-the-counter pharmacy market. Toiletries are personal items when Boots monitor these buying products, customers may not like it. And customers feel about that Boots concentrate like a preying animal. This fact can be seen that it is one of the negative ethical impacts.
Information Processing
Boots needs to competitive experience staff and new technology such as campaign management system.
Sensitive data is ethnic origin, political opinions and trade union membership.
Generally collection data and processing of sensitive is not allowed unless there is a strong justification. Boots use Customer Data Analysis System and Boots' analysts make predictive modeling. So, they can make customer purchasing trends. It is one of the considerable facts in legal issues.
In the e-marketing strategy, when Boots make Online marketing strategy, Boots need to describe Boots UK terms and conditions that include trademarks, copyright and laws and privacy which customers submit to enter Boots' website.
Information Distribution
When Boots' analysts use Customer Data Analysis System (CDAS) and make predictive modeling. If Boots' analysts have low level skills so they can make false predictive modeling. This effect can damage automate mailing list with campaign management system. This fact is one of the considerable facts when distributions of data using predictive modeling, Boots' analysts have good experience and high level skills.
Boots' information must be relevant.
Boots' information must be accurate when Boots' analysts make automate mailing list.
Required to customer satisfy.
Required to customer service
Boots data protection rights
Information Usage
Boots need data protection and used. It is tag along with;
Boots do no share customer data
Every day made back up for customer file
Using to safety security data
1Mark Van Name and Bill Catchings, writing in PC week in 1998, outlined four principles for handling customer data that provide a good outline for Web site administrators even today. These principles are as follow:
Using the data collected in order to provide improved customer service
Do not share customer data with others outside the company without your consent
Please tell customers what you're doing customer data you are collecting, you use it.
Give customers the right to have you delete any of the data you have collected about them.
A number of organizations are active in promoting privacy rights. So, Boots organization need to consider with these principles gathering data and use of information on internet. And Boots organization need to tell customer what data they are collecting and what they are doing with these information.
7. Conclusion
Boots want to compare the use of current technology and proposed campaign management system. So, strategic evaluation has been made using SWOT and PEST analysis tools to achieve this case study. Boots want to make loyalty advantage card using Customer Data Analysis System (CDAS). Boots can predict customer behavior and automate mailing list of the new system from predictive modeling and point of sales system. To achieve this current system and new system, we have to make strategy to make competitive advantage. When making the strategic evaluation, strengths and weaknesses are internal factors and opportunity and threats are external factors according to SWOT analysis. It can be compared with these factors whether or not to use the new system. Also strategic evaluation with PEST analysis, it can be compared and considered whether the laws and ethical issues are legal or against the laws of other countries when using the information. Using information system, in the Boots' case study, Boots have come to know the negative and positive impacts on the culture and productivity of the organization. In the e-marketing strategy, I have advised online marketing and offline marketing to adopt in the organization. And this strategy can have value proposition and differential advantage with using marketing mix. I also provide legal and ethical issues for Boots to use data gathering, processing and distribution. Boots should be aware of the complicated laws when it makes implementation. Boots should be careful when choosing strategy for if wrong strategy is used, Boots can lose the large amount of investment. Boots can make not only domestic markets expansion but also overseas market expansion. But the advice I would like to give is to make the domestic market a success and improve the popular image in the current situation.
