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Business function

B202 A: Understanding Business Functions I

Second Semester 2011 – 2012

This tutor-marked assignment consists of two parts each of which consists of a set of questions that are based on a case study. This assignment will be graded out of a 100 and is worth 20% of the total grade assigned to the course. Out of the 100 marks, 84% will be divided equally between the two parts, that is, 42 marks for each case study. The remaining 16% will be distributed equally as follows: presentation of ideas and organization of the answer, adherence to specified word count, proper referencing and use of the E-library. You are expected to attach the filled pt3 form as the first page of your TMA.

In this TMA, you are expected to demonstrate your knowledge and understanding of some of the major issues in human resource management and marketing.

The first case study focuses on training and development whereas the second one is concerned with the promotional mix. Prior to answering the questions, read each case study thoroughly and carefully. In your answer, you are expected to show your analytical skills of the subject matter. Your answer should be within the specified range of words, and you must follow the Harvard Style of Referencing. You are expected to present a well structured and organized piece of work that is of your own. Plagiarism will be penalized by deduction of marks. The right use of outside sources and personal examples is highly appreciated and will be rewarded.

 

PART A

Developing a career path in retail

Introduction

‘Harrods of London’ is a British institution. It is probably the most well-known and respected retail store in the world. For 162 years, Harrods has built its unique reputation supported by its key brand values – British; Luxury; Innovation; Sensation; Service. Harrods employs approximately 5,000 people from 86 different nationalities who deal with up to 100,000 customers a day at peak times.

Harrods needs employees who can face the challenges that its reputation and standards bring. It needs people who are looking for an exciting and rewarding long-term career with responsibility and prospects. Its challenge is to find (and retain) employees with the right mix of skills and abilities, who can be developed to become the managers of the future.

To achieve this, Harrods has to counter some of the negative perceptions about working in retail. Working in a shop has traditionally been seen as low-skilled – with long hours, poor pay and little chance of promotion. However, because quality is key at Harrods, employees are well-paid, respected and have clear career paths open to them. Senior managers at Harrods have come from all walks of life and started out with various levels of qualifications. All have benefited from development opportunities provided by the company.

The importance of training and development

Training and development is vital to any business. Its purpose at Harrods is to better the performance of employees to enable Harrods to meet its business goals. For example, at Harrods the Sales Academy develops employees’ sales skills, leading to increased sales when they return to the shop floor. Allowing employees to acquire new skills, expertise and qualifications supports employee progression which leads to increased motivation. This supports Harrods’ retention strategies.

Training is about gaining the skills needed for a job. These may be learned at the place of work (on-the-job) or away from work (off-the-job). On-the-job training tends to be more cost-effective and relevant. However, off-the-job training is usually carried out by professional trainers. It also occurs away from the distractions of work. Training tends to have very specific and measurable goals, such as operating an IT system or till, understanding a process, or performing certain procedures (for example, cashing up).

Development is more about the individual – making him or her more efficient at a job or capable of facing different responsibilities and challenges. Development concentrates on the broader skills that are applicable to a wider variety of situations, such as thinking creatively, decision-making and managing people. In short, training is typically linked to a particular subject matter and is applicable to that subject only, while development is based on growing broader skills which can be used in many situations.

Harrods employees come from diverse backgrounds and different nationalities. They have differing levels of competency, education and experience. Harrods offers comprehensive Learning & Development opportunities. These opportunities are offered at a variety of levels to suit the needs of all Harrods employees. These range from workshops for Sales Associates and Warehouse Operatives to developmental programmes for senior managers.

Amber is a Harrods Retail Manager who started as a Sales Associate at Harrods through an online application. Harrods has created a web site [url removed, login to view] to enable candidates to apply for roles easily.

‘I wasn’t sure I would get the job but it seemed a really challenging role and I was keen to try. I had only a little background in retail and none at all in the luxury retail market. Mostly I had been working in the hospitality sector.’ Amber

However, Harrods Learning and Development ensured Amber acquired the skills she needed to carry out her role. Development at Harrods is linked to the company’s Business Competencies which fall under four headings: Working at Harrods, Your Impact on Others, Making Things Happen, Focus on Improvements.

Each Business Competency is supported by workshops so that every skill can be improved. Learning is offered off-the-job in ‘bite-size’ sessions. These sessions give employees the chance to learn more effectively over a much shorter period, reducing time away from work and bringing a tightly focused approach to skills development. They have been described as concise and punchy and a workshop typically lasts 90 minutes. All the Business Competencies are supported by self-help guides which are run either on-or off-the-job and include activities such as observation and review, reading, and ‘one minute guides’ offering top tips and tactics.

Identifying key competencies also helps Harrods to design its recruitment process to ensure that it attracts the best candidates. They must have the right approach to sales, customer service and decision-making and support the ‘theatre of retail’ that underpins Harrods’ reputation. This is about flair, showmanship and expertise. Harrods Learning and Development department must be proactive in responding to changing customer needs. For example, Harrods has introduced cultural awareness training for employees better to serve the increasing number of customers from the Middle East, China, Brazil and Russia.

Developing a career path

Harrods stands out from its competitors by providing a wide variety of development opportunities for all employees. This means the business can recruit and retain good managers and maintain improvements in sales and business performance. Individuals’ self-esteem and motivation is raised. Once a year, managers talk to employees about their progress and ambitions during appraisals. Employees then identify their personal development targets.

The sales and service programmes include the ‘Harrods Welcome’. This induction provides essential training for new employees, such as Harrods’ brand values and The Theatre of Selling. Other courses ensure the effectiveness of Harrods sales associates:

• ‘Your Theatre’ is a two-day programme to improve sales skills and provide the highest level of customer service. It introduces the idea of selling as a ‘theatre’ requiring specific skills and expertise. ‘The Theatre of Selling’ element covers personal presentation, effective questioning, product selection and closing the sale. ‘The Science of Selling’ develops employee awareness of customer types and needs.

• The Harrods Fashion Programme is run in partnership with the London College of Fashion. It enables sales associates to understand the entire ‘product journey’ from design to sale.

• The School of Communication offers voice, body language and presentation skills workshops.

For suitable candidates, the Harrods Sales Degree provides the high level sales skills the company needs. This is the first and only degree of its kind in Sales. It is recognised globally and can be completed in two years.

High Potential programmes are concerned with succession planning. They are aimed at ensuring there is a strong pipeline of potential senior managers. The Harrods Management Programme develops ambitious and career-focused employees into a management role. Jessica joined the company after graduating with a degree in Art History. After just 3 years she is now a Harrods Retail Manager. She runs the Designer Collection sales floor, managing 26 employees and controlling a substantial budget.

‘My quick progression to Retail Manager was helped by the fact that Harrods allows people to take control of their own development to a large extent. Harrods supports you if you are keen to get on. The Harrods Management Programme gave me eight months of training, both in-house and external. This, together with the support of my mentor, has equipped me with the specific skills I need to carry out my job effectively.’ Jessica

Harrods offers other programmes:

• The Business Academy which supports managers as they progress into more senior positions.

• The Oxford Summer School which is a challenging academic learning opportunity held at Keble College, Oxford. This is designed to highlight some of the problems, decisions and challenges of running a retail business. 10 prized places are awarded to high potential managers.

• The Buying Academy which develops our Assistant Buyers into Buyers of the future.

Retaining talent

Employee retention is important for businesses. A low employee turnover can keep recruitment costs down. It also ensures a skilled and experienced workforce. Employee development is beneficial for both the employee and the business. However, sometimes employees think that their new-found skills will enable them to gain a better job elsewhere. Harrods, therefore, has put in place strategies to keep its talented Retail Managers. It has found that employees who develop within the company tend to stay. Those brought in from outside are more likely to leave. Another vital part of retention for Harrods involves identifying the ‘DNA’ (key factors) of great sales people. It then matches applicants to these factors.

To reduce employee turnover Harrods has developed a better management structure, improved benefits and created initiatives which make Harrods a ‘great place to work’. Harrods has put in place a system of rewards and incentives:

• An excellent package of employee benefits including good pay, employee discounts and a good working environment.

• Commission and sales bonuses for individuals and teams.

• Improved work schedules which help to give a better work-life balance.

Harrods also has systems to improve employee communications so that it can listen to feedback and address any issues. There is an Internal Communications department, regular performance assessment meetings and SMART targets for employees to reach. These initiatives have seen employee turnover fall from 51.4% in 2006 to 25% in November 2011.

Careers at Harrods

Harrods ensures there is a clear career path for any employee, from any background. Three key levels in Harrods are the sales employee, department managers and senior managers. At each level, employees can benefit from Harrods development programmes in order to build a career.

James is a Sales Associate and one of Harrods first Sales Degree students. When an injury prevented him from following his previously chosen career in contemporary dance, he applied to Harrods. He has never looked back. Harrods training has given him transferable skills. He has been able to work within more than one department, providing the same high levels of customer experience.

‘The course is absolutely fantastic. I feel very privileged to be on it. It is very much focused on work-based learning. It provides real insight into consumer psychology and behaviour - why people do what they do and how they shop - and how to deal with challenging situations. My managers are very supportive. If I need to take some time out during the day to make notes on an interesting situation, then I can. It has offered some amazing opportunities, such as giving me behind-the-scenes information on how Harrods works and increasing my awareness of its global influence. I have realised that Harrods offers great benefits, good conditions and an opportunity to work amongst fantastic people.’ James

James will complete his BA Honours in 2012. He believes that the qualification will provide the additional skills he needs before he steps up to the next level at Harrods. James now expects his future to be with Harrods.

Amber’s application was successful because of the customer skills she was able to bring from previous experiences. She is now the Retail Manager of Childrenswear. Her responsibilities range from overseeing budgets to managing both stock and people, as well as upholding the Harrods standards of service. By taking advantage of the Harrods Management Programme, Amber has risen to a better paid and more responsible job.

‘Retail is a challenging environment but I find it exciting. Although the company aims to hire the right people for the job in the first place, there is a whole range of training available to ensure we are equipped with key skills, for example, brand training for all the different ranges we offer. Harrods promotes the view that all employees should manage themselves responsibly and take advantage of opportunities offered.’ Amber

Sabrina joined Harrods 10 years ago as a part-time Sales Associate whilst studying for her degree. After graduating she worked in Human Resources (HR) and, with Harrods support, gained further qualifications. This led to a series of promotions and experience in other roles including Business Manager. Her current role is Head of Personal Shopping, managing a team of 50 people. Personal shopping is about creativity and exceptional service. Her role requires strong organisational skills, commercial understanding and practical and strategic thinking. Sabrina’s experiences at Harrods shows how diverse a career in the retail environment can be.

‘Knowing that my senior managers recognised my ability and supported me in my career development has made me eternally loyal to the company. Before coming to Harrods I hadn’t really considered a career in retail, now I can’t imagine working anywhere else. The thing I enjoy most about working at Harrods is that every day is unique and the work is interesting and innovative.’ Sabrina

Conclusion

People may have negative ideas about retail work based on their own experiences of part-time or vacation work. Harrods is different as it is possible to start building a career from any level.

Harrods is about the ‘theatre’ of retail. As with a theatre production, however, excellence is built on hard work and basic skills. The flair must be underpinned with discipline and attending to day-to-day issues, such as unpacking and displaying stock and managing employees.

Providing development opportunities is a key factor in how Harrods maintains its high levels of employee retention. The business looks after its employees and helps them along their career path. As a result employees are loyal to the company and continue to offer exceptional levels of commitment and service.

Answer the following questions for Part A:

1- Explain the importance of training and development of employees (10 marks, 200 words)

2- Analyze the methods by which Harrods ensures it recruits and retains its employees. (14 marks, 400 words)

3- Analyze how an appropriate investment in training and developing people in retail organizations is also an investment in the brand name. Support your answer with examples. (18 marks, 500 words)

 

PART B

Using promotion to boost sales and brand value

Introduction

How much cereal do you eat? Who makes most of it? The British are almost the biggest consumers of cereal in the world, second only to Ireland. Kellogg is the prominent player in the world of breakfast and produces more than three out of every ten packets eaten in the UK.

The company manufactures and markets ready-to-eat cereals (i.e. not hot cereals like porridge) and nutritious snacks such as cereal bars. Kellogg has 42% value share of the market for ready-to-eat cereals in the UK - a market that is worth £1 billion at retail sales value. This makes Kellogg the market leader in this sector.

Markets are divided into market segments and there are six key segments to the Kellogg market.

1. Tasty Start - the cereals that most people will eat to begin their day. Kellogg's brands include Kellogg's Corn Flakes and variations, such as Kellogg's Crunchy Nut.

2. Simply Wholesome. These are 'good for you' brands, such as Kellogg's Fruit 'n' Fibre, Alpen and Kellogg's Just Right.

3. Shape Management. Brands that can enable customers to manage their weight or shape, such as Kellogg's Special K and Fitnesse.

4. Mum Approved. Those that mothers see as being good for their children, such as Kellogg's Rice Krispies and Shreddies.

5. Kid Preferred. The brands that children themselves prefer, such as Kellogg's Frosties, Kellogg's Coco Pops and Weetos.

6. Inner Health. These are the brands that help people with digestion, such as Kellogg's All-Bran and own-label Bran Flakes.

Promotion

There are two reasons for promotion. It:

1. lets consumers know about products and services

2. tries to encourage consumers to purchase the product or service, often by telling them about the benefits they will gain.

Promotion is just one element of the marketing mix, known as the 'four Ps'. These stand for: Price, Product Promotion and Place. A marketing mix means that the business must have a high-quality product, for sale at a price that is reasonable and at places where people can easily buy it.

Promotion informs customers about the product and tries to encourage them to buy. Methods of promotion include advertising, public relations, value-added offers (e.g. three-for-two promotions or buy-one-get-one-free), price reductions, free gifts, coupons, loyalty rewards and point-of-sale material.

Kellogg arranges effective promotions around more than just the consumer. There are three key elements that all have to be integrated and work together smoothly. These are the:

• Consumer: who can be encouraged to purchase by an attractive and exciting offer.

• Advertising: the consumer promotion needs to be brought to the public's attention with a strong message.

• Trade: Kellogg needs them to support the promotion. Shops and other sales outlets should know the advertising is coming, so they can buy in enough stock and benefit from the promotion by displaying point-of-sale material.

Bringing these areas together involves accurate planning across all parts of the business. Kellogg management has a strategic overview of the whole process. This ensures all elements of the business are working together to create what is called, at Kellogg, an 'event'.

Promotion at Kellogg

Kellogg recently carried out two effective promotions aimed at totally different audiences. The first targeted families and drew on the incredible success of the Star WarsTM movies. This was a large-scale event extending over a number of Kellogg's brands appealing to families. These included Corn Flakes, Frosties, Rice Krispies and Coco Pops.

The event coincided with the worldwide movie release of the final Star WarsTM movie - Revenge of the SithTM. A large event such as this needs to create consumer interest straightaway, have 100% trade backing and use a number of varying methods of promotion.

Kellogg used a 30-second TV commercial to support the event - the first time Kellogg had used this time-length for a promotional advertisement since 1999 - linking their own familiar characters (Tony the Tiger and Coco Monkey) with Star WarsTM.

There was over £250,000 spent on TV advertising with additional online support making it the company's biggest family event for 2005. It involved the production of over 30 million promotional packs, some of which featured free mini LightsabersTM in every pack. The other packs allowed consumers a chance to win a LightsaberTM signed by actor Christopher Lee or one of 500 runners-up prizes of a Hasbro electric LightsaberTM. The promotion ran across both the cereal brands and some cereal bars allowing Kellogg to take advantage of Star WarsTM in both categories.

To measure the success of such an event, Kellogg observes the changes occurring within its market. The advertising for the event reached 65% of its target market audience. Its effectiveness can be shown by the increase in sales and in Kellogg's market share:

• Kellogg’s share of the ready-to-eat-cereal market for families rose from its usual 40-45% to 53%.

• An extra 859,000 households purchased at least one of the Star WarsTM brands during the promotion when compared with the previous period.

The second event was aimed at adults and involved just one brand - Kellogg's Crunchy Nut. Ten million packs carried the distinctive artwork, offering a chance to win one of ten special edition gold coloured Minis.

Kellogg used this event to apologise to its customers for making Crunchy Nut so irresistible! Consumers were invited to text in or enter on line or by post for a chance to win one of these unique prizes. Hundreds of thousands took the opportunity to do so and if you see a gold coloured Mini in the UK it will have been one of the prizes from the Sorry promotion.

The event provided great exposure and interest for the brand and encouraged consumers to try the newer variants of Crunchy Nut - Crunchy NutClusters and Crunchy Nut Nutty.

Above and below the line

Promotion is divided into two areas: above-the-line and below-the-line.

Above-the-line promotion is that which is paid for directly. It includes spending on TV, radio, poster and press advertising and on other paid-for media such as the Internet.

Below-the-line promotion refers to those methods of promoting a product that do not use direct advertising. These include public relations, such as getting stars to endorse products, or news and magazine stories featuring the product. They also involve packaging and point-of-sale material. Kellogg used both in the effective Star WarsTM campaign, including TV advertising along with special packaging, inserts and competitions.

Kellogg also separates below-the-line spending between consumers and the trade. For the trade, the Star WarsTM event included buy three for the price of two and special value-added offers. For consumers, there was a free insert in the box and the chance to win special prizes.

It is vital that all parts of the promotion are effective and within the law. There are two types of 'bad ads' to take into consideration. Firstly, those that fail to reach the target audience and increase sales; these are bad for the business, but not disastrous. The second type includes those that are offensive or illegal.

Advertisements that do not fall within the law (e.g. by breaking the Trades Descriptions Act), or which break ASA guidelines, can attract large financial penalties which can seriously damage a business. If an advertisement breaks guidelines it has to be pulled, even though this is expensive.

Co-ordinating promotion across the business

Major promotions like the Star WarsTM and Sorry events have to be co-ordinated across all the different departments. Management will make the major decisions about the type and direction of a promotion and departments such as sales, marketing, and even the legal division, will be involved in organising the event. A promotion will affect all parts of Kellogg business including:

• Sales-both to the consumer and to the trade

• Marketing - all the elements of the marketing mix

• Packaging - the designs for promotional packs, inserts and other parts of the promotion need to be supplied

• Legal - this does not just involve making sure the promotion is legal, but also handling the contracts for the various agencies and partners that help the business with the event

• Quality - any free gifts or other promotional items have to be tested for quality and safety

• Supply Chain - Kellogg needs to make sure that it has enough stock to keep the trade supplied when demand increases. This could mean building up stocks in response to the forecast change in demand

• Finance - the event has to be budgeted for. Finance will also carry out predictions and feed back information on the effectiveness of the event through the changes in sales value before and after.

The Consumer Promotions Team is responsible for the overall management of the event. The function of this team is critical to the success of the promotion and therefore to the business itself. It is responsible for:

• Communicating appropriately with all other areas of the business and external bodies. This includes agencies, the media and event partners, such as Hasbro and Lucasfilm.

• Developing original, creative, innovative and exciting ideas that will attract the attention of consumers. This happens in partnership with the brand teams and specialists, such as advertising agencies.

• Delivering the event, ensuring all parts are working together in an effective way and each part is launched and supported at the right time and in the right place.

• Getting the flow of promotional stock into and out of stores on time - this is critical to an event's success.

It is difficult to predict how sales will respond given the variances in trade display and consumer uptake. Getting it wrong means that shops may not have the right or sufficient stock and it is critical that demand is continually monitored with fall-back options if required.

In the case of the Star WarsTM promotion, Kellogg was able to balance fixed stocks of the insert packs with the variable competition packs. A failure to do so would have the added, unfortunate effect of undermining both consumer and trade confidence in any future promotions.

Conclusion

What a consumer sees is an exciting, professional and relevant promotion. This encourages them to choose the promoted brand and, in the case of almost a million households in the Star WarsTM campaign, to buy the Kellogg cereal brand. Behind these results is an enormous amount of planning and communication, all of which must be both effective in itself and in supporting other parts of the event.

A successful event takes teamwork, careful management and precise communication. But that isn't the end; the business must then immediately go back to planning. This will help to decide how to keep the market it has gained, or how to create yet another exciting and impressive promotion.

Answer the following questions for part B:

Part B: Using promotion to boost sales and brand value

4. Using an organization of your choice as an example (other than Kellogg’s), evaluate the effectiveness of the promotional mix elements used to enhance the brand value. (16 marks, 400 words)

5. Explain the difference between above-the-line and below-the-line promotions. Support your answer with examples. (10 marks, 300 words)

6. Which promotional mix elements were involved in the Star Wars promotional campaign? Discuss additional promotional activities that you suggest Kellogg’s management team should carry out to increase the effectiveness of this promotional campaign. (16 marks, 500 words)

Both Cases were adopted from [url removed, login to view]

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