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STUDENT ID # 0872966/1

MARKETING MANAGEMENT

MODULE REF: BD215011s

MARKETING PLAN
HOME RETAIL GROUP
ARGOS

WORD COUNT - 2999

TUTOR – Ms. Caroline Singh

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STUDENT ID # 0872966/1

TABLE OF CONTENTS

PAGE

EXECUTIVE SUMMARY…………………………………………………………… 4

Methodology………………………………………………………………………….4

INTRODUCTION…………………………………………………………………….. 5

SITUATION ANALYSIS

COMPANY SITUATION

 Shared Values………………………………………………………………....6
 Structure………………………………………………………………………..7
 Style…………………………………………………………………………….7
 Staff …………………………………………………………………………….8
 Skill……………………………………………………………………………...8
 System…………………………………………………………………………..8
 Strategy…………………………………………………………………………9

FINANCIAL SUMMARY………………………………………………………………10

MARKET SITUATION

 Macro Environment………………………………………………………….....11-12
 Micro Environment……………………………………………………………..13

COMPETITORS SITUATION

 Tesco Direct……………………………………………………………………..14
 Amazon.com ……………………………………………………………………15-16

ARGOS SWOT………………………………………………………………………….17

OBJECTIVES AND ASSUMPTIONS

CORPORATE OBJECTIVES………………………………………………………….18

MARKETING OBJECTIVES…………………………………………………………...18

ASSUMPTIONS…………………………………………………………………………18

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TABLE OF CONTENTS

PAGE

MARKETING STRATEGIES

 Strategy 1 – Market Penetration…………………………………………….19


 Strategy 2 – Market Development…………………………………………..20

MARKET SEGMENTATION…………………………………………………………21

TARGET MARKET……………………………………………………………………21

MARKETING MIX

 Product………………………………………………………………………….22
 Promotion……………………………………………………………………….22
 Price……………………………………………………………………………..22
 Place…………………………………………………………………………….22

FORECAST AND IMPLICATIONS

BUDGET………………………………………………………………………………..23

3 x 3 MATRIX………………………………………………………………………….. 24

TIMESCALE OF ACTIVITIES…………………………………………………………25

MONITORING AND CONTROL………………………………………………………25

CONCLUSION………………………………………………………………………….26

BIBLIOGRAPHY………………………………………………………………………..27

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EXECUTIVE SUMMARY

This assignment shows in detail, the concept of a marketing plan applied to Argos who
is a subsidiary of Home Retail Group. Home Retail Group (HRG) is a UK based
company. It is engaged in home and general merchandise retailing. The company
principally operates in the UK through a network of 990 stores. HRG operates through
three business segments, Argos, Homebase and Financial Services. HRG is mainly
engaged in the retailing of home and general merchandise items like small domestic
appliances, furniture, house wares, jewelry, toys, sports and leisure equipment, home
improvement goods, garden-related products, consumer electronics and large domestic
appliances. The company sells its products under two brands namely Argos and
Homebase.

METHODOLOGY

The information, concepts and theories used in this research is of secondary sources,
i.e. government websites, company websites and text books.

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INTRODUCTION

Mission Statement:
'We provide our customers with the best value for money through the most
convenient shopping experience'.

This statement clearly sets out the main areas which differentiate Argos from its rivals,
namely by offering its customers:
• value for money
• convenience ( through use of catalogues ).

Argos recognises that its many customers have different needs and prefer to shop in
different ways. About 80% of Argos’ customers have already decided what they want to
buy before visiting the store. One of the prime reasons these customers choose to shop
with Argos is because they know that they will get value for money. Argos is able to
offer the customer value for money prices, because it benefits from economies of scale.
Argos provides a very convenient way for customers to shop. They are able to look
through a catalogue at their leisure and choose from an extremely broad product range.

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SITUATION ANALYSIS

COMPANY SITUATION

Shared Values

There are five values and beliefs that drive the distinctive behavior of people in Argos:
1. They are customer focused
2. They excel through team work
3. They have a competitive will to win
4. They take ownership and make things happen fast
5. They respect and support each other
Argos’ vision is to be a leading retailing group that delivers sustainable returns for all
their stakeholders. Argos is committed to being a responsible retailer; something that
remains just as relevant in these challenging economic times since no conflict between
corporate responsibility (CR) and good business practice is seen. They continue to seek
out opportunities across the business to create shared value – meaningful benefits for
society that are also valuable to their customers and their business.

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Structure

Argos has over 700 stores throughout the UK and Republic of Ireland. As well as a
board of directors, Argos has an experienced senior management team who form the
basis of their executive committee. As part of their dual listed structure, the board runs
both Argos plc and Homebase.

Managing
Director

                                   
               
Retail   Supply  
Director of Finance Director Marketing
Operations Chain
HR Director     of IS Director
Director Director
   

Operations Commercial
Director Director

Style

A study of Argos found their leadership style to be Participative/Democratic


(according to Lewin) since their leaders offer guidance to group members, but they also
participate in the group and allow input from other group members, therefore receiving a
higher quality of work from their employees. They encourage their members to
participate but retain the final say over the decision-making process. Their group
members feel engaged in the process and are more motivated and creative.

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Staff
Argos employs some 33,000 people, across the business in over 590 stores. 51% of
the people who work for the Argos are women with more than half of the employees
being under 25 years of age.

Skill
Argos takes an active stance in developing the skills of its people. Every employee has
access to a development training program. Workshops are available for managers in
order for them to develop the necessary skills to get the most out of the performance
reviews with their teams and offer good support. Argos has an internal program of
developing management talent to enable employees to step up to senior management
and future Board positions.

System
To develop a good team it is essential to recruit the right people, keep them motivated
and create the right environment for them to perform well. Within Argos, employees are
motivated and retained through financial reward, offering interesting and empowering
opportunities. In this context, Argos’ system and operations are pivotal to developing a
positive image of order to recruit and retain a strong, motivated work force. Health and
safety performance is also regularly monitored system across the business.

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Strategy
It is believed that being a ‘responsible retailer’ means understanding and meeting the
general expectations – balancing the competing demands - of mainstream stakeholders
on the retail sector.
Argos’ key responsibilities are:
 Serving and satisfying customers.
 Providing a working environment that is conducive to the recruitment and
retention of talented staff.
 Providing a safe and healthy work place.
 Providing products of appropriate quality.
 Encouraging environmental and social practices within the group.
 Developing strong community relationships in support of business objectives.

In the pursuit of achieving these responsibilities, a three step approach is taken:

Step one: CR practices are embedded throughout the Group so that they become
'Business as Usual'. Example, in their drive to reduce operating costs through energy,
fuel efficiency and employee training & development and health and safety
management.
Step two: Argos understand and comply with stakeholder expectations to be a
responsible retailer. They recognize and plan to always be alert to public opinion in
order to retain and develop trust in their brands. Examples of these practices can be
seen in their product selection and stewardship policies.
Step three: Aside from stakeholder expectations, specific CR initiatives will be
developed to complement and contribute to the business strategy to achieve mutual
commercial and social benefits.

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FINANCIAL SUMMARY

  28-Feb-09 1-Mar-08
Sales (£m) 4,281.9 4,320.9
Cost of Sales (£m) 1,808.1 1,770.9
Benchmark Operating Profit (£m) 303.6 376.2
Like-for-like change in sales 4.8% 0.7%
Net new space contribution to
3.9% 3.1%
sales change
Total Sales change 0.9% 3.81%
Number of stores at period end 730 707
     

 Sales in 52 weeks to 28 February 2009 declined by 0.9% in total; the contribution


to sales from new space was 3.9%, while like-for-like sales declined by 4.8%
which was as a result of a challenging trading environment. There was further
strong sales growth and market share gain in consumer electronics categories
such as flat panel TV. The weakest areas were the furniture and home wares
categories.

 Gross margins were down by approximately 100 basis points, driven by a


continuing product mix shift towards lower margin consumer electronics
categories and away from higher margin furniture and home wares areas.
 Benchmark operating profit had a 19% decline on last year’s record. This was a
result of the weak sales environment.

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MARKET SITUATION

MACRO ENVIRONMENT

Political Factors

 Television services in the UK will be digitalized by the end of 2012. The old
analogue television signal will be switched off and viewers will need to convert or
upgrade their TV equipment to receive digital signals.

 The government reduced the VAT rate from 17.5 per cent to 15 per cent on 1
December 2008 as part of a package of measures designed to stimulate the
economy during the downturn. They plan to switch the VAT rate back to 17.5 per
cent on January 1st 2010. Retailers are opposing the government's proposed
timetable for the VAT switchback.

Economical Factors

 The unemployment rate was 5.5 per cent for the three months to July 2008. The
number of unemployed people increased by 81,000 over the quarter and by
72,000 over the year, to reach 1.72 million in 2009.
 Banks have been withdrawing on loan amounts. Therefore people are spending
less on comfort goods.

Socio-cultural Factors

In the UK, anything that can minimize lost time or is available when people are is all a
rage. Cocooning is the name given to the trend that sees individuals socializing less and
retreating into their home more. Consequently it has had an effect on demand for
consumer electronics like flat screen TVs. The cocooning trend shows no sign of
abating and so businesses associated with this trend will continue to appear.

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Technological Factors

New technologies create new products new processes. For example digital is now the
best technology for broadcasting TV. Because the digital signal is compressed, it takes
up much less space in the airwaves than the old system ('analogue').

Legal Factors

According to Act of Parliament, members of the public need a TV License to use any
television receiving equipment such as a TV set, digital box, DVD or video recorder, PC,
laptop or mobile phone to watch or record television programs as they're being shown
on TV. Portable televisions and equipment such as laptops and mobile phones are
covered for use anywhere under a license held for their owner's residence.

Environmental Factors

The growing desire to protect the environment is having an impact on many industries.
The major digital TV switchover today in the UK has coincided with a huge increase in
dumped analogue TVs. The number of TVs dumped at waste and recycling sites has
risen by 70% in the past year. This year, the council has recycled 50,000 analogue TVs
that was thrown away. These represent a source of toxic metals such as lead as well as
lesser amounts of other harmful materials which can have long-term negative effects on
the environment if dumped as landfill.

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MICRO ENVIRONMENT

Market

In the UK household, since HDTV‘s is not common in all homes, sales are forecasted to
increase. This is also expected to cause an increase in the sales of complementary
products such as digital boxes and digital video recorders. Sales of HDTV’s registered a
sales growth of 42.6% in the last year. Digital TV has a market share of over 57%. Sony
had the highest share in the TV market during 2007-2009 with Panasonic, Sharp and
Samsung following close behind. Sharp and LG recorded the highest growth rate which
was reckon to the fact that they focused on HDTVs which they sold at a comparatively
cheaper price than the leading manufacturers.
Over 75% of the UK population now has digital TV service.

Competitors

Argos’ major competitors include, PC World, Curry’s, Tesco Direct and online retailer
Amazon.co.uk. All competitors have internet presence. Tesco have been trying recently
to imitate Argos’ retailing style with its Tesco Direct catalogue and in-store shops.
Because of the economic downturn, it is difficult for businesses to gain access to credit
and so ease of entry into the retailing market is tougher than before.

Customer

Consumers’ income is shrinking and so their buying patterns are changing. About 41%
of customers are now turning to cheaper options and buying less premium products to
maximize their decreasing purchasing power. The middle-aged and couples without
kids, with a higher dispensable income has been purchasers of premium brands. They
are more likely to live in houses (instead of renting) and therefore spend more to equip
their homes.

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COMPETITORS SITUATION

Tesco Direct

TESCO is one of the top three retailers in the world, operating over 3,700 stores
globally and employing over 440,000 people. Tesco operates in 13 countries
outside the UK. Tesco has been in operation since 1929 and since then the
company has grown and developed responding to new opportunities and
pioneering in many innovations.

STRENGTHS WEAKNESSES
Tesco have secured commercial
standing within the global market Tesco's position a s a price leader
place winning Retailer of the year in UK markets can lead to
2008 at the "World Retail reduced profit margins in order to
Awards". This can be used for retain the key price on 'must have
campaigns to drive for future commercial items.
growth and sustainability.
Whilst current economic
Where global retail sales are conditions suggest TESCO's key
showing a decline, Tesco have value message will succeed there
published sales gain of 13% for is a weakness in non-essential,
Uk markets and 26% growth in mid to high priced items which will
international markets. suffer from the rising cost of living
and lower disposable income.
OPPORTUNITIES THREATS
UK markets have been affected
by economic concerns through
The development of Tesco Direct
the "credit crunch". Lower
through online and catalog
available income will impact and
shopping will grow the use of
focus may need to change to
technology, providing the launch
lower priced basic products rather
pad for larger products with
than higher priced brands
moderate to high margin returns.
suggesting a switch in price
architecture.
Statistics suggest that Tesco is
There is a persistent threat of
the third largest global retailer
market takeover from Wal-Mart
which indicates a level of buying
who has both means and motive
power to ensure mainstream
to pursue such action.
economies of scale.

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Amazon.com

Amazon.com is a Fortune 500 e-commerce company based in Seattle, WA. Amazon


was one of the first big companies to sell goods over the internet .The company was
founded in 1994 and launched in 1995. They started out as an online bookstore and
then quickly diversified by adding other items, such as VHS tapes and DVDs, music
CDs, video games, electronics - TVs etc, clothing, furniture, toys and even food items.
There are currently over 14,000 Amazon.com employees worldwide.

STRENGTHS WEAKNESSES

Focus on technology is important for on-


line facilities as the use of technology is
Amazon has a diverse range of
needed for all aspects of interface with
products and indicates strategic
the consumer. These system require
movement to grow the business
constant maintenance to ensure the
through new customer bases.
customer receives the level of service
the brand is expected to provide.

The use of an online market


Amazon are dependent on external
place providing a facility for
delivery companies to carry out the
customers to sell unwanted items
delivery function to the customer which
adds a point of difference to
can lead to service level problems and
competing retailers and succeeds
potential cost increase. If these cost are
in building strong customer
not absorbed they are passed back to
bonds with younger clients who
the consumer with potential negative
will provide longevity in loyalty to
effects.
the brand.

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OPPORTUNITIES THREATS

Amazon have the opportunity to


Growing on-line facilities with
develop specialist relationships
provisionally better economies of scale,
with publishers to offer exclusive
suggest Amazon may not be able to
editions and launch new authors
compete on like for like service and
which will provide point of
product price. Thus with no specific
difference within the marketplace
differential to the competition, there is
and generate stimulated growth
the potential that customer sales will
through followers of specific
migrate.
artists.

A membership facility has been


introduced to offer customers General economic conditions may drive
prime delivery slots during key retail prices down and customer
seasonal times and member expectations for promotional deals will
benefits can lead to providing a become a focus for all product areas -
differential within customer with smaller economies of scale overall
service expectations around within the marketplace, the buying
seasonal times, which may lead power may not be sufficient to carry
to growth in sales through this such offers.
facility.

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ARGOS SWOT ANALYSIS

Argos’ SWOT Analysis examines the company's key business structure and operations
and products, and provides summary analysis of its key revenue lines and strategy.

STRENGTHS WEAKNESSES
Over-dependence on the UK
Argos has Low cost products
market
Inability for customers to see
Integrated multi-channel products on display in-store
capability (especially for high risk goods
such as televisions).
Size of stock Argos carries giving
Relatively low on advertising
them a buying leverage.
Ability to by-pass intermediaries Size compared to their major
in sourcing some products competitors.
OPPORTUNITIES THREATS
Government’s decision to cross Global economic situation which
over from analogue to digital is causing a strain on consumers’
signal. income.
Decline in sales of the parent
Demand for digital TV's. company’s other band,
Homebase.
1.1 million active, store card
customers and an email database Invasion of hypermarkets into
of over five million customers. catalogue retailing (Tesco Direct
High vacation and outdoor Catalogues)
entertaining expenses.

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OBJECTIVES AND ASSUMPTIONS


CORPORATE OBJECTIVES
Argos’ aim is to increase market shares by expanding its retail outlets and having a
cheaper offer for branded products. This will be achieved by:
 Selling existing products in a new market. – e.g. India
 Market penetration – by expanding and using multiple retail outlets.
 Argos acquired Alba & Bush brand names which are two radio & television
brands who weren’t doing well. Their intention is to “save the very strong
heritage” of the unprofitable businesses. (Telegraph.co.uk-Nov, 2008).

Argos’ sales record shows a good growth in profits over the past three years. This year,
total sales declined by 0.9% despite opening new stores.

MARKETING OBJECTIVES
 To achieve a 25% increase in the sales of digital television each year by building
and holding market share within the next three years.
 To increase brand awareness by 15% within the next three years.
 To achieve a steady increase in market share growth within the next three years.
 To achieve a higher level of customer service within the next three years.

ASSUMPTIONS
 Assuming that interest rates continue at 0.5% (Guardian.co.uk – 2009) a loan will
be taken of around $500,000.00 to ensure that our objectives are met.
 Economic conditions should improve by the beginning of the year 2010 allowing
annual increase in total production, distribution and consumption of goods and
services to improve.

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MARKETING STRATEGIES
Since Product Development and Diversification usually requires new skills, new
techniques, and new facilities Argos will be using Market Development and Market
Penetration because they require nothing new, just enhancement.

STRATEGY 1 - MARKET PENETRATION


Argos will position itself through niche marketing. It will create digital TV packages for
different sub groups. Its product would include new HD ready TVs with built in digital
box, flat screens and home theatre. Argos product line will be reduced to allow greater
efficiency by cutting down on its unprofitable products like furniture, which because of
the housing crisis, there is less demand for this. Argos product is in the growth stage,
however the economic situation which resulted in customer’s loss of confidence coupled
with decline in sales has to be considered.

This will achieve Argos’ first marketing objective – “To achieve a 25% increase in the
sales of digital television each month by building and holding market share within the
next three years.”

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STUDENT ID # 0872966/1

STRATEGY 2 - MARKET DEVELOPMENT


The unique selling proposition in the retailing industry now is price, which is inevitable
considering the economical downturn. Instead of Argos focusing on unique selling
proposition, they will focus on creating a unique selling personality. A personality will be
created for Argos’ brand to reflect warmth, caring and togetherness. The creative
proposition will be “Together, forever, whenever…don’t shop for it, Argos it”
Argos will run advertisements through television, newspaper and online. The ad will
depict how Argos helps their customers to have a hassle free change, both in digital
changeover and also in their lifestyle change (cocooning).
There will be an in-store display (point of purchase advertising) on digital-transition that
emphasizes the features and advantages of HDTV and digital TV signal.

This will achieve Argos’ second marketing objective – “To increase brand awareness by
15% within the next three years.”

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MARKET SEGMENTATION
Being a B2C company Argos is positioned using a differentiated market strategy by
using different retail formats and carrying a very wide range of products (19000
products across 13 categories). However on one hand, their low price cater for value
conscious customers while their branded product line is able to meet the demands of
customers who are conscious of style/brand.

TARGET MARKET
Argos target market includes families without kids/dependent kids, aged 25-64. This
segment is chosen because of their higher buying power and they have a taste for
luxury products.
Focus will be on three major psychographic needs:
1. Pleasure seekers – people who want entertainment and want theatre effect at
home. This group is concerned about the image, sound quality and other added
functions of the TV.
2. Functionality seekers – People who just want to watch TV, especially to catch up
with what is happening in the economy.
3. Image seekers - These want something that looks sophisticated because it all
adds to their image.

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MARKETING MIX
Product
Argos product mix will include HD ready TV packages, home theatre packages and
upgrade packages.
HD ready TV packages will include new TV sets. Argos will carry more, smaller screen
size LCD and Plasma TVs (24”, 30”, 32” & 37”) in our inventory than the wider screens
(40”, 42” & 46”). The digital TV brands will consist of premium priced models like
Panasonic, Sony & Sharp and also less-priced models like LG and Samsung.

Promotion
To build customer loyalty through emotional appeal, every customer will be encouraged
to get the Argos Card so that they can benefit of our special buy-now pay-later offers.
Other offers include: 10% discount for installation, recycling of old product, delivery for
purchases up to £250.

Price
Argos does not want to compete on price but neither do they want their prices too far
from the competitors so break-even point and meet the competition strategy will be
used to set prices.
Changes in prices are expected considering the economic downturn. The exchange rate
and the drop in the pound value could cause import prices to be high, therefore to adjust
prices, a “price bundling or unbundling” tactic will be used.

Place
There will be intensive distribution at Argos in-store sector. With the use of the special
TV edition, CD-ROMS and brochure, Argos hopes to increase its non-retail share of the
market. The website will be upgraded to offer customers opportunity to track the
progress of their ordered products and watch 3D demonstrations of digital TV. The
proposed CD-ROM and brochure will be used to help customers assess the products
virtually since the store format is a weakness for such high-involvement products like
digital TVs.

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FORECAST AND IMPLICATIONS


BUDGET

MARKETING EXPENSE BUDGET


  2010 2011 2012
$11,80
Television Advertisements $8,200 $9,840
8
Newspaper Advertisements $3,800 $4,560 $5,472
$11,52
Web Upgrade $8,000 $9,600
0
Printed Promotional Materials
$2,000 $2,400 $2,880
(Brochures etc)
Promotional Events $3,400 $4,080 $4,896
Public Relations $600 $720 $864
Miscellaneous Expenses $2,000 $2,400 $2,880
Total Sales & Marketing $28,00 $33,60 $40,32
Expenses 0 0 0

N.B. – The increase for each year is based on a 20% increase on all expenses.

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3 x 3 MATRIX

  YEAR 1 YEAR 2 YEAR 3


Sales - £ (m) 5352.4 6690.5 8363.1
Cost of goods - £ (m) 2260.1 2825.2 3531.5
Profit - £ (m) 3092.3 3865.3 4831.6

9000

8000
7000

6000

5000 Sales - £ (m)


Cost of goods - £ (m)
4000
Profit - £ (m)
3000
2000

1000

0
YEAR 1 YEAR 2 YEAR 3

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STUDENT ID # 0872966/1

TIMESCALE OF ACTIVITIES

Yr1 Yr2 Yr3


Activities Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr
1 2 3 4 1 2 3 4 1 2 3 4
Advertising √ √ √ √ √ √ √ √ √ √ √ √
Promotional Events     √       √       √  
Web Upgrade √       √       √      
Training   √       √       √    
                         

MONITORING AND CONTROL


Employees will be trained to know certain necessary information about TVs in general,
the various brands and possibilities available for a smooth transition from analogue to
digital. They will offer technical advice for customers who want to buy a TV or to know
their options. Argos will make an investment in their employees to improve customer
service. Argos will withdraw its traditional TV package which is in the late maturity stage
and are about to become dogs according to the BCG matrix. Feedback will be gotten
from customers who will be asked to fill out a questionnaire to show how satisfied they
are. The brands and sizes that people are buying will be monitored the most so that
adjustments can be done.

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STUDENT ID # 0872966/1

CONCLUSION
Having set the direction for marketing and stating the appropriate strategies, Argos will
ensure that all aspects of its operations are well synergized. Argos will ensure that its
marketing and communication plan are integrated to achieve maximum effectiveness
and efficiency of its proposed plan.

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STUDENT ID # 0872966/1

BIBLIOGRAPHY

Books

Wall, S., Minocha, S. and Rees, B (2010) International Business, 3 rd edition, Financial
Times/Prentice Hall

Kotler, P., Keller, K.L. (2009) Marketing Management, 13 th edition, Pearson/ Prentice
Hall.

Weeks, P., Scott, B. and Gray, L., 2009. Managing People, Finance and Marketing
Volume 2. 2nd edition.

Websites

http://www.homeretailgroup.com/

[cited 12 October 2009]

http://www.homebase.co.uk

[cited 12 October 2009]

http://www.argos.co.uk/

[cited 12 October 2009]

http://www.absoluteastronomy.com/

[cited 12 October 2009]

http://www.digitaltelevision.gov.uk/

[cited 12 October 2009]

http://www.politics.co.uk/

[cited 12 October 2009]

www.telegraph.co.uk

[cited 12 October 2009]

www.guardian.co.uk

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[cited 12 October 2009]

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