Masters Home improvement- Lets go shop for boomerangs! (Project oxygen)

Last week whilst hunting for nuts and bolts for my 8 month old son Evan’s booster seat, i wondered if Master’s had any boomerangs in store!!.

Stunned by the huge eye catching announcement of “going out of business, everything on sale”.

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What Really went wrong?

Masters Home improvement a household hardware chain, owned by Woolworths and its channel partner “Lowe’s USA” infused $3 billion, only to have it leaking outside the drains of its 63 stores in Australia.

Masters failed when a cocktail of marketing mix became a “MOCK-tale”

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Project Oxygen, was designed to dethrone their competitors Wesfarmers (Owner of Bunnings Warehouse and Coles), in a battle of hammers and axle grinders in Australia, Master’s poor push and pull marketing (Iacobucci 2014), asphyxiated themselves in their vicious design.

Retail Marketing, consists of a considerable number of producers,relatively small number of retailers,vast numbers of consumers. The two big box “hardware retailers”, could not adopt a duopoly, wherein both companies could have shared power by controlling and dominating the market. Masters focused on Betrand’s Duopoly, as a result lets see what happened?.

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Master’s Got Hammered!

Distribution Channels and Supply chain logistics

Masters, often introduced nonseasonal hardware products, and focused on white goods instead of stocking on high margin basic hardware, due to lack of “integration” with Lowe’s their USA based hardware channel partner and distributor.

Differences in the environment between countries can diminish the effective transfer of the source of competitive advantage ( O’Grady & Lane 1996)
The conflict could have been resolved with better communication between Masters and Lowe with better level of service and product offerings to suit the local flavor.

product-marketing-distribution-channels

Having strong channels, highlight, the importance of significant co-operation to integrate “PLACE”, with channels of distribution and physical distribution, within the organization (Lynagh and Poist, 1984).

In the process of rolling out stores at the speed of lightening, intensely and widely distributing their products they cannibalized and “lost control” on their product offerings which Bunnings kept control and capitalized, by providing selective distribution, for its channel partners.

Poor Employee Satisfaction “Invites” Consumer “Exit”

Customer satisfaction shifts demand curves upward and contributes to economic growth through consumer spending increases (Fornell, Rust,and Dekimpe 2010).
From designing female friendly stores, to not having enough skilled employees on the floor, furthermore, losing out by not employing, skilled trades persons, kept its competitor Bunnings in the thick of things, with retention of its consumers.
The customer experience at its competitor’s was never matched by Master’s,depriving its consumers of free activities, workshops,community participation was more like a day out for most, in tandem with “Pull Marketing”

PLACE

A “guru” once told me, the 3 mantras for a successful retail business         “Location,Location and Location.”

“A retailer can choose quality sites, good value sites, or do it fast but no one can do all three at once” – Matt Tyson (MD,Woolworths Home Improvement)

Bunnings had significant “first in” advantage by occupying prime “PLACES” for its store, Masters was left to choose expensive,inferior sites, costlier and rejected by its competitor, with a compromise on the 4th P, a revival seemed very unlikely.

Leveraging on location, which IMC, is more appealing?

more-stores-for-masters-while-bunnings-faces-saturationmasters

WHAT’s AHEAD??- THE INFINITE SHELF!

Crowdsourcing could it be the missing key for DIY Maters?

Drift in technology and re-allocation of supply chain and distribution channels from retail stores to e-commerce, reaching out to consumers has never been easier, “THE MARKETPLACE HAS CHANGED”.

Instead of losing out on their framework and investments, Masters should consider transforming their real estate into warehouses and continue to cater to their loyal customers with an e-commerce objective.

DID I FIND MY BOOMERANG, JUST MIGHT BEFORE THE AIR CLEARS UP ON ITS SHELVES!! AT WOOLWORTHS- MASTERS OF WRONG PLACE,TIME AND CONDITION!!.

Rukshit Kadakia
rkadakia 216045181
rkadakia@deakin.edu.au

References:

Lynagh and Poist (1984) Managing Physical Distribution/Marketing Interface Activities: Cooperation or Conflict? Transportation Journal Vol. 23,No.3 pp.36-43

IACOBUUCI,d. 2014. Marketing Management,Cengage Learning.

Fornell, Claes, Forrest V. Morgeson III, and G. Tomas M. Hult(2016),“Stock Returns on Customer Satisfaction Do Beat the Market: Gauging the Effect of a Marketing Intangible,
”Journal of Marketing, 80 (September), 92–107

Claes Fornell, Forrest V. Morgeson III, & G. Tomas M. Hult (2016) Journal of Marketing Vol. 80 (September 2016), 122–125

Biddle, Ian. The Wesfarmers/Woolworths duopoly war: The Bunnings vs. Masters battle Busidate, Vol. 24, No. 3, Jul 2016: 3-8

O’Grady, S. & Lane, H. (1996) The psychic distance paradox,Journal of International Business Studies,17 (2), 309–333.

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