SEM 1 ACADEMIC SESSION 2014/2015

CBEB1106 PRINCIPLES OF MARKETING

GROUP ASSIGNMENT GIANT HYPERMARKET: A RETAILING SUCCCESS STORY

Prepared by:

AIMI NADIA BINTI AZIMI (CEA 140003)

CHIA POI YIN (CEA 140018)

MUHAMMAD FAIZ HAIKAL BIN NORIHANAFI (CEA 140086)

YVONNE LEE (CEA 140150)

MUHAMMAD AZRAD SYAZWAN BIN ALI (CEA 110060)

Supervised by:

DR. YUSNIZA BINTI KAMARULZAMAN

Date of submission: 15 December 2014

Table of Contents INTRODUCTION ....................................................................................................................................... 2

MARKETING ENVIRONMENT ................................................................................................................... 3

MICROENVIRONMENT ........................................................................................................................ 3

MACROENVIRONMENT ....................................................................................................................... 5

SWOT ANALYSIS ...................................................................................................................................... 6

MARKETING MIX ................................................................................................................................... 10

PRODUCT .......................................................................................................................................... 10

PRICE ................................................................................................................................................. 11

PLACE ................................................................................................................................................ 12

PROMOTION ..................................................................................................................................... 13

CUSTOMER DRIVEN MARKETING STRATEGY ........................................................................................ 13

SEGMENTATION ................................................................................................................................ 13

TARGETING........................................................................................................................................ 15

DIFFERENTIATION AND POSITIONING .............................................................................................. 15

REFERENCES .......................................................................................................................................... 17

INTRODUCTION

Giant store brand was established by Teng's Family as a simple grocery supermarket of

Sentul, Kuala Lumpur in 1944. In 1960s, Giant opened a retail shop in Lorong Kurau,

Bangsar. Teng's Minimarket headquater was established at Bangsar in Kuala Lumpur in

1974. The first Giant supermarket is opened at Kelana Jaya. Dairy Farm Group of Hong Kong

acquired Giant in 1998 through GCH Retail (M) Sdn Bhd when it entered the Malaysian

market. GCH is the subsidiaries of Hong Kong-based Dairy Farm International Holdings Ltd

and claims the nearby operations of Giant, Cold Storage, Guardian and 7eleven. Dairy Farm

obtained 90% of Giant Group in Malaysia. In 2000, the first Giant Hypermarket store opened

in Singapore at IMM Jurong and Dairy Farm gained the 10% stake in Giant TMC Berhad.

Giant, perceived as a pioneer in the low-cost retail segment, makes up an extensive part of

GCH's operations in Malaysia. Giant is one of the biggest retail organizations in Malaysia.

There are around 128 outlets spread throughout all over Malaysia, Singapore and,

Indonesia. The organization had developed to an aggregate of 86 hypermarkets in Malaysia.

It incorporates 6 stores in Singapore and 17 hypermarkets in Indonesia. On 2007, Giant

Hypermarket Malaysia opened their 100th outlets in Bandar Kinrara, Puchong. Then they

penetrated into Brunei Darussalam on March 22, 2008, the first Giant Hypermarket in

Brunei was opened at Tasek Rimba, Mukim Gadong An in the Brunei Muara District close to

the Rimba Housing Estate. This expended to the Seri Q-Lap Mall in Kiulap and the recently

opened Times Square Shopping Centre in Berakas near the international air terminal. By the

end of June 2011, Giant has 38 hypermarkets and 76 grocery stores in Indonesia. By 2013,

they have opened an aggregate to 128 stores across the region. There are around 1300 little

and-medium enterprise tenants and traders operating in all Giant shopping centres,

profiting from the tremendous client activity.

In Malaysia, Giant is synonymous with everyday low prices, big variety and great value and

recognised for offering the most vibrant, comfortable and complete shopping environment

with their mission "Great Value, Big Variety and Low Prices". They offer low costs of items,

huge mixture of product and extraordinary worth value for customers. Plus, they do their

things in least expensive way with the goal that they will have the capacity to pass on the

savings to the customers. They also offer an extensive variety of local merchandise, for

example, fresh local foods grown from the ground, vegetables, and seafood within a wet

market environment. As the pioneer, Giant sets the pace and standards for the industry

with innovative marketing strategy, store design and product pricing. To support Malaysian-

made products, especially those manufactured by SMEs, Giant organizes special

promotional events locally and abroad. Among the campaigns which have been launched

include 'Buy Malaysian-made Campaign' and the Taste of Malaysia Campaign. In Malaysia,

the "Produk Malaysia, Citarasa Kita", series has been highly successfully in helping SME

producers to reach Giant's millions of customers throughout the country. Giant has been

equally successful in helping to promote these products through the Taste of Malaysia

campaign in countries such as Hong Kong, Singapore and Indonesia, where its subsidiaries

operate.

For the buyer, Giant has tossed its weight completely behind the Malaysian Government's

system to make savvy customers of Malaysians through persistent promoting

developments, which bail them search out the best esteem bargains. Giant worked together

with the Government to dispatch various campaigns, for example, Price subsidy campaign

for Fresh Produce. This programme was the first in this sort of industry.

MARKETING ENVIRONMENT

MICROENVIRONMENT

Competitors

In order to gain success, Giant Hypermarket provide greater customer value and satisfaction

than its competitors do and gain strategic advantage by positioning their offerings strongly

against the competitors offerings in the minds of consumers. Facing the strong competitors

like Mydin, Tesco, Milimewah and Chua Kah Seng in the retailing industry, Giant

Hypermarket develop its strategy by offering a big variety of products at the very low prices

everyday to provide great customer value. To implement Giants strategic plan, Giant

Hypermarket also identify stores to takeover like Likasmart in Sabah and have its staffs to

survey the competitors prices at the major supermarket outlets. Giants 85 branches are

also strategically spread throughout the whole Malaysia while its competitors, Tesco and

Carrefour only pay attention to major cities. These are the strategic that attract customer to

visit to Giant Hypermarket.

Supplier

Giant Hypermarket build good relationship with the suppliers as suppliers play important

role in the companys overall customer value delivery system by providing resources needed

by Giant Hypermarket. As an example, Giant made a deal with their supplier to provide

them with free products when they purchased more for the opening day of their store in

Kolombong. The free products are then sold at the price of only RM0.10 on their opening

day as their promotion strategy which attracts a large number of customers to visit to their

store, purchase the products, and indirectly also buy other products there.

The company

All company departments under Giant Hypermarket such as top management, finance,

research and development (R&D), operations and other departments work and corporate

well together. Top management of Giant Hypermarket sets Giants mission, To provide the

biggest on savings and value across fresh, groceries and general merchandise along with the

right shopping experience to our customers every time while the marketing departments

make decision and carry out the strategy Everyday low prices, big variety, great value.

However, the marketing department couldnt promise us the low prices without operation

departments to deliver the low costs. Giant marketing team also advertised their product

through newspaper, bilboards space and brochures. This strategies is said as a success for

Giant as more and more customer come to their stores after seing that advertisement.

Customers

Giant Hypermarket aim to serve their target customers in a better way and build strong

relationship with them by studying their needs. Thus, Giant collaborate with the

government to organize campaigns such as a price subdisy campaign for Fresh Produce

product which effectively brought prices of daily essentials and consumables products to a

lower price. As the low price leading hypermarket chain in Malaysia, this efforts of Giant

that were the first in the industry greatly brings satisfaction to customers.

MACROENVIRONMENT

Political Factor

Political factor can greatly influence the performance of an organization or a business. The

Malaysias government strongly encourage the retailers includes Giant to create job

opportunity in Malaysia in order to increase the average income level of Malaysia and also

to improve the living standard in Malaysia. When Giant Hypermarket operates in Malaysia,

it increase the job opportunity and indirectly, the demand of their products increases

although creating job opportunity is not the part of the vision and mission of Giant

Hypermarket. So far, Giant Hypermarket has employ 1,000 workers in Sabah and 10,000

workers in the whole Malaysia. Employee working in Giant enjoy benefits like

comprehensive medical care and 10% discount when purchasing products from Giant

Hypermarket. Besides, Giant Hypermarket need to access the political environment in

Malaysia although it is owned by the Dairy Farm International Holdings Limited, an Asian

retailer company which its headquarters is in Hong Kong. Giant Hypermarket need to handle

well and avoid any unwanted political pressures that can interfere the running of the

business and cause loss to the company and be aware of the political issue.

Economic Factor

Giant Hypermarket aware of the income distribution and average income level in Malaysia

as it can determine the consumer purchasing power. Giant Hypermarket also pay attention

to trends and consumer spending patterns. Thus, with the decline of economic in Malaysia,

Giant Hypermarket offers variety of products with low prices everyday in order to attract

consumer to buy goods in Giant Hypermarket rather than the competitors.

Social Factor

In order to maintain success in the retailing industry, Giant Hypermarket collects data

regarding the communities and offers products that can always meet the preferences and

lifestyles of the consumers.

Technological Factor

Technological factor is important as technology advance can lower down the cost of

production and decrease the time taken to complete the specific task and thus increase the

efficiency of the operation of Giant Hypermarket. Giant Hypermarket creates their own

official website at www.giant.com.my where consumers can easily get the details about the

latest promotion from time to time and the information about background and milestones

of Giant Hypermarket. Consumer can also gives opinion on improving the service and

products offered by Giant Hypermarket for the best quality and convenience through the

feedback form online.

Environmental Factor

Giant Hypermarket concerns about the global environmental issues and tries to minimize

the wasted products and increase social conscience and awareness among the consumers. It

plans to replace the plastic bag with paper bag in future to save the environment.

SWOT ANALYSIS

SWOT is an analysis to identify the company's strength(s), weakness (w), opportunities (o)

and threats (t). The reason the analysis been conduct is because to help the company to

understand the current and potential environment that the product is marketed .Here we

will identify their strength, weakness, opportunities and weakness.

Strength

As we all know, Giant is the largest retailer company that we had in Malaysia. Giant has

about 85 branches all over Malaysia that make them known very well in Malaysia. By having

so many branches, they have achieved one of the largest supermarket chains in Malaysia.

With that, they may capture the market share and can take out theirs competitors. They

also put their branches across the countries unlike Tesco and Aeon which just put their

branches in major cities only. This way they can attract more customers in Malaysia as their

target customers mainly from middle to lower class customers.

They also offers a big variety of products at very low prices as compare to their close

competitors like Mydin, Tesco, Milimewah and Chua Kah Seng in the retailing industry. Their

low prices are not only for a certain period, but it take place everyday at every Giant's

outlet. Giant have introduced their own home brand for daily use products like cooking oil,

soap and others which is good in order to increase customer valuation to their products and

as to promote their brand name to the customer. This is also good for market positioning

and it provide great customer value.

Every departments under Giant Hypermarket such as top management, finance, research

and development (R&D), operations and other departments work and corporate well

together. Giant has a good marketing team to promote their brand name among the people.

As their primary tool of marketing, the marketing team buys the billboards space, do

advertisement in newspapers, delivering the flyers and brochures. This method is useful and

proven when Giant introduce their first stores in Sabah. More and more customer has come

to the stores after they use that marketing strategies compared to before they do that.

Another Giants strength is make a good relationship with their suppliers. They know that to

be a successful retailer company, they must have a good relationship with their suppliers.

This is because if we have good relationship with suppliers, they will give us the best quality

product they have and will deliver it to us in time and might also be able to get a discount

from the suppliers or a free gift. For example, Giant make a deal with the suppliers to

provide them free gift if they bought many product on their opening day in Kolombong.

Weakness

Although Giant is a large retail company, they also experiencing high turnover rate with

their employee especially on the operating department. The employee will quit the job after

working there for one or two month. This will give Giant a problem which is to find a new

employee. After that, it will take time to train the new employee.

Besides that, they also need to have high maintenance on certain supermarket like in

Kolombong. Their image on customers eyes will be decrease if they do not do the

maintenance properly. As evidence, Giants store in Karamunsing has bad maintenance

which lead to smelly store.

Giant company led to lack of efficiency in bureaucracy. Giant use centralized decision

making which means every decision, anything happen or anything they do, they need to

report or tell it to the management team in Shah Alam. As in their marketing, they also

experiencing the high cost in promoting their brand especially in Sabah where they need to

do many advertising to get the attention of the customer.

They also facing pricing problem. They usually use shelf type pricing which price for the

product will be at the shelf. The problem is the pricing can get confuse for the price for the

products because the price list on their shelf are outdated and the worker often put the

price at the wrong place. A couple of incident had occurred which when a customer saw the

price for a product is different but when they reached the counter, the salesperson charge

at different price. This will made the customer afraid to buy the product and can cause the

customer run to another retailer shop because of the pricing tag.

Opportunities

Opportunities is a favorable situations that a firm should capitalize on in order to make

profits. As Giants have already well established in the market, they already have loyal

customers. Giants product is focused on household product. Household are now increasing

so everyone will increase their buying quantities and this will increase the demand for

Giants products which is good for Giant. So Giant should be aware of the income

distribution and average income level in Malaysia as it can determine the consumer

purchasing power.

Other opportunities for now is Giant is an already know retailer company so they need to

increase their branches to the new place in Malaysia as what they have been plan which is

to increase their branches up to 40 stores throughout Sabah, Sarawak and Brunei. In Sabah,

they have identify stores to takeover like Likasmart and have its staffs to survey the

competitors prices at the major supermarket outlets. This strategy can boost their market

share and attract more new customer or other companys customer and can take out their

competitors.

They also can increase the variety of products for their house brand. They will attract many

customers and maintain the old customers as they can get everything they need in Giants

stores and for the low prices. Customers do not need to go to other retails shop to buy

products as Giant can provide all of it. By doing that, Giant will get more customers and

customer will be loyal to them.

Technological advancement can also acts as opportunities to Giant as improvement in

technology means improvement in lowering cost of production. Technology may lower the

cost of production, decrease the time taken to complete a specific task and increase the

efficiency of Giant's daily operations as well as marketing promotion strategies.

Threats

Threats is unfavorable situations that the firm should beware in order to minimize any loses.

With the fluctuations or much uncertainties in Malaysian economics, Giant Hypermarket

should pay attention to trends and consumer spending patterns. Thus, with the decline of

economics in Malaysia, Giant Hypermarket may offers products with low prices everyday in

order to attract consumers to keep spending at Giant rather than the competitors.

Giant also face a stiff competition within the retailing industry. There are so many retailing

companies that can be a threat for Giant such as Tesco, Aeon, Jusco and others companies

in Malaysia. Other companies can be a threat to Giant is if the competitors do some

promotion or do something innovative products that can attract Giants customer, which

will be a big problem if Giant does not do something.

Another threats that been faced by Giant is although Giant has their own home brand, that

brand is not the most preferable by their customers. Their customer more prefer to other

popular brand. Survey had been made in Sabah for this situation. People in Sabah cannot

accept the Giant brand because of many reasons. This situation could be the poison to

Giant because if the customers cannot consider their brand, they may experience decrease

in sell due to many customer had gone to other retail shop.

Last threats faced by Giant are online shopping which is become popular among the people

right now. Now, we are living in an IT world which means we will use computer to do our

daily task. Almost every day we will use computer and do not have enough time to go

shopping for some goods. So we almost do everything by using computer such as pays the

bills, transfer money, and others. There are many alternatives of online shopping such as

Facebook, EBay, Walmart, Amazon and many more. Thus, the existence of online shopping

may lead to Giant failure.

MARKETING MIX

The concept of Marketing Mix was proposed by E. Jerome McCarthy in 1960. According to

Kotler, (1999) The marketing mix is the set of controllable, tactical marketing tools that the

firm blends to produce the response it wants in the target market. This concept consists of

4 Ps that are Product, Price, Place and Promotion. This concept best describes the strategies

of GIANT for being successful years in market for attracting and able to maintain their loyal

customers as being a low price leader.

PRODUCT

According to Kotler, (1999) A product can be defined as anything that can be offered to a

market for attention, acquisition, use or consumption that might satisfy a want or need.

(A) VARIETY

Figure 1: GIANT Product Mix (Home and Personal Care)

As shown in Figure 1, GIANT provides a wide variety of products of different prices and

brands. These varieties give customers more choices. For example, a customer who has

sensitive teeth will most likely choose Sensodyne. At the same time, customers get to

compare prices of different brands before making a decision. These enable customers to

enjoy greater satisfaction.

(B) SIZES

GIANT understands their customers needs. GIANT often provides alternatives of

product sizes for customers especially for those products for consumption. This

hypermarket realizes that not all their customers are from a big family. They provide

items in smaller packaging for smaller family consumers. For example, the packaging

of MILO comes with a refill pack of 500g, 1kg, 1.5kg and 2kg.

(C) RETURNS

Every customer is entitled to 7 days return of goods and products from the day of

purchase stated in the receipt of transaction. This continuous policy of GIANT to

enable customers to believe that all products sold in this hypermarket are at good

quality. Customers will be able to feel safer and trust towards the products

purchased in GIANT.

PRICE

According to Kotler (1999), Price is the amount of money charged for a product or service.

(A) COMPETITION- BASED PRICING

Competition-based pricing involves setting prices based on competitors strategies,

costs, prices and market offerings. The greatest rivals of GIANT are TESCO and AEON

BIG while the local competitors are ECONSAVE and Mydin. As GIANT is a

hypermarket offering economic prices of products to consumer, GIANT ensures its

customers enjoy buying products at lower prices and enjoy greater satisfaction

compared to the competitors. Thus, GIANT is always recognized as the hypermarket

that provides lowest price of product in the market.

(B) CREDIT TERMS AND PAYMENT PERIOD

GIANT enables their customers to buy things in credit terms. Expensive items like

electronic devices and furniture can be paid in installment. The GIANT-Citi credit card

where Citibank partners with GIANT allows their customers to enjoy more privileges.

These cardholders of GIANT-Citi credit card are entitled with 5% rebates of purchase

in GIANT. Besides, there is also a rebate of not more than 2% dining and utilities

privileges at selected stores in Malaysia.

(C) PROMOTIONAL PRICE AND PSYCHOLOGICAL PRICE

During events and festivals, like Christmas and Chinese New Year, GIANT uses special

event prices to attract more customers. These customers get to cut down their

expenses while shopping in this hypermarket. In such way, GIANT gets to gain sales

and attract new customers. Other than that, GIANT uses psychological prices on the

items sold. For example, GIANT will set $9.99 as the price of a packet of biscuit

instead of $10.00. The price of $9.99 appears relatively lower compared to $10.00

for customers. Such prices give an impression to customers that the products in

GIANT are cheaper. Lastly, GIANT also practices the Everyday Low Price concept.

Groceries like vegetables and fruits sold in GIANT are always at a low price even if

there is no promotion.

PLACE

According to Kotler, (1999) Place includes company activities that make the product

available for target customers. As per reported in THE STAR on the 28th of January, 2014,

there are a total of 127 GIANT outlets in Malaysia.

(A) LOCATIONS

Since GIANT objectives is to provide low price items to consumers, most GIANT

outlets are located in low and medium cost housing areas. The strategic locations of

the hypermarkets match with their objectives according to the purchasing power of

the consumer. Customers in this area will go for economic options rather than

premier ones that are congruent with what GIANT is offering.

(B) COVERAGE

GIANT have branches all over Malaysia, covering all 14 states from Peninsular

Malaysia to East Malaysia. These give greater accessibility to people of different

states to satisfy their needs in the outlets.

PROMOTION

According to Kotler (1999), Promotion means activities that communicate the merits of the

product and persuade target customers to buy it.

(A) ADVERTISING

GIANT have weekly promotional items and seasonal promotion like Deepavali and

Hari Raya. These promotions are advertised through newspaper and GIANT official

webpage to enable its customers to aware about this promotion.

(B) PUBLIC RELATIONS

To ensure continuous of publicity of GIANT about its promotion and events that take place,

GIANT build good relations with newspaper companies and media mass such as THE STAR

and SIN CHEW DAILY.

CUSTOMER DRIVEN MARKETING STRATEGY

Customer driven marketing strategy is marketing offerings or strategies responding to the

customers needs and expectations. There are four steps in planning customer driven

marketing strategy. The four steps are market segmentation, market targeting, market

differentiation and market positioning.

SEGMENTATION

According to D. Chandra Bose in his book Principle of Management and Administration,

market segmentation can be defined as the various segments of the market based on the

common characteristics of the customers. This book also stated a statement from William J.

Stanton who stated that Market segmentation consists of taking the total heterogeneous

markets for a product and dividing it into several sub-markets or segments, each of which

tends to be homogeneous in full significant aspects. In market segmentations, there are 4

types altogether. There are the geographic, demographic, psychology and behavioral. For

Giant Hypermarket, they have chosen demographic segmentation, psychographic and

behavioral.

Demographic segmentation divides the markets into segments based on variables such as

age, life-cycle stage, gender, income, occupation, education, religion, and generation. It is

the most widely favored in segmentations. Giant uses demographic segmentation in terms

of income. This can be shown by Giants famous concept and slogan which is Everyday Low

Prices which attract customer with low and moderate income level. Despite of the low

prices Giant offered to the market, they also provide good quality of goods. This is the

answer to why customers shop at Giant. This segment usually called budget conscious. They

are very limited to fixed budget in their shopping. The budget conscious people will always

shop at places which offered lower prices and discounted items. They are also not loyal,

because they can easily switch to other brands due to promotions. Therefore, Giant will

always need to offer low prices. Thus it is parallel to Giant concept of Everyday Low Pricing.

In this way, Giant can gain loyalty from customers.

Behavioral segmentation refers to division of buyers into segments based on their

knowledge, attitudes, uses, or responses concerning a product. Giant has segmented their

behavioral segmentations in terms of attitudes. They focus on the segment which is called

A day out. This A day out phrase bring a meaning where consumers enjoy shopping and

are happy to spend more time by browsing all the way in a huge hypermarkets or shopping

mall. Product mix is really essential to attract this type of customers as they are easily

attached to new and variety of products. This is parallel to Giants concept where it holds

that Giant is a modern supermarket. Modern supermarket shopping brings customers to

buy and shop everyday groceries, fresh produce and fresh foods under one roof and in a

hygienic environment. Not only that, Giant also provides other departments as well such as

clothes, medicines, sport equipments, and even seasonal items like school uniforms on

December or Cheongsam for Chinese New Year.

Giant uses psychographic segmentation in terms of lifestyle. Giant branches in Malaysia

should know more about Malaysians lifestyles. For example, adults worked on weekdays

and go shopping with their family on weekends, most of them spend more at the end of

every month or payday ahead. Other than that, school students started their session on

January so Giant needs to do huge sales on schools stuffs a month before that. Therefore,

Giant segmented their market to lifestyle which is the normal Malaysians lifestyle.

TARGETING

Referring to the book written by Michael Armstrong entitled A Handbook of Management

Techniques: A Comprehensive Guide To Achieving Managerial Excellence & Improved

Decision Making, market targeting is the process of formulating market coverage policies,

which segments of the market provides the best opportunities for the company. Giant has

to study all segments of market and decide which segments to serve. In market targeting, it

can be conducted in three different levels which are undifferentiated, differentiated and

concentrated marketing.

For Giant hypermarket, they have chosen undifferentiated marketing. Undifferentiated

marketing ignores market segment differences and attempts to appeal to all prospective

customers with mass marketing through mass advertising and distribution. Instead of just

targeting for a small share of a large market, Giant goes after larger share which they have

targeted customers from middle and low income level. This is shown by Giant hypermarket

itself where Giant has more than 50 outlets in peninsular Malaysia and more than 20 outlets

in Sabah and Sarawak. Thus, Giant use undifferentiatied marketing strategy where Giant can

get large share of various segments in the market.

DIFFERENTIATION AND POSITIONING

After the company had segmenting the market and chooses which segment they would like

to serve at, it is now time for them to choose a value proposition by differentiating and

positioning their products. Value proposition is a set of benefits or values that company

promises to offer for their customer. Giant must differentiate their products from other

supermarkets products, can be in terms of quality and price. Also, Giant must position their

company well in the minds of customers so that customers will remember Giant and the

values it offered.

Therefore, Giant has chosen Everyday low prices, big variety and great value as their value

proposition. The value proposition of each company must be able to answer customers

question Why should I buy your products instead of competitors. The answer Giant

provides is complete enough to state that they have products with very low prices, the

products are varies where customers can choose which brands they favored and they are

also high in quality as stated great value. Other than that, Giant also highlighted themselves

as Your low price leader which makes customers be more confide in Giants concept. In

conclusion, Giant stick in the minds of consumers because of their low prices and great

value products.

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