Marketing Strategy and Competitive Positioning pdf ebook

CHAPTER 13
Growing demand for car maintenance 
products a boon for the group
The motoring and cycling retailer Halfords has 
reported rising sales and said it will deliver on its 
full-year profit expectations, despite a challenging 
market.
The group said total revenue was up 2.8 per 
cent for the 20-week period until August 17, with 
retail sales up 2.6 per cent and revenues in its 
autocentres up 4 per cent, compared to the same 
time last year.
AJ Bell, the investment advisers, said, ‘While 
the robust trading is encouraging, it is important 
not to get carried away given Halfords served up a 
profit warning as recently as May.’
At the time, the group reported a fall in under-
lying pre-tax profit because of a weaker pound and 
increased investment in staff training and customer 
service.
AJ Bell added that the latest results provided ‘some 
evidence’ that ‘spending on customer service, staff 
training and marketing, while initially undermining 
Halfords boosted by fall in new car sales
By Colm Fulton
Source
: British Retail Photography/Alamy Stock Photo.

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INTRODUCTION
Introduction 
The pressure on companies to compete through superior service and effective customer rela-
tionships has never been higher. But achieving appropriate competitive positioning based on 
service and relationship investments has never been harder. Certainly, the post-2008 financial 
crisis consumer is more demanding than has ever been the case before. Equally, the case for 
‘lean consumption’ built by leading operations experts is compelling: 
The concepts underlying lean consumption boil down to six simple principles: 
1 
Solve the customer’s problem completely by insuring that all the goods and services 
work, and work together.
2 
Don’t waste the customer’s time.
3 
Provide exactly what the customer wants.
4 
Provide what’s wanted exactly where it’s wanted.
5 
Provide what’s wanted where it’s wanted exactly when it’s wanted.
6 
Continually aggregate solutions to reduce the customer’s time and hassle.
 ( Womack and Jones, 2005 )
Similarly, from a marketing perspective, Barwise and Meehan (2004) put the central 
competitive strategy issue nicely when they underline the fact that as products have become 
more difficult to differentiate (largely because there are few real differences between them), 
companies have resorted to excessive branding and marketing, leaving customers less satis-
fied now than they were a decade ago. Their appealing logic is that customers do not want 
bells and whistles and trivial brand differences – they just want quality products, reliable 
services and fair value for money ( Barwise and Meehan, 2004 ). It may even be that ‘con-
sumer decadence’ is dead and that marketing must focus on the basics of value, practicality 
and durability – even luxury car brand Lexus in the USA has run ads with the tagline ‘lowest 
cost of ownership’ to emphasise fuel economy and resale value rather than extravagance 
( Helm, 2008 ). Indeed, Price and Jaffe (ex-Amazon executives) argue in their book, The 
profitability, may be beginning to have some impact 
on the performance of [Halfords] stores’. 
According to Amy Higginbotham, a Retail Ana-
lyst at GlobalData, improved customer service and 
staff expertise is key to the group’s strategy for com-
peting with online retailers. 
She said: ‘ensuring that customers purchase the 
right product for them is very important. Doing so 
helps maintain customer trust. . . and provides a key 
point of difference from emerging online players.’ 
The results come at a time of difficult trading con-
ditions for bricks-and-mortar retailers. Last week 
DIY chain Homebase was forced to shut 42 stores in 
order to remain solvent. 
According to Ms Higginbotham, robust growth in 
the group’s autocentres business was also helped by 
‘stricter MOT regulations introduced earlier on this 
year’. 
Falling sales of new cars also worked in the 
group’s favour: demand for car maintenance prod-
ucts increased by 4.5 per cent and motoring retail 
sales in total were up 3.8 per cent. 
Laith Khalaf, an analyst at Hargreaves Lansdown, 
said, ‘Declining car sales are actually a tailwind for 
Halfords, as more older models on the road means a 
greater need for parts and servicing.’ 
Source : from ‘Halfords boosted by fall in new car sales’, Financial Times , 04/09/18 (Fulton, C.).
Discussion questions
1 
What are the issues here?
2 
How can Halfords’ spending more on customer service improve the performance of stores?

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