Macy’s Department Store Reposition Case Study
In Partial Fulfillment of Course Requirements for
BUS 530A Marketing Management
California Baptist University
Dr. Natalie C. Winter
May 21, 2013
The case study is Macy’s Department Store Repositioning. The key problem is that the traditional department stores sales and profits are declining. There are specialty stores, discount stores, and online stores that offer similar products at a fraction of the cost for the most part. However, in the declining market for the department store industry, Macy’s consolidated stores, established a national department store and continues to make a steady profit. It is usually the time to divest, sale, or change product mix of a company when a company enters in a mature or declining phase in business.
The marketing strategies used to do the analysis were the PEST and product life style. PEST examines the political, economic, social and technology of a firm to determine a company’s strengths, weaknesses and position in the industry. In the future, the Affordable Health Care Act will affect Macy’s in additional costs, which is political. The economic conditions will continue to be an issue as disposable income levels are not at the levels of 2006 prior to the recession. The social norm is to not like change. As Macy’s changes to improve sales, cut expenses and maintain its competitive advantage, some customers may not just care for it and shop online or in a discounted store. And, the technology for Macy’s to implement will be accepting debit cards from a hand held device vs. cash register, to be able to advertise as a customer walks in the door with their phone and in corporate user friendly replenish of inventory if an item is sold out.
The product life cycle of the department store is mature and declining, due to declining sales. Furthermore, according to estimates, market share has eroded to 7 per cent, which is far below the 15 per cent desirable rate (Johnson, 2011, p. 3). Although, Macy’s during the declining phase has implemented strategies to maintain competitive advantage, create value for their customers and is staying afloat in the industry.
In conclusion, the three marketing strategies Macy’s could use in the mature department industry are harvesting, defender and maintenance. The harvesting strategy requires raising prices and cutting costs. Defender strategy builds on what Macy’s has such as brand image, strong management team, competition being low to moderate and the stability of technology used. And, maintenance strategy is to maintain market share.
The case study is Macy’s Department Store Repositioning. The key problem is that the traditional department stores sales and profits are declining, and the traditional department store is obsolete. Yet, Macy’s consolidated stores in an attempt to differentiate a new company from its competitors at the same time and remain a traditional department store. The marking strategies used to do the analysis was PEST and product life style. The solution presented is a combination of the defender, harvesting and maintenance strategies to create value and maintain a competitive advantage in a declining market of the traditional department store. Key Problem
The key problem in the article, Macy’s Department Store Repositioning, is that Macy’s is that traditional store sales and profits are declining, and the traditional department store is obsolete. Yet, Macy’s consolidated stores in an attempt to differentiate a new company from its competitors at the same time and remain a traditional department store. The consolidation was completed two years prior to the economic recession of 2008. However, sales and profits had already begun to decline. The consolidation was done to establish Macy’s as “a national brand with national advertising, and lowered the cost structure...
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