Strategic Review of Australian Department Store David Jones

Topics: American Express, Credit card, 2009 Pages: 8 (2617 words) Published: January 20, 2012
David Jones Limited (DJS) is an Australian retailer tracing its origins back to 1838 when it first opened in Sydney to sell “the best and most exclusive goods” (DJS, 31 Oct. 2009). It has since expanded to become a national retail chain comprising of nearly 40 premium department stores. The subject of this analysis is a strategic business unit (SBU) that is playing an increasingly important role in the company’s future growth strategy; namely the provision of financial services. As the result of a strategic alliance with American Express (AMEX), DJS launched the David Jones American Express (DJA) card in 2008 (ASX Media Release, 20 February 2008). To effectively analyse the value proposition of this SBU and product it is important to first examine the overall value proposition of the company. As defined by Kotler, a company’s value proposition is the set of benefits which it promises to deliver to consumers in order to satisfy their needs (Kotler et al. 2009). In the case of DJS these core benefits are the provision of an “empowering level of customer service”, a distinctive store ambiance, a unique and high quality product range and international brand portfolio offered at competitive prices, and a mission statement to “be the best full line, differentiated department store” (DJS Enterprise Agreement 2006). Key aspects of this proposition include the company’s focus on quality, luxury and aspiration. In terms of Maslow’s hierarchy of needs it demonstrates a desire to deliver an experience and array of products which satisfy needs of belongingness and self-esteem in a potential buyer (Maslow 1954). It also forms the basis for the company’s positioning strategy and its marketing orientation towards customer satisfaction (AFR Boss Magazine, October 2009, p.22). The company strives to deliver these key benefits to a primary target market consisting of “three generations of women (daughter, mother, grandmother) from households with above average disposable incomes” (DJS JP Morgan Conf., October 2009). In other words DJS has a segmenting, targeting and positioning (STP) strategy that is female skewed and aimed at the affluent ‘AB demographic’ which constitutes the top 20% of the socio-economic quintile based on education, income and occupation (Roy Morgan, 2009). The value proposition of the DJA card dovetails into this broad set of company values, offering an array of additional benefits and functionality for DJS customers that compliment the company’s market position as an aspirational brand (ASX Media Release, 20 Feb. 2008). Whereas historically the company’s branded store card was only accepted in DJS stores, the DJA card offers customers credit facilities at any merchant who accepts AMEX. It therefore leverages the AMEX brand as a leading global payments, network and travel company with its corresponding level of acceptance to offer DJS customers additional credit purchasing power and functionality (AMEX, 31 Oct. 2009). The DJA card also offers unique reward benefits and gift points to loyal customers, professing to “turn everyday spending into dream brands and dream destinations” (DJS, 31 Oct. 2009). The value propositions of DJS and DJA can be considered effective for a number of key reasons. Firstly the core beliefs which underpin these value propositions have remained largely consistent over time, with only small changes in response to evolving markets. This is important given they act as the foundation of a company’s brand building process (MM 2009, p.2-34). Secondly they are unique, leveraging DJS focus on luxury and aspiration to help differentiate product offerings like the DJA card from that of competitors. Thirdly these values augment the company’s segmenting and positioning strategy by providing clear benefits targeted to their core customer base. Lastly the value proposition is well communicated, permeating all aspects of their marketing mix and integrated marketing communications strategy...

References: Maslow, A. 1954, Motivation and personality, Harper and Row.
Aaker, D. A., & Joachimsthaler, E. 2000, Brand leadership: Building assets in the information society, Journal of Consumer Marketing.
Kotler, P., Adam, S., Denize, S. & Armstrong, G. 2009, Principles of marketing, 4th edn, Pearson Prentice Hall.
Marketing Management, 2009, AGSM MBA Programs Graduate Diploma in Management.
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