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Situation Analysis SWOT Analysis

By Dan Simpson,2014-05-16 16:34
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Swot Analysis 0. Internal Strengths and Weaknesses 0. History 0. Nature of Firm/Current Situation 0; Resources of Firm 0; Policies and Objectives 0

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    Nordstrom: A Marketing Analysis

    “Does the Company’s Marketing match its Mission?”

    Justin King

    Brittany Culver

    Michael Jorgensen

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    Brief of Contents

Executive Summary 3

Introduction 5

Part 1 0

    Swot Analysis 0

    1. Internal Strengths and Weaknesses 0

    ? History 0

    ? Nature of Firm/Current Situation 0

    ? Resources of Firm 0

    ? Policies and Objectives 0

    2. External Opprotunities and Threats 0

    ? Social 0

    ? Demographic 0

    ? Economic 0

    ? Competition 0

    ? Technological 0

Part 2 0

    Marketing Strategy 0

    3. Target Market 0

    4. Marketing Mix 0

    ? Product 0

    ? Place/Distribution 0

    ? Promotion 0

    ? Price

Part 3 0

    Charts 0

    1. Porter’s Five Forces Model 0

    2. Porter’s Value Chain 0

    3. List of Nordstrom Employee Benefits 0

Conclusion 0

References 0

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    Executive Summary

     Nordstrom was founded in 1901 by John W. Nordstrom and Carl Wallin. From

    the companies beginning, the business philosophy of Nordstrom has been to provide the best possible service, selection, quality and value to its customers. This philosophy has remained unchanged for over 100 years. Today the mission of Nordstrom is still the exact same.

     Over the years Nordstrom has created individual departments that focus on the individual lifestyles of the customers. The company nor only provides its customers with a wardrobe, but also a countless line of accessories, cosmetics, and fragrance. Over the past few years, the company has added new brands to its product line to satisfy its customer needs. In order to give the best possible service to the customer, the company plans on continuing to update the product line as new customer desires evolve.

     The employees are extremely focused on creating an environment of customer service within the store as well. The employees are not only focused on meeting the company standards, they are also focused on reaching the standards they have set within their own department as well. Each employee is trusted by the store managers to make good decisions and represent the company well. This trust has built confidence in the employee and enables them to focus all of the energy toward the customer.

     The atmosphere of the store also shows evidence of the company mission. The store is easy to navigate through, specific soothing colors are well placed throughout the store, and there is always a piano that can be heard playing in the background. These three things create a soothing and comfortable atmosphere for the customer.

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     Nordstrom‟s mission of providing customer service, quality, selection and value

    to its customers is carried out in every aspect of the company. The company employees,

    store atmosphere, and product line all display extraordinary qualities of service. The

    Mission Statement of Nordstrom is definitely evident in its day to day operations.

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Situation Analysis (SWOT Analysis)

Internal Strengths and Weaknesses

    History (Sales, Profits, Organizational Philosophies)

    Nordstrom was co founded 1901 by a 30 year old man named John W Nordstrom

    and his partner Carl Wallin. At age 16, John W of Sweden left his home and moved to

    Alaska where he struck gold. While in Alaska, he met a man named Carl Wallin, “who owned a shoe repair shop in downtown Seattle” (Nordstrom Employee, 2006). The two decided form a partnership and open a shoe store entitled Wallin & Nordstrom.

    Right form the start, the business philosophy was “based on exceptional customer

    service, selection, quality and value” (Nordstrom Employee, 2006). Focusing on this

    philosophy helped Nordstrom develop a competitive advantage in the shoe market. Due

    to their success, the company opened a new store in 1923.

    The company was soon taken over by John W‟s sons. Under their management it “grew to become the largest independent shoe chain in the United States. By the 1960‟s

    the current market had started to reach maturity and the company began to look “for new

    ways to spread its wings” (Nordstrom Employee, 2006). In an attempt to diversify itself, and gain greater market penetration, Nordstrom took on a new name, Nordstrom Best,

    and ventured into the clothing market. Now, upon entering a Nordstrom store,

    “customers were greeted with a selection of both shoes and fine apparel” (Nordstrom

    Employee, 2006). Now for the first time in history, Nordstrom offered a diverse product

    mix, something no other competitor offered.

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    In 1971, under the third generation of management, the company decided to go

    public. Two years later Nordstrom reached a critical point in its business, surpassing

    $100 million in sales, making it the largest volume specialty store on the west coast.

    Profits were growing, market share was increasing, and Nordstrom‟s marketing plan seemed to be working.

    Even though Nordstrom was experiencing tremendous success, the management

    was not satisfied. There was still room to grow. In order for Nordstrom to retain its

    competitive advantage, the company needed to revise its marketing strategy and further

    its market penetration.

    The company decided to take action. By 1975 the company penetrated into the

    markets of Alaska and California and by the late 80‟s, the company opened up the first Nordstrom Rack in the mid 70‟s. This store was a “clearance center for full-line store merchandise” (Nordstrom Employee, 2006). The higher prices in the regular store

    targeted the upper segment of society, while the Rack enabled Nordstrom to orient itself

    to a completely new crowd.

    Today, more than 100 years after its establishment, Nordstrom maintains the same

    focus of offering the customer the best possible service, selection, quality, and value” (Nordstrom Employee, 2006). This is evident in the product line and store ambience.

    Nordstrom has created a unique store atmosphere designed to enhance the shopping

    experience of the customer. “Instead of categorizing departments by merchandise, Nordstrom” has “created fashion departments that fit individual‟s lifestyles” (Nordstrom Employee, 2006). Focus on serving the market (or customer‟s needs and wants) has

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    helped Nordstrom grow from a small shoe store in Seattle “into a nationwide fashion

    specialty chain” (Nordstrom Employee, 2006).

    Nature of Firm/Current Situation

    Aside from Nordstrom‟s customer service, one of its most influential qualities is

    the store atmosphere. Immediately after walking into a Nordstrom, one experiences a

    sense of calmness that is not experienced when walking into other department stores. At

    Nordstrom, “careful attention has been given to achieving an esthetically pleasing

    atmosphere”, a Nordstrom customer commented (Bee H, 2006). Nordstrom has put a lot

    of research into testing different layout scenarios within each store. Every time the

    layout of a department changes, a diagram is made and a record of sales is kept for that

    layout. From this information, Nordstrom has been able to develop the most economical

    and profitable layout for the customer and the organization.

     The Nordstrom colors are also carefully selected. Deep earthy colors present

    customers with a comfortable and desirable atmosphere. Deep red, brown (wooden

    floors), blue, purple and green are used to color the store. Every color is strategically

    placed throughout the store to enhance the shopping experience.

    Nordstrom has put a lot of research into effects that color has on the human

    psyche. For example red is chosen because it produces feelings of “energy, desire, and

    attention” (Bear , 2006). Purple is another color that is placed in distinct locations

    throughout the store. It brings about feelings of self assurance, dignity, high aspirations,

    royalty, sophistication, wealth, ambition, fame, luxury, and power. These two colors are

    used to promote confidence and feelings of satisfaction within the customers as they shop.

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    During sales, employees are also given a tie to wear which almost always includes the

    color purple. Purple is also found near the more expensive items in the store. The color

    scheme is critical in creating a store atmosphere that is desirable to customers.

    Aside from the colors, the product layout also plays an essential role in providing

    a even-tempered atmosphere. Nordstrom has separated its products into different

    departments for men and women. This helps provide better service as each department

    can cater to the specific needs and wants of the customer. Within each department the

    clothes are either laid out on hanging racks or on tables. Organization is the primary

    focus when setting up the departments. Clothes are always neatly folded and clothing

    racks are well separated. A general rule of thumb is that if two people can not walk side

    by side between two fixtures, they are too close together. To produce an even cleaner

    look, jackets and heavier clothes are always hung on wooden hangers instead of plastic.

    The most famous contribution to the atmosphere of Nordstrom is the Piano.

    Nordstrom has created a “partnership with Levine School of Music” where it hand selects students to work for the company upon graduation. The partnership is working; “the

    dude playing the piano just adds to the calm shopping atmosphere” commented one man after a day a day of shopping (Bee H, 2006). To provide even more relaxation,

    comfortable couches are usually found somewhere around the piano for tired shoppers to

    sit down and for men to wait while their wives shop. Andrew Cooper, a computer design

    major at North Park University in Chicago said “these couches are a great place for me to relax while my wife spends all my money”.

    Resources of the Firm

Finance:

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    Nordstrom uses a verity of resources to help attract new customers and retain its

    current customer base. By far, one of its biggest resources is in the area of finance.

    Nordstrom recently “reported third-quarter earnings of $135.7 million” (Portland Business Journal , 2006). These earnings jumped unexpectedly and are up from $107.5

    million earlier this year.

    The financial resources of Nordstrom are an essential part of the companies

    marketing plan. This money has given Nordstrom the ability to put on expensive training

    programs for employees, purchase personal book (a customer database program), send

    out bulk mailings to customers (such as catalogs, promotions, etc.), build new stores, and

    create a customer friendly in-store atmosphere.

Human:

     Nordstrom‟s employees and management are the company‟s most valuable resource. An article written in the Seattle PI describes exactly why this is true. It states

    that, “Nordstrom salespeople make decisions as if managing their own business; they are

    trusted to do what is right. Everyone else in the company is there to help the sales staff

    make the sale and please the customer” (Mulady, 2001). The way the employees are treated and valued is a perfect portrayal of the company‟s mission of providing the best

    possible customer service and value to the customer.

     Even though the sales person is the front man for the company (being put in

    positions of direct contact with the customer), the human resource and management team

    act as the glue that holds the company together. The president of the company, Blake

    Nordstrom, says that people in support positions “like myself or someone in human

    resources that isn‟t on the floor manning a register,” needs to understand that their job is

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    to use the “energy and the activities they‟re doing (to) contribute to a better customer and

    employee experience” (HR Magazine, 2006). It is therefore extremely important that the workers in the HR department stay connected to the selling process in order to stay

    connected with the employees.

     It is this connection that helps the employees “take care of their customers”. It is

    not unusual for employees to go in on their days off to meet a customer that is in need of

    a new suit or pair of shoes. The manager of the men‟s suit department at the Tacoma

    Nordstrom comes in regularly on his days off. In an interview he commented that if a

    customer is in need “I will find them the suit, get it altered for them so they can have it in

    time” (Mulady, 2001).

     The sales employees have a tremendous amount of trust in the tailoring shop.

    One employee comments: “We rely heavily on the tailoring shop; they are great”

    (Mulady, 2001). In one situation, a baseball player needed a special shirt for a

    conference that Nordstrom did not have. To solve this problem, the sales person took a

    few shirts up to the tailor shop and used the material to make a brand new shirt. The shirt

    was then delivered to the player‟s hotel room that afternoon.

     The employees of Nordstrom are what keep the company going. The trust built

    between employees is critical in helping Nordstrom provide the excellent service it does.

    Without trust and support of all the company‟s workers, Nordstrom would be just another company.

    Physical:

    Currently Nordstrom operates “156 US stores located in 26 states” (Nordstrom

    Staff, 2002). Of these stores, there are 99 full line retail, 49 Nordstrom Racks, 5

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