Analysis of the Consumer Profile of LeShop.ch and Coop.ch
Length: 1725 words (4.9 double-spaced pages)
Nowadays, we are living in a changing world of consumption, where new trends are appearing, especially in Western societies. The most important of them are the growth of the service economy, the changes in purchasing methods, and the evolution of technology. The latter is quite important, because it involves the opening of new markets and niches for organizations, and especially in the food retailers and wholesalers industries.
For customers, this evolution implies new methods for acquiring things. According to the purchase model decision, the consumers will have to choose, among others things: the product category and the channel purchase decision. The recent evolution in the field of technology allowed the appearance of a new purchasing channel, namely the online shopping.
The goal of this report is to analyze the marketing strategy and the customer profile of the two main actors in the Swiss industry of online shopping, namely LeShop.ch and Coo.ch. Then, from the information gathered, conclusions and recommendations will be drawn. The reflections will mainly focus on the advantages and drawbacks of the strategies of the two leaders in order to determine a potential market or niche in the Swiss market for Bina.ch.
The actual situation in the online shopping industry in Switzerland
The Swiss market of online shopping is actually experiencing a fierce competition. In fact, six major actors are dominating the industry. However, two of them are clearly outstanding as the leaders: LeShop.ch and Coop.ch. The first of them has the biggest share of the market.
For a new business to enter in this market, it must be perceived by the customers as having a substantial differentiation in comparison with the competition. For this reason, I will try during this report to show you the major advantages and drawbacks of the two leaders. According to me, it is clearly possible to fulfil even more the expectations and needs of potential consumers by providing services than the competition do not, and to acquire a niche by creating customer loyalty and devotion.
The global consumer profile
A global consumer profile may already be drawn from logical reasoning, the people who are willing to go shopping online have usually the following characteristics: they are willing to discover new ways of purchasing, they are open to changes and to the introduction of new technologies, they also accept the principle of the anticipated consumption involved by shopping online, and finally they are willing to adapt themselves through experiencing and adopting new services.
The first important point is that this site is available in three different languages: French, German, and English. This is clearly a competitive advantage for LeShop.ch as it broaden the scope of potential consumers to the international community, which is really important in such a cosmopolitan country as Switzerland. The second point is that the site is designed in an attractive, easy-to-use, and timesaving manner, which is important to attract those consumers who are not familiar with computers. The site contains a “research product engine” which clearly facilitates the navigation in the supermarket.
The delivery process is very well organized. In fact, the products ordered are directly delivered to the door and are left there if nobody is here. The packaging methods differ according to the nature of the products ordered, which add quality to the service. This kind of details is very important in the marketing strategy of the company, as it can be crucial for consumers with high expectations standards and also for those who may be sceptical about these new services.
The payment systems are very convenient, since the consumers have the possibility to choose among several different methods of payment: credit cards, yellownet and billing.
The last point is about cigarettes and alcohol. Usually, the Migros stores do not sell this kind of products, however, they can be easily found on LeShop.ch. The logical explanation for this strategy is the need for profitability, as these products enlarge the scope of potential consumers for the company.
The main disadvantages in the marketing strategy of LeShop.ch are the following. First the company have limitations regarding the quantities allowed to order. By adopting this rule, the organization is limiting the scope of its potential clients to those who only want to buy less than a certain amount. We can conclude that LeShop.ch is only operating as a retailer and not as a wholesaler.
The second problem is the minimal limitation required to purchase, which is CHF 95. This clearly limits the scope of consumers to those who want or need to purchase above this price, and it may be a substantial part of the potential consumers.
Another competitive disadvantage (but may be an advantage for some people) is that LeShop.ch mainly advertise for Migros brands, which are products made directly by the company. According to me, this approach reduces the number of potential consumers, since some people are clearly attached to a particular brand such as “Red Bull” and would like to see it on their online shopping list.
Globally, all the advantages of LeShop.ch can also be found in Coop.ch. However, there are several crucial differences that need to be mentioned. The most important of them is that there is no limitation in terms of quantities ordered, which implies that the company is operating as a retailer and as a wholesaler, it clearly allows the organization to enlarge its market share by adding other potential consumers than simply individuals: restaurants, schools, hospitals and so on.
The methods of payment and the process of delivering differs also a little. For instance, you may pay with cash at the moment of the delivery, which is impossible with LeShop.ch. You may also choose the time of the delivery by checking the availability of your request in a grid.
The prices are higher than those of its main competitor, bur the products available include brands and high quality products such as the category “fine food products”.
The main disadvantage is that there is not the possibility to switch to English. In fact, only two languages are available: German and French. This is clearly a competitive disadvantage, because it limits the scope of potential consumers, by excluding a part of the international community, which speaks only English.
Another problem is that you have to be at home at the time of delivery, otherwise the order will be taken back to the store. For other products than common articles, such as wine, gifts, flowers and books: you have to wait several days before the delivery. In fact they will be delivered by postal services, this is why it will take more time.
The consumer profile
The general profile for consumers at LeShop.ch may contain the following elements. First, they would be mainly individual consumers and households. Secondly, given the fact that the prices are really cheaper than those of the competition, the company targets the working class, young adults, and students. In short, all those who care about the amount of budget allocated to food. The organization is also trying to create a customer loyalty; it means to attract to their site the actual consumers who go the malls, by giving them the possibility to use their M-Cumulus card when they are shopping online. Another important point, is that LeShop.ch try to charm the potential consumers who care about the environmental impact of such operations. In fact, the company tells that ordering online create less pollution than to take the car to go to the shop as usual.
All these marketing strategies are basically designed to broaden the scope of potential consumers by attracting them in a way or another to the site.
The general profile for consumers at Coop.ch is straightforward: the site is basically designed for consumers who are more looking for the quality of the products than for the prices. The aim of the company may to attract different social classes such as the working class but also the middle and upper-middle class.
The company also try to create a customer loyalty by giving the possibility to use the “Coop Card” while purchasing online.
An important point is that the scope of the potential consumers, as it was said before, is more extended since the company do not put any limit in the quantities you may order.
Conclusions and recommendations
According to the data that I gathered, the online industry is not a profitable business. For instance, LeShop.ch, which is actually the leader in this market, has an annual turnover of CHF 20 million, but the fact is that the company need to reach CHF 60 million to begin to be profitable.
Another important issue is the number of potential customers, which tends to be very low. Moreover, most of the actual online consumers already rely to one of the six competitors available in the Swiss market, and there is no reason for them to switch to a new one.
The biggest problem will be the operating costs involved to create the necessary infrastructure for these services. It will be particularly difficult to compete in this field with such giant industries as Migros or Coop.
To conclude this report, I would not advise you to extend the activities to the online shopping for all the reasons above. I’m afraid it will appear to be a very costly operation with no rewards at all. Nevertheless, we may take into consideration the marketing strategies used by Leshop.ch and Coop.ch, and see if we can apply them in our company. Thus, we may extend our core business and enlarge our market share, and may be after this, we may think about a diversification in the nature of our services.
Consumer Behaviour – Reading Material (Dr. Zamaros)