1. Executive Summary

The online supermarket sector is constantly expanding all over the

world. UK is the third largest online shopping market in the world after

South Korea and Japan. The percentage of people in UK who buy

groceries online is 68% currently and is growing. This industry is highly

competitive and companies are doing whatever they can to stay on top.

Tesco is the leading brand in this industry and holds 38% of the total

market, followed by Sainsbury in the second position with 15% and

Ocado holding the third place with 14% of the share in this market. The

main challenge for Ocado in comparison to its competitors is the lack of

physical stores, whereas its competitors have stores all over UK,

enhancing the in-store experience for its consumers. Ocado has a virtual

relationship with its customers assuring them fresh and premium quality,

excellence in customer service as well as low competitive prices. Ocado

is known for using various digital platforms for reaching out to its

consumers. In this report we will be creating a new campaign for Ocado

called ‘Eat Fresh Stay Fresh’ aiming to increase brand visibility and

brand awareness. The campaign will have two stages: Acquisition and

Retention. With acquisition the campaign wants to attract new shoppers

belonging to class AB females, age group 20-34 years, whereas for

retention the goal is to retain the existing customers enhancing their

shopping experience online with Ocado.

2. Macro Analysis

2.1 Market Overview

1

As per Mintel, the online grocery shopping is a sector in expansion. UK is classified

as the third largest country in the world for online shopping. Its market share is 6.9%

after South Korea which holds a global record of 16.6%, followed by Japan 7.25%

(Dunning, 2017). This year the sales are globally reaching £11.1 billions , a rise from

£9.9 billion in 2016, seeing a growth of 10.8%.

In UK ,73.7% of the market share is counted by the retailers with online stores, and

26.3% by shops online. Tesco is the market leader constituting 38% of the market

share. Its sales decreased in 2015 due to a rise in competition. Ocado has seen a

rapid growth in the last few years, accounting to 14% of the market share in 2015

(Mintel, 2017).

As mentioned earlier, UK has the highest percentage of online grocery usage and

London leads with 68%. The graph below shows the shopping pattern in different

region in UK.

Figure 1: The online grocery shopping percentage in the different country in UK

(Mintel, 2017)

As per Mintel, online retail sales have a well established pattern i.e. peak season

during winters festivities such as Christmas and other promotional events during

black Friday etc. It has been noticed that the online retail sales in the recent years

have grown by one percentage point a year with an increase of two percentage

2

points in 2016. This increase has taken place due to rise in the reliability of online

retails, more familiarity with online shopping and with the success of amazon prime,

which has positively affected other sites as well. (Mintel,2017)

Figure 2: Online sales as % all retail sales, (exc fuel), 2010-17 (Mintel,2017)

2.2 Market Trends and Market SegmentationPeople aged between 25 to 34 have the highest share for shopping online (Mintel).

These consumers prefer to receiving their shopping at their doorstep.

Online grocery is more common in urban areas due to the busy lifestyles of the

people, whereas rural areas are also use online shopping frequently because of the

distances with the retailers.

Supermarkets online are convenient in terms of time and transport but involve some

additional costs such as delivery and minimum spending (normally £40) which is not

affordable for all. The social grade who shop online mainly belong to AB social

group. Such consumer have a healthy lifestyle.

According to Mintel report, there are two different opinions on the new way of

shopping food and drinks. For consumers who prefer shopping from supermarkets

3

online, the main reason is time convenience, discounted offers and the easy delivery

service. Consumers who don’t prefer this type of shopping have tried it at least once

but stopped due to lack of freshness.

The chart below demonstrates social grades and their grocery buying patterns. 67%

of group A and the 61% of the group B shop online on a regular basis. The groups

C1 and C2 shop lesser with 45% and 46%.

Figure 3: The usage of groceries online among the social grades in UK (Mintel,

2017)

2.3 PESTLE factors: Implications

As UK is currently experiencing the Brexit, there have been certain noticeable

changes in the economy that have had an impact on the purchasing power of the

consumers causing a decline in the employment rates.

4

2.4 Porter’s Five Forces

5

2.5 Competitive Landscape

There are four leading players in the online grocery market which are Tesco,

Sainsbury’s, Ocado and Asda. In comparison, Ocado sets a minimum spend of £40

same as Tesco and Asda, while Sainsbury’s minimum order is the cheapest at £25.

These four brands have similar ‘Delivery Pass’ promotions in order to grow their

loyalty amongst customers. Therefore, they offer free delivery anytime during off-

peak hours after one-off payment. Ocado’s rates for a month, 6 months and 12

months are lower as compared to Tesco but more expensive than Sainsbury’s and

Asda. It is noticed that Ocado is the only brand that does not have physical stores.

This is the reason why Ocado cannot offer click and collect service.

6

Figure 4: Competitor Analysis (Asda; Ocado; Tesco and Sainsbury’s, 2017)

2.6 Market share

According to Mintel (2016), Tesco leads the market in online grocery, holding 38% of

market share followed by its four dominant competitors. Sainsbury’s accounts for

15% although its online revenues have gradually declined. Ocado shows an

outstanding performance in sales growth of 17% in 2015 and holds 14% of total

market share. In the last few years, many innovations were made by Ocado in terms

of launch of wearable technology in integration of grocery facilities with Apple Watch

and MasterCard applications making it easier to track orders.

Figure 5: Market Share of Online Grocery Retailers (Mintel, 2916)

3. Micro Analysis

7

3.1 Company overview: History, Mission and ValuesOcado is a British-based online grocery retailer, founded in UK in 2000. In 2002, they

started a partnership with Waitrose and opened their first Customer Service Center

(CFC) in Hatfield. In 2008 they presented Ocado Delivery Pass and in 2009

launched the mobile application "Ocado on the Go".

Over the years, Ocado has expanded its range of brands available as Fetch, Sizzle,

Ocado Everyday and Fabled and, in the meantime, they have increased deliveries

up to 100,000 orders exceeding £1bn in annual sales (OcadoGroup. com, 2017).

The company does not have any physical stores, but provides home delivery of

premium food, beverages and consumer goods directly from its warehouses. Every

year since 2010, Ocado has been voted as the largest online grocery retailer in the

world. The corporate mission is “to revolutionise the way people shop forever; by

giving them a uniquely innovative and greener alternative to traditional grocery

shopping” (Ocado.com, 2016).

3.2 LifecycleThe life cycle for Ocado is more service based rather than product based. It begins

with the customers placing their orders online using Ocado’s website or mobile app

through which the order reaches Ocado’s warehouse. Once the order is completed

at the warehouse, Ocado sends it to the customers using Ocado logistics as per the

delivery slot booked.

Figure 6: Ocado lifecycle

3.3 Ocado Marketing strategy Ocado differs from traditional grocery stores as they provide customers with easy,

fast, convenient, accurate and fun service without having to move homes.

8

Since Ocado is an exclusively online platform, it does not have the ability to interface

directly with its consumers. Therefore, to improve its relationship with the consumer,

Ocado seeks to focus on the quality of service, the availability and freshness of

products and the competitive prices.

Ocado uses several marketing channels like digital, direct mail, especially press and

door drops, except TV advertising. However the brand recently announced in March

2017 to start using TV advertising.

Ocado's marketing strategies are mainly focused on press and door drops channel

as the latter delivers highly targeted material to consumers in their own homes.

Overall, the main objective of its marketing strategies is to attract customers and

increase brand awareness. Ocado does not make much use of the digital channel

and, as a matter of fact, it has never done digital marketing campaigns.

One of the most successful Ocado marketing strategies was the launch of the

Ocadolife magazine, a perfect mix of content marketing and branding as it promotes

Ocado products and sponsors promotional events, which increased the brand

awareness.

9

Figure 7: Example of Ocadolife magazine content (OcadoBlog, 2017)

3.4 Financial & Marketing performanceBased on data in figure 8, Ocado sales growth is steadily rising from £598.3m in

2011 to £1,217m in 2016. The other financial key performance indicators such as

EBITDA and operating profit have also improved, but the most interesting and

surprising growth figures are investments, which reached £550.9m in 2016 and

continue to increase in 2017. Overall, from this table you can see that Ocado

represents perfectly the market trend of rising online grocery shopping in UK.

Figure 8: Ocado Financial Report 7 Years Summary in £m (OcadoGroup, 2017)

The Figure 9 below shows the value percentage of each grocery retail channel in

2016 with projection in 2021. Through this graph, we can see that in 2016 the online

grocery retail channel values 5.8% of the overall grocery market (Statista, 2016).

10

Figure 9: Share of grocery retail channels based on value in the UK, 2016 and 2021

In 2016, the market share of Ocado accounted for 12.8% of the overall online

grocery retailing, lesser than the year before (13%). This decrease is not due to its

poor performance but because of new businesses expanding their parameters in

online grocery and causing market growth at a faster pace (Mintel, 2017).

Ocado’s marketing expenditure has been one of the highest in the industry ad are

known to spend the most on advertising since 2000 (Mintel, 2017). In 2015, its

marketing expenses reached £10.5 million accounting for only 1% of its retail

revenues. The same percentage (1%) is also valid for 2016

(Results15.ocadogroup.com, 2017). Press is the marketing channel where Ocado

focuses more, spending 46.5% of its marketing expenditure, followed by door drops

(40.7%), digital (9.2%) and direct mail (3.7%).

3.5 The Marketing Mix

11

3.6 Ocado Brand WheelThe Brand Wheel is a brand analysis that explains in five categories the substance

of the brand. It enables us to understand the core mission of the brand (Cameron

and Green, 2015).

12

Figure 10: Ocado Brand Wheel

3.7 Positioning Analysis

13

According to figure 11, Ocado has lower levels of use (13%) relative to awareness

(77%) due to a smaller geographic cover.

Figure 11: Key Brand Metrics (Mintel, 2017)

22% and 80% of its consumers would recommend the brand, with percentages

higher than other online grocery retailers.

Although Ocado has good values and attributes, it does not have a clear brand

personality and is seen as stylish and aspirational brand.

Figure 12: Ocado Brand Personality and Attitudes (Mintel, 2017)

4. Conclusion4.1 SWOT Analysis

14

4.2 Implication for companyAfter analysing the SWOT, we concluded that that Ocado is a well performing brand

but has a long way to go before it makes its mark in the market. Consumers

nowadays want everything with ease and without any hassle, with services getting

delivered to their doorstep.

Ocado depends on Waitrose for some of its products. Approximately 4,300 items

sold by Ocado are provided by Waitrose, Ocado needs to improve their independent

image among its target market, so that their reputation is not affected by Waitrose.

15

Collaborating with a social media influencer who will convey a positive message of

Ocado when it comes to quality and freshness will help the brand to gain awareness

and build trust among its audience. The benefit of using a social media influencer will

be to promote the brand to social media users and create awareness among them.

Retail market is highly competitive and there are many companies that are struggling

to maintain their market position. Ocado has invested in offers and promotions to

hold a high competitive position in the market, but it has affected their overall growth

and profit which is why they have not been very profitable for a long period. Lowering

the prices can also affect the perception of the consumers in terms of quality of the

products, which can further damages the brand image.

Finally, there is a big concern amongst consumers regarding online frauds. There

are IT procedures to reduce this risk, using whatever precautions to avoid fraud.

5. Campaign Delivery 5.1 Campaign’s Objectives

16

5.2 Target MarketAccording to YouGov and ONS (2017), Ocado consumers are mainly young

females, aged between 20 to 34, accounting to 6,001,396 in total. 27% of them fall in

AB class or around 1,620,377 people which is the number of target market. This kind

17

of customers belonging to AB social grades live in urban areas such as London.

People who purchase groceries online normally have a busy and high lifestyle,

having less time to shop in stores and prefer purchasing online from the website or

the app. Ocado customers are techno savvy and use digital devices to make their

shopping convenient. These people generally prefer to cook at home rather than

eating out.

Figure 13: Ocado target market (YouGov, 2017)

5.3 Positioning statement“Ocado is an online-only grocery retailer that cares for the environment and provides

consumers with a revolutionary way to shop forever. Unlike its competitors, Ocado

offers a uniquely innovative and greener way to make grocery shopping.”

5.4 Creative Brief

18

19

The campaign will be divided into two stages: Acquisition and Retention.

6. Campaign6.1 ACQUISITION CAMPAIGNAIM: With the acquisition campaign we aim to reach out to new customers and make

them a part of our Ocado community by making it their first choice and encourage

trial among them, delivering them the best quality products in the market.

Target to acquire: 162,300 females who fall in the AB social group, aged between

20-34

● Direct Marketing Strategy 1: Direct emails

20

We will use a warm list ,with highest level, provided to us by a reputed agency, which

we will then use to send emails to our target audiences with the voucher code

FIRSTOFF to use with their first purchase. Using this strategy we plan to provide our

customers with an offer to choose a free veggie box or a fruit box on their first

purchase above £60. The cost of each box is £14.99 that the customers will be able

to get for free.The veggie box will contain 8 seasonal varieties of organic vegetables

and the fruit box will include 7 seasonal varieties of organic fruits.

If the first purchase is above £80 then the customers will have an option to choose a

veggie box or a fruit and veggie box worth £19.99 for free. These boxes will have 11

seasonal varieties of veggies and the fruit and veggie box will have 12 seasonal

varieties mixed.

Figure 14: Example of voucher for Ocado

Strategy 2: Cosmopolitan MagazineFor the Cosmopolitan Magazine we will be presenting the same offer to our target

audience, which will be included inside the magazine as an insert. We plan to use

the magazine as one of our channel because this magazine focuses on a wide

percentage of females who fall in the AB social group with a readership of 1.18

million and combined circulation of 405,308.

We are focussing on this strategy because we want to build trust among our target

audience giving them a chance to witness the quality of our products themselves. As

stated on Mintel a large percentage of the people are reluctant to buy edibles online

because they are not certain about the quality of the product they are purchasing.

21

Figure 15: Example of Ocado Insert voucher

● Digital Marketing- Strategy 1: Internet Banners, Google Adwords With this tool we aim to increase awareness of Ocado and encourage first trial

among the target audience using digital banners on websites through Google

Adwords.

We will be creating customized digital banners with promotional codes on it, and with

the help of Google Adwords we will be placing those banners on different websites

which are relevant to the search. From those banners our target audience will be

able to get the promotional code and use it at the checkout page of Ocado on their

first purchase after they have subscribed to it.

Figure 16: Examples of Ocado Internet Banners

Strategy 2: InstagramWe will also be collaborating with a social media influencer. her name is Pixie Turner

22

and she has a reach of 127,000 people on Instagram. Her focus is on promoting a

healthier lifestyle and in her posts she covers topics related to food, nutrition, fitness

and health foods, and she is a registered nutritionist. She also has her own website

that she uses to introduce people with healthy lifestyle ideas using her posts and

blogs. She provides recipes to her followers for different meals and organises health

related events and she’s very active with press and is also a nutrition consultant. We

will be paying her £219 per post to promote our product and she will also be

mentioning our product on her website and her recipes. The average engagement

rate on her Instagram page is 2.5 per user.

Figure 17: Examples of Influencer pages on Instagram

Flowchart for acquisition campaign

23

6.2 RETENTION CAMPAIGN

Target to retain: 20% of 541,000 existing active customers plus new 162,300

prospect customers from acquisition campaign

Strategy 1: Direct mail For the retention of our valuable customers we plan to use tactics that will help them

to grow with us as a community. Our existing customers will receive a direct mail

which describes conditions of the new loyalty program. On each purchase the

customers will get digital points on Ocado. The number of points they get will depend

on the amount they spend on Ocado, for example when there is a minimum spend of

£40 the customers will get 2 points. Every 10 points, customers will get £30 valued credit on Ocado account. When the accumulation of these points reach a

certain threshold which will be £30, the customers will be able to redeem their points

24

into currency and use it on Ocado on their next purchase. The customers can also

make some extra points by uploading their picture on their Instagram with our

product using our official hashtag (#EatFreshStayFresh), this will enable them to

become active members of our community and they will be portrayed as the

promoters of a healthy and a fit lifestyle.

Figure 18: Example of wallet point on Ocado

Strategy 2: Photo contest on Instagram We plan to conduct a photo contest to engage our current customers. We will allow

our customers to recreate recipes that are provided on Pixie’s (Social media

influencer) website and click a picture of their prepared meals and share it on their

Instagram using our official hashtag. The picture with the most engagement (likes

and comments) will be declared as the winner at the end of the campaign and their

names will be featured on our website. In addition, the winner will get a great

champagne as an incentive every month from February to May 2018. Using this

strategy we aim to include the acquisition strategy with the retention and make it

interactive for both the current and the new customers.

25

Flowchart for retention campaign

6.3 AIMRITE ModelThe AIMRITE model will help to have a clear idea of the campaign and also to

evaluate every single aspect.

26

27

28

7. Campaign Management

29

7.1 Measurement and Evaluation

Direct email- Numbers of voucher codes redeemed will let us know how many

people we have acquired.

Magazine/Insert- We will have a specific voucher code for magazine inserts which

will tell us how many new customers we have attained using the code from the

magazine.

Banner/Google Adwords- The reach on Google Adwords will be tracked by Google

Analytics to give us the number of reach our digital banners have achieved. It will tell

us the exact number of click on our advert and the time spent on our website and the

percentage of website visits by the new customers.

Online Influencer- We will have specific promo codes on the influencer’s post of

Ocado and we will get the number of people we have managed to reach by the use

of those codes, and we will be tracking the engagement of the customers in terms of

likes and comments on the posts.

Photo Contest- We will be able to measure the reach with the photo contest by the

count of hashtags used on the pictures that will be uploaded by the users. When

they upload a picture using the official hashtag they will have automatically entered

the contest and will give us the exact count of the people reached.

30

Direct mail- We will prompt the customers to sign up for the loyalty program with the

points wallet. We will be tracking the number of people who have signed up for it to

give us an exact number of reach and we will continue tracking the people who

redeem the points after accumulation to measure the active engagement rate.

7.2 Testing programAcquisition-For the acquisition testing program we will be sending out direct main to 10,000

people in our target audience who’s emails we will have acquired from the warm list.

This testing will be done in the month of December, a month before the initiation of

our campaign. Using this we will encourage trial among them try out our offer using

voucher code TESTOFF. On the spendage of £60 the customers will get a choice of

a free veggie box or a fruit box with 7 varieties of seasonal vegetables or fruits, and

on the spendage of £80 the customers will have a choice of a free veggie or fruit and

veggie mixed box with 12 varieties of seasonal fruits and vegetables.

This will also help us to measure the preference of the customers on the choice of

the veggie box or the fruit box and give us an approximation of the response rate by

the customers.

Retention-For this strategy we will choose 10,000 existing customer who are already

subscribed on Ocado website. We will introduce new loyalty program to them using

direct mail, by sending them a brochure to explain the program. On the checkout

screen of their Ocado page the customers will be prompted to sign up for a points

wallet, and every time they spend £40 their points wallet will be topped up with 2

points. When the accumulation of the points reach 10 they will be able to redeem it

which will in turn give them £30.

The number of customers who sign up for the points wallet will allow us to estimate

the success of this program in our actual campaign. The test will be conducted in

december, a month before the initiation of the actual campaign.

8. Timeline

31

We will run this campaign for 6 consecutive months. For the first month, there are

testing process through both postal mail and email before launching the real

campaign. In the next two months, we plan to do acquisition methods which consist

of marketing activities through direct email, magazine, Google Adwords/ Internet

Banner, online influencer on Instagram. For the last 4 months, retention tactics will

be run through direct email, photo contest on Instagram including website and

application development.

9. Budget and bottom line forecast resultsThe whole campaign would generate money from acquisition and retention to the

business around £31,704,223. From the following table below, it demonstrates that

total cost of this campaign is £3,735,683 that originates from acquisition cost,

retention cost, test cost and fixed cost. Therefore, the return on investment (ROI) is

calculated as 1:8 (£31,704,223 divided by £3,735,683). It is expected that more than

half of the revenue come from retention strategies. Finally, we can achieve the

marketing objective to increase sales by 3%.

32

Appendix 1: Budget and List cost

33

According to table above, budget of Cosmopolitan magazine, influencer on

Instagram, internet banner are calculated by price per unit multiply by unit. For

example, the influencer will post 40 pictures on her Instagram during 5 months

therefore the total cost of influencer will amount to £219 x 40 times = £8,760. If there

are 127,000 followers, then the list cost £/1000 will amount to £69.

Appendix 2: Group Diary

34

Group meeting

Cristina Ankita Daanish Federica Jirawat

Week 1 (Nov 6-10)

Mon

Tue Meeting Planning the campaign with my group

Discussion of the campaign

Discussion of the campaign with group members

Planning the campaign with group members

Planning the campaign with my group

Wed Research of the info for the macro analysis

Set Deadlines for completion of parts allocated

Divided parts among the group members to work on individually

Research for the macro and micro analysis

Research on the competitive analysis on the macro analysis part

Thu

Fri Writing the macro analysis

PESTLE and Porters Five forces

Started forming the SWOT

Start to write the micro analysis

Writing competitor analysis

Week 2 (Nov 13-17)

Mon Writing the report

History and Market Overview

Continued working on the formation of the SWOT

Continue to write the micro analysis

Planning the campaign delivery part

Tue Meeting We discussed about the campaign and the objectives

Changes to PESTLE

Discussed the campaign and chalked out the different objectives

Discussed about the campaign and chalked out the different objectives

Writing the SMART objectives

Wed

Thu Writing the report

Completed the table with impact

Wrote the implications

Continue to write the micro analysis

Fri

Week 3 (Nov 20-24)

Mon Research Research for Worked on the Research Research

35

about ideas for the acquisition and retention

Ideas for acquisition and retention

report. Added the SWOT and the implications to the report

about ideas for the acquisition and retention campaign

about ides for the acquisition and retention

Tue Meeting Discussion and research about Ocado and the incentives for the customers

Group discussion with the ideas

Discussed about the campaign strategies of acquisition and retention and decided the incentives

Discussion about the campaign strategies and decided the incentives for the customers

Discussion and research about Ocado and the incentives for the customers

Wed

Thu Meeting Working on the report with my group

Collective work on report

Worked on the report

Continue to work on the report

Working on the report with my group

Fri

Week 4 (Nov 27-Dec 1)

Mon Working on the report and thinking about new ideas about the acquisition and retention campaigns

Finalised Macro analysis

Worked on the report and came up with creative ideas for the report

Working on the report and thinking about new ideas about the acquisition and retention campaigns

Tue Meeting Discussing with my group about the various ideas for the campaign and research about Ocado customers

Creative ideas for the campaign with group

Discussion of the creative idea and how to put them together with the group

Discussion about creative ideas with the group

Discussing with my group about the various ideas for the campaign and research about Ocado customers

Wed

Thu Meeting Working on the report

Working on the report

Worked on the report together

Working on the report together

Create the two flowcharts

Fri Defined the number of target market

36

Week 5 (Dec 4-8)

Mon Writing the campaign

Planning timeline and budget

Tue Meeting Working on the report. We came out with new ideas for the campaign

Execution of campaign for report and presentation

Started with the campaign formation, putting ideas together in the report

Working on the report to came out with new ideas

Writing measurement and evaluation part.

Wed I started the powerpoint

Worked on presentation

Worked on the formation of the creatives for the presentation and report

Thu Writing the power point

I have done the PPT presentation.

Fri Meeting Completing the report and the power point

Completion of report and ppt

Completed the report and the presentation

Completed the report and the presentation

Completing the report and the power point

Week 6 (Dec 11- 15)

Mon Preparation for the presentation

Preparation for the presentation

Preparation for the presentation

Preparation for the presentation

Preparation for the presentation

Tue Presentation

Wed

Thu Submission

37