Waterstones Saving the Largest British High Street Bookstore

Rachel Wheat / N0249105 FASH30004 / Yvonne Richardson

Waterstones

Contents Introduction (7) Methodology (11) Key Issues and Opportunities (15) Current Brand Position (19) Strategy Objectives (29) Positioning (33) Community and ‘Glocal’ Business (43) Marketing Strategy (47) Promotional Strategy (65) Communication Strategy (71) Environmental and Ethical Stance (85) 3-5 Year Plan (89) Financial Strategy (93) Summary and Recommendations (101)

Waterstones

1.0 Introduction Waterstones, along with many other high street stores, has been hit by the economic downturn, a decline in the British high street and a huge rise in online sales. Within the book market the brand has been impacted by the increasing popularity of e-books and the rise of giant competitor, Amazon. The research produced in stage 1 of this project indicated that Waterstones remains a loved and respected high street brand, however was deemed expensive and outdated in comparison to competitors, particularly by younger consumers. Research into current and future consumer trends found a number of opportunities that can be used to evolve the future of the brand, including the building of communities, providing a more personalised service and creating interactive relationships with their consumers. In order to ‘save’ Waterstones it is essential to position the brand in the market at a place that is not or cannot be replicated by competitors, giving Waterstones a unique point of difference from other similar stores, whether on the high street or online. The report will then outline a marketing and communications strategy that promotes this point of difference to a suitable target audience and gives an indication of the potential costs involved for the Waterstones company. This will culminate in a series of recommendations for the brand that are hoped will re-establish their once successful position on the high street and online. REPORT OBJECTIVES - Establish a unique position for the Waterstones brand on the high street and online, finding its target audience and areas of promotion. - Define a clear and cohesive marketing and communications strategy that indicates a multi-channel approach. - Produce 2 potential budget solutions, outlining the costs of various strategies and providing possible alternatives. - Consider the key performance indicators that will assess the success of different strategies and outline how these can be used by the brand.

Waterstones

2.0 Methodology Further primary research is necessary to progress from stage 1, namely in the form of a focus group that will be carried out in order to establish whether Waterstones has the correct positioning and target audience, as well as testing potential strategies. This group will be compiled of 20 consumers across the 5 generational segments as defined in stage 1. Furthermore a larger sampling questionnaire will be used to further assess the brand’s position and the way that it is viewed by consumers. These results will be compiled of 200 consumers, equally across the same segments. Secondary research will be used to provide further examples and case studies of successful brands, stores and enterprises that may provide potential direction for the Waterstones brand. Secondary research will also allow insight into the potential costing and the return on investment that can be expected from the various strategies, resulting in an indication of the success of the plan. This research will be compiled through books, databases and online sources such as articles and blogs. As in stage 1, the sample size for my questionnaire and focus group are the main limitation to my methodology. Neither group are necessarily representative of the population as a whole, however, due to the content of the research it is less likely that there may be seasonal bias present in responses, as may have been seen previously.

Waterstones

3.0 Issues & Opportunities A number of issues became apparent for Waterstones in stage 1 of this project. Firstly, they have not been reacting to changing macro pressures; with the British high street in decline, online sales on the rise and the emergence and subsequent growth of the e-book. More specifically to the Waterstones brand, consumers have no apparent reason to choose to purchase from them over competitor alternatives. There is no clear point of difference. Customers have found competitor alternatives that are cheaper, more personal and providing more offers. However, research did find a number of opportunities or potential methods of evolution for the brand; the building of relationships between brand and consumer, the creation of communities and expansion within both the e-book market and in their online presence. Furthermore, for Waterstones an issue has arisen in that competitors have already begun to evolve into these opportunities, with Amazon demonstrating a huge online presence and creating their own range of e-reader devices, which are now being sold by Waterstones in their stores. The key opportunity for Waterstones comes in finding a positioning that will encourage customers to their stores or website. With no clear position outlined at present, the brand is one of few that can take the opportunity to create a new position that is not currently met by any competitors. From these opportunities there are two clear directions for the brand: a) They can work to progress from their current position and brand themselves as traditional, reputable and reliable, providing an increased focus upon personal service and the foundations of relationships between themselves and their consumers b) Waterstones could position themselves as innovative and interactive, extending their range of e-books and introducing interactive areas to stores for consumers to try such products. However, this would mean a complete alteration from their current place in the market.

Waterstones

3.0 Issues & Opportunities In terms of the potential risks in implementing these opportunities, the largest is possible alienation of parts of their existing target market. Their current consumer segmentation (see section 4.2) being cross generational poses a potential issue in that any new concepts may appeal to certain consumer groups and not others. Waterstones must work not to alienate any of their existing consumers when re-positioning themselves in the market. Another potential risk for the brand is that a strategy with heavy focus upon stores, or online could leave the other neglected. It is therefore essential that all considerations are made involving both online and offline, creating a multi-channel approach for Waterstones.

Waterstones

4.0 Current Positioning Waterstones has become Britain’s largest chain of high street bookstores, with over 300 nationwide. They are a well respected and much loved brand that are acknowledged by consumers as holding an important position on the high street. Business was hit by the recession, with the brand being sold first to the HMV group and later to Russian billionaire, Alexander Mamut in 2011 for £53million (Wachman, R, Lea, R and Bowers, S, 2011, Online). In the 3 months prior to its sale, Waterstones had seen an 8% decline (Wachman, R, Lea, R and Bowers, S, 2011, Online) and had not seen a peak in growth since 2005 (Portas, M, 2012, Online).

Waterstones

4.0 Current Positioning Fig 1: Perceptual Map – Price vs Range – Waterstones are positioned at a premium price point, placing them above other high street and online competitors, however, they are the only brand at this price position offering consumers a wide range of products. Whilst the brand may feel that this range offering is enough to justify their premium pricing, other competitors are offering this number of products at a lower price, the brand must therefore consider another way in which they can justify their positioning.

Low Price

High Price

Wide Range Narrow Range

Waterstones

Amazon

Blackwells

WHSmith

Charity Shops

The Works

HMV

Independent Stores

The Book People

Daunt Books Foyles

Where Waterstones Aim to Be

Middle Market – Currently Ruled by WHSmith

Waterstones

4.0 Current Positioning Fig 2: Perceptual Map – Online Presence vs High Street Presence – Waterstones currently have a large high street presence but this is not replicated online at present, their online presence is low in comparison to competitors such as Amazon and WHSmith. However, the majority of other competitors have a comparatively low overall presence, indicating that the Waterstones only have few true competitors and by raising their online profile, would have even fewer.

Narrow Online Presence

Large Online Presence

Large High Street Presence

Waterstones

Amazon

Blackwells

WHSmith

Charity Shops

The Works

HMV

Independent Stores

The Book People

Daunt Books

Foyles Where Waterstones Aim to Be

Middle Market – Currently Towards Narrower Presence

Narrow High Street Presence

Waterstones

4.1 Current Positioning In their current positioning, Waterstones is showing very little point of difference between themselves and their competitors. They have a significant presence on the high street, however are not replicating this online, particularly in comparison to giants such as Amazon. This is of particular importance to the brand’s vision of becoming equally successful in both channels. Waterstones stocks a large range of products, in comparison to other high street stores as well as online, however they have a higher price point to high street competitor WHSmith and online competitor Amazon. At present, this high price point has become the main point of difference for consumers, between Waterstones and their competitors and is a particularly negative one. For younger consumers especially this was deemed to be a key issue (for full questionnaire results see appendix 1). In comparison, older consumers were less concerned by the price but did comment that it was necessary for Waterstones to find a greater point of difference to other retailers. Those consumers over 47 had also noted another point of difference for Waterstones - their personal staff recommendations and links to local authors, an area that younger customers, particularly those under 30, had failed to notice. However these are not currently promoted and are therefore not pushed as a point of difference for the brand.

Waterstones

4.2 Current Consumer At present Waterstones has a cross-generational consumer base, with customers ranging from young children to those in retirement. With such a wide range of consumer ages and habits it is more significant for the brand to segment their consumers by how often they read, or the genres they most often purchase. The six largest consumer segments for Waterstones therefore are The Avid Reader, The Collector, The Academic, The Commuter, The Holiday Reader and The Magazine Reader (see figure ?) with each of these segments consisting of differing ranges of older and younger consumers. Currently, strategies and promotions are not specifically targeted towards one consumer group, instead canvassing all generational and habitual segments. With a more defined position, Waterstones must define a more specific target market and communicate strategies and promotions to a more specific segment, without creating such a position that other existing consumers will feel neglected.

Waterstones

4.2 Current Consumer The Avid Reader It is the Avid Readers who form the base of Waterstones’ consumers; they read at any given opportunity including fiction, non-fiction and magazines. This consumer is the most likely to have an e-reader as they feel that it may offer them better value for money, however, they are also the group who feel the most loyal to print-books <18: 16% 18-30: 17% 31-46: 10% 47-66: 22% 67<: 35% The Commuter The Commuter is most commonly aged between 30 and 50 and may be male or female; they have busy and potentially stressful jobs that prevent them from being an avid reader. Instead they use their commute as a time for escapism or entertainment and therefore, reading. Commuters may buy books in-store or online, and are also likely to have an e-reader or download e-books to other personal devices. <18: 1% 18-30: 14% 31-46: 54% 47-66: 28% 67<: 3% The Holiday Reader The Holiday Reader is one who is mostly likely to read during the summer or holiday times such as around Christmas. They may be of any age, and could also be formed of other consumer types such as the academic or the magazine reader, who feels that they have more time for reading during these periods. <18: 9% 18-30: 23% 31-46: 42% 47-66: 19% 67<: 7% The Academic Academic Readers are mostly aged between 16 and 24 and read solely for the purpose of their academic work, meaning that their purchases are mostly restricted to term-time, the opposite of the holiday readers. This group are the most likely to buy second hand products and may buy these at charity shops, or through online sellers such as Amazon. Their primary reasons for purchase are price and relevance. <18: 36% 18-30: 45% 31-46: 11% 47-66: 5% 67<: 3% The Magazine Reader The Magazine Reader is likely not to describe themselves as a reader at all; aged between 14 and 30 they are most likely to be female. Magazine purchases may appear spontaneous and sporadic; however they are often based around the same preferences and at regular intervals. <18: 43% 18-30: 27% 31-46: 6% 47-66: 11% 67<: 13% The Collector A Collector may be of any age or gender, and the collecting element to their reading habit could refer to a number of different things. The collector group forms part of the 41% of internet users who agreed with the statement “I like to collect books and keep them on bookshelves” (Mintel, 2012, Online). <18: 14% 18-30: 26% 31-46: 18% 47-66: 20% 67<: 22% Fig 3: Current Consumer Segmentation

Waterstones

4.3 Brand Qualities In terms of their branding, primary research (see figure ?) indicates that Waterstones are seen above all to be a traditional but serious brand. They are considered by consumers to be reliable and organized rather than spontaneous or fun and whilst these traits of tradition and reliability were seen positively by older consumers (see appendix 2), to younger consumers this translated as outdated. If Waterstones choose to position themselves more towards the younger market, they are looking for a brand that focuses more on the laid-back, modern or spontaneous branding, rather than the traditional. It may be possible therefore to assume that whilst Waterstones believes they have a cross-generational target audience, they are appealing more widely to older consumers at present. Strategies and communications would therefore need to be completely re-designed if the new positioning targets this younger market. Waterstones current mission states that they aim to “excite” and “engage” consumers (Waterstones, No Date, Online) and with consumers viewing them as serious and sensible, this may not be translated into their communications at present. With exception to the 5 attributes rated least and most favourably, others were mostly rated in the middle ground, with no clear definition as to whether the brand are conservative or open-minded, independent or co-operative and reserved or confident.

Waterstones

0 1 2 3 4 5 6 7 8 9

4.3 Brand Qualities Approachable Sophisticated Serious Fun Passive Wise Traditional Modern Ambitious Sociable Independent Cooperative Competitive Reserved Confident Private Sensible Sexy Imaginative Practical Open-Minded Conservative Organised Spontaneous Careful Hard Working Laid-Back Reliable Fig 4: Branding Qualities Chart – 200 consumers were asked to rate Waterstones on each of these qualities between 1 and 10, with 10 indicating that the brand is highly like this.

Waterstones

5.0 Strategy Objectives BRAND MISSION To be the leading bookseller on the high street and online providing customers the widest choice, great value and expert advice from a team passionate about bookselling. Waterstones aims to interest and excite its customers and continually inspire people to read and engage in books. (Waterstones, No Date, Online). STRATEGY OBJECTIVES - Become the lead retailer in the book industry both on the high street and online (Waterstones, No Date, Online). - Drive more traffic to Waterstones.com (I Spy, No Date, Online). - Reduce Amazon’s 75% share of the online book market (The Booksellers Association, 2011, Online) by at least 5% in the next three to five years, the percentage of the market currently held by Amazon’s closest competitor. It is the key aim of this strategy therefore to re-ignite and inspire people to read and engage in books through Waterstones. The strategy must consider both high street stores and online selling, as it is the brand’s mission to be equally successful within both, something that is not apparent at present.

Waterstones

6.0 Positioning A new position for the Waterstones brand should be evolved from their existing place within the market and their current promotions and policies, rather than something new that consumers do not associate with the brand at present. A number of the opportunities found in stage 1 of this project would act to support a new position, or become part of the brand’s new strategy, such as the increase in the importance of online and the rise of e-books; however these cannot form positions in themselves. Moving Waterstones to a purely online basis would lose any form of advantage the brand has over main competitor Amazon, losing their high street presence. Similarly, there is not yet the market for a move to e-books, but their presence can be implemented into the new marketing strategy for the brand. An opportunity found in the creation of communities and a more personalised level of customer service, would however fit with the current Waterstones brand image. Therefore, of the two directions outlined in section 3.0 it is clear that the more appropriate line of positioning is within the creation of a traditional, consistent brand, rather than changing their image completely to become more innovative and interactive.

Waterstones

6.0 Positioning

“Waterstones is driven to provide exemplary personal service, for book lovers to discover new interests and

new passions. Waterstones is at the heart of your reading

and of your community”

Waterstones

6.0 Positioning The company already forges links with their local community in promoting local authors or books surrounding local attractions and heritage. Furthermore, existing Waterstones stores are all uniquely stock managed (Waterstones, No Date, Online) with managers choosing the stock that comes into store and staff providing recommendations, making a more personal and community-based service possible. Consumer research also suggested that the brand was already well known for its customer service and the knowledge of their staff; however the new position will take this service one stage further by providing personal recommendations of new products, events or activities to customers. The new brand essence for Waterstones will therefore be as the ‘Community Bookstore’ with concentration on working actively within the local community and the provision of a personalised level of service currently not being replicated by competitor brands.

Waterstones

6.0 Positioning Fig 5: Perceptual Map – Level of Service vs Multi-Channel Retailing – In their new position, Waterstones will offer a more personal service to their consumers, ensuring that this is equalled across all of their selling platforms. This places them at an advantage to those competitors who are using less purchase channels, such as Amazon with no high street stores, and those who are not offering the level of service that Waterstones can provide.

Singular Channel

Multi-Channel

Standard Service

Waterstones

Amazon

Blackwells

WHSmith

Charity Shops

The Works

HMV

Independent Stores

The Book People

Daunt Books Foyles

Where Waterstones Aim to Be

Competitor Positioning

Personal Service

Waterstones

6.0 Positioning Fig 6: Perceptual Map – Price vs Community Consideration – Waterstones becoming active within local communities will position them apart from their competitors, particularly those of a similar price point. Furthermore, a community consideration gives the brand a point of difference over main competitor Amazon, who have less opportunities to become involved in community work.

Low Price

High Price

Unconcerned with Community

Waterstones

Amazon

Blackwells

WHSmith

Charity Shops

The Works

HMV

Independent Stores

The Book People

Daunt Books Foyles

Where Waterstones Aim to Be

Competitor Positioning

Active in Community

Waterstones

6.0 Positioning Waterstones will be positioned as an entirely multi-channel brand, with services available in-store, online and on mobiles, in comparison to Amazon who currently have no in-store presence, becoming more like American counterpart, Barnes and Noble. Their service will be entirely personal, with currently generic communications being replaced by those featuring more of a personal connection. Whilst Amazon and a number of other companies are providing customers with recommendations of future purchases, Waterstones will use personalisation throughout their strategy, as part of their positioning, meaning that this will be present in all elements of their strategy as opposed to simply post-purchase. At present there are no competing brands providing a personalised service in a multi-channel approach. Similarly, within Waterstones’ price point there are no competitors interacting within the local community, creating an entirely unique position for Waterstones. In order to assess whether this would be a desirable and imaginable position for Waterstones and understand the consumer segments who would be most attracted by this positioning, I questioned my cross-generational focus group. Older consumers already had an understanding of Waterstones’ stores current links with their communities and therefore felt that it was a “natural extension” for the brand to become a ‘Community Bookstore’ (for full results see appendix 1). In addition whilst younger consumers were less aware of this existing connection they still understood that this would be an improvement in position for Waterstones, differentiating them from other brands and providing them with a core idea that is currently missing. All consumers were excited by the possibility of a more personalised level of service, particularly with recommendations of what to read next or similar titles. However younger consumers were concerned with how this positioning would translate across multiple channels. This must therefore be considered in the new communications strategy, as Waterstones aim to offer consumers a truly multi-channel experience. It can therefore be considered that positioning themselves as a ‘Community Bookstore’ would be plausible for Waterstones and as outlined in stage 1, provides an opportunity that considers both the current climate and the future.

Waterstones

6.1 Target Consumer With a new position Waterstones must consider the key target audience groups that will be more attracted to the brand. As previously, primary research was used to discover who would find this position most desirable (for full results see appendix 1), with results showing that there were two potential target audiences. Primarily, it was the older consumers who were most attracted to the community nature of Waterstones, considering the attributes of being ethical, traditional and reliable to be of the highest priority (see appendix 2). This was agreed by my focus group, with those of the older generations (47-66 and 67+) showing the most interest in this positioning (see appendix 3 for consumer portrait). Furthermore it is this target group who are more likely to be Avid Readers, purchasing more regularly than those who only read on occasion. Younger consumers were shown to value innovation and spontaneity in brands, however those questioned in the focus group did not consider the community positioning to be off-putting for them as consumers and they did feel that it was an appropriate position for Waterstones. A secondary consumer base is that built of Mums, from my focus group (see appendix 1) this group was formed mostly of those aged between 31 to 46 and the older range of the 18 to 30 segment (see appendix 4 for consumer portrait). This consumer group are often looking to build communities, with the rise in sites such as Mumsnet indicating the rise in community building amongst parents. Furthermore the children’s departments are an integral part of Waterstones’ stores and they form an important existing consumer base, therefore a positioning more suited to this consumer will be popular, and consumer research (see appendix 1) reflected this.

Waterstones

6.1 Target Consumer Fig 7: Consumer Segmentation The majority of the primary new consumer group will be formed of Avid Readers, Holiday Readers and Collectors, with Academic Readers and Magazine Readers being least represented. Within the secondary consumer group of mums, whilst the women themselves may not be Avid Readers, they may purchase often for their children. For Waterstones this is extremely positive, in that providing recommendations and welcoming readers and the community into stores will be particularly attractive to Avid Readers who may require help choosing what to purchase next.

Academic

Avid

Holiday

Commuter

Collector

Magazine

Waterstones

7.0 Community Brands Fig 8: Polyvore Homepage In their new positioning, Waterstones will become part of a cluster of businesses that are showing focus upon communities or becoming ‘glocal’ brands. However, there are a number of ways in which brands can become associated with communities; firstly, they can align themselves as a brand community, encouraging their consumers to form a community based upon their love for the brand itself. In order to create this brands must be “hyper-responsive to customers, focus on usability, be unapologetically human and be ok with customers driving the direction of the brand” (Morrisey, B, 2008, Online). Brands whom have been successful in creating these communities are consistently consumer driven, including Google (Morrisey, B, 2008, Online) whose lack of advertising indicates a more consumer led outlook. In addition, with the rise of online, social community brands such as Etsy and Polyvore (see case study in appendix 5) have launched. Here, consumers interact with one another both over shared interests and a shared love of the brand or company. This idea may be evolved by Waterstones, creating communities online as well as a community surrounding the brand. Whilst this will not be their primary aim, as they become more aligned with their local community, the creation of social communities may become more prominent for Waterstones both online and in-stores.

Waterstones

7.0 Community Brands Other community strategies held by brands have coined the term ‘glocal’, whilst once this term meant that brands altered their strategy or products depending upon the place in which they were selling them, in the digital age brands must consider a more seamless strategy, one which does not rely upon international borders (Cooper, L, 2010, Online). The new strategy for ‘glocal’ brands is, as with community brands, in responding to consumers (Cooper, L, 2010, Online), with the aim of creating a global community that is responsive to your brand. Finally, and most suitably for Waterstones, becoming a community brand may mean being active within local communities. The Starbucks brand have worked hard to ensure that they are seen as providing for their local communities, stating “being good neighbours is something we take seriously and is led locally by our store managers. They know what is important to their communities” (Starbucks, No Date, Online) (for case study see appendix 6). By placing community responsibility with store managers, the brand ensures that issues tackled are important to that core community, as well as joining with nationwide charitable campaigns. Similarly, the Britvic and Pepsi Company in the UK has recently begun the ‘Transform your Patch’ campaign, providing green spaces in communities nationwide, again aligning consumer support by providing charitable opportunities within local communities (Eleftheriou-Smith, L, M, 2012, Online). In all aspects of community brands it is the consumer who is key. In order for Waterstones to be successful in re-positioning themselves as a ‘Community Bookstore’ they must ensure that they are attentive to consumer needs, finding causes that are well received by local communities and nationwide.

Waterstones

8.0 Marketing Strategy The report will now focus upon the marketing and communications strategy for Waterstones, exploring their product range, pricing point, in-store and online platforms and their communications. The strategy surrounds the promotion and implementation of the new community focused positioning for the brand and will explore how this can be introduced to all areas of the business. Furthermore a personalisation of service will be represented throughout the strategy, ensuring a plan for the evolution of customer service over the next 3 to 5 years. For Waterstones focus must be on their new, refined target consumer, with all strategies considering both their primary consumer base of over 47s and their secondary consumer of Mums. Furthermore, the brand must accept the wide appeal of their product range and therefore work not to alienate other consumer groups. The strategy will use a ‘pull’ method to attract consumer interest across all channels. The aim of this would be to attract the new target consumer to purchase from the brand as well as creating a loyal and on-going relationship between the two.

Waterstones

8.1 Product Range Fig 9: Kindle Fire at Waterstones The current product range available at Waterstones will not be extended within the early years of their five year strategy. The brand will continue to stock and promote Amazon’s Kindle range, finding promotional methods to attract consumers to purchase from Waterstones over their competitor. Local authors will continue to be stocked in stores, with a wider range of additional local products being made available through the use of concessions (see section 8.3.3) promoting the brand’s community position. As at present, there will remain a large section of children’s and teenage books, attracting the secondary consumer group of Mums. Towards the later years of this plan Waterstones may consider the creation and launch of their own range of e-reader products, particularly with the likelihood of their increasing popularity (Owen, L, 2012, Online). If this is chosen as an option, the products must be deemed to be of the highest quality, as the launch of a Waterstones’ e-reader was previously rejected due to the consumer desire for the Kindle product (Jones, P, 2012, Online) and the high expense of creating a range of products. This therefore will be assessed as the strategy progresses and the market evolves, however if, as predicted in the US, the e-book market begins to form half of the overall book market (Owen, L, 2012, Online) it must be a consideration for Waterstones to design their own range of e-readers.

Waterstones

8.2 Pricing Strategy The pricing strategy for Waterstones is defined as ‘premium pricing’ meaning that products are priced at a higher price point when compared to competitor products. For the brand, this is similar to their current positioning, but will also align with their new strategies. Those brands priced at a higher point are often viewed by consumers as being more reliable, or offering better services than cut-price competitors. In addition, consumers are expecting a higher level of service, feeling that they are paying a premium in return for an added extra. In their position as a community brand and by offering personal recommendations, Waterstones is providing the additional services necessary to warrant their premium price. However, the brand will also offer options for those who cannot afford their premium price point continuously, with the promotional offers used at present being retained at various points in the year, (see section 10.2). In continuing these offers Waterstones will continue to appeal to their current consumer base, particularly Holiday Readers who buy in bulk, and potentially increase footfall into stores. Finally Waterstones Marketplace (see section 8.4.3) will see an increase in promotional activity, offering second hand, and therefore lower priced, products to consumers.

Waterstones

8.3 In-Store Store layout and features must be altered to reflect the new community based positioning of Waterstones and the features that were felt by consumers to be important. It is their stores that differentiate Waterstones from market leader Amazon and therefore it is essential that they are catering to consumer needs through this channel. 8.3.1 Stock Management At present, stock management is controlled on a store-by-store basis, with each location managing their own stock levels and content (Waterstones, No Date, Online). This system is currently successful for Waterstones and allows for local authors and non-fiction local heritage pieces to be included in stores. In order to become more efficient and ensure a reduction in waste it is suggested that stock management becomes centralised, with more of a focus on automation that allows for nationwide considerations such as promotional offers, as these are often not taken into account on a store-by-store stock management system. McDonalds implement a similar stock management system, using automated forecasting techniques to estimate the levels of stock required across stores (McDonalds, 2008, Online). Benefits of maintaining this type of system include removing any issues from inexperienced store managers, a reduction in the time needed by store managers in managing stock – they now need only enter their stock levels, the system then produces their order and promotional stock can be more effectively managed. It is essential however for Waterstones stock management system to still account for local works to be included in each store, therefore this will remain under the control of each store manager.

Waterstones

8.3.2 Customer Service In providing an outstanding level of customer service, Waterstones are both promoting their community, caring position within the market and making use of their advantage over competitors such as Amazon by enhancing their in-store experience. A staff training programme will be introduced within year two of the five year strategy, outlining a set of guidelines to ensure staff are providing a consistent level of service across all products and channels. The guidelines will encourage the building of personal relationships with customers, using questioning to probe what the consumer is looking for and using sound product knowledge to provide that customer with recommendations. In stores, tills will be placed throughout the store, rather than in one or more select positions, this will mean that assistance is provided across the store. Staff would not be tied to till points, instead completing jobs throughout the store, providing assistance where necessary and guiding the customer to the nearest till, completing their purchase for them. By having one staff member assist throughout their purchase journey, a relationship is formed between consumer and brand, particularly if that staff member has provided recommendations or a more personal service. This level of service must be provided across all channels to create the cohesive platform Waterstones need to create. Therefore a live chat option will be added to the brand website, allowing for an instantaneous discussion with an employee, who, after training, will probe to create that personal relationship with the customer. Similarly the live chat will be added to the mobile application (see section 8.5).

Waterstones

8.3.2 Customer Service Fig 10: Live Help Option Added to Waterstones.com Fig 11: Live Help on Waterstones.com

Waterstones

8.3.2 Customer Service With the ever-increasing importance of e-books and Waterstones selling an Amazon product it is essential that customer service becomes a key feature in the promotion of e-books. As an extra to the obligatory staff training programme, at least one member of staff per store will receive additional training that places them with responsibility for the e-book section in stores. In a similar way to the running of the ‘Genius Bar’ in Apple stores, this member of staff will be responsible for promoting the Kindles and encouraging consumers to interact with the products, as well as answering any queries and solving issues. It is this offering of instruction and help that will separate Waterstones from Amazon in the selling of these products, and was deemed a positive in consumer feedback (see appendix 7). 8.3.3 Concessions Concessions within stores are becoming an increasingly popular way for smaller, local business to launch their products. At present Waterstones stock stationary and greetings cards, however they are from larger, nationwide companies. In order to become more in-keeping with their community positioning Waterstones will offer the opportunity for products from local, up-coming businesses to be stocked in their nearest stores. This will come within the second or third year of their marketing strategy, allowing the community positioning to become somewhat set in consumer’s minds before offering this opportunity. These concessions will remain in-keeping with the layout and design of current Waterstones stores, with products being the main focus, however larger stores may be able to hand over a larger space to a local company/companies. The current concession products will continue to be stocked also, as some of the larger or popular names may attract consumers in to the stores.

Waterstones

8.3.4 Store Layout In creating an exceptional store layout and atmosphere, Waterstones will attract consumers to their place on the high street and will further differentiate themselves from competitors. Brands such as WHSmith sell their products as part of a ‘newsagent’ style of store, with little atmosphere and no encouragement for consumers to stay within the store longer than the purchase time. In contrast, Waterstones will promote an atmosphere of escapism, one of the upcoming market trends found in stage 1. In creating seated areas throughout the store consumers will feel more free to spend time in store browsing, or simply relaxing. Whilst these seating areas already exist in some stores, this needs to be constant across all stores and their use encouraged through communications and the creation of this more relaxed atmosphere in stores. Quiet music will therefore be played throughout stores for those spending time browsing, this may simply be in the form of CDs or may be local radio, promoting their community feel. A potential idea for the later years of the market strategy may be the creation of a Waterstones radio station, with music and features being played out across all stores. As outlined in section 8.3.2 till points will be positioned individually throughout the store, rather than in few, select points, allowing customers to interact with staff more easily. In addition, where possible, cafes will be added to stores, creating a community meeting point and again, encouraging consumers to spend more time in stores. When questioned in stage 1 many consumers over 47, the new target consumer, stated that they considered a café to be an important feature within stores (for full stage 1 results see appendix 7), and that often they chose to visit stores specifically to use their café, providing Waterstones with the opportunity to attract impulse purchases. Many of the cafes in stores at present are franchised by Costa, this relationship should continue, as the named coffee brand may attract more customers; however the areas should be laid out to match the Waterstones décor and atmosphere. More structured seating will be swapped for sofas and comfier chairs, encouraging a longer stay in the area. A community book swap area will also be added, encouraging consumers to bring a book and swap it for another on the shelf. Whilst this may clash with sales for Waterstones it may also encourage indirect sales by introducing a customer to a new author who they then choose to purchase.

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8.3.4 Store Layout Furthermore, whilst there should be a consistent store-wide atmosphere, Waterstones should consider the atmosphere created and desired in different sections of the store. The customer who purchases non-fiction products may not be the same as those who purchase from the children’s department. Whereas, in the non-fiction section the most important feature is the ease of being able to find a particular product, in comparison the children’s department should be more interactive. The seating areas mentioned previously should therefore be mostly based in the fiction areas, where customers are most likely to be browsing, with fewer in the non-fiction area. The children’s department should encourage browsing with a seating area more suitable for children such as bean bags and/or a mat, encouraging them to interact with the products. The decoration of this area should also be reflective of a more fun, playful atmosphere, with themed seasonal decorations and a generally brighter colour palette. The key to customers returning to stores is in producing this atmosphere and constantly revolving stock and offers to provide new reasons for them to visit (see appendix 8). Each week, specific titles will be placed on shelves cover forward, rather than spine forward, meaning that they are more likely to be picked up by impulse customers. These products serve as a recommendation from Waterstones, altered to another title as stock becomes low. The brand can use this technique to sell older stock that has become hard to move, whilst playing to their more personal positioning by seemingly recommending certain titles. In addition, this would be popular with publishers, who pay for the cover designs, only for them often to be hidden in-store. Furthermore, at an advantage to Waterstones, this would not require any costs, no new stock is necessary; instead it helps to move products that have become stagnant. New and popular titles should also be displayed cover out, but on tables rather than shelving. These products that will be bestsellers and/or attract consumers to stores and should therefore be positioned near to the store entrance. These titles must also be revolved, promoting different products regularly to attract regular visits from customers. In using the automated stock management tool (see section 8.3.1), Waterstones will be able to ensure minimal stock levels of each product are needed within stores, and can monitor those titles that are selling less well, suggesting that they become promoted the next week.

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8.3.4 Store Layout Figs 12, 13 and 14: Waterstones re-imagined by Salt and Pegram

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8.4 Online Platform The online platform will become an essential part of the Waterstones brand, taking their community image outside of stores and offering 24/7 services to their consumers. In the research undertaken in stage 1 consumers felt that the current website design was basic and potentially outdated (see appendix 7), however it has a similar structure to that of Amazon. Therefore the design will remain the same within the early years of the community strategy, however a re-design, as imagined in figures 14 and 15 should be considered at around year 4 in the plan. With both their current website and potential re-design, Waterstones must consider the appeal across multiple devices including mobiles and tablets. As soon as possible within the plan, Waterstones should change their mobile website home page. At present there is the option to launch the mobile site or use the online homepage. This option should be removed, taking consumers automatically to the mobile site ensuring that the process is effortless and seamless across different channels. Purchasing is increasingly occurring across multiple devices and therefore the brand must make this as easy as possible for all potential customers. In the case of a re-design, the important features of the site must remain the ease of navigation and the ease of the purchase journey (see appendix 7 for full survey results from stage 1). There should also be the option of privacy as a customer by signing in as a ‘guest’ (Parkin, G, 2009, P103) or the option to sign up to receive more content (Parkin, G, 2009, P103), both key features in the progression of online purchasing. Waterstones may find that consumers are willing to provide them with more information in return for more personal content (Parkin, G, 2009, P104). In the early years of the new strategy, the focus online should be the addition of the features outlined in the following sections, rather than a complete re-design of the site.

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8.4 Online Platform Figs 15 and 16: Waterstones.com Redesigned

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8.4.1 Community Forums The most important online feature to the new community based Waterstones is the addition of online forums and communities. These will be multi-purpose, linking customers to local communities and groups as well as creating online communities. A community ‘tab’ will therefore be added to the website with links to areas such as “find your local bookclub” and “Waterstones recommends” as well as a forum where customers can start their own feeds. A monitoring system will therefore need to be put in place, using buzz words to prevent the posting of malicious or inappropriate content. In addition, security checks such as ‘enter the letters seen here’ can be used to ensure only human content is posted. Waterstones must be aware that in adding a public forum it may be used to post negative feedback on the brand or to ask questions about specific orders, therefore the space must be monitored as social media is, with consumer queries being re-directed to a customer service email address for more specific help. The “find your local bookclub” will use a postcode look-up service to direct customers to bookclubs in their area, those running bookclubs will have the option to add their club to the system, posting details such as the times, days and frequency of the meetings as well as the option to provide information on favourite genres, authors etc. “Waterstones recommends” will showcase personal reviews of new/upcoming products by Waterstones staff, mentioning the store where they work to maintain the local, community element of the brand. The addition of forums to the website will allow for the community nature of the brand to be available across all platforms, with this feature also available on the mobile and tablet versions of the site.

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8.4.2 Delivery Policies In the creation of a multi-channel distribution policy the consumer must be able to purchase, and collect, through all purchase channels. Consumers should be offered the opportunity to “buy anywhere, fulfil anywhere and return anywhere” (Manthan Systems, 2011, Online) providing the true multi-channel experience. The option of ‘Click and Collect’ must be present for customers, and is beneficial for Waterstones, increasing the likelihood of impulse purchases when in store. Returns must be offered free to consumers through all channels, showing them to be equal, despite the cost this may incur Waterstones, particularly as these services are being offered by competitors such as Amazon. Furthermore Waterstones should implement a free ‘saver’ delivery option for customers purchasing online and through the mobile application, another feature offered by competitors and one suggested as important by consumers when questioned (see appendix 7). In a similar ‘anywhere’ manner, gift cards must be available to be sold and used online and through the mobile application, as currently these are only available in-store.

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8.4.3 Marketplace Fig 17: Waterstones Marketplace incorporated on Waterstones.com Waterstones Marketplace is a pre-existing feature of the Waterstones website, allowing consumers to purchase second hand products. Launched in 2009 (Jones, P, 2009, Online) the Marketplace allows for second hand options to be provided to consumers as they search on Waterstones.com. This feature has placed the brand in more direct competition with Amazon and Play.com; however consumer research in stage 1 indicated that consumers were unaware that this option was available from Waterstones. Whilst a promotion campaign would make consumers more aware of this feature, the Marketplace will also no longer be a separate part to the Waterstones website. By becoming fully integrated into the purchase experience (see figure 17) the Marketplace should instantly receive more purchases. However, the brand should consider that whilst this may provide more sales it may take sales away from Waterstones themselves, although they would make commission on Marketplace sales. For Amazon this ‘referral fee’ is 17.25% as well as a cost of £0.86 to add the item to their listings (Amazon, 2013, Online). In order to remain competitive Waterstones would therefore offer an initial rate of 15% commission, attracting sellers to the site, raising this to the full 17.25% after 3 months of selling. Waterstones will therefore remain at their premium price point; however Marketplace will provide a lower priced option for those consumers for whom price is the largest purchase factor. In allowing local and smaller businesses to sell through a large platform, the Marketplace is in-keeping with the community nature of the Waterstones brand and will attract customer other than that of the core target market, with a very low cost, as the feature is pre-existing.

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8.5 Mobile Application Figs 18 and 19: Mobile Application Additions For Waterstones to provide a cohesive, multi-channel strategy the current mobile application must be adapted. Whilst at present the application allows for basic purchasing, the new version will have multiple functions. Primarily its use will remain the purchase of products, however the application will also have the secondary function of allowing customers to track their loyalty card points (see section 9.1), as well as search through some of the new online functions such as the book club location search. As outlined in section 8.4.2 the application will allow customers to choose free delivery and will offer the option for free returns also.

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9.0 Promotion 9.1 Loyalty Card Whilst Waterstones have an existing loyalty scheme, the brand should consider how this can be altered to adjust to purchasing habits of book buyers. Brands such as Boots receive more regular custom and therefore consumers feel that they are receiving true incentives from their loyalty scheme. Boots is a popular scheme with consumers with several mentioning the scheme in stage 1 primary research (see appendix 7 for full results). With books, purchasing is often more irregular and occasional, therefore different incentives should be used, rather than points per spend. This would be in the form of a discounting offer such as purchase 5 products and receive the 6th half price. As the store will be reducing the amount of price promotions (see section 9.2) this would become an added incentive for consumers. The loyalty scheme would be available across all platforms, therefore each loyalty card should have a number that consumers can use when purchasing online and via mobile application. A loyalty card would also be sent to any consumers who purchased online or via mobile upon their initial spend, encouraging them to continue purchasing from Waterstones, with the scheme also being offered to each consumer in-store. Whilst this will require an initial spend by Waterstones in setting up the scheme, it should attract repeat customer from both new and existing consumers. Finally, consumers will be able to track their purchases with the new Waterstones Loyalty mobile application as discussed in section 8.5.

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9.2 Price Promotions Fig 20: Waterstones 3 for 2 Offer James Daunt, Waterstones’ Managing Director, has stated that he is looking to reduce the number of price promotions currently offered by the brand (see appendix 8); however they are an important feature to a number of consumers, particularly Avid Readers and Holiday Readers, who often buy in bulk (for full results from stage 1 see appendix 7). To meet these demands but still remain at the premium price point, discounts and promotions will be offered seasonally rather than throughout the year. With a winter promotion to attract present buyers and a summer promotion attracting those looking to purchase for their holidays, discounts will be offered at the times where consumers are most likely to purchase. Whilst providing price promotions increases the brand’s cost of sales, the overwhelming popularity with consumers should lead to an increase in sales, particularly in comparison to recent years where promotions have become a given and an expectation.

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9.3 In-Store Events In-store events are hugely important to the new positioning of Waterstones as they provide an advantage over online only competitors, who only have virtual means of keeping in touch with their customers. These events will be formed of two types, those designed to retain consumer loyalty and those designed to attract new custom. Events to form loyal relationships with existing consumers are based around interactions between the store and its consumers, namely, book clubs. Each store will hold a weekly or fortnightly club, offering incentives such as 10% discount to meeting members who buy the reading material from Waterstones. Larger stores may find that they are able to run more than one group if there are enough interested consumers. In addition each store would also run a Saturday book club aimed at Mums and their children, with each meeting also including an interactive or craft activity, these meetings will further encourage sales and build relationships between Waterstones, their customers and their local communities. Whilst these events may attract some new consumers, they are primarily targeted at those who already purchase from the brand, whom Waterstones are hoping to achieve loyalty from. The second type of in-store events are designed specifically to attract new custom and increase sales. These are in the form of author talks and book signings, providing authors with the opportunity to promote their work and encouraging purchases from consumers. The brand currently holds these kinds of events, however on a more occasional basis and without always taking advantage of them owning a chain of stores, offering the opportunity for a tour. Each event may cost up to £5000 to promote, however a tour may cost less in promotional materials as posters can hold all of the dates. Furthermore, larger tours or big name authors may require an additional press release, however there would also be free promotion in the author themselves promoting the events via their own platforms. In-store events may also be used to promote Waterstones’ community positioning, where stores can be used for fundraising events and putting on smaller activities for customers such as crafts for children. These events will help to push the community message alongside encouraging relationships between brand and consumer.

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10.0 Communication All communications must have a consistent message and tone of voice. All messages must be directed at consumers stating ‘you’ and ‘your’ to ensure consumers feel that they are the most important feature of the brand and to indicate the personal level of service that Waterstones will now be providing. The tone of voice for communications must be formal, but approachable, a message too informal may be discounted by the older target consumer and all communications must be honest, open and trustworthy, with consumers needing to feel that all messages are authentic. Finally, all communications must put across Waterstones’ passion for their product, it is the brand mission to excite and engage consumers and in demonstrating their passion for reading, Waterstones are more likely to do this. COMMUNICATION OBJECTIVES - Demonstrate the new community based positioning through all communications - Illustrate the personal service offered by Waterstones, encouraging consumers to feel that they are treated as an individual - Maintain a pro-longed conversation with consumers, demonstrating their importance to the brand - Interact with consumers in their own communities

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10.0 Communication Objective Role of Media Appropriate Media Interact with Demonstrate the new Billboards and ambient posters at bus stops consumers in community based that are placed within the community. These their community positioning will provide strong coverage and are a good alternative to television advertising. Social Media allows the brand to interact at anytime or anywhere with their consumers. Illustrate the Showcase the new PR places Waterstones in the media for personal service services offered and positive reasons and informs the press of the now offered by make the consumer new services offered through a press release Waterstones feel like an and/or conference. individual Direct and personal email communications will create loyalty from consumers and will allow the brand to show appropriate content for each consumer. Maintain a pro- Create strong bonds Social Media as outline previously. longed between the brand In-Store Events will attract consumers into conversation and its consumers stores and allows for positive interactions with consumers between the brand and its consumers. Fig 21: Types of Media and their Roles

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10.1 Branding Consumers see Waterstones at present to be approachable and reliable but also serious and sensible (see section 4.3). Whilst the new strategy will maintain the positive traits held by the brand, it will also aim to alter the perceptions of consumers who may feel that the brand is too sensible or serious. Through strategies such as social media (see section 10.2), working within local communities and through a lighter tone to communications, the brand will remain approachable but also more spontaneous and fun. Furthermore in producing a readily available ‘brand book’ that customers can view (see separate document), Waterstones will show their confidence as a brand and demonstrate their openness and honesty with their consumers. At present, branding for Waterstones has become skewed, with an update to the logo and store frontages not being carried out nationwide. In order to present consumers with a consistent image across all platforms and stores the logo will be the design shown in figure 22. This is the previous Waterstones logo, however across some stores was replaced by a more modern, sans serif ‘w’ design, whilst others were then changed back. The key in updating the Waterstones branding is consistency, ensuring that the same logo is used across all communications and all store fronts. This logo will be the original, serif design in the Baskerville Serif font, with the more traditional font being representative of the brand image and the image perceived by consumers. Furthermore, in creating their consistent brand image Waterstones must ensure that any store fronts still using the Waterstones name with an apostrophe should be updated, following their 2012 alteration and in-keeping with other high street names such as Boots and Marks and Spencer.

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10.1 Branding Fig 22: Waterstones Logo

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10.2 Social Media Waterstones are already tapping into the social media trend. Connecting with their consumers throughout Facebook, Twitter and Pinterest. Use of social networking sites remains on the rise, particularly within the brand’s primary target market (see figure 23), however only 24% of those questioned said that interacting with a brand on social networking would make them more likely to purchase (for questionnaire results from stage 1 see appendix 7). It is recommended therefore that whilst the brand continues to communicate across the same social platforms, they consider different types of posts and messages to attract more consumers to purchase. At present messages often surround the promotion of new or upcoming products, however the brand should also consider creating more interactive content such as competitions and questions, encouraging consumer involvement, While James Daunt is reluctant for the brand to offer pricing promotions (see appendix 8), incentives for those who have chosen to connect with the brand on social media may entice more sales. These may be in the form of a discount code or a printable coupon that can be ‘re-pinned’ on Pinterest. Furthermore, the social media pages can be used to promote the brand’s community essence, advertising upcoming in-store events or creating posts about a store’s involvement in their community. To further enhance this positioning, Waterstones may also consider creating separate accounts for each individual store, allowing them to interact more directly with their particular, local customer, keeping them entirely informed with their nearest store’s involvement in the community.

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10.2 Social Media Fig 23: Social Media Use by Age Waterstones may also consider advertising via social media platforms, particularly Facebook and Twitter, where adverts can be targeted to certain consumer groups. The demographic to receive advertisements can be narrowed by age and gender as well as other interest shown by consumers, therefore Waterstones could target the over 45 year old consumer as well as Mums. By setting an annual budget for this advertising method, the brand can simply use the feature on the Facebook website to indicate their budget and their demographic, with Facebook then placing the advertisement where necessary. To attract consumers to connect with Waterstones themselves this advertisement may describe loyalty offers, or upcoming in-store events that may be popular with this consumer. Separate advertisements could also be sent to consumers depending upon their geographical location, showing them events and offers relevant to their local store.

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10.3 Representatives As part of their community based position, each Waterstones store will have a nominated community representative. This will be an additional responsibility to those already held by the employee and will mean that they are involved in any activities the store chooses to participate in. Furthermore it will be their responsibility to select the opportunities within the community that Waterstones will participate in, making decisions surrounding the charities supported and the events attended or held. Any overtime hours put in by this member of staff will be paid at their standard hourly rate, and would be offered to those who have shown commitment to the brand.

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10.4 Recommendations The key element to the new Waterstones positioning is in the provision of personal recommendations to their consumers, giving them the unique level of customer service that will differentiate the brand from their competitors. This personal relationship must be authentic and be equally accessible across all selling platforms. Personal recommendations will be provided online, with consumers making their first purchase being shown other products bought by customers who had previously bought that particular item. Following this, recommendations would be made on past purchases and emailed to consumers on a weekly basis. Those who purchase whilst signed in as a Guest would receive further recommendations as they purchase, however would not receive the follow-up emails. A personalised email system implemented by John Lewis increased sales by 27.9% over a period of five weeks (RichRelevance, 2012, Online) and it is aimed that Waterstones would gain at least half this in return for their investment. A similar recommendations system would also be used on the mobile purchasing application, providing recommended items during the purchase process, with this then followed by personalised email communications. This process is already implemented by competitor Amazon. Those brands who choose to incorporate personalised service onto their website are likely to receive a strong return on investment, with 54% receiving this within months of implementing the service (Neolane, 2012, Online). In stores, this personalised level of service will be provided by well-trained staff, who can provide their own recommendations as to upcoming authors or favourites within a particular genre. In addition, through till points staff will have access to the previous orders of any customer who has previously purchased using a loyalty card or online, with till points placed around the store this information will be readily accessible.

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10.5 PR All PR for Waterstones will be completed via an external agency, with an annual fee payment including the constant promotion of the brand within the press. An initial press conference would also take place, outlining the brand’s new positioning to the press by demonstrating examples of their work within the community and their new personal recommendations service. Continuous PR will ensure the maintenance of this image in public opinion.

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10.6 Campaign The concept for the new Waterstones campaign will be named “Waterstones Recommends” and will surround the idea that it is hard to know what to read next, or which product to choose when browsing in a bookstore. Waterstones would then narrow this choice by recommending certain products to fit consumers’ reading habits. Six designs will be created, each surrounding a popular phrase followed by the statement “Waterstones Recommends”, these statements may include “it’s a jungle out there” or “there’s a light at the end of the tunnel’. The campaign will be in a similar format to the existing designs, using the same font and style; therefore the same agency would be used to create the designs. Behind the text may be an image such as those shown in figure 23 or a plain black background if this is more suited to the nature of the text used. The new campaign will be distributed in a similar manner as is used now by the brand, with posters being placed upon bus stops and billboards, allowing the campaign to be noticed across local communities. The images could also be formatted to be used in press communications such as magazines; however this is an expensive method of promotion and is not entirely relevant to Waterstones and their brand.

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10.6 Campaign “it’s a jungle out there” “there’s a light at the end of the tunnel”

Fig 24: Campaign Moodboard

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10.7 Media Timeline Press Conference / Release to Media APR 14 Adjustments to Social Media Posts APR 14 Billboard / Poster Campaign Launch MAY 14 Personal Email Communication Launch AUG 14 Forums Added to Website SEPT 14

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11.0 Ethical Stance A key upcoming trend found in stage 1 was that of Citizen Brands, brands that are at the forefront of environmental and ethical activities. As part of their change to a community based position Waterstones should aim towards becoming one of these brands - a brand recognised for their ethical policies. This will involve reaching out across their supply chain to ensure that production, transportation and all other aspects of the business are as ethical and considerate of the environment as possible. A 360 degree report would then be produced online on an annual basis, a recommendation based upon the ‘Citizen Brands’ trend that would outline all Waterstones policies and their impact upon the environment; this would also need to include any activities undertaken by external companies on behalf of Waterstones, showcasing their full activities. Books cannot be recycled, due to the glue used in their production process, however, the brand may consider promoting the giving of books to charity or launch a range of events where used books can be sold for charity, to further push their ethical stance.

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12.0 3-5 Year Plan The marketing strategy will be implemented as more of a ‘drip-drop’ campaign rather than a ‘burst’ of promotions, introducing new policies throughout a three year period. This will reduce the initial costs to developing the new positioning, something of particular importance to Waterstones, and will remove the risk of alienating any members of the current consumer base by drastically changing all communications. YEAR 1 Press Conference / Release to Media APR 14 Adjustments to Social Media Posts APR 14 Mobile Website Homepage Altered APR 14 Billboard / Poster Campaign Launch MAY 14 Community Events Begin MAY 14 Improvements to Stores Begin JUN 14 Personal Email Communication Launch AUG 14 Forums Added to Website SEPT 14 In-Store Bookclubs Launch SEPT 14 Loyalty Scheme Updated DEC 14 Red Nose Day Fundraising MAR 15 YEAR 2 Online Brand Book Uploaded APR 15 Local E-Newsletter Launch APR 15 New Campaign Launch JUN 15 Re-evaluate Social Network Channels AUG 15 360 Degree Report Released DEC 15

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12.0 3-5 Year Plan YEAR 3 Update Promotions Showing Waterstones in the Community APR 16 Re-evaluate Social Network Channels AUG 16 Promote an Aimed Date for Brand to Become Completely Ethical OCT 16 Upload 360 Degree Report DEC 16 YEAR 4 Launch Website Redesign APR 17 Re-evaluate Social Network Channels AUG 17 Upload 360 Degree Report DEC 17 YEAR 5 Launch Waterstones Radio for In-store MAY 18 Re-evaluate Social Network Channels AUG 18 Consider Launching Education Programme for Schools and Local Libraries OCT 18 Upload 360 Degree Report DEC 18

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13.0 Financial Plan PROFIT AND LOSS 2012 2011 2010 Turnover £410,354 £477,424 £488,901 Cost of Sales £412,184- £453,025- £465,559- Gross Profit £1,830- £24,399 £23,342- Administration Expenses £31,581- £20,581- £24,806- Operating Profit £34,048- £19,477- £1,382- Before Tax Profit £37,314- £20,597- £2,133- After Tax Profit £42,907- £22,078- £1,482- The brand has seen a significant fall in profit since 2009, their last year in positive profit and whilst their turnover has decreased, so have their cost of sales. Without accountancy knowledge it is difficult to appreciate the reasons why the brand has seen such a decline, however it is evident that a solid change in strategy is needed to boost the brand. Such a change will therefore need a significant budget assigned to make the alterations, and the proposals outlined in the following pages make for only a small proportion of the brand’s turnover.

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13.0 Financial Plan PLAN A YEAR 1 Campaign Development: £35,000 Media Costs: £300,000 PR Agency Fees: £45,000 All Inclusive Press Conference: £5,000 Website Updates Annual Fee: £1,000 Website Forum Additions: £3,000 Pay Per Click: £50,000 Social Media: Assumed In-House Social Media Advertising: £20,000 Mobile Application: £20,000 In-Store Campaign Creative: £10,000 In-Store Campaign Formatting: £3,000 In-Store Furniture Additions: £90,000 (Average £300 x300 stores – some will require more, some less) Store Exterior Alterations: £200,000 Email Personalisation: £50,000 Loyalty Scheme Alterations: £50,000 Retail/Loyalty Promotions: £700,000 Promotions Campaign Creative: £10,000 Promotions Campaign Formatting: £3,000 Staff Training: Assumed In-House Promotional Stickers: £10,000 In-Store Events: £300,000 Pre and Post-Launch In-Store Evaluation: £10,000 Brand Tracking: £50,000 TOTAL £1,965,000

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13.0 Financial Plan PLAN A YEAR 2 ADDITIONS Brand Book Development: £15,000 Local E-Newsletter Launch: £50,000 360 Degree Report Development: £35,000 YEAR 3 ADDITIONS Further Campaign Development: £35,000 YEAR 4 ADDITIONS Website Re-Design: £30,000 YEAR 5 ADDITIONS Waterstones Radio: £250,000 Education Programme Development: £20,000

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13.0 Financial Plan PLAN B YEAR 1 Campaign Development: £35,000 Media Costs: £300,000 PR Agency Fees: £45,000 All Inclusive Press Conference: £5,000 Website Updates Annual Fee: £1,000 Website Forum Additions: £3,000 Pay Per Click: £30,000 Social Media: Assumed In-House Mobile Application: £20,000 In-Store Campaign Creative: £10,000 In-Store Campaign Formatting: £3,000 In-Store Furniture Additions: £60,000 (Average £200 x300 stores) Store Exterior Alterations: £130,000 Email Personalisation: £50,000 Loyalty Scheme Alterations: £50,000 Retail/Loyalty Promotions: £350,000 Promotions Campaign Creative: £10,000 Promotions Campaign Formatting: £3,000 Staff Training: Assumed In-House Promotional Stickers: £5,000 In-Store Events: £150,000 Pre and Post-Launch In-Store Evaluation: £10,000 Brand Tracking: £50,000 TOTAL £1,320,000

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13.0 Financial Plan The second financial plan reduces the level of retail promotions offered by the brand, an area that James Daunt is keen to reduce, however, an area that remains popular with consumers. The potential implications of reducing this investment must therefore be considered. Furthermore the cost of creating a new website has been removed, although in Plan A this would not be a first year consideration, it holds a significant cost for the brand. Finally, Plan B relies more heavily upon traditional media costs, and less so on online advertisement such as pay per click and social media advertising, however these may provide more direct advertising to target consumers. Whilst both budgets appear initially high, with the brand’s turnover in decline it is important to make solid changes that will ensure with an increase in sales that the brand becomes more stable. If successful, the more expensive strategies suggested for years 2 to 5 will then further increase the stability and success of Waterstones.

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14.0 Conclusion To summarise, the key area of improvement for Waterstones is in defining a more unique positioning. By offering a more personal level of service and with stores becoming more involved in their local communities, the brand provides a point of difference over their competitors and justifies their more premium price point. With this new positioning comes more defined target consumers, whilst the store would remain popular with all age segments and reader types, the new positioning more specifically targets a primary consumer of the over 45 age group, alongside a secondary consumer of Mums. Small adjustments to Waterstones’ existing marketing and communication strategy will promote this new positioning, placing importance upon their competitive advantage over Amazon, their stores. An enhanced loyalty scheme and continual in-store events will ensure that relations with current consumers are maintained, with the addition of the personal recommendations service attracting new customers, alongside retaining those who may have purchased before. Waterstones will provide an omni-channel experience, providing a consistent level of service across all purchasing platforms, ensuring that the brand holds a competitive advantage both in-store and online. Finally the new Waterstones campaign will focus on their new positioning, showcasing the ‘Waterstones Recommends’ initiative using a similar design concept to the brand’s current advertising campaign. KEY RECOMMENDATIONS - The new community based position offering personal service is an essential move to ensure the brand’s survival. - In-store events and book clubs should be used to build communities for all potential consumer segmentations. - All considerations and changes in strategy must follow a multi-channel approach; the consumer must receive the same level of service across all platforms. - Use communications to showcase the ‘Waterstones Recommends’ campaign, revealing the key to the brand’s new position.