BUNNINGS WAREHOUSE

BRAND ANALYSIS

MAY 2018

FRANCES GUASTALEGNAME 698669

The University of Melbourne MKTG90006 Brand Management

3,174 words

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TABLE OF CONTENTS

Executive Summary 3

Introduction 4

Brand Analysis

Lowest Prices

Widest Range

Best Service

6

6

7

8

Identification of Key Issues,

Challenges and Opportunities

9

Recommendations 10

Conclusion 12

References 14

Appendix 16

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EXECUTIVE SUMMARY

This report analyses current sources of brand equity for Bunnings Warehouse, and

provides recommendations in relation to building and managing equity for the brand.

A customer based brand equity analysis is conducted for Bunnings Warehouse,

considering key strategies in relation to the brand’s three strategic pillars: lowest

prices, widest range and best service. Strategies discussed include the brand’s price-

beat guarantee, PowerPass trade loyalty program, in store merchandising and Special

Orders service, and team member training to provide high quality customer service.

Key issues, challenges and opportunities highlighted in this report find an inability to

target all customer segments through loyalty programs, a lack of an online store and

engagement in e-commerce, and poor online presence in social media marketing

communications.

Based on the customer based brand equity analysis conducted, and the key findings of

issues, challenges and opportunities, this report proposes three holistic strategies for

the Bunnings brand to source brand equity. Firstly, the introduction of a universal

loyalty program for all customer segments. Next, the formation of an online store and

shopping experience to build on the service experience delivered in store. To

conclude, I recommend the development of a unique marketing mix for each customer

segment, which is then addressed and communicated through integrated marketing

communications campaigns in the digital space.

The report finds that although Bunnings Warehouse exists as an industry and market

leader with high brand equity, there is opportunity for improvement in the

recommended areas, to aim to further increase brand equity for all consumers.

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INTRODUCTION

Bunnings Group Limited, trading as Bunnings Warehouse (Bunnings) is the market-

leading retailer in home improvement and outdoor living products in Australia and

New Zealand, and exists as a major supplier to commercial and do-it-yourself (DIY)

customers (Bunnings Warehouse 2018). First established as an operational timber

yard in Western Australia in 1886, Bunnings has developed into the trade and DIY

supplier it is today throughout changes in brand management and ownership

(Bunnings Warehouse 2018). In 1994, Wesfarmers Limited (Wesfarmers) bought the

Bunnings brand, and continues to exist as the organisation’s parent company in

Australia today (Bunnings Warehouse 2018). Acquisition of the BBC Hardware

network occurred in 2001, allowing the Bunnings brand to expand into the New

Zealand market (Bunnings Warehouse 2018). As of 31 December 2017, the Bunnings

brand operates from 253 warehouses, 77 smaller format stores, 33 trade centres and

three fame and truss centres throughout Australia and New Zealand, employing more

than 40,000 team members (Bunnings Warehouse 2018).

In recent years, Bunnings has expanded into the United Kingdom (UK) and Ireland

(known as Bunnings United Kingdom and Ireland or BUKI) through the acquisition

of Homebase in February 2016 (Bunnings Warehouse 2018). In the last two years, 15

BUKI stores have piloted, with a further 234 Homebase stores continuing to operate

across the UK and Ireland (Bunnings Warehouse 2018). However, Wesfarmers

announced in late May 2018 that they have since sold BUKI to the restructuring firm

Hilco Capital, after failed attempts to maintain relationships with Homebase’s

existing customers and poor market research led to significant financial loss for the

Bunnings brand (Hatch 2018).

Considered within the hardware and building supplies industry in Australia and under

its parent company Wesfarmers, Bunnings possesses a market share of 35.2% as of

February 2018 (IBISWorld 2018, p. 23). Major competitors of the brand within the

industry include; Metcash Limited, operating through its Mitre 10, True Value

Hardware and Home Timber and Hardware brands and possessing less than 5% of the

total market share, and Bowen & Pomeroy Proprietary Limited, operating as Bowens

Timber and Hardware stores and possessing 0.9% market share (IBISWorld 2018, p.

24). Woolworths Limited, who operated as Masters Home Improvement from

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September 2011, existed as Bunnings’ primary competitor due to its similarity as a

big-box retail warehouse, exited the market in December 2016 with the closure of all

stores (IBISWorld 2018, p. 24).

Acknowledging the brand’s vision of “we’re building the best, our team make it

happen”, as well as its guiding principles of integrity, achievement, respect,

innovation and teamwork, it is evident the Bunnings brand places value on employee

participation and growth, as well as the importance of community involvement

(Bunnings Warehouse 2015, p. 7). Bunnings aims to emphasise the importance of

building team networks to provide outstanding customer service in store, while

engaging with local communities through sincere and active participation in

community group initiatives. This in turn allows Bunnings to identify as a team-led

and community-driven brand, encompassing the brand’s visions and values to

establish a positive and resonate brand identity.

The Bunnings brand is positioned as a one-stop, big-box hardware store, providing its

customers the opportunity to purchase all their DIY and hardware essentials at the

lowest prices, conveniently located in one store. The Bunnings brand ultimately

provides its consumers with strong, favourable and unique associations that define the

meaning and purpose of the brand, and in turn reflect on the positioning of the brand

as a whole. A positioning statement for Bunnings is featured below.

Positioning statement for Bunnings Warehouse

To tradespeople, commercial businesses and DIY enthusiasts who want convenient

access to all their hardware and DIY supplies to complete their tasks at hand,

Bunnings is the brand of big-box hardware retailing that offers its customers everyday

lowest prices, widest range and best service because of its price-beat guarantee and

leading market share. The brand character is trustworthy, reliable and popular,

existing as the top-of-mind choice for hardware and building supplies retailers.

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BRAND ANALYSIS

Bunnings sources its brand equity through the use of what the brand calls its ‘three

strategic pillars’. All efforts to build brand equity for Bunnings are developed based

on the pillars of lowest prices, widest range and best service (Bunnings Warehouse

2018). Considering the brand’s vision and guiding principles and values previously

listed, the three strategic pillars ultimately aim to provide customers with “the best

service and widest selection of products at the lowest prices every day”, and therefore

remain crucial in determining how adequately Bunnings is able to build brand equity

for its consumers (Bunnings Warehouse 2018). It is through the use of these three

strategic pillars that Bunnings creates brand-building strategies that aim to reinforce

brand identity, while also addressing brand meaning and consumer judgements and

feelings to foster desirable brand relationships. To best understand Bunnings’ efforts

in achieving brand equity for its consumers, key strategies will be considered in

relation to each of the brand’s strategic pillars.

Lowest Prices

Lowest prices remains a core foundation for the Bunnings brand, primarily due to the

brand’s price-beat guarantee policy, delivered through the brand’s slogan, “If you find

a competitor’s lower price on the same stocked item, we’ll beat it by 10%. That’s our

policy.” (Bunnings Warehouse 2018). The use of a slogan to deliver the price-beat

guarantee to consumers helps to reinforce brand awareness, as repeated exposure to

the slogan through television advertising campaigns increases familiarity of the

brand’s identity (Holt 2003, p. 10). Bunnings predominately delivers lowest prices to

its consumers through store-based pricing departments, who are able to monitor

competitor pricing and in turn temporarily reduce product prices, to ensure customers

are delivered the lowest possible price through Bunnings (Bunnings Warehouse 2015,

p. 48). The price-beat guarantee policy is used as a contingency to maintain lowest

prices; as product pricing can fluctuate throughout the market at a rate faster than

what pricing teams can monitor, the price-beat guarantee policy provides consumers

with the opportunity to continuously shop hardware supplies at the lowest possible

price. Although the policy excludes trade quotes, commercial quantities and stock

liquidations, its provides Bunnings’ customers with the ability to develop brand

meaning through performance, as consumers can rely on the brand to effectively meet

their needs in obtaining hardware supplies for a low cost.

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Furthermore, commercial businesses and trade customers are offered access to the

PowerPass program, a loyalty scheme that provides pricing discounts and additional

exclusive services, such as a waived deposits on hired tools (Bunnings Trade 2018).

PowerPass customers are granted discounts of up to 5% off products, with greater

discounts given to products relating to their specialty trade – for example, a painter

would receive greater discount on paint-related products (Bunnings Trade 2018).

Most importantly, these customers are able to develop a personal relationship at no

cost with their preferred store’s Trade Specialist, who they are able to contact directly

to request trade quantity orders and organise business events sponsored by Bunnings.

Widest Range

Widest range remains an integral part of the formation of the Bunnings brand, as it

reinforces the brand’s positioning as a market leader in supplying hardware essentials

to both the DIY enthusiast and commercial tradespeople and businesses. Operating

from large warehouses and small format stores, Bunnings provides consumers with up

to 45,000 product lines in store, ranging from a variety of outdoor and indoor building

materials, to hand and power tools, and interior decors (Bunnings Warehouse 2018).

Bunnings encourages consumers to shop the widest range in store, providing product

features and benefits tickets (see Figure 1) on all display items to aid customers in

making informed purchasing decisions within a wide array of products (Bunnings

Warehouse 2015, p. 41). Similarly, the display of simple and easy to follow ‘how-to’

banners (see Figure 2) in store helps to inspire and motivate customers to try new

products within the in store range. Providing functional information and experiential

project ideas to consumers based on ranged products allows Bunnings to address

functional and experiential benefits of brand imagery, as consumers are made aware

of the brand’s ability to provide products that can address consumer concerns, while

also encouraging consumers to engage in different experiential projects based on their

purchase decisions in store (Keller 2001, p. 11).

Additionally, a Special Orders service offers customers the opportunity to shop an

extended 400,000 product lines that are not ranged in store (Bunnings Warehouse

2018). As of 2018, customers are able to shop a large number of Special Order items

online, as well as placing orders for these products in store through the designated

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Special Orders department. Existing as a big-box retailer that provides its consumers

with extensive products both in store and through ordering services, Bunnings is able

to enhance customer based brand equity by promising brand credibility, quality and

superiority to its consumers.

Best Service

Best service arguably exists as the most fundamental strategic pillar to building

customer based brand equity for Bunnings, as it emphasises the importance of

addressing and meeting consumer needs in successfully building strong relationships

between the brand and the consumer. Bunnings aims to provide the highest possible

level of customer service, training over 40,000 team members to approach customers

in a helpful, friendly and knowledgeable manner (Bunnings Warehouse 2018).

Outstanding in store communication between team members and customers

essentially forms the basis for the best service pillar, and is outlined by the following

five ‘keys to outstanding customer service’, as quoted from the Bunnings and You

team training booklet (Bunnings Warehouse 2015, p. 18):

• Greeting customers with a friendly smile and making them feel welcomes as

they enter your store.

• Consistently approaching and acknowledging customers; smiling and saying

hi so they know you are there for them.

• Having a chat, asking the customer questions and giving helpful, accurate

advice about their project or product.

• Ensuring the customer gets what they came for by being in stock.

• Delivering a fast, efficient and friendly checkout process and thanking the

customer as they leave.

Customer based brand equity is developed through this pillar as it considers consumer

judgements and feelings of the brand, highlighting the quality and credibility of

Bunnings, while allowing consumers to determine their overall feelings of the brand

through their in store service experiences. Most importantly, the best service strategy

taps into brand relationships, encouraging consumer loyalty and engagement by

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providing the best possible customer service, holistically effecting brand resonance

(Keller 2001, p. 15).

IDENTIFICATION OF KEY ISSUES, CHALLENGES AND

OPPORTUNITIES

Undoubtedly, Bunnings exists as the market leader in hardware supplies retailing

primarily due to their ability to create customer based brand equity across all facets of

the brand. The brand fundamentally considers each of its main consumer segments –

that being, tradespeople, commercial businesses and DIY enthusiasts, across all

elements of branding, communication and customer relationship building. Yet, there

are key issues that need to be addressed for the brand to maintain its position as the

market leader, as well as opportunities that can be taken to help further increase

customer based brand equity for Bunnings.

First considering Bunnings’ use of the exclusive PowerPass program, available only

to those who possess an ABN number, ultimately excludes the DIY enthusiast target

segment from creating loyal relationships with the brand (Bunnings Trade 2018). At

the present time, there is no available loyalty program or scheme for DIY enthusiast

and everyday shoppers, who in turn are not able to access the same discounted prices

and services as tradespeople and commercial businesses shopping in Bunnings.

Preventing a specific target segment from building relationships with the brand based

on customer loyalty ultimately depicts Bunnings to favour their trade and commercial

business customers, despite positioning themselves as equally available to all three

primary target segments. Additionally, there is a missed opportunity for the brand to

increase profitability through customer retention, as customers who develop a sense

of loyalty to a brand will continue to build their relationship with said brand (Rowley

2000). From this, it is evident that there is opportunity for Bunnings to establish a

means of building and further maintaining relationships with their loyal DIY

shoppers, who make up a large percentage of daily in store sales, particularly in

suburban areas.

Secondly, Bunnings currently provides their customers with an in store shopping

experience, where they are able to make instant purchases as well as order products

sought that are not ranged in stores. In 2018, Bunnings branched into e-commerce,

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giving customers the opportunity to purchase a limited number of Special Order items

online via the brand’s website, which can then be delivered to the customer’s home,

or picked up from their chosen store (Fernyhough 2017). However this is the first and

foreseeably only step Bunnings has taken towards an online shopping platform for its

consumers, with no intentions to further extend the brand’s online shopping

experience (IBISWorld 2016, p. 8). This ultimately reduces consumer’s buying

incentives, as a Bunnings’ shopping experience is only available within a brick and

mortar store, or through limited product availability online.

Lastly, Bunnings’ marketing communications strategies exist as an issue that the

brand has been working to address in recent years. Currently, Bunnings’ online

presence is relatively weak (see Table 1), as the brand makes use of traditional forms

of advertising such as television adverts and print catalogues to communicate with its

consumers. In attempts to maintain brand identity and image, Bunnings avoids

launching new campaigns and continues to use its most recognisable campaigns,

despite the significant growth of social media marketing in recent years. Bunnings’

most recognisable campaigns include their television adverts featuring team members

quoting the brand’s slogan, as well as their line-illustrated catalogues distributed in

store (see Figures 3 and 4). These campaigns are relatively favourable among

Bunnings’ key target segments, as they are easily identifiable and aid in brand recall

for consumers (Keller 2009, p. 141). Although these campaigns exist as a point of

difference and a unique selling proposition for Bunnings in relation to its competitors

to reinforce brand identity, opportunity is missed in holistically reaching each target

segment across all available communications channels. In recent years the brand has

moved towards communicating with its consumers online, although Bunnings

struggles to identify and create targeted marketing mixes for each customer segment,

and therefore cannot effectively reinforce their visions and values in a digital space

(Hunt and Arnett 2004, p. 7).

RECOMMENDATIONS

Based on the key issues, challenges and opportunities addressed above, this report

provides three recommendations to help the Bunnings brand improve on its customer

based brand equity.

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First, aiming to improve customer loyalty and retention for all key target segments, I

recommend the introduction of a holistic loyalty program. Gómez et al. (2006) note

that loyalty programs are one of the simplest yet effective strategies a brand can

introduce to prompt consumers’ buying incentives, and to increase customer

retention. As loyalty programs are designed to offer incentives to the customer in

attempts to secure loyalty to the brand, creating a program that considers rewarding

purchasing frequency will aid in increasing buyer incentive (Gómez et al. 2006, p.

387). As mentioned above, Bunnings currently offers the PowerPass program to trade

and commercial business customers; yet, no program is available to everyday and

DIY consumers, effectively restricting this key consumer segment’s access to the

brand’s pillars of lowest prices and best service. I recommend that Bunnings establish

a loyalty program that is accessible by all target segments, where points can be

collected through each shopping experience, and then translated to vouchers issued

with each change of season, when there is generally both a clearance of older stock,

and an influx of current seasonal products (IBISWorld 2017). Introducing a program

that allows DIY customers to receive discounts on a seasonal basis will effectively

allow the brand to increase customer based brand equity through customer retention

and increased loyalty, while further encouraging the brand to better meet their three

strategic pillars.

Additionally, to increase product range and availability for consumers, I recommend

for the Bunnings brand to extend on their current attempts of e-commerce, and

introduce an online store for all products. Without intentions to expand into the online

shopping market, Bunnings is not addressing its guiding value of innovation, and

further restricts the ability for consumers to access the widest possible range of

products outside of the warehouse environment. Research by IBISWorld denotes an

increasingly high demand for online shopping platforms, both as a way for consumers

to browse products, and in turn make timely and efficient purchases (IBISWorld

2016, p. 8). Furthermore, IBISWorld considers that online shopping experiences

promote timeliness and price transparency, two factors highly desired by a middle age

demographic, and one of the brand’s largest target segments (IBISWorld 2016, p. 8).

Creating an online store would allow Bunnings to engage with their consumers in a

shopping experience outside of the warehouse environment, meeting the strategic

pillars of widest range and best service without customers having to shop in store. In

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relation to building customer based brand equity, an online shopping platform would

enhance brand performance through service effectiveness and efficiency, in turn

influencing consumer judgements of the brand to build increased resonance through

effective engagement.

Lastly, to address Bunnings’ limited online presence, I recommend that the brand

develop a unique marketing mix for each of its target segments, and create integrated

marketing communications campaigns that reflect current and traditional campaigns.

Building campaigns for the digital space that reflect the brand’s current favourable

campaigns will aid in maintaining brand recall for consumers and cementing brand

identity, and further help Bunnings to begin fostering two-way communication with

their consumers (Keller 2009, p. 141). As the popularity of social media marketing

continues to grow, Bunnings needs to encourage engagement and communication

with each of their consumer segments online, so as to remain a market leader and

continue to provide best service to all consumers (Stelzner 2016, p. 7). Most

importantly, it is evident that tradespeople typically aged 15 to 34 are emerging as the

brand’s largest consumer segment, contributing to approximately 32 per cent of

subdivision revenue in consumer goods retailing (IBISWorld 2017, p. 14). These

consumers, as well as DIY enthusiasts, largely turn to social media platforms

including Pintrest and Instagram for project ideas and inspiration; thus to begin

fostering effective communications strategies with their consumers in a digital space,

Bunnings needs to increase their online social presence, and develop cross-platform

campaigns that aim to uniquely target each segment, so as to prompt resonance

through community engagement.

CONCLUSION

Ultimately, Bunnings holds its position as a market and industry leader primarily

through its ability to build its brand through its strategic pillars of lowest prices,

widest range and best service. All aspects of the Bunnings brand are developed on the

foundations of these pillars, and thus aim to consistently address the needs of the

consumer to build and maintain customer based brand equity. Despite its position as a

market leader, the Bunnings brand does highlight key issues, challenges and

opportunities that the brand needs to address, so as to remain an industry leader, and

further its position of high brand equity. Taking into consideration the introduction of

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a loyalty program, an online shopping experience and increased efforts of online

communication with their consumers, Bunnings will be able to continue to prosper

and grow as a strategically pillared brand, enhancing consumer resonance to facilitate

increased customer based brand equity.

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REFERENCES Bunnings Trade 2018, Bunnings Commercial: PowerPass, viewed 22 April 2018, <https://www.bunningspowerpass.com.au/> Bunnings Warehouse 2015, Bunnings and You – Book 1, Bunnings Warehouse. Bunnings Warehouse 2018, About Us, viewed 22 April 2018, <https://www.bunnings.com.au/about-us> Fernyhough, J 2017, Bunnings unveils online shopping – but there’s a catch, viewed 6 May 2018, <https://www.smartcompany.com.au/industries/retail/bunnings-unveils-online-shopping/> Gómez, B G, Arranz, A G and Cillán, J G 2006, “The role of loyalty programs in behavioural and affective loyalty” in Journal of Consumer Marketing, vol. 23, no. 7, Emerald Group Publishing Limited, p. 387. Facebook 2018, Bunnings Warehouse Australia, viewed 31 May 2018, < https://www.facebook.com/BunningsWarehouseAustralia/> Hatch, P 2018, In for $705m, out for £1: Wesfarmers abandons UK Bunnings disaster, viewed 26 May 2018, < https://www.smh.com.au/business/companies/wesfarmers-decides-to-pull-out-of-uk-bunnings-disaster-20180525-p4zhg4.html> Holt, D B 2003, Brands and Branding, Harvard Business School Publishing, p. 10. Hunt, S D and Arnett, D B 2004, “Market Segmentation Strategy, Competitive Advantage, and Public Policy: Grounding Segmentation Strategy in Resource-Advantage Theory” in Australasian Marketing Journal, vol. 12, no. 1, Texas Tech University, p. 7. IBISWorld 2016, October, Online Hardware and Tool Sales in Australia, retrieved from <http://clients1.ibisworld.com.au.ezp.lib.unimelb.edu.au/reports/au/industry/default.aspx?entid=5118> IBISWorld 2017, February, Consumer Goods Retailing in Australia, retrieved from <http://clients1.ibisworld.com.au.ezp.lib.unimelb.edu.au/reports/au/industry/default.aspx?entid=1720> IBISWorld 2018, February, Hardware and Building Supplies Retailing in Australia, retrieve from <http://clients1.ibisworld.com.au.ezp.lib.unimelb.edu.au/reports/au/industry/default.aspx?entid=1877> Instagram 2018, Bunnings, viewed 31 May 2018, < https://www.instagram.com/bunnings/>

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Keller, K L 2001, Building Customer-Based Brand Equity: A Blueprint for Creating Strong Brands, Marketing Science Institute, pp. 11, 15. Keller, K L 2009, “Building strong brands in a modern marketing communications environment” in Journal of Marketing Communications, vol. 15, no. 2-3, Routledge, p. 141. Rowley, J 2000, “Loyalty kiosks making loyalty cards work” in British Food Journal, vol. 102, no. 5-6. Stelzner, M A 2016, 2016 Social Media Marketing Industry Report: How Marketers Are Using Social Media to Grow Their Businesses, Social Media Examiner, p. 7. Twitter 2018, Bunnings Warehouse, viewed 31 May 2018, < https://twitter.com/Bunnings> Youtube 2018, Bunnings Warehouse, viewed 31 May 2018, < https://www.youtube.com/user/bunningswarehouse>

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APPENDIX

Figure 1 Figure 1: A sample features and benefits ticket included on all display products in store (Bunnings Warehouse 2015). Figure 2: A sample ‘how to’ banner displayed in store (Bunnings Warehouse 2015).

Figure 3: A screenshot from Bunnings’ current television advert campaign (YouTube 2018).

Figure 2

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Figure 4: An example of a product line illustration used in television and print catalogues (Bunnings Warehouse 2018). Table 1: Social media platform statistics for Bunnings Warehouse, as of Thursday 31 May 2018 Social media platform

Number of posts

Number of followers

Number of followings

Average interactions per post

Facebook N/A 21, 621 N/A N/A Twitter 1 3,626 0 34 replies

14 retweets 30 likes

Instagram 451 49k 42 ~500 likes ~20-25 comments

YouTube 1,048 136,284 N/A < 1,000 views (Facebook 2018; Twitter 2018; Instagram 2018; YouTube 2018).