Deneise and Starr -- Marketing370-Consumer Behavior

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Date Posted: 12:20:41 04/14/02 Sun
Author: Heather
Subject: Deneise and Starr

I don't know if you have added in citations for your part. However, I have put the paper together almost completely. You can just post your part with the citations if you have them. Anyway, here is what I have:
Table Of Contents

Kmart Corporation
� The Brief History
� Current Market Mediums
� International Expansion

BlueLight.com
� Brief History
� Web Site Features
� Comparison with Competitors
� Future

Conclusion

History of Kmart

The Kmart Corporation was founded by S.S. Kresge. After running Kresge department stores for 45 years, Kresge developed the Kmart Strore program. Kmart became incorporated in March of 1916, opening its first Kmart Store in March of 1962.
The mission of Kmart is to sell to low and middle-income families. Specifically, Kmart's mission statement is:

"Kmart will become the discount store of choice for middle-income families with children by satisfying their routine and seasonal shopping needs as well as or better than the competition" (Kmart 1997 Fact Book).

Kmart's target is the middle class family. The stores want to provide them with products they need at prices they can afford. The Kmart stores offer a variety of products. They carry many private labels, some of which are celebrity labels. For example, Jaclyn Smith and Kathy Ireland both have ladies apparel lines. Martha Stewart supplies her Martha Stewart Everyday line that consists of home fashions. Bedding and bath products are a few types of products that she designs for. Kmart also sells fishing gear (B.A.S.S.), Benchtop tools, Penske Auto products, and White-Westinghouse small appliances. The stores also have shoes and clothing available. Kmart carries Sesame Street clothing and merchandise for kids (Hoover's, 883).

Current Kmart Mediums

There are over 2000 Kmart stores in operation today. The Kmart Corporation has evolved into a $37 billion company that serves America with more than 2,100 Kmart, Big Kmart and Kmart Super-Center retail outlets and through its e-commerce shopping site, www.bluelight.com. These stores serve as discount general merchandise stroes. There are Kmart stores operating in the United States as well as internationally.
The traditional Kmart stores offer the typical general merchandise. The Big Kmart format is a cleaner, brighter atmosphere that offers a high-frequency format with a larger assortment of items that are purchased more frequently. The Seper Kmart centers are equipt with a full grocery store and a large selection of general merchandise that is found at the Traditional and Big Kmart stores. The other difference is that the Super Kmart Centers are all open 24 hours a day, seven days a week. There are over 100 Super Kmart Centers in operation, making it the third largest super center operation in the United States.[�Kmart Corporation�,www.bluelight.com] The web site, www.bluelight.com sells a wide variety of products sold in the Kmart stores, as well as those not available for purchase at the stores.

International Expansion

Kmart first expanded internationally in Canada under the Kresge nameplate. The first Kmart store opened in Canada in the mid 1960�s. While this expansion was heading the company in the correct direction, Canadian Kmart stores did not keep up with Canadian discount retailers such as Zellers. When Wal-Mart started expansion into Canada, the Canadian Kmart division experienced similar problems as U. S. stores Kmart stores did against new and larger competition. Kmart also failed in an expansion program in Mexico in the early 1970s.
Kmart�s new international program under Tom Watkins started in Canada with a similar renewal program that was being launched in the United States. The program also considered ways to expand into Mexico with the new Super K store format. Other areas such as Asia, Europe and the Caribbean were researched.
The opportunities in Eastern Europe provided an entry into an underdeveloped retail market with poor competition in more advanced economies. Establishing central operations in the Czech Republic in 1992 allowed for further growth into Poland, Hungary and eventually Russia. Again, government intervention was seen as a major obstacle in the development of this area. Kmart purchased the national retailer Majority. By 1993, more than 80% of the merchandise sold through these Kmart stores was supplied by local companies. The merchandise selection in the Prague stores was more extensive than that in domestic stores to reflect local preferences. Expansion into Prague proved better than expected and was profitable immediately.
A focus on Mexico serves as a launching pad to more southern countries such as Costa Rica, Chile and Argentina. Many believed Latin and South America to be a large opportunity for future expansion. Kmart operations in Mexico were started in 1993 through a joint project with Liverpool de Mexico, a large Mexican retailing corporation with 17 department stores and expertise in retail real estate development. Within 3 years, the joint project established 4 stores which generated sales of over $250 million. Several U. S. retailers had already begun operations in Mexico focusing on the most densely populated areas, primarily Mexico City. Since highly populated Mexican cities were more densely populated than U.S. cities, real estate was extremely expensive. The less developed transportation infrastructure allowed more retailers to successfully compete in a smaller geographic area.
Southeast Asia served as another region for international expansion. The expected growth in disposable income of this region led many members of management to believe that strong growth was well-known. Kmart had been sourcing products from suppliers in Southeast Asia for more than 20 years. This experience provided strong opportunities for partnerships with companies that could be trusted as reliable suppliers. Similar to the Eastern Europe strategy, Kmart developed central operations in Singapore in order to grow Southeast Asia sales. The first Kmart store in Southeast Asia was opened in Singapore in 1993. Again, this store was established with the intention of gaining merchandising experience in the region and then using this experience to branch into other Southeast Asian countries.
The international program allowed Kmart to begin international expansion without large capital expenditures. In 1994, the International Division generated over $3 billion in profitable sales with growth opportunities in the long run. Mexico and Singapore were not profitable at the time.

BlueLight.com

History

Through all the expansion by the Kmart Corporation across the world, Kmart can stay on track to accomplish success in the Internet Commerce using this medium to display Kmart merchandise. This allows a larger medium to utilize the Kmart name to sell services not available to everyone or simply not available at the stores themselves. Offering more through the web site allows Kmart to build relationships with new and current customers. [Keller]
In the beginning of Kmart�s e-commerce voyage there was Kmart.com. Kmart.com was launched in 1995. This site was formed to reach customers at a broader range than the physical stores had the ability to do. When Kmart.com was active, the site developed into a low risk, low yield form of retaining over the internet. This web site offered few products and had no gone very far. There were separate URLs for seven major product categories. Having all the separate URLs made it impossible to have a �shopping cart� to go from one category to another and combine numerous purchases[Wasserman] As the internet demographic became more main stream, Kmart.com needed some changes. Kmart needed to present itself better to its own customers[Keller]. In order to accomplish a more strategic presence on the internet, Kmart launched Bluelight.com.
Bluelight.com was launched in 1999 by the Kmart Corporation and SoftBank Venture Capital with an investment by Martha Stewart Living Omnimedia, Inc. Bluelight.com which is 60% owned by the Kmart Corporation is an independent company based in San Francisco. The company was formed to leverage Kmart's assets. "Bluelight.com represents Kmart's Blue light brand online by rewarding customers with nationally recognized products at unprecedented values". The goal was to form a ground breaking e-commerce company for Kmart. Mark H Goldstein, former CEO of the e-commerce company felt that Kmart.com needed to grow from a fast paced start up to a structured solid business. Bluelight.com's goal is to meet the online shopping needs of more than 30 million Americans who shop at Kmart every week.
Kmart and other discounters are hoping that the convenience of the Internet along with low prices will expand their customer base to higher-income households. Blue-Light says subscribers so far have used the site mainly for e-mail, chat rooms, and shopping from other retailers on Yahoo! Inc. The most common visitors to the site were married women in their mid to late 30s. Kmart finds that pricing is even more important on-line than off.
K-mart invested $55 million dollars into Blue-Light.com. Blue-Light currently has 7 million Internet customers, and the company hopes that the numbers will increase. The website now features 240,000 items, which is 175,000 more than the expected 65,000. Instead of keeping the free Internet access as when Blue-Light first started the store has to now charge it's customers for their time spent on the Internet because of the financial problems that they face.
Further Integration and Technology

K-mart also tries to increase sales by fusing online and in-store access. Kiosk content is expected to attract traffic for the retail outlet and Web site as well as carry out other services. EDR Corp. has grown by helping businesses communicate internally and with their customers through the seamless integration of electronic media technologies. They help to install computer kiosks in a portion of Kmart stores. Kiosks are regarded as the low rent customer service desk for Web sites of companies.
Kiosks are interactive purchasing area, which allows customers to order products and services on a touch-screen computer terminal. Kiosks are a part of the Kmart solution center. This system makes the purchasing process much more convenient and easy for the customer. Kiosks help consumers find products in another store in the same chain; they also give retailers a backup in case products aren't on the shelves but can be shipped from a distribution center. In addition to listing the physical and virtual inventory, kiosks may also contain side-by-side comparisons of product types and pricing information from competing retailers. Kiosks also have been outfitted with gift registries, replenishment lists, affiliated services, and frequently asked questions--anything to automate customer-service functions in an era when the cost per transaction for a live person to service a customer can get very expensive. Five months after Kmart installed 3,500 kiosks throughout the US, it reported that 20% of BlueLight.com shoppers came from inside Kmart outlets. Customers who shop both on line and in stores spend 22% more than those who only buy from outlets, which suggests that kiosks also make good business sense for retailers. Online sales, including those from kiosks, typically have higher margins than sales from other channels. Kiosks give retailers more insights into their customers' shopping habits and desires.

Web Site Features

The main web site features are simple:
� Sales and Specials
o Here you can add any item to you �cart� for purchase. Then you proceed to the �checkout� and provide the necessary personal information for purchase.
� Kmart Weekly Ad
o Here you can view the exact circular ad and create a �shopping list� to bring to the store with you.
o Items here may not be purchased online; they may only be purchased at the department stores.
� Other Self-explanatory features
o Shop by brand, check order status, check your account information, find a Kmart, and Online help.

� Bluelight.com ISP
o Here you can find out more about using bluelight.com as an internet service provider.
****Maybe Features****
Strengths and Weaknesses of Website

Strengths

Kmart�s website is bluelight.com. They have many strengths. Among them are: strong customer service, display of the weekly store ads, tracking of orders, and a lot of information to help out customers that is easily accessible.
One of the first strengths of their website is if you type kmart.com, the browser will automatically take you to bluelight.com. The website is very easy to navigate, giving you a choice of what department you want to shop in. Another strength is there is a homepage button on the top of the screen. This allows a user to go back instantly to the homepage, regardless of what page he/she is on. This is very convenient and saves time.
Another strength is the weekly Kmart store ads are displayed. A customer can view the ad exactly as it appears, and can order from it. This is very convenient if someone misplaced an ad, didn�t receive one, or has no time to go into a traditional store and shop. Families with children and the elderly can greatly benefit. If a Kmart is out of an item, a person can order it online. Also, the website features daily online sales that are only offered on the website. This is good for bargain shoppers.
The website has an exceptional ordering system. When a customer chooses an item to order, the website shows: the product description and features, the availability of the product, and when the order will leave the warehouse. Shipping and ordering information is very easily accessible to read. People can read about shipping information, such as shipping policies for standard and special shipping items. Also, a customer can track his/her order online. All of these factors make ordering easy and are strengths for the website.
Customer service is offered on bluelight.com. A user can contact customer service twenty-four hours a day, everyday. For example, people can write about customer service experiences (good and bad), inquiries about rain checks, and check for product recalls. A response is always given. This is a great strength because it gives customers someone they can always contact.
Users can access the Kmart pharmacy. A customer can refill existing prescriptions, request a new prescription, and transfer a prescription to a Kmart pharmacy. This is a good strength because it allows people who are too busy and the elderly the opportunity to do these activities without physically being in the store.
Another strength of bluelight.com is the store locator. If a user doesn�t know where the nearest Kmart store is, he/she can type in their city. The website shows phone numbers, maps, and directions for the nearest Kmart. This is good for a few reasons. A person may move to a new area and wants to know where the nearest Kmart is, or if a local Kmart is out of an item, a person can look for the next closest store and either call or visit the store.
Kmart�s website offers online applications for employment and the Kmart MasterCard. This is a strength because people can fill either one out any time they want, without having to go to the store to get one or bring it back. Many more people have the opportunity to fill out these applications.

Weaknesses
Bluelight.com has many strengths. However, there are a few weaknesses. For instance, it takes a while for someone to respond to inquiries. This may cause some customers to take their business elsewhere. Also, you can�t actually see the products physically, only the pictures. People cannot try on clothes, shoes, etc. They cannot see how items will fit until they receive them. But, this is true for any website that sells clothes.
There aren�t that many weaknesses of the website. Overall, bluelight.com is a very strong website internally.

Comparison of Bluelight.com with competitors

The main competitors for bluelight.com are Target.com and Walmart.com. All of these web sites are pretty self explanatory. The sites serve their purpose as online retailers, and are not difficult to navigate. Bluelight.com and Walmart.com both offer internet access for their customers. All of the sites offer the site search engine, and basic information related to the online shopping.
The main strength for bluelight.com is that the blue light specials for the day and the Martha Stewart everyday links are for the most part prominent on the home page. This is very important because these are two important features for Kmart's image being portrayed to the customer. The site also allows you to search for a product by an item number. This is good for repeat customers who enter the item number to get to the product as soon as possible. A major weakness of bluelight.com is the location and set up of the product categories. It would be helpful to new and returning customers to have more prominent links to the product categories. The biggest weakness on the bluelight.com web site is that the site lacks emphasis on the fact that the business is a subsidiary of Kmart, and is selling Kmart products. I is necessary to diminish any confusion a customer may have as to whose site is actually being visited. A person that is not familiar with the blue light special, may be confused about what web site they are browsing.
The Target.com web site home page is very organized. This site is by far the most organized out of the three main competitors. Every link seems to be in a very good location. All categories are easily accessible. The Target.com site seems to be about more than just shopping. There is a community link as well as links to other web sites. There are also many links to Spring related items and even items that Target recommends. The only weakness with Target.com as compared to the competition's, could possibly be that the site does not off internet access. However, this is not a big weakness because Target.com is a retailer, and may not have any desire to be in the internet service provider business.
The Walmart.com web site is also better organized than Bluelight.com. All the categories are right at the top of the home page an dare easily accessible. Walmart.com is the only of the three main competitors to have their slogan on the site. This is a strength because it allows for familiarity. The fact that the Wal-Mart. Com doesn't have to heavily promote sales, reminds a customer of how low the prices are on an every day basis. Another strength of Walmart.com is that there is a link at the top to the home page for new customer to click on for them to "get started". A difference between Walmart.com and the competitors would be the fact that there is no flyer available for viewing online.

Future of Bluelight.com
Kmart planned spending about $2 billion in over two years on technology and infrastructure improvements. It hoped to cut the time customers spend in checkout lines by 20%, improve customer relations and inventory management and reach Black and Hispanic consumers in Urban areas.
Unfortunately, with the current financial situation that Kmart faces, the plans to install more kiosks in more stores will not be possible, however they plan to try to keep as many kiosks as possible in the remaining stores. The integration of the Internet and in store access has truly made a difference in Kmart's profits and the company hopes that this increase in profits will continue.
Even though Kmart faces bankruptcy it was reported in the market share reporter as having the second largest retail market share among the companies in the retail industry. As reported Kmart has a market share of 15.6 percent, with Wal-Mart leading with 47.8 percent and Target third at 11.5, while all other retailers cover just 25.1 percent of the market. When Kmart does close all the stores scheduled to close its market share is expected to decrease. Even with their current financial situation Kmart still expects profits to rise up to $100,000 million by the year 2005.
In light of Kmart's bankruptcy filing, bluelight.com is still operating. In addition bluelight.com's spokesman Dave Karraker said that the site is operating as usual and that he doesn't anticipate any problems with the consumer site or the internet service. "We are a key element in their retail strategy, and the internet is an important part of reaching out to customers," Karraker said, "We see ourselves as having a valuable spot in [the company's] strategy." [Lyman] The bluelight.com even contacted the 200,000 subscribers to the internet service to inform them that the service will continue.
Kmart illustrates the importance of their customers on many levels. In light of all of Kmart�s troubles, the CEO has submitted a letter to the Kmart customers to inform them of some things. The letter is found as follows on the Bluelight.com web site under:
Home > About Kmart > Restructuring Information

Dear Kmart Customer:As you might have heard, Kmart Corporation has filed for reorganization under chapter 11 of the United States Bankruptcy Code. I would like to take this opportunity to explain what this means for you, our loyal customer. Most importantly, we are open for business and will continue to provide great service and value to our customers. The Company's credit cards, checks, gift cards and store credits will be honored as always and all return policies remain unchanged. The filing gives us a chance to make a fresh start and reposition Kmart as the store of the future. With the protection of chapter 11, and with our strong people, brands, business partners and customer relationships, we will aggressively address our financial and operational challenges. We will also accelerate the transformation of Kmart into the authority for what Moms value by being in-stock with exclusive, quality brands in pleasing store environments. In the meantime, you should notice little if any change in your Kmart store or shopping experience. If, however, you have any questions about the reorganization, please feel free to call our customer hotline at (877) 475-6278. We at Kmart appreciate your business and look forward to the continued opportunity to serve you. Sincerely, Charles C. ConawayChief Executive Officer

Currently the Online sales are surpassing those of the in store sales. In-store sales are now only 34% of Kmart sales. The website also features far more items than In-store. The items available in store are 70,000 compared to on-line, which is 240,000 items. K-mart expects that the online sales will continue to out number the in store sales with the closing of more than 280 of its stores. However there will be an increase in in-stores sales with the liquidation of the closing stores, which is expected to pull in $500 million for Kmart.

Further initiatives in Kmart's overall multicultural aspects will include national sponsorships and grass-root efforts that directly reach regional markets or individual stores. These will complement Kmart's policies that empower store managers to build merchandise selections and facility operations around the varying multicultural communities they serve. Along with the advertising, these programs will clearly demonstrate the dedication Kmart has to its consumers and their communities.

Conclusion

As Kmart has cleaned up its balance sheet, strengthened its house brands and improved its operating efficiency, the global stakes have heated up. According to Gartbner G2 research director Kevin Murphy, Kmart will have no choice but to cut the bluelight.com. Murphy says that the competitors are moving ahead and it would be very expensive for Kmart to catch up. As stated by the Nielsen/Net ratings senior analyst, the bluelight.com site has struggled against the online competition since the beginning. Uncertainty is nothing unusual for Kmart's e-commerce company.
Some analysts believe that bluelight.com has a decent chance of surviving the troubles that Kmart has been experiencing. However, Bluelight doesn't appear to be the company that Kmart had originally hoped for. This company was designed to be separate from Kmart, but has been folded back into the company. Most of the bluelight.com management duties are being handled by the parent company in Troy, Michigan.
Kmart has had unfortunate trouble in fulfilling its mission. However, there is a strong possibility for a bright future. If Kmart can use this bankruptcy filing to its advantage and truly start fresh, the corporation will accomplish many goals.

Works Cited
� Anderson, Gordon, Hoover�s Handbook of American Business 2000. Ed.,
Companies A-K. Austin, Texas: Hoover�s Business Press, 1999.

� Business Editors (May 24, 2001),"BlueLight.com Confirms Management Change",Business Wire.

� Business Editors (May 23, 3001), �BlueLight.com to Further Leverage Kmart Resources to improve Efficiencies; Operations Synergies will Accelerate
Company Towards Profitability", Business Wire.

� Cohen,R.(1993)"K-mart unit aimed at lifting oversees growth". WWD,
v145,12(1).

� Coleman, Calmetta (2000, June 26), �Bluelight.com Boost Product Line as Kmart Pushes to Break Even�, The Wall Street Journal; Chicago Tribune, p. 4

� Keller, Laura (March 22, 1999), "Kmart Uses Solutions to quicken Pace on Info Highway", Discount Store News.

� Lasich, Robert. S. Market Share Reporter: 2002. Farmington Hills, MI : Gale Group, 2001, (33)

� Liebeck, Laura (March 9, 1998), "Kmart's to-do List", Discount Store News.

� Neuborne, Ellen (2001, June 4), �The Box That Rocks�, Business week.

� Rueters,( 2000, August 11). Kmart Plans to Spend $2 Billion On Store Improvements. New York Times (National Ed.)
� Sweeny, Terry (2001, March 12), �Kiosks Spur Spending in Stores�, Information Week.

� Wasserman, Todd (October 2, 2000), "BlueLight, Green Light.(Kmart subsidiary 5th Largest Internet Service Provider)", Brandweek.

� "Kmart's BlueLight.com Teams with Yahoo! and Spinway.com to bring the Web to Millions", PR Newswire, December 16, 1999.

� "Kmart Corporate Information", www.bluelight.com.

� "Home Page", www.target.com.

� "Home Page", www.walmart.com

� http://www.kmartcorp.com/corp/investor/fact/factbk_1997/3.stm#Mission%20Statement.

� http://www.kmartcorp.com/corp/story/general/corporate_history.stm

� Kmart Customer Information Line :1-877-475-6278

� Kmart Corporate Affairs: 248-463-1021

The Kmart Corporation
And its subsidiary
Bluelight.com

Deneise Davy
Starr Franklin
Jennifer Lazarek
Heather Westcott

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