Case Study Analysis for Dollar General Corporation

Introduction

In any industry, businesses face different environments when providing goods and services to its consumers. They have specific strengths, which provide competitive advantages in the industry, thus allowing them to grow. Firms also face significant weaknesses that derail growth and reduce profitability based on the competitive environment the business faces. To understand the external environment, businesses conduct REST analyses to review, economic, social, and technological factors in addition to regulatory frameworks affecting businesses. Ideally, the drive for businesses is to meet set objectives and provide products for target markets. Thus, companies establish marketing strategies that follow guidelines and channels that encourage growth. To understand the scope and significance of the factors in the growth an expansion of a business entity, one can analyze the performance of an existing retail firm such as the Dollar General Stores.

Part 1: Situation Analysis

Dollar General Stores is a chain retail store that provides consumer goods throughout America. Products sold by the company range from small items like jugs and mugs to large items like television sets and cupboards. The company functions as a retail store where it purchases products from manufacturers, stocks them in different stores across the country, and provides them at retail prices to consumers (Dollar General 8). Through special orders, the firm functions as a wholesaler to smaller businesses. Hence, the company functions as the retailer and wholesaler of manufactured products.

The Strengths and Weaknesses of the Firm

The business strengths include its concentration in rural areas, its flagship mission to provide affordable products, and its relative flexibility for consumer needs. The firm enjoys a dominant market share throughout America within the rural areas because it concentrated on opening stores in areas where large retailers like Walmart and Target deemed unviable for business. The company, therefore, faces less competition and high consumer bases. The company, through its inception, committed to the provision of products at lower costs in its “One Dollar Stores” mission. Additionally, the company has single-price point retail and extreme-value retail systems which attract huge customer bases (Vandell & Charles 18). Final, the company encourages flexibility by providing transport services for special group consumers such as the elderly and the disabled. Thus, the company is popular among rural populations hence leading to high revenues.

Weaknesses of the company include reluctance to embrace technology fully and reliance on distributors. Dollar General Stores is yet to invest heavily in revolutionary trademark technology such as artificial intelligence in service delivery. Companies such as Walmart set up hubs to conduct research in groundbreaking technological methods thus dominating in the industry. The company relies heavily on distributors appointed by manufacturers and does not have a fully established distribution channel for its products (Vandell & Charles 22). Reliance on distributors causes delays in product arrival and stocking and some stores report running out of stocks on a regular basis. Thus, the company loses significant potential revenue and cedes market domination to other players in the market.

External Analysis

A REST analysis for Dollar General Stores reviews the Regulatory, Economic, Social, and Technological factors that affect productivity within the company. Regulatory restrictions on the company include laws, regulations, policies introduced or enacted by state, and federal governments (Vandell & Charles 27). Employment and labor laws affect wage standards, OSHA law influences working conditions for employees, and tax laws govern taxation compliance by the company (Vandell & Charles 15). A litany of other laws including contract, tort and corporate affect the conduct of the firm as a retailer in the United States. Other factors affecting Dollar General Stores include economic stability of the United States in the face of the country’s trade wars with China and Europe, the economic independence of developing countries, which impose higher restrictions on trade, and decreasing unemployment rates leading to demands for higher wages, which increase the costs of operations. Dollar General Stores Company is affected by social factors that change the tastes and preferences of products. In the United States, people seem to demand healthier options in their choices of food brands and drinks, culture changes affect fashion trends, footwear choices, and the growth of rural areas force the company to abandon its rural-style design for a more diverse design (Vandell & Charles 15). The growth and expansion of technology led to changes in operation with most pricing options being automated (Castellanos 5). The company diversified to include an e-commerce wing and a website dedicated to handling customer complaints. Thus, REST factors show that the proper balancing of changes in the industry allows the company to maintain its growth trajectory.

Competitive Advantage

Dollar General built a competitive advantage on the basis of price and convenience. The company functions primarily by providing consumer goods which are largely affordable to average consumers. The company faces fierce rivalry from large-scale retailers like Walmart. Dollar General introduced the concept of “One Dollar Products” and the slogan allows it to operate on the cusps of low pricing of products. Consumers become drawn to the company because most of the products are less than $1 in price (Vandell & Charles 15). The company also runs a small-box campaign that provides only small goods in a major share of its store capacity, thus allowing consumers to comfortably shop for household items with ease. The firm has stores located mainly in rural areas where other retailers like Walmart and Target find unviable business. The opportunity taken by Dollar General ensures that it provides products to consumers within the shortest distance possible, and their services include delivery for subscription consumers (Vandell & Charles 15). Therefore, the combination of low prices, convenient shopping, and location gives the company its competitive advantage.

Market Analysis

Industry players in the retail business include Walmart, Kroger, Amazon, Home Depot, Target, and Costco. Recent trends in the retail industry show progress towards better service delivery, diversification in retail portfolio, and lower costs of doing business (Grewal et al. 88). Amazon leads in technological innovations through its e-commerce platform, which provides products to consumers in America through its delivery options and online stores. Walmart is heavily invested in its Walmart Pay system which allows shoppers to pay using a Walmart card, the Scan, and Go system which allows consumers to scan products on their own without going to a queue (Foroudi et al. 275). In the retail industry, players have introduced systems such as Endless Isles (allowing consumers to place online orders at physical stores when items run out) and Artificial Intelligence (to help consumers make decisions regarding best brands) (Foroudi et al. 275). Based on the outlook, Dollar General can potentially take the advantage of technology and preference as competitive opportunities. The company invests heavily in AI and other smart technologies, and should set up a hub to rival other companies. It should integrate the digital technologies with the traditional systems of service delivery that appeal to the rural population. Since other players prefer the urban market, Dollar General should prevail in providing service delivery with technology superimposed by human emotional touches such as gift hampers home-delivered (Mark 5). The company should design products which appeal to tastes and the preferences of rural consumers such as traditional, gothic, semi-urban, or laid-back styles for their shopping comfort. Thus, the company will enjoy higher sales through maximizing on such opportunities.

Part 2: Objectives and Target Market

Objectives

Dollar General Stores is a publicly traded company operated and managed by a Board of Directors. The board has remained unchanged since July 2017. It comprises of Michael M. Calbert as Chair to the Board, Todd Vasos (CEO), and other members such as Warren Bryant, Sandra Cohen, Patricia Fili-Krushel, Paula Price, William Rhodes III and David Rickard (Dollar General 3). Currently, the company has over 15,000 stores located in 45 states through the United States, and about 135, 200 employees. The firm’s mission statement is “Serving Others” and it commits to ensuring that its service delivery is of high quality. The objectives of the company are to become the leading dollar store retailer in America and to be the dominant retailer with the largest consumer base (Dollar General 3). The company aims to expand its consumer brands and products to ensure zero reports of run-outs in stocks, and to be the leading dollar store in America. It also targets at advancing the careers of its employees by becoming the leading employer in the retail industry, to offer seamless services to its consumers, and to provide affordable products to all (Dollar General 8). Thus, the goals of the company target at increasing the quality of services and profitability.

Target Market

Market segmentation helps Dollar General Stores to target its market based on demography, geography, behavioristic, and psychographic information. However, since it is a retail consumer store, restrictions on segmentation boundaries are flexible. The firm strategically targets the youth aged between 18 years and 38 years for most of its products (Shih et al. 9). It sells products ranging from televisions, home theatre systems, washing liquids, and clothes; all of which are majorly used by people within the demography. Since most household goods dominate the consumer stores, the company tends to target females as the overriding gender based on their high influence on products. Men typically have similar fashions, preferences and tastes, and women mostly purchase household items (Shih et al. 10). Thus, the company targets a youthful demography and females with influential authority in purchases.

Geographically, the company operates stores in 45 states within America (over 90% of USA) and targets rural areas with little urbanization. The company prefers sparsely dispersed areas where no stores exist and where it harnesses advertisement incentives for neighboring populations. Behaviorally, the company targets repeat shoppers who make purchases daily, weekly or bi-weekly. Consumers with regular shopping trends are easier to target through product promotions, incentives provisions, and discounts (Shih et al. 11). The psychology of its target population also affects its promotion strategies. The company targets customers with traditional and idealistic beliefs. For instance, the firm promotes country-style products in states such as Texas while promoting ocean-style products in Florida (Shih et al. 13). Thus, the company benefits from increased sales revenue and expansive customer bases through targeted product promotion which enhance business growth.

Part 3: Marketing Channel Strategy

The marketing channel strategy is operated from the Sales Promotion department headed by a manager and overseen by a Board member who acts as the supervising head. The channel strategy consists of mainstream media teams, social media networking teams, sales marketing promotion, and general advertisement teams. Mainstream media teams promote the store through television ads, radio announcements and other forms of mainstream media such as newspaper advertisements. Social media channels such as Facebook, Twitter, Instagram, LinkedIn, and adverts on dating sites (Shrestha 376). The sales marketing team promotes products by targeting consumers at popular events and providing free samples of new products as authorized by manufacturers. General advertisement teams conduct advertisement and product promotion in areas where the company sponsors community activities such as local football and basketball games (Shrestha 377). Thus, the teams work together to ensure that consumers have all the information regarding the firm.

After creating interest in consumers and developing stores in target areas, the company established an omni-channel strategy for its product. First, manufacturers hire distributors to transport products to designated sites where the company has centers. At the distribution centers, products are sorted, categorized, inventoried and packed for distribution to stores across the country. Once at the store, employees arrange the products in the storage rooms and display them on the shelves. The marketing channel includes manufacturers who produce the merchandise, distributors who transport products from warehouses to various centers and to stores, marketing strategists and product promotion managers who increase consumer awareness, and employees at every stage of packaging; packing and unpacking of products (Shrestha 382). Hence, each member is supposed to work towards integrated management systems.

The firm and the channel members often have disputes regarding misinformation and miscommunication forwarded by advertising agencies on behalf of the firm. Advertisers sometimes advance falsehoods or contravene regulations regarding product promotions, and the company raises such issues with them. Distributors who delay with products from manufacturers also come into conflict with the firm since it causes stocks to run out (Shrestha 383). However, based on recent strategies, the company achieves the seamless channeling of products and high efficiency. The business may increase efficiency through the adoption of management systems automated through technology. Systems such as vertical management systems (VMS) and Automated Management systems help companies to keep the track of products at all stages of the channel and guarantees product delivery with no losses (Shrestha 386). Therefore, the company will manage stock more efficiently and transfer employees from the department to other workstations.

Conclusion

Companies operate with specific objectives and targets within each annum. Dollar General Stores targets youthful consumers with regular shopping habits and its mission is to provide high quality service delivery. The internal environment of the company involves retail operations with thousands of stores stocked with consumer goods. The external environment consists of various laws governing employment, labor relations, employee safety, corporate tax ,and inter-state commerce. The company faces competition from other companies including large box retailers like Walmart and small box retailers such as Dollar Tree. Market analysis revealed that the company holds a competitive advantage in low pricing for most of its products, and location advantage creating convenience for shoppers. The marketing channel strategy includes members drawn from manufacturing, distribution, storage, packing and arranging on shelves, and advertising agencies for product promotion. The company, therefore, should integrate technology into its management models for increased efficiency.

Works Cited

Castellanos, Sara. “Dollar General Boosts Digital Strategy.” The Wall Street Journal, (2019). https://www.wsj.com/articles/dollar-general-boosts-digital-strategy-11570646318.

Dollar General. “About us.” Dollar General, 2019. https://aboutus.dollargeneral.com/.

Foroudi, Pantea, Gupta, Suraksha, Sivarajah, Uthayasankar and Broderick, Amanda. “Investigating the Effects of Smart Technology on Customer Dynamics and Customer Experience.” Computers in Human Behavior, (2018), Vol. 80, no. 4, pp. 271-82.

Grewal, Dhruv, Motyka, Scott, and Levy, Michael. “The Evolution and Future of Retailing and Retailing Education.” Journal of Marketing Education, (2018), Vol. 40, No. 1, pp. 85-93.

Mark, W.J. (2008). Reinventing Your Business Model. Harvard Business Review. Web.

Shih, Willy, Kaufan, Stephen P. & McKillican, Rebecca. “Dollar General (A).” Harvard Business Review, (2019), 7-14.

Shrestha, Sriya. “Dollars to Dimes: Disparity, Uncertainty, and Marketing to the Poor at US Dollar Stores.” International Journal of Cultural Studies, (2014), Vol. 19, No. 4, pp. 373-90.

Vandell, Kerry, D. and Carter, Charles, C. “Retail Store Location and Market Analysis: A Review of the Research.” Journal of Real Estate Literature, (2015), Vol. 1, no. 1, pp. 13-45.