The QVC SWOT Analysis, Essay Example

Strengths

QVC’s greatest strength is its brand name which has become synonymous with TV shopping, exemplary customer service, and a wide variety of products. QVC came after its closest competitor HSN but surpassed it to become the largest TV shopping network due to more effective strategies’ execution. Thus, leadership is one of QVC’s core strengths as its founder Joseph Segel sensed an opportunity to improve TV shopping experience and achieved his goals through a combination of better programming, an effective supply chain network, strong relationships with supply chain partners, and exemplary customer service.

QVC also enjoys strong customer loyalty as evident by the fact that three-quarters of QVC customers rated QVC 7 out of 7 for trustworthiness. These customers were 80 percent more likely to repurchase than those who gave a rating of 6(Hunter).One of the reasons QVC has been successful despite phenomenal growth is its highly efficient distribution network which set a company record on November 12, 2006 by shipping more than 678,000 items in a 24-hour period (QVC, Inc.).

QVC is also strong at innovation and quickly responding to audience changing lifestyles. QVC started as a TV shopping destination but now offers multiple purchase platforms such as internet website, mobile phones application, and tablet computer application. QVC also has reputation for selling quality products and has won customers’ confidence over the years which is not surprising given the strict quality standards followed by the company.

Weaknesses

One of QVC’s weaknesses is that it has low audience capture rate since only 10 percent of its audience has purchased anything from it. QVC’s second weakness is its failing operating margins as is evident by the company’s new strategy to move away from low margins products such as electronics and discover other high margin products such as cosmetics. A third weakness is that the women over forty comprise a major portion of the company’s female customers. These customers were used to direct mail shopping before internet appeared, thus, it was not difficult to convert them to TV shopping customers. But internet is the future of shopping and as older generation is replaced by young generation who is loyal to internet shopping, QVC will be faced with a tough task of convincing them to try TV shopping. It’s possible that QVC succeeds in changing its business model from TV shopping to live internet shopping as the company is already investing in technology and internet operations.

Another QVC weakness is its current product line because many items that QVC has traditionally sold are going out of fashion which is why QVC is trying to search hard for alternatives. At the same time, many products popular with the customers are those that QVC wants to stop selling due to low margins such as electronics(Dess, Lumpkin and Eisner). In addition, QVC generates most of its revenue from few markets such as U.S., UK, and Germany etc. all of whom are now saturated with little room for growth (The Telegraph). Thus, QTV will have to establish a strong presence in other countries besides these to ensure continuous growth at the same impressive rates that it has enjoyed over the last decade.

References

Dess, Gregory, Tom Lumpkin and Alan Eisner. “Case 13: QVC.” Strategic Management: Text and Cases. McGraw-Hill, n.d.

Hunter, John. QVC: Using Technology to Build Relationships. 1 June 2003. 27 September 2011 <http://www.cio.com/article/29718/QVC_Using_Technology_to_Build_Relationships/1>.

QVC, Inc. Fact Sheet. 27 September 2011 <http://www.qvc.com/qic/qvcapp.aspx/app.html/params.file.%7Ccp%7Cmainhqfact,html/left.html.file.%7Cnav%7Cnavhqabout,html/walk.html.%7Cnav%7Cnavhqwel,html>.

The Telegraph. Who will buy into QVC’s model? 9 June 2009. 27 September 2011 <http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/5488142/Who-will-buy-into-QVCs-model.html>.