Marketing Strategies Of Woolworths: A Comprehensive Discussion

Marketing strategies of Woolworths

Discuss about the American Marketing Association.

Marketing is a broad concept. According to the American Marketing Association, marketing is the set of activities and processes in order to create communication and deliver products or any kind of exchange that has some value to customers, clients or society. To develop sales and reputation it is important for any company to buildup strategies for emphasizing the concept of marketing. A company that lack good marketing strategy may lose essential opportunities for increasing their market value (Armstrong, Adam, Denize, & Kotler, 2014).

Australian retail market contains many noteworthy names. One such name is Woolworth that has attained a apex of success. For its target customers Woolworths have a wide range and variety of products that includes groceries, vegetables, meat, packaged food items, magazines stationary products and even DVD (Arli, Dylke, Burgess, Campus, & Soldo, 2013). Recently Woolworths launched its clothing line in South Africa to increase its business and popularity. Woolworths has 980 stores across Australia and 16 retail stores without the name Woolworth but under the same logo. They have their Headquarters in New South Wales and they operate under the name Safeway in Victoria where they have four stores in rural Victoria and three in Melbourne. They are at the market of retail business for over 92 years with average sale of 33,275 million dollars and profit margin of 1099 million dollars. Their asset value is worth 11,936 million dollars (Knox, 2014).

In this current report the marketing strategies of Woolworth including the issues faced by the brand is discussed. Ways for resolving such issues is also recommended.

In Australian Market, the prime competitor for Woolworths is Coles and together they dominate over 80% of the Australian retail market. In recent years however a new name Aldi, came to business to give these two giant a competition. Woolworths became the fastest growing food and liquor retailer in Australian market in 2013. For achieving such peaks, the company must have some concrete marketing strategies. In this section, these strategies are discussed elaborately with context to the eight Ps of marketing.

The marketing strategy targeted for products includes Design, technology, usability, value, quality, brand and warranty. Woolworths being a retailer has a wide range of products in their supermarket chains. Their product range includes fresh and packaged foods and vegetables; beverages and liquor; clothing line; Home accessories. In addition, they also have financial services (Perrone & Wodonga, 2015).  For food and beverages, they focus on quality. Supplying the customers with high quality food is their first choice. Next, they rely on convenience, providing the customers feasibility of shopping in wide range of branded products. Innovation is their strongest marketing strategy that includes delicious authentic yet innovative recipes, which are tasty yet nutritious. Their clothing line focus on improving ranges, introducing new fashionable styles in budget value and sustainable quality. Woolworths present a wide range of home accessories and furnishings that include kitchen and bathroom ware, crockery and vases, bedroom wear and curtains. They also have a market for furniture that is stylish and contemporary in an affordable range (Digital, 2017).

Product

Keeping their customers in mind, and to appeal to a huge range of customer, Woolworths offer a wide range of price that fits the budget of majority of taxpayers. To attract customers they give offers in a wide range of their products as well. A total basket of goods that includes bread, milk, eggs, apples, chicken, cabbage, cheese maize, sugar, mincemeat, soft drink, flour, tea bags, rice and margarine is worth R479.44, which is quite affordable. Combined with lucrative offers Woolworth has a solid marketing strategy to attract a good range of customers (Digital, 2017).

The successful promotional strategies that Woolworths take make them the key player in the Australian retail market. According to analysts, their key to success is that they focus more on growing category sales rather than price cut. Even though there are players in business who offer same range of products in much lower price, Woolworth stays as the customer’s choice of brand to shop. Their central focus is on extending their food and liquor range.  Promoting their grocery, petrol through celebrities had been a prime promotional strategy for Woolworths that attracted attention of customers. This helped increase their brand value considerably (Methner, Hamann, & Nilsson, The Evolution of a Sustainability Leader: The Development of Strategic and Boundary Spanning Organizational Innovation Capabilities in Woolworths., 2015).

Place represents a particular point from where products of an organization reach the end customers. Place can be both offline and online. Depending on the type of product offerings of the organization, online or offline mode is selected and in some cases both are selected, so that the company is able to grow its business manifold (Armstrong, Adam, Denize, & Kotler, 2014). Place offers a different picture to the consumers. While deciding to set shop in a particular city, an organization has to carefully study various parameters with respect to the existing demography, purchasing power parity of the consumers, existing competitors and local tax laws.

It is the community for whom quality products and services are offered by an organization. People factor can be categorized with respect to both in house human resources of the firm and also the consumers to whom the same will be sold. If qualities of services are not up to the mark or the desired level of expectations, then a very good quality product might not sell to its intended customers. Woolworths has an excellent human capital workforce which has helped them expand its network and product portfolio across Australia and now to South Africa as well (Shin & Lee, 2015).

Price

Processes:

Since it’s important to develop a quality product offering to the customers, the method in which a product undergoes should be of very high standard as customers are paying premium to buy the same (Human & Bick, 2016). Quality is a critical attribute of Woolworths’ product offerings, which has been maintained since the time it set up its business in 1924.

Through partnership route, a firm gains competitive advantage over its rivals as two brands and their distribution points and strategies merge together, thereby realizing good economies of scale (Rosenbaum-Elliott, Elliott, H., Percy, & Pervan, 2015). When strategic partnerships are formed, it delivers a greater impact on the company’s intended message in the market through smart packaging of products and good merchandising.

Physical evidence determines the level of satisfaction from the customer’s point of view. They often judge the quality of a product based on their perceptions of the surrounding infrastructure (Muposhi & Dhurup, 2016)

Achieving the business strategies, analyzing the influential environment on its profitable ground are the important point that Woolworths need for its understanding (Feigin, 2016). The corporate strategies are not only accomplished but also the business performance of the organization significantly affects on the impact of the external factors of the organization. On analyzing the external environment, the internal aspects will help Woolworths to improve its present strategies and turning the mission into effective actions (Methner, Hamann, & Nilsson, The Evolution of a Sustainability Leader, 2015).

Woolworths adapted some competitive strategies for competing in retail industry. It identified its position the field of retail marketing.  The two levels of external environment can be divided into two major levels that include the environment of the industry that can influence outside the company and the general influential factor, called macro environment of the company.

Issues that Woolworths faces currently in Australia that can be listed below:

Woolworths, being a large market scale in retail industry; they have very low dependency on the suppliers of the particular items. They must have very low dependency rate in the ground of the supply chain (King & Thobela, 2014).

The fixed customers of Woolworths bargains tremendously in the store for the discount of any items. They get huge level of discounts in the e-commerce sites almost al the year round. Customers start trusting those online sites more than to step in for the retail market (Cameron, Sayers, Sacks, & Thornton, 2015). The discounted items from the sites become cheap in the price range and the quality remains the same.

Promotion

The current and new threat of Woolworths is considered significantly due to several other reasons. Any new organization competing in the particular business needs a huge amount of start-up capital for fixing up the facilities and for operating the business. Woolworths competes with Coles with 23% of the market that is controlled by them.

Woolworths is the leader of the Australian market and its position flourishes the power of the company for exploitation of the potentiality of the market by its well-built resources and a proper presence of the company (Feigin, 2016).

The Australian government has several restrictions on the movement of Woolworths as it keeps on increasing its prices quiet higher for any of its products specially liquor. The price rise is one of the common business strategies for profit making. The increase in price rise is the major weakness of the company for promoting growth because government restricts that in the upcoming future.

Woolworths have several opportunities that is related in the retail industry that focuses with the potentiality of the growth like computerization, advancement of the supply chain and the lifestyle that changes the consumers that facts the abilities of the retailers for growing better opportunities in the market. However, they have adopted several strategies to cope up with the strategies for adopting the multi optional retailing for the changing needs of the consumer.

A new technology that is adopted by Woolworths was the subscription of GEMMN(Global Electronic Marketing and Merchandising Network). However, on improving their chain of supply and the system of distribution that includes important impacts on cost saving. They also introduced the facilities for the online shopping, which make them to identify from any other company (Methner, Hamann, & Nilsson, The Evolution of a Sustainability Leader: The Development of Strategic and Boundary Spanning Organizational Innovation Capabilities in Woolworths., 2015).

Recently, Woolworths have diversified from grocery store to Hotels, Petrol, Liquor general Merchandise and general services. The expansion and the acquisition made Woolworths a largest supermarket chain in Australia with 31% share.

The main growth of Woolworths is by the strong commitment towards its employees and the customers. It has benefits for multiple activities with innovation and identified strengths for conducting operations flexibly by the coordination of the activities and the close interrogation by the employees and the customers.

The first and foremost challenge for Woolworths has always been the neck-to-neck competition provided by the other Aussie retail giant Coles. The last couple year has brought a number of other competitors in the market as well (Ausfoodnews.com.au., 2017). Along with that, the customer satisfaction level of retail chains took a massive hit as the online sites started emerging with their new discount schemes every day. In order to cope up with the current market schemes and the government restrictions on price hike the retail markets are facing increasing debts. Woolworths is no exception to this scenario, and the financial equilibrium of the company took further hits due to its many acquisition in period of 2008 to 2012 (Santos, M., Svensson, & Padin, 2014). The geographical market seclusion also plays a major role in the current instability in the company and the need for global expansion has become prevalent. Dealing with this many challenges needs renovation in strategic and operational level; a few recommendations have been listed down below:

• Cost-Profit Balance: Price strategy is considered as one of the most vital decisive factors of the retail sector. Strategy of cost-leadership sated the major focus of the customers are focused on the cost of a product and how it differs from other retailers. The trick to an excellent cost-management strategy is to reduce the packaging cost to the bare minimum to ensure that the cost-profit balance is maintained. Woolworth should focus on reducing overall cost by cutting down their packaging and wastage expenses to ensure the growth of profit margin (Keith, 2012).
• Strategic conduct: In order to obtain success in any business the link between core business strategies and different operational applications is mandatory. Strategic collaborations and alliances can be the turning point in the retail marketing of Woolworths. Woolworths already has alliances with Caltex and Visa to provide discount to the customers, which has significantly improved their customer satisfaction levels. Other such collaborations and reward point offers will benefit the company attain long-term customer loyalty.
• Brand Diversification: New brands and ranges are coming up every day and by the virtue of social media marketing, the consumers are more aware of the new arrivals now more than ever. The company needs to focus on expanding their product range by incorporating new brands in order to broaden their target market. However, all new brands might not be trustworthy and incorporating unreliable phantom brands will only case more harm to the customer royalty. Therefore the company needs to walk a fine line in order to strategically expand their product range while ensuring that the brands they are incorporating would not negatively impact the company’s reputation in the long run (Fernie & Sparks, 2014).
• People-focused strategy: Retail markets have been public-focused business from the very beginning. Consumer behavior and preferences have changed in a myriad of ways along the years and the retail markets should take attentive notice of it. The value of feedback is immense in smooth market operations as that makes the customers feel valued by the company. Woolworths should focus in incorporating customer feedback programs, which will increase their customer loyalty significantly.
• Lastly, Australia is a proud multicultural country and a major setback in the service standards of Woolworth has been the challenges of controlling and managing the people from different cultural background and meeting their expectations (Berning, 2014). The company needs to focus on eliminating the gaps left behind due to cultural differences in both staff and customers.

Place/distribution

Conclusion:

Woolworths started its journey back in 1924 as just a basement outlet and have come a long way since then. In 2012, the company reached the pinnacle of success when it acquired the position of largest supermarket chain in Australia. Woolworths has managed to capture 31% market shares with a customer base of more than 28 million per week. Even after tackling the Australian retail market for almost a century, Woolworth still has challenges ahead to overcome if it wants to uphold its duopoly in the Aussie retail market. The cutthroat market competition and government jurisdictions have placed hurdles after hurdles in its path that has dimmed the market potential for Woolworths in the last couple of year.

However, the Woolies have always been a trusted enterprise due to  their core competence and unsurpassed quality standards. Hence it can be concluded, that a company as reputed as Woolworths just needs a well-articulated and renovated marketing strategy with current market scenario at the focal point to put the company back in the market with renewed zeal.

(2017, February). Retrieved from Ausfoodnews.com.au.: https://www.ausfoodnews.com.au/2015/05/06/woolworths-announces-new-strategies-to-win-over-grocery-shoppers-afn-reveals-full-detail.html

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