The basic function of the supermarket industry is to play the role of an intermediary for the producers along with providing services for complementing sales (Armstrong et al. 2014). The Australian supermarket industry has experienced massive revenue growth over the past four years by 4.1%, which has increased the overall industrial revenue to $68,500 million in 2016. The GDP growth of the industry has been strong over the past five years, which has culminated its growth of 4.4% previous year in reaching $7,850 million.
The main players in the industry constitute of Woolworths Limited, Wesfarmers, Aldi and Costco. Woolworths Limited has more than 1,000 stores in Australia; however, its overall revenue declined from $58,812 million in 2015 to $58,085.7 million in 2016 (Woolworthsgroup.com.au 2017). The organisation owns control of 42% of the industry, while Wesfarmers owns control of 23% of the industry. However, with the changing conditions of the environment, Woolworths has faced some issues in maintaining its competitive position in the market (Syerov, Fedushko and Trach 2016).
The mission statement of Woolworths Limited is to provide the customers with effective shopping experience each time of purchase. The vision statement of the organisation, on the other hand, involves providing quality services and products each time to all its customers with the help of fresh food strategies, pricing strategies and human resource strategies.
According to Baker (2014), the marketing orientation could be of five types, which include production concept, product concept, selling concept, marketing concept and societal marketing concept. Woolworths Limited follows the societal marketing concept, as it intends to fulfil the needs and desires of the customers by taking into account the welfare of the society. The organisation intends to bring out new product lines through responsible behaviour by ensuring the quality and safety of the products. In order to ensure the well-being and health of the associated community, Woolworths Limited has been involved with the “Australian Government’s Food and Health Dialogue” for ensuring the quality of food like cereals and bread. In addition, the organisation sells alcohol in a responsible manner to prevent harm to the society from consumption of excess alcohol (Bharadwaj 2015). Thus, Woolworths Limited has focused on maintaining the health and safety issues, which is identical to the societal marketing orientation.
The main areas of operation for Woolworths Limited include Australia and New Zealand, as it is the largest organisation in Australia in terms of revenue generation. The main product offerings of the organisation include grocery supermarket (under Woolworths in Australia and Countdown in New Zealand), liquor retailing (under Dan Murphy’s and BWS in Australia), pubs and hotels (under Australian Leisure and Hospitality Group) and discount departmental stores (under Big W in Australia).
In the words of Burke and Draper (2014), branding helps an organisation to motivate the target market in selecting over the rivals along with the prospects of envisioning the only solution provider to the issue or need. Woolworths brand has played a significant role in the marketing strategy of the organisation, which is discussed briefly as follows:
In order to evaluate the company performance of Woolworths Limited, the following aspects could be considered:
The significant attribute of Woolworths Limited is the committed and dedicated team. Although projection has been made that the sales revenue for the organisation would decline largely, it has been still higher by 6.5% of the forecasted growth in 2016 (Wymer 2017). As a result, the Australian supermarket has experienced an increase in revenue and the financial services of the organisation have experienced growth in all products. The most amazing performance of the organisation has been identified in grocery and women attires.
Since most of the retail stores of Woolworths Limited are placed in secondary retail centres, it has been the most significant weakness of the organisation. The main district centres constitute of 60% of the units and thus, the share is quite large (Ding, Eliashberg and Stremersch 2014). As the stores of Woolworths are located in non-primary retail stores, the amount of rent Woolworths pays is significantly low. However, such location and strategy has reduced the sales of electrical and home retail products of Woolworths Limited.
According to a survey result related to customer satisfaction of Woolworths Limited, 86.6% of the customers have stated that they are highly satisfied with the products of the organisation. On the other hand, the percentage for Wesfarmers has been 85.6%, which is considered as the biggest success of the organisation in recent times (Hollensen 2015). The improvement in the quality of fresh vegetables, fruits and meat is the primary reason behind this performance. As a result, it could help Woolworths Limited to increase its business performance in the Australian market.
The fluctuations in global currencies, stringent trading conditions and decline in market share coupled with global economic slowdown has made it difficult for Woolworths Limited to develop its market further. In addition, the increasing competition from Aldi and Wesfarmers has resulted in fall in customer loyalty of the organisation (Leonidou et al. 2013).
It has been observed that the main customers of Woolworths Limited include the domestic households, who are engaged in buying household utensils and grocery products. The product prices are kept low intentionally so that the middle class customers could buy the same easily along with ensuring competitive advantage in the market (Lusch and Vargo 2014). However, the purchasing power of the consumers is expected to increase in future.
This is because the government of the nation has minimised the barriers of entry to the new firms, which would increase the choice of the consumers. Hence, this would increase the bargaining power of the customers (Luxton, Reid and Mavondo 2015). Thus, rise in the bargaining power of the customers would result in comparison of price amongst the customers. As a result, they would tend to contrast prices and select the cheapest option available. Thus, these influential dynamics would bring the bargaining power of the customers to an increased moderate level.
It has been assessed that Woolworths Limited is a retail organisation, which denotes that it does not manufactures the products it sells. Instead, the organisation is engaged in controlling the distribution network of its products. It goes directly from the producers to regional or national centre of distribution, in which quality certification is made for direct transportation to stores. With the help of this system, the organisation has minimised its costs by $2.5 billion in 2015 (Mittelstaedt, Kilbourne and Shultz 2015). For obtaining food items, it collaborates with the local suppliers for extending support to the local producers to assure development and growth of the local organisations. Moreover, the organisation is involved in owning and operating each truck and centre of distribution associated with the distribution network. Thus, Woolworths Limited has made a favourable position for preventing staff strikes to enable higher control for assuring shipment punctuality.
Woolworths Limited and Wesfarmers are the two leaders in the Australian retail industry, in which Aldi poses a serious threat by offering lower-priced products to the customers. Wesfarmers In addition, Wesfarmers has over 100,000 staffs and 700 outlets in Australia and it owns a major portion of the market share. In 2010, the organisation has adopted lower pricing strategy for becoming the leader in the market. In the context of online shopping, Coles enjoys the top position in the market. However, there is variation in price for a basket of fresh vegetables among the three organisations. In Woolworths, this would cost $113, while in Wesfarmers; the cost would be $114. In case of Aldi, the price of such basket would cost the customer $87. Finally, Aldi concentrates on fixed cost advantage system for pricing its products (Madhavaram, Granot and Badrinarayanan 2014). However, Wesfarmers functions on daily basis and it focuses on competitive pricing strategy for pricing its products.
The other factors affecting the overall business performance of Woolworths Limited include the following:
The Australian Competition and Consumer Commission and Trade Practicing Act have favoured the retail industry in Australia through provision of grants. Hence, the legal factors favour enhancement and development of the business services of Woolworths Limited.
The position of Woolworths Limited is advantageous because of “Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA)”. This agreement covers two countries, in which Woolworths Limited has worked as a single community for catering to the needs of the customers (Mallen 2013). Both the foreign and domestic shareholders are secure due to the political stability of the two nations.
The organisation has introduced self-checkout machines in all its stores for enabling the customers in weighing, scanning and making payment for its grocery and food products with the help of cash, debit card and credit card. In addition, it has deployed “Service-Oriented Architecture” software for identifying and monitoring the drawbacks in its operational procedures and services in appropriate time, which would help in minimising its overall costs (Palmer, Simmons and Mason 2014).
The following methods are used on the part of Woolworths Limited to collect information about 5Cs:
The potential market segments available to Woolworths Limited include the rich individuals and higher middle-class earners. This is because it aims at contributing to the development of the society along with laying stress on the environmental needs of the nation’s people. However, the target market segment would include all age categories for maintaining competitive edge in the market (Wei, Samiee and Lee 2014). The target market needs to be approached through product customisation for enhancing the customer relationships. In addition, the favourable economic conditions would help Woolworths Limited to design target market strategies effectively.
Value proposition:
The primary activities would take into account inbound logistics, outbound logistics, operations and services provided to the customers. In case of food sourcing strategy, Woolworths Limited has adopted the right strategy by obtaining resources from the local suppliers to extend support to the local manufacturing firms. However, as the retention rate of the employees is high in Woolworths Limited, it needs to recruit highly skilled human resources at fair pay. In addition, as the organisation employs different classes of people from different nations, it needs to arrange special training programs for them to minimise the communication gap (Zeriti et al. 2014). Although the infrastructure facility of the organisation is highly advanced, it needs to improve it further for increasing its global presence. This would help the potential customers to avail the products of the organisation even from distant places.
Since Australia is a broad market, Woolworths Limited is required to choose the positioning strategy fitting under the mentioned circumstances. Hence, it needs to cut its product price to a certain extent for maintaining sustainability in the Australian retail industry. Although the organisation might face certain issues due to such strategy in the short-run; however, it would be beneficial in the long-run. It would mainly focus on providing additional benefits to the customers. Promotional campaigns need to be innovative by depicting unique selling proposition to maintain competitive edge in the market.
The following marketing mix would be extremely beneficial to Woolworths Limited in improving its overall business performance:
The products of Woolworths comprise of vegetables, meat, fruits and packaged goods. In addition, it has started selling magazines, stationery items and DVDs. However, it needs to diversify its product base for providing a wide range of choice to the customers. It would help the customers to fulfil their needs.
The organisation tends to maintain competitive pricing strategy for its products in the market. Therefore, it needs to initiate special reward programs for the customers where the customers could avail products at discounted rates. Hence, when such shopping cards would be issued, it would enable in tracking purchases. There is no requirement for retaining paper receipts.
At present, Woolworths Limited has above 1,000 stores in Australia, out of which nearly 950 are superstores and others are convenience stores. In addition, the operations are made in online platform as well. However, as most of the superstores are located in tertiary locations, it needs to open up a few stores in primary locations for boosting up its declining sales.
Woolworths Limited has always been innovative when it comes to promotional activities. However, it has never used billboards and pamphlets in order to promote its products, which denotes that the organisation does not use offline platform for promotional activities. Thus, they could use these promotional techniques for attracting the passers-by, which would help the organisation in increasing its overall sales and profitability.
At present, the employee base of Woolworths Limited is around 2,000. However, it needs ti be increased further by 1,600 employees to ensure the overall business success. Adequate training must be provided to the newly recruited staffs so that they could develop strong bonds with the customers.
In order to improve the process mix of the organisation, Woolworths Limited needs to use updated billing technology software coupled with knowledgeable support staffs. In addition, customer feedbacks need to be gathered carefully to maintain competitive position in the market.
It has been observed that Woolworths Limited maintains cleanliness and attractiveness in each of its stores. However, they need to place offers in such a manner that they could attract the potential customers. In addition, they need to provide environment-friendly bags for discharging the purchased items to the customers.
References:
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Baker, M.J., 2014. Marketing strategy and management. Palgrave Macmillan.
Bharadwaj, S., 2015. Developing new marketing strategy theory: addressing the limitations of a singular focus on firm financial performance. AMS review, 5(3-4), pp.98-102.
Burke, M. and Draper, S., 2014. Marketing strategy for small diameter Douglas fir.
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Ding, M., Eliashberg, J. and Stremersch, S., 2014. Innovation and marketing in the pharmaceutical industry. Emerging Practices, Research, and Policies. New York: Spring Science. Print.
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