Balancing Industry Needs Against Global Competitiveness – Marketing Audit Of Woolworths Group

Company

Discuss about the Balancing Industry Needs Against Global Competitiveness.

According to Pride, Ferrell, Lukas, Schembri & Nininen (2015), marketing management is a process of planning implementing, organising and controlling various marketing practices in order to facilitate efficient and effective exchanges to ensure that products, service, promotion, advertisement and promotion reach their targeted market. This report will conduct a marketing audit of ‘Woolworths Group’ and evaluate different threats and opportunities faced by the firm. This report will evaluate current trends in growth, profitability and macro environment of the retaining industry in which Woolworths operates. This report will consider ‘Sunshine Marketplace’ as the market for Woolworths and evaluate different threats and opportunities which exist for the company. The location is is situated in Sunshine, Melbourne and it is a multicultural suburb. The population of the location is 9,768 according to 2016 census (Australian Bureau of Statistics, 2016). The primary demographic in Sunshine marketplace includes veteran soldiers who prefer to purchase Australian grown high-quality goods (Vietnamvetssc, 2013). The product selected in this report is fresh vegetables, fruits and meat that are offered by the company to its customers. This report will analyse the primary and secondary target markets for the company and discuss the level of involvement of the firm in the decision-making process. Further, positioning map for the marketplace will be given to after analysing the involvement and the competition.

Woolworths Group is one of the largest enterprises in Australia in terms of profits. The Bella Vista, New South Wales, Australia headquarters based firm was founded in 1924, and it operates in the retailing industry. The firm offers its services in Australia, New Zealand and India. The company is operating 995 supermarkets across Australia and 3,000 in total; it relies on assistance from more than 205,000 employees (Woolworths Group, 2018a). The corporation generated revenue of AU$1.53 billion in 2017 financial year, and its sales increased by 3.6 percent which 29 million customers every week (Chung, 2017). The key competitors of the firm include Wesfarmers, Coles, ALDI, and Dan Murphy.

The firm operates in retailing industry and offers its services through Woolworths Supermarket firm which is its subsidiary (Figure 2). The supermarket offers a wide variety of products including groceries, food, gold, liquor, dairy, pantry, pet supplies and many others to its customers (Woolworths, 2018d). The company offers online services to its customers through which they can purchase its products online, and the company delivers them to their homes. Woolworths Group is known for offering high-quality products to its customers. In the food department, the corporation source 100 percent of meat and 96 percent of all fresh vegetables and fruit from Australian farmers and growers, and they are marked with government authorised standards (Australian Food News, 2018).

Products/Services

Mostly, the customer base of Woolworths includes people who prefer to buy fresh Australian grown food products. Woolworth’s products prices are higher than compared to its competitors; however, its customers pay extra money because of high quality and freshness of products. A large number of veteran soldiers live in Sunshine marketplace that prefers to purchase high quality Australian grown fresh products.

Woolworths Group operates in the retailing industry, and it has captured a large retailing market in Australia and New Zealand. The corporation has a positive brand reputation for offering high-quality products to its customers.

The retailing industry is dominated by Woolworths, Coles and ALDI as they are the leading players in the market. The sales of retailing organisations are growing along with its profitability (Report Linker, 2018) (Figure 6). Although the industry is growing, however, it is facing a threat from online shopping websites such as Amazon. Recently, Amazon launched its services in Australia, and it can negatively affect the growth of offline retailing chains. Similarly, in Sunshine marketplace, the retailing sector is growing with supermarkets operating such as Big W, Woolworths and ALDI. In January 2018, a growth of 0.3 percent is reported in the retailing sector (Australian Bureau of Statistics, 2018). In the global retailing market, Woolworths Group is world’s 24^th largest leading retailer, and it holds 35.7 percent food retailing sector in Australia (Thomsen, 2017) (Figure 7).

The PESTLE analysis is referred to a framework which is used by marketers to analyse different external factors that influence a firm’s operations and profitability (Yuksel, 2012). It is an acronym for political, economic, social, technological, legal and environmental factors.

PESTLE Analysis
Political	· Stable political environment · High rate of employment generated · Threat of radical political change
Economic	· Economic stability · Growth in GDP · Increasing in purchasing power of customers
Social	· Lifestyle trends increase requirement of health and fresh food products · Demographic include people who prefer to purchase Australian grown products
Technological	· Woolworths offers services such as Visa Pay Wave, self-checkout methods, online shopping, and mobile applications for improving customer experience · Availability of online shopping and free delivery
Legal	· Compliance with different food safety, taxation, employment and other laws · Food safety standards issued by FSANZ · Compliance with Employment and Labour Law in Australia · Compliance with local laws in Melbourne
Environmental	· ‘Doing the right’ campaign for reducing carbon emissions · Announcement of ‘circulate economy approach’ adaptation by 2020

The political environment in Australia is stable, and Woolworths Group has a positive relationship with the government. The firm employs more than 202,000 individuals and overall the industry employs more than 416,557 people (Australian Bureau of Statistics, 2014). Any rapid change in political environment can negatively affect the profitability of Woolworths Group. In Sunshine marketplace, different local laws implemented by the government are necessary to be followed by the corporation. For example, Activities Local Law 2009, Environment Local Law 2009 and Conduct of Meetings Local Law 2010 are some laws that are necessary to comply by Woolworths Group while operating in Sunshine marketplace (City of Melbourne, 2018). Any radical change in the political environment of Australia caused due to rapidly changing international political environment can negatively affect the company’s operations.

Consumer

The primary operations of Woolworths Group are situated in different parts of Australia and New Zealand, and the stable economic conditions in both the countries provide a positive working environment for Woolworths Group. The economic stability results in improving people’s living standards, and they prefer to purchase high-quality products. In 2017, two percent growth in nation’s economy has been recorded which increased its GDP to $1.261 trillion (Country Economy, 2017). Although the service industry primarily dominates the country’s economy, the retailing industry is also a key contributor to national income. Wesfarmers Limited and Woolworths Group are two of the highest earning corporations in Australia, and both have extensive interest in the retailing sector (Pash, 2017). In Sunshine marketplace, the economic condition is stable, and population include mostly mid to high earning individuals who prefer to purchase high-quality products from Woolworths.

The popularity of Corporate Social Responsibility (CSR) approach is growing in Australia, and Woolworths Group has also implemented a CSR model to fulfil its social responsibilities (Woolworths Group, 2018b). In Sunshine Marketplace, customers prefer to purchase high quality Australian grown products from Woolworths Group since it offers a wide variety of freshly grown products. The firm offers 100 percent fresh meat and 96 percent fresh fruit and vegetables in its supermarket’s chains (Australian Food News, 2018). In Sunshine marketplace, a large number of patriotic veteran soldiers live who prefer to purchase products that are grown in Australia and Woolworths is the only place that offers such products.

In retailing sectors, companies use technology to improve customer experience by offering easy checkout, free home delivery, online shopping and other facilities. Woolworths Group invests in modern technologies to improve customer experience, for example, the company use Visa Pay Wave, self-checkout methods, online shopping, mobile applications and other technologies to improve efficiency of operations and customer experience (Budmar, 2011). In Sunshine marketplace, the corporation offers its online services and home delivery to customers. Customers can use its mobile application to book fresh products, and the company directly delivers them to their homes.

Woolworths Group has to comply with different food safety, employee rights, taxation policies and other legislation implemented by the government in Australia and New Zealand. The company comply with food safety standards issued by FSANZ (Food Standards Australia New Zealand) to ensure that its food products are fresh and it did not offer any hazardous products to its customers that can be detrimental to their health (Ariyawardana & Collins, 2013). The firm also complies with the Employment and Labour Law in Australia for avoiding discrimination among employees and providing them salaries as per minimum wages guidelines (Azizul Islam & Jain, 2013). In Sunshine marketplace, the organisation complies with different local laws such as Activities Local Law 2009, Environment Local Law 2009 and Conduct of Meetings Local Law 2010 (City of Melbourne, 2018).

Industry Analysis and Market Trends

As per its CSR model, the firm focuses on minimising its environmental impact and sustaining the development of environment in Australia. For example, the corporation started ‘Doing the right’ campaign for reducing 40 percent of their carbon emissions, saving 200 million litres of water, 3.4 million re-usable crates and zero food waste (Woolworths, 2018b). The company identify different aspects of its value chain that cause carbon emissions, and it collaborates with suppliers to reduce its carbon footprint. The corporation has announced that it is adopting a circular economy approach by 2020 that focuses on reducing carbon emissions, improving recyclability, use of natural refrigerants and zero food waste (Woolworths Group, 2018b). In Sunshine marketplace, the firm continuously improve its supply chain to reduce carbon emissions and keeping products fresh.

The competitors of Woolworths Group include other large retailing brands such as Coles, ALDI, Big W, Myer and others. The market leaders are Woolworths, Coles, ALDI, and Big W and market followers include Dan Murphy, Metcash, Myers and others (Morning Star, 2018). The main competitor of Woolworths in Sunshine marketplace is ALDI which is a Germany-based retailing chain that is known for offering low priced products to its customers. The firm has established more than 500 stores across different locations in Australia more than 10,000 globally (ALDI, 2018), and its sales and revenue is growing continuously which makes it the primary competitor of Woolworths

Following is a comparison between strengths and weaknesses of ALDI and Woolworths.

	Woolworths	ALDI
Strengths	· Current market leader in Australian retailing industry · Positive brand image of offering high quality and fresh Australian grown products · Effective supply chain which enables it to offer fresh vegetables, fruits and meat · Large market capture with 995 stores across Australia · Effective CSR model that create a positive brand image	· In just 12 weeks, ALDI’s sales increased by 19.8 percent (Butler, 2017) · Strong international presence with more than 10,000 worldwide (ALDI, 2018) · Offers relatively inexpensive products and heavy discounts · Low operating costs
Weaknesses	· Lack of Global presence · Lack of low priced products and discounts availability · Failure of online services · High operating costs which reduces its net profits	· Still relatively small in Australia than compared to competitors such as Woolworths and Coles · Patriotic Australian did not prefer to purchase products from foreign company · Lack of high-quality products · Lack of Effective CSR model

Major target market of Woolworths includes mid to high-income individuals who prefer to buy high quality Australian grown food products. Further, customers and organisations buy products from Woolworths for daily purposes.

The primary market for Woolworths includes mid to high-income individuals appreciate freshness of food products and prefer to pay extra for higher quality. Due to effective supply chain management, Woolworths directly buy fresh fruits and vegetables from local Australian farmers and supply them to their customers. A large number of veteran soldiers live in Sunshine marketplace that prefers Australian grown products over other products offered by companies such as ALDI and Big W. They are middle to high earning individuals who purchase fresh food products only. It has established a B2C approach which allows them to directly sell fresh food products through online website (CMO, 2016). Many of the customers are old, and they prefer to purchase products through mobile application of Woolworths and direct deliver at home. The secondary market for Woolworths in Sunshine marketplace includes individuals who are health conscious and prefer to buy fresh vegetables and meat products. However, it is difficult to forecast the demand of these customers because change retailers if other companies are offering heavy discounts.

Growth and Profitability

Woolworths Group’s level of involvement in the decision-making is considerably high, and its top-level management closely monitors customers’ trends to create effective business policies. Following are different examples of how it relates to the decision-making procedure.

Woolworths Group understands that its primary competitive advantage is effective supply chain which enables it to offer fresh vegetable and meat products to its customers. The firm has partnered with local Australian farmers that provide freshly grown vegetables and meat to the company. The corporation has also improved the efficiency of its supply chain which reduces the time taken between collections of products to offering them which ensure that products remain fresh. The company has introduced packed food for its customers in Sunshine marketplace since they prefer ready-to-cook meals (Figure 3 & 4).

Prices of Woolworths Group’s products are relatively higher than compared to its customers. In order to maintain trust of their customers and justify high product rates, the company has introduced ‘Fresh or free’ program (Figure 9). In this program, the company guarantees that its products are fresh otherwise they refund their customers. The corporation also focuses on packaging of their products to ensure that they remain fresh.

Woolworths Group has implemented a B2C model in which customers can book order for food and other products online the firm delivers them directly to their homes. The top-level management has decided to implement a B2C model because most of the customers living in Sunshine marketplace are old retired people and it saves them from visiting their stores.

In order to meet the requirement of customers, the corporation is renovating its store in Sunshine marketplace for making the customers’ shopping experience more comfortable. The structure of the store will be easier for old people, and employees will assist them during shopping. It shows how closely Woolworths Group is involved in the decision-making process and how they implement strategies for improving customer experience.

The perceptual map shows that Woolworths Group is positioned above other competitors in terms of quality and price. As compared to its competitors, the firm focuses on maintaining high quality in its products, and it only offers fresh vegetable, fruit and meat to its customers. Coles and ALDI, on the other hand, are known for offering inexpensive products along with heavy discounts. In Sunshine marketplace, customers prefer to purchase food products from Woolworths since it only offers fresh products and also offers online shopping and home delivery facilities. It provides a competitive advantage to Woolworths in Sunshine marketplace and assists them in expanding their business.

Macro Environment – PESTLE Analysis

Conclusion

In conclusion, Woolworths Group has a positive brand image of offering fresh and Australian grown food products to its customers, and it is the second largest firm in terms of revenue in Australia. The firm is highly involved in the decision-making process, and it introduces new strategies for improving customer experience. The company has adopted a B2C model for providing quick services to its customers and improving their shopping experience. In Sunshine marketplace, the firm has generated a competitive advantage over its primary competitor ALDI because it offers fresh products to its customers. This strategy assists in improving company’s profitability and sustaining its future growth.

References

ALDI. (2018). Who We Are. Retrieved from https://corporate.aldi.com.au/en/about-aldi/

Ariyawardana, A., & Collins, R. (2013). Balancing industry needs against global competitiveness: a challenge for the Australian vegetable industry. Outlook on Agriculture, 42(3), 155-161.

Australian Bureau of Statistics. (2014). Retail and Wholesale Industry, Australia, 2012-13. Retrieved from https://www.abs.gov.au/ausstats/[email protected]/0/67D8BA080BA9E45CCA2569770000FA7D?Opendocument

Australian Bureau of Statistics. (2018). 2016 Census QuickStats. Retrieved from https://www.censusdata.abs.gov.au/census_services/getproduct/census/2016/quickstat/SSC22383

Australian Bureau of Statistics. (2018). Retail Trade, Australia, Feb 2018. Retrieved from https://www.abs.gov.au/ausstats/[email protected]/mf/8501.0

Australian Food News. (2018). Woolworths commences Country of Origin label rollout. Retrieved from https://www.ausfoodnews.com.au/2016/10/24/woolworths-commences-country-of-origin-label-rollout.html

Azizul Islam, M., & Jain, A. (2013). Workplace human rights reporting: a study of Australian garment and retail companies. Australian accounting review, 23(2), 102-116.

Budmar, P. (2011). Woolworths adopts Visa payWave technology for checkouts. Retrieved from https://www.arnnet.com.au/article/387304/woolworths_adopts_visa_paywave_technology_checkouts/

Burrell, S. (2018). Woolworths, Coles and ALDI compared. Retrieved from https://www.news.com.au/lifestyle/health/diet/woolworths-coles-and-aldi-compared/news-story/f047c0892a8295cd4b32ada4424e3266

Butler, S. (2017). Strong sales growth at Aldi and Lidl takes their market share to 12%. Retrieved from https://www.theguardian.com/business/2017/may/31/aldi-lidl-sales-growth-uk-market-share-supermarket-raise-prices

Chung, F. (2017). Woolworths reports full-year profit of $1.53 billion. Retrieved from https://www.news.com.au/finance/business/retail/woolworths-reports-fullyear-profit-of-153-billion/news-story/1b8b3fe2d88e51585a9a29fcc42594fb

City of Melbourne. (2018). Acts and local laws. Retrieved from https://www.melbourne.vic.gov.au/about-council/governance-transparency/acts-local-laws/Pages/acts-local-laws.aspx

CMO. (2016). How Woolworths reinvented its B2C model to meet the B2B market. Retrieved from https://www.cmo.com.au/article/595918/how-woolworths-reinvented-its-b2c-model-meet-b2b-market/

Country Economy. (2017). GDP rises 2% in Australia in fourth quarter. Retrieved from https://countryeconomy.com/gdp/australia

Morning Star. (2018). Woolworths Group Ltd. Retrieved from https://financials.morningstar.com/competitors/industry-peer.action?t=WOLWF&region=usa&culture=en-US

Pash, C. (2015). CHART: Aldi’s sales numbers show how hard the German supermarket group is pushing into Australia. Retrieved from https://www.businessinsider.com.au/chart-aldis-sales-numbers-show-how-hard-the-german-supermarket-group-is-pushing-into-australia-2015-7

Pash, C. (2017). Australia’s top companies for 2016. Retrieved from https://www.businessinsider.com.au/australias-top-companies-for-2016-2017-3

Pride, W. M., Ferrell, O. C., Lukas, B. A., Schembri, S., & Niininen, O. (2015). Marketing principles. Boston: Cengage Learning.

Report Linker. (2018). Retail Market Research Reports: Latest Retail Industry Trends & Statistics. Retrieved from https://www.reportlinker.com/ci02193/Retail.html

The Stand Coolangatta. (2018). Fresh Food & Grocery. Retrieved from https://www.strandcoolangatta.com.au/shopping/fresh-foods-grocery

Thomsen, S. (2017). CHART: Here’s how big Aldi now is in Australia. Retrieved from https://www.businessinsider.com.au/chart-heres-how-big-aldi-now-is-in-australia-2017-5

Vietnamvetssc. (2013). A list of veteran’s retreats. Retrieved from https://vietnamvetssc.org.au/a-list-of-veterans-retreats/#.WsyJ0C5ubIU

Woolworths Group. (2018a). About Us. Retrieved from https://www.woolworthsgroup.com.au/page/about-us

Woolworths Group. (2018b). About Us. Retrieved from https://www.woolworthsgroup.com.au/page/about-us

Woolworths. (2018a). About Us. Retrieved from https://www.woolworths.com.au/Shop/Discover/about-us

Woolworths. (2018b). The Australian Food Industry – Retail Sector: Woolworths. Retrieved from https://retailsector-woolworths.weebly.com/

Woolworths. (2018c). Product Detail. Retrieved from https://www.woolworths.com.au/shop/productdetails/443314/woolworths-simply-stir-fry-vegetable-superfoods

Woolworths. (2018d). Our Brands. Retrieved from https://www.woolworths.com.au/shop/discover/our-brands

Yuksel, ?. (2012). Developing a multi-criteria decision making model for PESTEL analysis. International Journal of Business and Management, 7(24), 52.