Woolworth’s supermarket group started its operations in the June of 1924. Initially it was established as a small retail store in the Pitt’s street of Sydney. However, the market expansion of Woolworths increased by 21% in the first 5 years of its business. This started to draw the attention of the shareholders of the organisation and Woolworths increased its dividend from 55 in 1924 to 20% in 2028 (refer to the appendix). Initially the company focused on some of the basic strategies like incorporating a wide range of products including grocery apparel, home decor and essentials and other products along with processing and finished food. The organisation always valued the policy of adapting innovative policies to ensure customer satisfaction. This prompted them to introduce, receipt printing cash machine first in the world among all major supermarket chains. The organisation since its advent has also followed the policies of keeping prices low as well as giving cashbacks.
1.2 Industry Background
The Australian retail sector has adopted three primary retail strategies in general. The first is the customer research and analytics policy. Major retail organisations like Woolworths or Harvey Norman have adopted the strategies of customer behaviour recording. They study the purchasing preferences of the customers closely. According to Bhakoo, Singh and Chia (2015), major companies like Billabong uses customer data and sends discount offers on similar products to the customers by means of email and electronic messages.
2. Findings and Analysis 2.0 5Cs of the organisation
The 5Cs analysis aims at analysing the external environment in which a company operates and also sheds light on the marketing strategies of the company. The major factors that the analysis focuses upon are: company, competitors, Context, Collaborators and the customers.
2.1 SWOT analysis of the marketing management of Woolworths
2.1.1 Strengths
Woolworths is counted among the top peering retail companies of Australia. The market positioning of the company allows them to exploit the Australian customer market in a better way. The organisation has gained a strong market position by means of strong technological resources, sound human resource management and well-knit network of stores across the country. Recently, the organisation has adopted the policy of reducing its carbon footprint by 1.5% also. Moreover, Woolworths is the only organisation that has a policy of zero food wastage (woolworths.com.au, 2018).
2.1.2 Weaknesses
The prime weakness of Woolworths is the domestic growth strategy. This allows the organisation to optimise and escalate in the domestic operations only. However, other retail brands operating in Australia like Bing Lee or Bakers Delight have a strong international presence. As an outcome, the organisations have a wider source of revenue generation. Woolworths actively operates chiefly in Australia and in the neighbouring countries where the demographic purchase pattern of the customers are almost similar. Moreover, as per Bndiguel (2013), higher carbon emission and other instances like employee mishandling has imposed stringencies on the business operations of Woolworths according to the provisions of the Fair trading Act of Australia (Section 212). Again. The government has also0 restricted Woolworth from increasing its prices in the domestic sector.
2.2.3 Opportunities
The retail sector of Australia lacks peering companies Woolworths. This is great scope for increasing the market penetration. Other factors like computerisation in the retail stores or advancement in the supply chain will enable the organisation in securing stronger position in the future. The change in the lifestyles of the customers have made shopping a greater part of their life. According to Culley et al. (2017), after the invention of e-commerce, shopping is not only a necessity but a hobby and passion for the people of Australia. Therefore in order to address the change in the customer base of Australia, the organisation is adopting a multi-channel sales policy. They are growing to expands
2.2.4 Threats
The major threat of Woolworths in the Australian supermarket is the subtle competition with Cole’s supermarkets chain. In future also, Woolworths is going to face strong competition in terms of price competitiveness, market occupation and customer retention (Greenland, Johnson and Seifi, 2016). Along with that, the government intervention is another major aspect that would affect Woolworths’ business operations in Australia.
|
SWOT table for marketing competency of Woolworths |
|
|
Strength · Woolworths is one of the best retail chains in Australia · Strong market presence due to technological innovation |
Weaknesses · Domestic expansion policy · Higher Carbon emission level of Woolworths |
|
Opportunities · Computerisation in the retail stores or advancement in the supply chain will enable the organisation in securing stronger position in the future |
Threats · the subtle competition with Cole’s supermarkets chain · government intervention |
Table 1: SWOT analysis of Woolworths’ market strategies
(Source: Zakaria, 2016, p.26)
2.2 Consumer Behaviour Theory
The Economic man model of shopping has become popular in Australia since the last decade. Online shopping has told upon the conceptualisation of shoppers. About 59% of the Australian shoppers are interest to shop online more than shopping from physical stores (Williams, 2015). In response of this strategy
Another trend among the Australian shoppers is the behaviourist approach of the customers. Majority of the Australian customers focus on the same factors while shopping. That is why, the analysis of the behaviourist trends of the customers is important for the major supermarket chain is that have a large customer base. Since 2012 to 2016, majority of the customers have searched the frontline search engines for apparel trends and styles in the country. This reflects that purchasing trends have played a major impact on the customers’ mind (Gunawardena et al. 2014).
Again, in the recent years, the customers have become price sensitive. Customers are nowadays more interested in buying product form the online stores. The major products that customers buy online are clothing, electronics, household goods, sports equipment, furniture, grocery, baby care and so on. Hence, it is evident that major categories of supermarket products are readily available online and customers are mostly liking to purchase them online.
2.3 Porter’s Five Forces analysis
Threat of new entrants
This is not a major threat for Woolworths. They are listed among the top listed retail brands of Australia. Besides, Woolworths have huge presence in the whole of Australia with over 600 physical and franchise stores. The range of products is also high. As an outcome, new retail brands would not be able to gain strategic advantage over Woolworths in Australia.
Bargaining power of Suppliers
Majority of the supermarket chains in Australia buy their products from numerous suppliers. That is why they always have acompetitive advantage over them. However dominant suppliers who have a strong market presence have the power to determine the profit margins of Woolworths. Particularly the suppliers in the food and staples sector in Australian market have a strong hold on the market and thus influence the business of Woolworths and other supermarket chains (Hicks et al. 2015). Besides Woolworths also do not haver third party tie-up with major suppliers that retail brands of Europe like Wal-Mart have. They are the most potential collaborators of Woolworths.
Bargaining powers of buyers
Majority of the customer base comprise of individual buyers who have a high bargaining power. Buyers always have the propensity to purchase the best offerings paying the minimum possible price. Thus the higher purchasing power of the customers are a threat top Woolworth’s retail. This is because potential customer have the capacity of forcing the company to decrease the price of its most needed deliverables.
Threats of new substitute products
Woolworths face high threat from the substitute products. Other major supermarket chains are always intended to introduce new products in the market. According to the ideas of Hingley, Lindgreen and Grant (2015), this market threat is threatening if it offers value proposition that uniquely differs from the current offerings in the retail industry.
Rivalry with the peers
Any increase in the overall productivity or the profitability of the supermarkets in Australia attracts the attention of its peers. Peers, in that case tend to drop down the process of the major products that are responsible for the variation and thus being a cease in the entire industry. Figure 1: Porter’s Five Forces analysis
(Source: Methner, Hamann and Nilsson, 2015, p.89)
2.4 PESTLE analysis of the marketing management of Woolworths
Political Factors
The Australian government in the last year spoke up to acknowledge the duopoly of the supermarkets in Australia. According to Hutchinson et al. (2015), the two market peers namely Woolworths and Coles have been influencing the entire market owing to the subtle market rivalry among them. As an outcome, the commoners of Australia have been forced to face the impact of this rivalry. This has been officially reported by the Australian Food and Grocery council. The Australian government has launched a three year prolonged plan to control Coles and Woolworths’ activities of squeezing suppliers. This is affecting the business of the supermarkets also. According to Johnston et al. (2017), the small retail enterprises are also affected by this dual rivalry also.
Legal Factors
Before entering new market domain or new business sectors organisations should keep in mind, some of the legal factors that might influence the business of Woolworths. The main law in this regard is the Anti-Trust law in Australian Food and Staples industry. According to the law, the business organisations in the retail business cannot develop monopoly over distributorship of the major products in the country. The second factor is the discrimination law. This law required the business organisations of Australia to treat their male and female employees alike. Moreover, company also needs to follow the consumer protection law and the e-commerce law of the country alike. According to the consumer protection law, the Australian company needs to address the consumer needs and grievances properly. Any customer who have been deceived by the comp any or its representatives in terms of service or product might seek resolution form the higher organisations. The company is entitled to positively address the grievances of the customers (mbaskool.com, 2018).
Economic factors
Owing to the stability of the value of the Australian Dollar and reduction of the inflation rate in the country, the sale of liquor, petrol, groceries and apparel have increased by 4.95 in Australia (Ramanathan, Subramanian and Parrott, 2017). The total sales value have increased by 57 million in the year. Hence, the market conditions are also favourable for the country. Again, the factors like a rise in the GDP of the country by 3.2% in the last 3 years have helped to increase the purchasing power of the people working in the organised sector if the country. Therefore with more disposable income, people would make bigger purchases. According to Methner, Hamann and Nilsson (2015), it is expected that the sales limit of the organisation would increase by 4.2% in the coming 5 years.
Social Factors
Woolworths have introduced a campaign of farm fresh products. They ensure deliverance of the products fresh from the farm within 24 hours to the store. This strategy had been highly acclaimed in the country since the Australians s generally favour farm fresh and organic products. Besides, they have introduce in store kitchens in their retail stores. This initiative is aimed at making the Australians understand the value of farm fresh products. The initiative is mainly handled by the distribution centre of the organisation at Perth. Various logistical challenges have prevented the organisation to launch the program in Australia. Finally, after establishment of proper network. The campaign have been launched. Besides the destination 0 program has also been highly acclaimed by the Australians.
Technological Factors
Recent technological inclusions like computerised billing in the major 250 stores of Australia have been very popular. The product clearance rate of Woolworths stores after the installation of the machines have increased by 1.7%. The reduction of the operational costs after the installation of automation have been AUS 1.6 million. As an outcome, the company has planned to declare a heavy discount on grocery and liquor (woolworths.com.au, 2018).
Environmental Factors
Woolworths Australia have planned a major strategy to prevent indiscriminate consumption of electricity. They have all of their refrigeration lot by LED lights. Recently, they completed lighting of 75% stores with LED also. As such, they have been able to save 1500 watts of electricity every quarter of the hour (Williams, 2015). Moreover, they have taken another big step in ensuring environmental sustenance through their zero food wasting campaign. Again, they are also building large water storage facilities to store rain water. About 27% of their water supply comes from the rain water harvested by the water tankers installed by them. Moreover, as per Ramya et al. (2017), internal drainage also enables them to save water.
2.5 BCG matrix for the marketing environment of Woolworths
Stars
The Stars for Woolworths are the high market growth rate of the retail business sector of the organisation. Moreover, the high market share of Woolworths (nearly 48% of the retail sector of Australia) is another Stars for the Company (Torquati et al. 2018).
Question Marks
The major question marks of Woolworths is the new and inexperienced management of the company under their new CEO Grant O’Brien. Another question mark is the 0.7% decrease in the food and liquor sales of the organisation. As per So et al. (2016), this is a negligible fluctuation of sales. However, this small change is going to have a big impact upon the revenue accumulation of the company since about 60% of the profit of Woolworths comes from their liquor, petrol and food sales (Teller, Alexander and Floh, 2016).
Cash Cows
The food and liquor section of Woolworths account for about 38% of the sales of Woolworths. Hence they are the cash cows of the organisation. In the last 12 years the sales of Woolworths have increased by 8.2%. The larger share of this increased sales might be credited to the sales hike gained by these two cash cows.
Dogs
In the financial year 2017 and 2018, the sales margin of Australian food have been the dogs of Woolworth. About 25 reports of poor quality of packaged and finished food has reached the consume3r grievance cell of the company. As an impact the organisation has lost 0.2% of its regular customers also. Hence, in response the farm fresh campaign has been launched by the company (Sutton-Brady, Kamvounias and Taylor, 2015).
3. Recommendations and Justifications
The competitive pricing strategy of Woolworths is commendable. However, in order to ensure the realisation of the long term goals of the company, the management needs to bring major changes in the strategy. They needs to implement the pricing strategy to fit the needs of the township customers. They need to make the products prices without compromising the prices. Besides that, Woolworths relies excessively on customer mapping.
The management of the company maps the customer criteria of a particular area and then opens new sales counter in the area. However, the other supermarket brands opens their outlets in an area and then projects the facility through planned marketing programs. Hence, Woolworths needs to open new stores more frequently in order to expand their customer’s base. This campaign should be a part of their effective market development strategy. Again, in order to expand their sales in the suburbs, Woolworths authority might considers opening their personal Woolworths stores in those areas, if building shopping complexes is not possible.
The first strategy would help them to develop the practice of spotting new target market more efficiently. Woolworth’s scouts have an effective strategy of market research, whereby they collect customer data that help them to get accustomed with the purchasing trends. However, the organisation has not made utilisation of the market data to innovate their facilities.
Another major advantage is the reduction of the operational costs. The operational costs of large and eloquent facilities in major city based shopping complexes are much higher in comparison to the smaller personal stores. Hence they would be more effective in implementing the strategy of economies of scale.
3.1 Marketing Mix for the Recommendations
3.1.1 Product
The major Woolworths products that deserves mention are grocery items like vegetables, processed meat, fruits and other packaged products. In order to make their product base more versatile, the organisation has started to sell stationery items along with DVDs and magazines. The choice of products that is available in Woolworths is versatile also. It includes local flavours, international produces and so on. Some major overseas products include Indian spices, South Asian Sea food, and silk products. Internationally designed jewellery is also available in the Woolworths store (Solomon et al. 2014).
3.1.2 Price
Woolworth’s product prices are similar or may be slightly higher than the average market price in Australia. The retailers focus more on promoting the premium quality of their p4roducts than reducing prices to attract customers. They offer heavy discount on their products at specific ti9mnres of the year also. Besides, they have a low price segment also. Again, they have a shopper club, where the members earn points on shopping. On collection of 2000 points, they get rebate of AUD 20 dollars.
3.1.3 Place
Woolworths have more than 950 physical stores in Australia. Most number of Woolworth’s stores are located in Melbourne and Victoria. Again the organisation also have dedicated stores, like Woolworths’ Home brand, Woolworths Fresh, Woolworth’s gold and so on.
3.1.4 Promotion
Marketing promotions have always been an effective strategy of the organisation. Various loyalty schemes like petrol pump discounts, shopping coupons and so on are provided to the customers of Woolworths.
3.2 Gap analysis
The major gaps that the Woolworths management needs to bridge are
Conclusions
Finally, in conclusion to this report, it might be commented that the incapacity of the employees in delivering to the demands of the customers is a big negative factor. The brand image of the company is going to be hampered for this issue. The supply chain management and the logistics are another fields of worry for the company also. The BCG matrix of Woolworths helps to conclude that the organisation is simply failing to capitalise on the market research of their scouts. Analysing the nature of the retail customers, it might be concluded that Woolworths needs to import more proficiency in projection of their own brand as well as their versatile product base. Resurrection of their customer retention and sales approach in the recommended manner will help the organisation to achieve brand loyalty in in the Pan-Pacific market.
Reference List
Bhakoo, V., Singh, P.J. and Chia, A., 2015. Supply chain structures shaping portfolio of technologies: Exploring the impact of integration through the “dual arcs” framework. International Journal of Physical Distribution & Logistics Management, 45(4), pp.376-399.
Bndiguel, F. (2013). 5 Effective Customer Retention Strategies for Retailers. (Growmap.com).
Culley, B., Graham, J., Kay, G., Norberry, J. and Wilson, S., 2017. Digital Marketing Plan: Naked Wines Australia. Newcastle Business School Student Journal, 1(1), pp.68-89.
Greenland, S.J., Johnson, L. and Seifi, S., 2016. Tobacco manufacturer brand strategy following plain packaging in Australia: implications for social responsibility and policy. Social Responsibility Journal, 12(2), pp.321-334.
Gunawardena, D., Bennett, L., Shanmugam, K., King, K., Williams, R., Zabaras, D., Head, R., Ooi, L., Gyengesi, E. and Münch, G., 2014. Anti-inflammatory effects of five commercially available mushroom species determined in lipopolysaccharide and interferon-γ activated murine macrophages. Food chemistry, 148(9), pp.92-96.
Hicks, B.J., McWhirter, B.K., McArthur, D. and Williams, B., Retail Technologies Corporation, 2015. Wearable mobile scanner system with mobile tablet having a mobile POS and enterprise resource planning application for POS customer order fulfillment and in store inventory management for retail establishment. 17(3), pp.1-28.
Hingley, M., Lindgreen, A. and Grant, D.B., 2015. Intermediaries in power-laden retail supply chains: An opportunity to improve buyer–supplier relationships and collaboration. Industrial Marketing Management, 50(5), pp.78-84.
Hutchinson, K., Donnell, L.V., Gilmore, A. and Reid, A., 2015. Loyalty card adoption in SME retailers: the impact upon marketing management. European Journal of Marketing, 49(4), pp.467-490.
Johnston, R., Stafford, J., Pierce, H. and Daube, M., 2017. Alcohol promotions in Australian supermarket catalogues. Drug and alcohol review, 36(4), pp.456-463.
mbaskool.com, (2018). Woolworths Marketing Mix.
Methner, N., Hamann, R. and Nilsson, W., 2015. The Evolution of a Sustainability Leader: The Development of Strategic and Boundary Spanning Organizational Innovation Capabilities in Woolworths. In The Business of Social and Environmental Innovation, 14(3), pp.87-104.
Nicasio, F. (2018). Customer Retention Strategies for Retailers: 6 Ways to Boost Repeat Sales and Loyalty. (vendhq.com)
Ramanathan, U., Subramanian, N. and Parrott, G., 2017. Role of social media in retail network operations and marketing to enhance customer satisfaction. International Journal of Operations & Production Management, 37(1), pp.105-123.
Ramya, S., Harshidaa, S., Gomathi, P. and Kochar, D., 2017. A Study on Performance Analysis of Fast Moving Consumer Goods (FMCG) Of Britannia Industries Limited. Imperial Journal of Interdisciplinary Research, 3(3), pp.1-18.
Rayapura, A. (2018). 5 KEY CUSTOMER RETENTION STRATEGIES FOR RETAIL. (zuora.com)
Sia, S.K., Soh, C. and Weill, P., 2016. How DBS Bank Pursued a Digital Business Strategy. MIS Quarterly Executive, 15(2), pp.1-19.
So, K.K.F., King, C., Sparks, B.A. and Wang, Y., 2016. Enhancing customer relationships with retail service brands: The role of customer engagement. Journal of Service Management, 27(2), pp.170-193.
Solomon, M.R., Dahl, D.W., White, K., Zaichkowsky, J.L. and Polegato, R., 2014. Consumer behavior: Buying, having, and being, Eds, 5th. London: Pearson.
Sutton-Brady, C., Kamvounias, P. and Taylor, T., 2015. A model of supplier–retailer power asymmetry in the Australian retail industry. Industrial marketing management, 51(8), pp.122-130.
Teller, C., Alexander, A. and Floh, A., 2016. The impact of competition and cooperation on the performance of a retail agglomeration and its stores. Industrial Marketing Management, 52(4), pp.6-17.
Torquati, B., Scarpa, R., Petrosillo, I., Ligonzo, M.G. and Paffarini, C., 2018. How Can Consumer Science Help Firms Transform Their Dog (BCG Matrix) Products Into Profitable Products?. In Case Studies in the Traditional Food Sector, 15(3), pp.255-279.
Williams, W., 2015. Investigation into the critical success factors for the implementation of a quick response supply chain strategy in the South African fashion apparel sector. Master’s in Business Administration (MBA), South Africa, University of Stellenbosch, 12(2), pp.1-97.
Zakaria, I., Rahman, B.A., Othman, A.K., Yunus, N.A.M., Dzulkipli, M.R. and Osman, M.A.F., 2014. The relationship between loyalty program, customer satisfaction and customer loyalty in retail industry: A case study. Procedia-Social and Behavioral Sciences, 129(12), pp.23-30.
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download