Marketing Strategies Of Coles And Woolworths In The Australian Supermarket Industry

Overview of Coles and Woolworths

Discuss about the Marketing Strategies of Australian Supermarket Chains.

The purpose of this report is to discuss marketing strategies of two supermarket chains, Coles and Woolworths respectively. Report will also focus on the process of implementing strategies in order to gain competitive advantage in the market and achieve industry based goals and objectives. As it is known to all that these two supermarket chains share immense competition in the Australian market (Knox 2015), a detail report will be made on the strategies they have been following in order to sustain in the competitive business environment (Špi?ka 2013). Their different process to deal with risks and which theories they have incorporated so far in order to increase the revenue those aspects will be elaborated. These two brands of retail industry cover almost 80% of the Australian market yet Woolworths presently is leading and has already gained success over Coles. It is true that Coles do not possess as many stores as Woolworths is currently operating yet the fact cannot be denied that Coles is undergoing a process of growing business. Both the companies have introduced attractive offers as well as engaged themselves in increasing customer loyalty programmes. The aim of this report to analyse the strategies adopted by these two brands in order to fight against threat of competition and achieve a decent market position.

Although, the number of retail businesses is higher yet there are very few supermarket chains in Australia, which are able to influence the retail market on a huge scale. Major retail companies of Australia, which are dominating the market includes Woolworths Ltd. and Coles Group Ltd. As well as the competition between these two brands are increasing as the time progresses.  These retail companies not only deliver wide range of best quality groceries but also work as one of the largest employers of the country. The large retail companies’ revenue influences the Australian economy greatly. Under this particular industry, how these two companies have implemented their promotional policies will be the agenda of this report.

Woolworths has started its journey from a small store in Sydney back in the year of 1924. It has become the largest supermarket chain of Australia by opening numerous stores and gradually achieved 31% market share (Arli et al.2013). In terms of almost every business aspect, such as, sales, profit, area coverage, number of outlets, literally the organisation is the largest. Apart from Australia, it has expanded its territory to some parts of New Zealand as well as initiated a joint venture in India collaborating with an Indian supermarket chain, Tata. Supermarket industry generally promises a prosperous future and in the case of Woolworths, a consistently powerful financial performance of the company has been noticed throughout.

Competitive Strategies

Coles Group Ltd. technically ten years older in the market as they introduced themselves in the year of 1914. The Melbourne based company offers fresh food materials (Hattersley 2013), grocery products and liquors which means they also offers the same wide variety of goods just like Woolworths. In the addition, they have developed an online product delivery application with the purpose of creating global approach. However, due to extensive expansion of Woolworths, the company lost its market share, hence achieved the rank of second largest retailer brand of Australia.

Therefore, it has been distinctly noticed that both the companies are trying hard to gain customers’ trust in order to retain the market position. There is a consistent competition between these two retail companies. With the purpose of attaining organizational objectives, supermarket chains keep introducing customer loyalty programmes. The process, which has been practiced mostly by the retail industry, is low-pricing policy. Daily low-pricing and promotional low-pricing policies hardly disappointment the organisation. These two Australian company’s methods of executing promotional tactics is going to be the central concern of the report.

For Woolworths their customers have always been prioritize across all the business stores operated by them. In order to satisfy the customers they have some policies to maintain within the organisation. They prefer to establish a healthy culture between the service providers in the stores and the customers with the belief that it will generate a sustainable progress in sales (Tan 2018). They ensure the entire system and process work excellently without any hazards, which is essential to provide a decent shopping experience to the customers. The company started its business with liquor to add more value and power to their brand name and undoubted it has been working in their favour (Wardle and Chang 2015). These are the basic strategies that the company follow and implement to fulfil goals and objectives. There is a process of collecting regular feedback from the consumers with the motto of recognising new opportunities and it helps to revise the faults within system. Company aims to serve the customers with best quality product and service, therefore their team try to “bring a little good to everyone everyday”. The strategies based on entirely customer’s requirement. As it is known to all that retailing is dynamic. The industry is going through a change (Burch, Dixon and Lawrence 2013) for several factors, such as, advancement of technology, customer’s choice and demand (Sacks et al 2015). Therefore, a consistent need can be observed to meet the customers’ requirement through innovation, hard work and incorporating online application to shop.

Customer Service and Policies

Although Coles group has more years of experience of operation retail industry, it is consistently lagging behind Woolworths. The company is concentrating on a programme to retrieve their customers by various pricing strategies and cutting down non-profitable brands from their collection. In order to get back the opportunities in the market they have identified the issues first and planned to move gradually resolving them before taking any leap. There is a rising dissatisfaction among the customers regarding price, quality of the product and comparatively poor service and systems. Coles has adopted several basic strategies like simplifying product range, implementing penetration pricing and assuring the quality of delivered product. As customer loyalty is the central concern to enhance business by recruiting efficient service provider team the organisation has been trying to provide better shopping experience. Organisation has realised the necessity to adopt the change (Booth and Whelan 2014) within the industry therefore, they have begun to prioritize the customer’s feedback in order to sustain in the competitive business environment.

As Coles group is facing challenges, by adopting penetrating pricing they are trying to gain a competitive advantage in the market. Australian retail industry has still scopes for this enterprise and by depending on prior customer loyalty, the organisation has proceed to engage themselves into further implementation of customer loyalty programme. Penetrating pricing strategy refers to a method of quoting low price initially with a purpose of a rapid growth in market share (Hu Chen and Hu 2016). The expectation is to distract customers from their regular choice and to at attract them towards new ranges of products. Apart from this, the management of Woolworths engages in innovation of their service, products and regular low-pricing policies. They offer a good deal of discount and combo offers. However, Coles penetration pricing is able to bring them their lost glory if implemented correctly.  Although, this pricing strategy has certain demerits Coles do not have any substitute methods to apply. All they can do is satisfy their customers in every way possible. Advantages will be numerous with the proper execution of this method. It can result in rapid growth of new product in the market as well as according to the porter’s five forces analysis the low price of the acts as a barrier and discourages the competitors to enter the business territory. The flow of distribution gets high and the relationship between the distributer channel and the company improves (Sutton-Brady, Kamvounias and Taylor 2015). Disadvantage includes customers’ expectation of long-term availability of a particular product in return of a low price. There are some consumers as well who misunderstood the strategy by developing a wrong conception about the product’s quality and brand, as it is available on a cheap range. However, retail industry is operating their regular functions by incorporating this strategy mainly as well as the competition between these two brands and the process they are applying can be considered as effective to achieve organizational goals and objectives (Lereboullet, Beltrando and Bardsley 2013).

Pricing Strategies

Conclusion

After developing a concept on the retail industry of Australia, it can be understood that the industry is greatly dominated by these two supermarket chains. However, Coles had been facing some internal and external issues for a long span of time as well as Woolworths has been maintaining the position of a strong competitor of Coles in the market. In the conclusion, it can be stated that, though they share a competitive relationship in the market both the companies come with a common objective and they follow a regular process of improvement to achieve that. That is where the competition lies. The theories applied by Coles in order to frame the strategies are working towards the organisation’s profit. On the other hand, as far as Woolworths’s strategy is concerned, being the largest supermarket chain, it is consistently maintaining the process of innovation and satisfying their customers to sustain a powerful competitive advantage in the market.

References

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Booth, S. and Whelan, J., 2014. Hungry for change: the food banking industry in Australia. British Food Journal, 116(9), pp.1392-1404.

Burch, D., Dixon, J. and Lawrence, G., 2013. Introduction to symposium on the changing role of supermarkets in global supply chains: from seedling to supermarket: agri-food supply chains in transition. Agriculture and Human Values, 30(2), pp.215-224.

Hattersley, L., 2013. Agri-food system transformations and diet-related chronic disease in Australia: a nutrition-oriented value chain approach. Agriculture and human values, 30(2), pp.299-309.

Hu, Z., Chen, X. and Hu, P., 2016. Dynamic pricing with gain-seeking reference price effects. Operations Research, 64(1), pp.150-157.

Knox, M., 2015. Supermarket monsters: The price of Coles and Woolworths’ dominance (Vol. 6). Black Inc..

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Sacks, G., Mialon, M., Vandevijvere, S., Trevena, H., Snowdon, W., Crino, M. and Swinburn, B., 2015. Comparison of food industry policies and commitments on marketing to children and product (re) formulation in Australia, New Zealand and Fiji. Critical Public Health, 25(3), pp.299-319.

Špi?ka, J., 2013. The Competitive Environment in the Dairy Industry and its Impact on the Food Industry. Agris On-Line Papers in Economics & Informatics, 5(2).

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, pp.122-130.

Tan, P.J., Corsi, A., Cohen, J., Sharp, A., Lockshin, L., Caruso, W. and Bogomolova, S., 2018. Assessing the sales effectiveness of differently located endcaps in a supermarket. Journal of Retailing and Consumer Services, 43, pp.200-208.

Wardle, J.L. and Chang, S., 2015. Cross?promotional alcohol discounting in Australia’s grocery sector: a barrier to initiatives to curb excessive alcohol consumption?. Australian and New Zealand journal of public health, 39(2), pp.124-128.