Strategic Marketing Analysis Of Coles Supermarket

Internal Analysis of Coles Supermarket Using VRIO Framework

Marketing defines the activities associated with an organization towards buying and selling its products and services (Payne and Frow 2014, p.215). This study will discuss the strategic marketing of Coles Supermarket for assessing its external and internal markets. Coles Supermarket is highly recognized Australian Supermarket, which is owned by the parent company Wesfarmers (Coles Supermarkets 2017). The study will describe the macro environment of the organization through VRIO model. The external market of the organization will be analyzed through PESTLE and Porter’s Five Force Model. The study will also analyze the micro environment of the organization through Stakeholder analysis. Furthermore, the market size of the organization will be assessed through BCG model. Based on the assessment of micro and macro market, the study will explore the SWOT analysis of the organization.  

Resource and Capabilities	Valuable	Rare	Inimitable Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	Organized	Competitive Advantage
Competence to Leverage IT	Yes	Yes	Yes	Yes	Sustained Competitive Advantage
Strong and Extensive Distribution Network	Yes	Yes	Yes	Yes	Sustained Competitive Advantage
Customer Service	Yes	Yes	No	Yes	Temporary Competitive Advantage
Strong Brand Reputation	Yes	Yes	Yes	Yes	Sustained Competitive Advantage
Wide Range of Product Category	Yes	No	No	Yes	Competitive Parity
Effective Price Positioning	Yes	Yes	Yes	Yes	Sustained Competitive Advantage
Strength and Dedication of Human Resource	Yes	Yes	No	Yes	Competitive Parity

Table 1: Internal Analysis of Coles Supermarket Using VRIO Framework

(Source: Kim, Shin and Min 2016, p.5650)

According to Kumar, Sharma and Gupta (2017, p.167), Coles Supermarket has strong competence in leveraging information technology for smooth business operation. The organization has perfectly blended the advantage of information technology with their business towards providing excellent customer service. Moreover, Coles has initiated online shopping system for the customers, where they can get delivery of their products by sitting at home. It reduces important time of the customers leading to customer satisfaction and increased sales volume. Furthermore, the organization has also initiated self-service checkout system, where the customers need not to stand in the long queue for make payment. In such system, the customers can make payment for their purchased products by themselves on a specific machine. On the other hand, Lee et al. (2013, p.560) opined that strong brand reputation of Coles Supermarket attracts huge customers for purchasing the products. Brand reputation also enhances the loyalty level of the customers, which enhances the sales volume of the organization. In this way, usage of IT and strong brand reputation of Coles Supermarket has led to sustained competitive advantage.

DeTienne and DeTienne (2017, p.292) pointed out that wide variety of product ranges of Coles Supermarket drives competitive parity for the organization. Moreover, the organization has wide variety of products ranging from baby product to bakery, dairy, deli, Cole mobile, gift card, liquor meat and many more. Such variety of products meets every day needs of the customers, which add to increased sales volume profit level of the organization. Apart from that, Osuagwu (2016, p.145) stated that Coles has gained sustained competitive advantage in the market through its low cost strategy. Moreover, low pricing strategy has enhanced the sales volume of the organization and helped it in gaining high competitive advantage over the competitors.

Stakeholders	Contribution	Legitimacy	Willing to Engage	Influence	Necessity of Involvement
Shareholders, owners and investors	High	High	High	High	High
Employees	High	Low	High	High	High
Customers	High	Low	Low	High	Low
Suppliers	High	Low	Low	High	Low
Communities	Low	Medium	Low	Medium	Low
Government	Medium	High	Low	High	Medium
Media	Low	High	Low	High	High
Competitors	Low	Low	Medium	High	Low

Micro Factors Using Stakeholder Mapping Model

Table 2: Micro Factors Using Stakeholder Mapping Model

(Source: Finch, Nadeau and O’Reilly 2013, p.60)

Shareholders, business owners and business investors of Coles Supermarket have huge contribution and influence on the business. Moreover, they also have huge legitimacy and authority on the business process. They frame the business policies for proper and profitable business operation of the organization. Miles et al. (2015, p.100) opined that employees are most important part for the business success of Coles Supermarket. However, they do not have much legitimacy on the business operation. High level of employee involvement and their dedication to work has built the success level of the organization. Customers are the most important stakeholder for the organization towards enhancing the profit level. Moreover, increases purchase from the customer side enhances the profit level of the organization. They have high influence on the success level of the organization, but they do not have much involvement in the business process. On the other hand, Venter and Van Rensburg (2014, p.3398) opined that suppliers have huge contribution on the business success by providing unique quality products. Moreover, the unique source of suppliers has maintained the quality level of the organization leading to competitive advantage over the competitors in the retail market. Hence, they have high level of influence on business success, but they do not have much involvement in the business process.

Community is an important part for maintaining the image of the organization for longer times. Hence, they have medium legitimacy and influence on the success level of the organization. Furthermore, the organization also maintains the organizational reputation through sponsorship and community development. According to Kanagal (2017, p.35), Government bodies have high level of authority on the business process of Cole Supermarket. Moreover, the organization has to operate its business being within the framework set by the government. Furthermore, Government also have medium contribution on the success level of the organization. Moreover, the exemption in government tax often reduces the overall cost of the organization, which contributes in the profit level of the organization (Heirati, O’Cass and Ngo 2013, p.90). Competitors do to have any contribution in the business success, but their pricing strategy and selling strategy have high influence on the business success of Coles Supermarket.

PESTLE ANALYSIS OF COLES SUPERMARKET
POLITICAL FACTOR	· Stable political condition of Australia develops the business condition of Coles Supermarket · Political support for industrialization helps the organization in business growth · Frequently changing government regulation often discourage the investors to invest in business
ECONOMIC FACTOR	· Upward economic situation of Australia has increased the profitability of the business · Changes in the inflation rate hampers the pricing strategy of the organization · Developed economic condition had reduced the interest rate in the banks, which help the organization in getting loans having low interest rate
SOCIAL FACTOR	· Growing economic condition has increased the spending power of the people, which hand increased the sales volume of the organization · Growing inclination of people towards shopping from retail organizations and supermarkets has increased the sale of Coles Supermarket · Changing buyer pattern of the customers often hampers the business of the organization
TECHNOLOGICAL FACTOR	· Technological advancement has helped business progress of Coles Supermarket · Online shopping facility has increased sales volume of the organization · Self-checkout system has increased the satisfaction level of the customers · Usage of digital and social media has increased the promotional opportunity of the organization
LEGAL FACTOR	· ACCC legal action seems to be a threat for the organization · Call for strict mandatory product standard enhances product quality · Increasing corporate tax has enhanced the business cost
ENVIRONMENTAL FACTOR	· Strict environmental laws often influence the business process · The concept of eco-friendly supermarkets leads to adherence with environmental laws

Table 3: Macro Factors Analysis through PESTLE Model

(Source: Miles et al. 2016, p.40)

PORTER’S FIVE FORCE MODEL ANALYSIS OF COLES SUPERMARKET
THREATS OF NEW ENTRANTS	· High investment requires for establishing new venture creates barriers for new entrants in retail industry · Huge market scope often encourage the new entrants to establish new venture in retail industry · High brand reputation of the retails like Woolworths and Coles seems to be threat for the new entrants · Coles Supermarket faces moderate threats of new entrants
THREATS OF SUBSTITUTES	· The substitutes of Coles Supermarket can be the local grocery shops · The quality of local grocery shops cannot be same as the retails like Coles Supermarket · High brand value helps the organization in beating the threats of the substitutes · Coles Supermarket faces less threats of substitutes
COMPETITIVE RIVALRY	· Fierce competition among the major players in the retail industry · Large market size helps in accommodating the market share among large scale retail supermarkets · Tough price competition among the major players leads to tough competition in retail industry · Coles Supermarket faces tough competition from the major players
BARGAINING POWER OF SUPPLIERS	· Retail industry is full of suppliers providing same products even at less market price · Suppliers always look for  branded organization, which have bulk orders of products · Wide availability of suppliers has reduced the bargaining power of the suppliers · Coles Supermarket face low bargaining power of suppliers in retail industry
BARGAINING POWER OF BUYERS	· Fierce price competition among the major retails has increased the bargaining power of buyers in retail industry · Wide availability of retail organizations has enhanced the bargaining power of the customers · Consumers do not have to put much effort in switching one retail to other · Coles Supermarket faces high bargaining power of buyers

Table 4: Macro Factors of Coles through Porter’s Five Force Model

(Source: Lisita, Prinsloo and Pelser 2015, p27)

PESTLE Analysis of Coles Supermarket

Considering the above BCG Matrix, it can be said that Coles, Woolworths and ALDI are the strongest competitors in Australian supermarket. Though it has been identified that Woolworths and Coles has started creating duopoly considering the past five years, however at present the government is helping through subsidy for new entries in the retail market (Coles Supermarkets 2017).

According to Roy Morgan (2016), in the year 2016, Coles has been found to hold the second largest position in retail supermarket chain with 33.2% market share. However, in 2017, according to Ausfoodnews.com.au (2017) Cole’s market share has started declining to 30.9%.

The main fall in the market share has been because of the rise of ALDI, which predominantly caters grocery items. However, recently the organization has started concentrating on other commodities. On the other hand, IGA has gained 9.8% market share in 2016, due to which the overall competition is extremely tough (Ausfoodnews.com.au 2017). It can be said that Coles is holding huge market size with more than 800 supermarkets throughout Australia however, as per competitive environment and threat from new entrants, it might start to lose market size. Even from the BCG matrix it can be found that Coles is in Cash Cow segment, which indicates lowest market growth possibility in future and therefore, it need to sustain its share in future by creating partnerships with more local manufacturers.

SWOT ANALYSIS OF COLES SUPERMARKET
STRENGTH	· High brand value of Coles Supermarket attracts the customers · Attractive pricing strategy leads to competitive advantage for the organization · High efficiency of supply chain build the success of the organization · Immensely successful promotional strategy enhances customer awareness · Various types of generic brands caters to specific types of buyers · Impressive online system builds the success of the organization
WEAKNESS	· Reputed brand image can be at risk to breakthrough even for any little mistake · Lack of highly talented employees can limit the success of the organization · Negative publicity for hard line negotiation with the suppliers ha marginally hurt the public sentiment
OPPORTUNITY	· High brand reputation can be helpful for the organization towards global expansion · Market exercise and sponsorship can assists in boosting the business · Improvement in the quality of the products can enhance the loyalty level of the customers
THREATS	· Intense competition from the competitors like Woolworths, IGA and others impose high competitive pressure · Changing consumer demand can impose threats on business

Table 5: SWOT Analysis of Coles Supermarket

(Source: Chaneta 2014, p.71)

Conclusion

While concluding the study, it can be said that strong distribution network has build the success level of Coles Supermarket. Strong brand reputation of the organization highly attracts the customers towards purchasing its products. On the other hand, government support of Australia towards industrial development directly assists Coles for its business growth. Moreover, the rising economic condition of Australian has enhanced the potentiality of business profit. Employees have huge contribution in the success of the organization, but they do not have much legitimacy on the business progress. However, the organization faces huge competitive pressure from the reputed retailers like Woolworths, IGA and others.

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