MGMT703 Marketing Management : Fountain Essays

Question:

The next stage of the marketing audit is for you to consider the market for your organisation and evaluate the opportunities and threats that exist for your chosen organisation. NB: if you have a number of markets it is a good idea to focus on just one.

Incorporating theoretical concepts into your discussion from chapters 2, 4, 5 and 6 (are these in relation to the new or the old version of the book) of the text, and with the use of other theoretical sources and secondary research, please discuss the following:

1. Briefly describe the industry market for your organisation and evaluate current trends in:
a. Growth
b. Profitability
c. Macro environment (PESTLE factor)

2. Outline and examine the major market segments for your organisation and identify your primary, and secondary target markets

3. Discuss the level of involvement your primary segment is likely to have towards your organisation in terms of the decision making.

4. Describe the nature of competition in your industry. Explain and analyse your organisation’s place in the market by comparing and contrasting its strengths and weaknesses to your main competitor.

5. Taking into consideration the primary segment, their level of involvement and the competition, create a positioning map for the market place.

 
 
Answer:

Introduction

Marketing management is defined as a process of formulating strategies and planning various functions relating to product, service, advertisement, sales and promotion to ensure that it reaches targeted customers. Woolworths is an Australian retailing corporation, and it was established in 1924. The company operates in the retailing industry, and its head office is situated in Bella Vista, New South Wales. Primarily, the firm operates in various locations in Australia, New Zealand and India with more than 990 stores. In 2017, the corporation generated revenue of AU$55 billion. The main competitors of Woolworths include ALDI, Coles, Dan Murphy’s and Wesfarmers; the company serves more than 29 million customers each week (Woolworthsgroup, 2017).

This report will examine various opportunities, and risks face by the corporation from its competitors while operating its business in the Sunshine marketplace. Sunshine marketplace is situated in Sunshine, Melbourne; it is a multicultural suburb with a population of 9,768 as per 2016 census. Both Woolworths and ALDI have stored in Sunshine marketplace, and they compete for customers; the demographics of Sunshine include veteran soldiers and refuse who prefer to buy high-quality Australian products. This report will focus on conducting industry analysis and market analysis of Woolworths. Further, the report will analyse marketing position of Woolworths in Sunshine marketplace by comparing it with ALDI.

 

Industry Analysis of Woolworths

The primary focus of industry analysis is based on its targeted customers, and its preferences and demands influence the decision of the firm. Woolworths is a leading retailing corporation in Australia, and it is world’s 24th largest leading retailer in terms of profits; it is also the largest liquor supplier in Australia (B&T, 2017). A large number of loyal customers are the reason Woolworths is a key player in Australian retailing industry. Further, the report will analyse current marketing trends in Australian retailing market.

Woolworths was established in 1924, and since then the corporation has expanded its business in various parts of Australia, New Zealand, and India. Woolworths is still the largest retailing chain in Australia, but their growth rate has slowed down in previous years. As compared to Coles, the sales of Woolworths have raised 3.1 percent whereas Coles reported a growth of 0.3 percent (Goko, 2017). The share prices of the firm have risen nearly 2 percent even after losing 27 percent in last year. The corporation reported 4.5 percent and 4.3 percent growth in its Australia Food and Endeavour Drinks respectively., whereas, the apparel division reported a decline of 1.4 percent (Woolworthsgroup, 2017). In Sunshine marketplace, Woolworths has reported a growth as compared to its competitors because of loyal customers who prefer high-quality products.

Woolworths has reported revenue of AU$55 billion in 2017 financial year; the profits of the firm increased 3.7 percent since last year. In 2016, the enterprise reported a loss of AU$1.235 billion (Boyd, 2016). The corporation decided to update and transform its information technology strategy to increase its profitability in 2017. As per the 2017 Annual report of the firm, the corporation increases its customer transactions by 5.2 percent and the firm has reached an overall customer satisfaction rate of 78 percent. Increased customer satisfaction rate allow the company to increase its profits as compared to last year.

Macro Environment (PESTLE)

The macro environment of Woolworths includes various external factors that significantly influence its operations; the PESTLE analysis allows corporations to evaluate and analyse their external environment that affects their business operations.

P: Political

Woolworths has a positive political relationship with the government of Australia and New Zealand due to which it was able to establish trading cooperation between the two countries. The government supports the operations of Woolworths since it provides employment to more than 202,000 workers. In Sunshine marketplace, the company comply with various local laws and ensure that it contributes towards the development of local communities; it maintains positive relations with local political leaders. The economic stability between the two countries secures the interest of Woolworth’s shareholders although the radical change in political disturbance can reduce the number investors for the firm (Chen & Bouvain, 2009).

E: Economic

Woolworth’s main operations are situated in Australia which has a stable economic condition because the people have relatively high living standards. Australia has a fairly stable monitory rate which benefits the corporation. Thought, the enterprise reported a decline in sales because of recession. The high rate of unemployment in Australia also affects the business of enterprise which might affect its operations (Chittithaworn, Islam, Keawchana & Yusuf, 2011). Similarly, the company finds it difficult to employ and retain qualified workers in its store situated in Sunshine marketplace because the population is low and people live with high standards. 

S: Social

Woolworths focus on providing a high level of customer service and its offer products based on consumers’ demands. The enterprise closely monitors marketing trends and customers preferences to formulate its future policies. The corporation offers its products and services at a relatively high price and focuses on achieving high customer satisfaction rate which improves its social image (Esteves, Franks & Vanclay, 2012). In Sunshine marketplace, most of the customers prefer to buy products from Woolworths because it offers fresh food products and wider choices. In Sunshine marketplace, Woolworths offer fresh Australian products; the Australian farmers grow 96 percent of the fresh fruit and vegetables offered in the store, and 100 percent of the fresh meat comes from Australia as well (Sunshinemarketplace, 2017). 

T: Technological

Woolworths use information system strategy to improve its business operations and their efficiency. The IT technology promotes the innovative approach of the enterprise which allows them to improve the efficiency of its operations (Dunning, 2013). The firm implements modern technologies to increase the efficiency of its operations such as self-checkout methods, Visa pay Wave, online shopping facility and many others. These technologies reduce the checkout time of customers from the supermarket and improve their overall shopping experience (Budmar, 2011). In Sunshine marketplace, Woolworths allow customers to buy products online and deliver them to their homes. The company also provide pickup facility via its mobile application and website through which customers can book their order and pick it up from nearest Woolworth’s store (Woolworths, 2017).

L: Legal

Woolworths has to comply with various legislative requirements provided by the government; the firm complies with food licensing requirements and other legal factors that affect its operations. The corporation comply with food safety regulations which ensure that it did not offer any hazardous products to the customers that can be dangerous for their health; the enterprise also has to maintain certain food safety measure to maintain the quality of food products that it operates to the customers (Jongwanich, 2009). While operating in Sunshine marketplace, Woolworths complies with local regulation and various other laws provided by Melbourne government relating to consumer law, GST and employment regulations.

E: Environmental

Woolworths comply with various environment-friendly policies to ensure that its business practices did not pollute the local environment; the enterprise takes part in various initiatives to reduce its part in environmental damage. The corporation recognise its environmental impact across its value chain and work with its suppliers to reduce its carbon footprint and properly use environmental resources (Woolworthsgroup, 2017). The company is moving towards a circular economy approach which focuses on zero food waste, improved recyclability, reduced carbon emission, and use of natural refrigerants by 2020 (Woolworthsgroup, 2017). In Sunshine marketplace, the company uses effective supply chain strategy to keep its products fresh; it encourages recycling and minimises the wastage of resources. 

 

Primary and Secondary Target Market

The segmentation which is most profitable according to the company is considered as primary target market; Woolworth’s primary target market includes high-income individuals living in Sunshine since they spend heavily on their shopping requirements. The living standard of customers is high in Sunshine because most of them are retired soldiers, and they prefer to buy high quality products. Woolworths offer fresh fruit, vegetables, and meat to its customers in Sunshine at higher prices than compared to ALDI; the company provides “Fresh or Free” Guarantee in which its refunds the money if products are not fresh. The corporation maintains this policy through its more than 990 supermarkets (Sunshinemarketplace, 2017).

 The secondary target market of the firm is also substantially important for the enterprise since it aids in increasing its profits. The individuals who buy products based on their preferences are the secondary target market of the firm. The refugees and soldiers living in Sunshine prefer to use products that are manufactured or grown in Australia. Woolworth provides 96 percent of fresh fruit and vegetable which are grown in Australian lands, and 100 percent of the meat comes from Australia as well. Therefore, the secondary target market of Woolworths in Sunshine marketplace is satisfied with their offerings, and they prefer to buy products from the company rather than its competitors (Omarjee, 2017). 

Involvement of Woolworths in Primary Segment

Woolworth’s level of involvement with its primary segment is critically important for the company’s growth, and it has a significant impact on the decision-making strategy of the firm.

Woolworths closely monitors the requirement of its primary segment market which provides necessary information that assists the enterprise in its product development strategy. The company introduces new products based on the requirement of its target demographic living in Sunshine because it increases its sales. The firm mainly focuses on the requirement of high-income soldiers and refugees of Sunshine; they prefer to eat at home, but they did not have time to cook their meals. Therefore, Woolworths introduce ready-to-cook food products which can be easily prepared by customers just by heating them (Arli, Dylke, Burgess, Campus & Soldo, 2013). These customers are also patriotic, and they prefer to buy Australian products, therefore, Woolworths mostly offer Australian products in its Sunshine marketplace store.

Woolworths analyse the buying pattern of its targeted customers in Sunshine before implementing effective pricing strategy. The company offers a large variety of products to its customers which include both high priced and cheap products. The corporation target high-income individuals that are living in Sunshine, therefore, they tend to set a high price for their products. The soldiers and refugees buy high-quality environment-friendly products that are manufactured or grown in Australian, and they pay high prices for them (Wahyuni, 2010).

The popularity of online shopping is growing rapidly with Amazon leading the way for other e-commerce websites. In Australia, the popularity of online shopping and e-commerce websites are continuously growing which provide a new shopping platform to customers which they can access easily. In Sunshine marketplace, Woolworths offers its products through online platforms which allow its customers to buy groceries easily and the company directly delivers them to their homes. The company also provide ‘pick up’ facility which allows its customers to order online and pick up their order at the nearest store. Though, in 2017, the company experience a ‘major delivery system outage’ which affects its profitability and many customers changed their retailer after the incident (News, 2017).

Woolworths provided that it is focusing on maintaining a balance between new store expansion and existing store refurbishments to improve their services and target a wider audience. The corporation is renovating its Sunshine marketplace store based on the requirement of local customers to make the shopping experience more comfortable for them (Woolworths, 2017).

 

Competitor Analysis

The competitors of Woolworths are continuously increasing in Australian retailing industry; one of the key competitors of Woolworth is ALDI. Woolworths has more than 990 stores in different location in Australia, and it primarily operates in Australia and New Zealand. ALDI is a German-based retailer which operates in 18 countries; the corporation has more than 370 stores across Australia. Along with Coles, Woolworths hold more than 80 percent of the retailing industry in Australia, whereas, ALDI has covered 13.2 percent of the Australian retailing sector (Hogan, 2017). As per a nationwide study, Woolworths was consistently cheaper than Coles, but ALDI is cheaper than Woolworths. Following are strengths and weaknesses of both the competitors in order to evaluate their competition.

Strengths

  • The corporation is one of the oldest brands in Australia with more than 990 stores across the country.
  • The company is known for its commitment towards environment protection and sustainable development; it focuses on establishing an effective corporate social responsibility (CSR) program and fulfilling the same.

Weaknesses

  • Lack of international presence
  • Comparatively high priced products and lack of discounts

ALDI

Strengths

  • Attractive pricing strategy which offers lowest priced products along with discounts
  • Global presence and promotional strategy aid in its growth in Australian retailing industry

Weaknesses

  • Lack of Effective CSR policies
  • Lack of diversity in product offered in the stores

The points mentioned above define various strengths and weaknesses of Woolworths and ALDI; the weaknesses of ALDI is Woolworth’s strengths and vice versa. The competition between both the companies is fierce, and both of them are formulating strategic policies to gain competitive advantage.

 

Positioning Map

Currently, Woolworths is placed high over its competitors because of large market share and positive reputation. The corporation’s position in the retailing industry can be analysed by the amount spent by Australian on supermarkets.

The data mentioned above has been provided by the research of Roy Morgan which provides that Australian spends most of Woolworth’s products and services. In 2015, Australian spends around AU$32.6 billion on products of Woolworths whereas they spent only AU$11.2 billion on products offered by ALDI. In terms of revenue, the corporation stands second in Australia after Wesfarmers but in the retailing industry, the company is number one in terms of profits (Clemons, 2017). ALDI is rapidly increasing its market share by offering the lowest prices which affect the growth of Woolworths, therefore, the company targets high-income individuals who prefer to buy high-quality products at high prices rather than cheap low-quality products.

In Sunshine marketplace, customers are high-income individuals who prefer to buy products from Woolworths rather than ALDI. The Woolworths situated in Sunshine marketplace sell more products than ADLI because customers prefer quality to price. The facility of Woolworths building is also better than ALDI such as large parking space, and other popular brands. The positioning map categorises corporations on the basis of prices and quality which assist in analysing and understanding a company’s position in the market. The quality and price of products play a crucial role in increasing a corporation’s market share.

The positioning mentioned above map of Woolworths shows the position of the company in the market by comparing it with other competitors. Woolworths offers high-quality products to its customers, and they charge high prices, on the other hand, ALDI offers low priced products to its customers. The corporation focuses on delivering high-quality products to its customers, and they maintain a positive brand image by fulfilling their corporate responsibilities. The company can sustain its future growth by maintaining a stable position in the market.

Conclusion

Conclusively, Woolworths is one of the largest retailing corporations in Australia, and they offer high-quality products to its customers. The company operates in the retailing industry, and it has reported a growth in food and beverage department in 2017. There are various external factors which affect the decision-making and operations of Woolworths such as legislation, environment, and political policies. ADLI is a primary competitor of Woolworths which offer high-quality products at cheaper rates. The corporation should improve its pricing strategy to maintain its competitive advantage over ADLI. The company should reduce the prices of its products to attract middle-income individuals that will assist in increasing its market share. Affordable price will also enhance the brand image and value of the corporation. Later on, Woolworths should expand its business at an international level to increase its global image.

 

References

Arli, V., Dylke, S., Burgess, R., Campus, R., & Soldo, E. (2013). Woolworths Australia and Walmart US: Best practices in supply chain collaboration. Journal of Economics, Business & Accountancy Ventura, 16(1).

B&T. (2017). Coles Ranked 21st Biggest Retailer In The World, Woolies 24th (But Amazon Is Set To “Destroy” Them All). Retrieved from https://www.bandt.com.au/marketing/coles-21st-biggest-retailer-world-woolies-24th-amazon-set-destroy

Boyd, E. (2016). Woolworths results 2016: Full-year loss of $1.235b for Australian food and petrol business. Retrieved from https://www.dailytelegraph.com.au/business/woolworths-results-2016-fullyear-loss-of-1235b-for-australian-food-and-petrol-business/news-story/dcbd03efea55489d7254217511500f4

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/

Chen, S., & Bouvain, P. (2009). Is corporate responsibility converging? A comparison of corporate responsibility reporting in the USA, UK, Australia, and Germany. Journal of Business Ethics, 87, 299-317.

Chittithaworn, C., Islam, M. A., Keawchana, T., & Yusuf, D. H. M. (2011). Factors affecting business success of small & medium enterprises (SMEs) in Thailand. Asian Social Science, 7(5), 180.

Clemons, R. (2017). Want to spend less at the checkout?. Retrieved from https://www.choice.com.au/shopping/everyday-shopping/supermarkets/articles/cheapest-groceries-australia

Dunning, J. H. (2013). Multinationals, Technology & Competitiveness (RLE International Business) (Vol. 13). Routledge.

Esteves, A. M., Franks, D., & Vanclay, F. (2012). Social impact assessment: the state of the art. Impact Assessment and Project Appraisal, 30(1), 34-42.

Goko, C. (2017). Trading conditions squeeze Woolworths’ growth hopes. Retrieved from https://www.businesslive.co.za/bd/companies/retail-and-consumer/2017-07-17-trading-conditions-squeeze-woolworths-growth-hopes/

Hogan, A. (2017). Aldi’s market share continues to grow, but for how much longer?. Retrieved from https://www.ausfoodnews.com.au/2017/05/22/aldis-market-share-continues-to-grow-but-for-how-much-longer.html

Jongwanich, J. (2009). The impact of food safety standards on processed food exports from developing countries. Food Policy, 34(5), 447-457.

News. (2017). Woolworths experiences ‘major delivery system outage’, leaving customers hungry. Retrieved from https://www.news.com.au/technology/online/woolworths-experiences-major-delivery-system-outage-leaving-customers-hungry/news-story/b8e4e6636bbc2a190a3b75580174d42a

Omarjee, L. (2017). Why SA consumers are most satisfied with Woolworths. Retrieved from https://www.fin24.com/Companies/Retail/why-sa-consumers-are-most-satisfied-with-woolworths-20170421

Roy Morgan. (2016). Supermarket weep: Woolies’ share continues to fall and Coles and Aldi split the proceeds. Retrieved from https://www.roymorgan.com/findings/7021-woolworths-coles-aldi-iga-supermarket-market-shares-australia-september-2016–201610241542

Sultan, P., Wong, H. Y., & Sigala, M. (2017). Segmenting the Australian organic food consumer market. Asia Pacific Journal of Marketing and Logistics.

Sunshinemarketplace. (2017). Woolworths. Retrieved from https://www.sunshinemarketplace.com.au/stores/woolworths/

Wahyuni, D. (2010). The Importance of Supply Chain Management in Competitive Business: A Case Study on Woolworths.

Woolworths. (2017). Sunshine Market Place. Retrieved from https://www.woolworths.com.au/Shop/StoreLocator/VIC-Sunshine-3186?utm_source=GooglePlaces&utm_medium=organic&utm_campaign=GooglePlaces&utm_content=VIC-Sunshine-3186

Woolworthsgroup. (2017). About Us. Retrieved from https://www.woolworthsgroup.com.au/page/about-us

Woolworthsgroup. (2017). Annual Report 2017. Retrieved from https://www.woolworthsgroup.com.au/icms_docs/188795_annual-report-2017.pdf

Woolworthsgroup. (2017). Our Planet. Retrieved from https://www.woolworthsgroup.com.au/page/community-and-responsibility/group-responsibility/responsibile-sourcing/

Woolworthsgroup. (2017). People Planet Prosperity. Retrieved from https://www.woolworthsgroup.com.au/icms_docs/186036_woolworths-group-corporate-responsibility-strategy-2020.pdf

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