Marketing strategy Woolworth
Marketing strategy refers to the identification of one or more competitive advantages that companies possess in the market in which they operate. The firm has to allocate the required resources to exploit the competitive advantages. In strategic marketing, all the organization’s marketing goals are combined to form a comprehensive plan (Booth and Coveney, 2015). Woolworth and Coles have dominated the Australia market due to their separate competitive advantages, and this has been a strong barrier for other firms to enter the market, (Sotgiu and Gielens, 2015). This paper will therefore, elaborate on the competitive advantages of the two supermarkets, their performance, and the possibility of Aldi supermarkets to enter the market
Woolworth is a large retailer in Australia and New Zealand. According to Ariyawardana and Collins (2013), Woolworth decisions are affected by both the internal and external factors.
The internal factors of Woolworth supermarkets include those that are within the organization. These factors include following:
Employees: the employees are drivers of the business and provide excellent services to their customers. The staff is assigned their duties at the distribution centers, store and support offices. Woolworth provides various careers opportunities to its employees because it believes in diversity (Blundell 2014).
Machinery: Woolworth has built great infrastructures regarding large furniture, stores, and support office. Its strategic location and infrastructure give it a competitive advantage over others.
Money and pricing: the supermarkets wealth has grown due to the increasing base of shareholders. Their financial performance has been better than that of its competitors giving it a competitive advantage. However, the company charges higher prices that are detrimental to their operations.
Resources: Woolworth supermarket has huge resources that they use to produce and source their products in collaboration with other producers.
Suppliers: the bargaining power of the supplier has increased, and this has reduced the controlling power of the company. However, the supermarket has achieved to develop a healthy relationship with them for smooth operations in the supply chain.
Political forces: Woolworth operates under proper adherence to law. This enables it to conduct business legally and relate well to all stakeholders. Further, it creates opportunities for the company.
Economic factors: The favorable business relations of Australia and other trading partner provide friendly economic factors for Woolworth operations.
Technological factor-Woolworth has embraced modern technology with the aim of achieving efficiency and innovation in the product development and customer satisfaction (Balogh, 2014).
This is a grocery retailer based in Western Australia. It has it position in Australia supermarkets.
In bound logistics: Cole supermarket does not produce its products but controls the distribution of the products. It, therefore, control the logistics and procurement of the product, and this ensures convenience in product availability (Gupte and Doyle, 2014).
Operation: The constant checks are done to ensure that defective products are detected and removed. Also, it uses technology to keep track of stock level for restocking and keeping track the number of units sold.
Marketing and product sales: short-term sales are boosted by holding weekly specials. Prices of certain products are reduced by a large margin. Additionally, sale catalogs are distributed to inform consumers of weekly specials.
Resource and capabilities: an integrated competitive strategy is utilized to compete. It combines differential elements and cost leadership to achieve efficiency in supply and minimize costs. It has a supply chain that is highly effective, good brand reputation, and effective top management and these give it a competitive advantage over other supermarkets.
Pricing: Coles has established effective pricing strategies that have helped to charge lower prices thereby achieving a competitive advantage.
Social-cultural factors: There is increasing consciousness toward well –being and health. This offers an opportunity for Coles to expand its operations in offering organic food.
Economic factors- the economic climate in Australia is favorable resulting to lower spending, especially when dealing with flexible goods (Taylor, 2013).
Competition: there is serious indirect competition such as specialist grocery store and farmer markets. This is a serious future threat to Cole’s operations.
Woolworth vs. Coles
As articulated by Sutton-Brady, Kamvounias, and Taylor (2015), Woolworth has dominated the Australian market for a long period but has lost a large portion of its market share to Coles. This has been attributed to several reasons such as increased competition and their focus on profit over the customer. According to Turner and Mortimer, (2014), Woolworth’s customers has been complaining of the quality of fresh produce, on-shelf product availability, value for their money, overall presentation, in-store theater and competitive pricing.
Cameron, Sayers, Sacks, and Thornton, (2015), asserted that by 2007, Coles started way behind Woolworth but by 2008 and 2009, Coles narrowed the gap in the key performance measure. Coles eventually surpassed Woolworth and their sales and profitability reduced significantly. The performance score of Woolworth started to drop and by December 2011, the performance moved to a gradual decline. Cole continued to do well, and their performance improved gently. In 2014, Woolworth experienced a steeper decline while Coles experience decisive lead (Knox, 2014).
The heart of Woolworth poor performance is the higher pricing of their products contrary to Coles, which has implemented superior pricing strategies charging lower prices every day. Though many customers prefer to shop high quality than lower price, this strategy became a key competitive advantage of Coles. In this regard, customers complained of Woolworth high prices for a long period (Jie, Parton and Chan, 2015).
According to a survey done by Nenycz-Thiel and Romaniuk, (2012) in competition analysis, Cole is also better in promoting its products and strategies and thus able to convey its pricing messages. Woolworth has also acknowledged that their in- store services has fallen and is an issue of concern that has contributed to the loss of market share (Spectator, 2013).
Woolworth recovery strategy
The comeback of Woolworth supermarkets despite its self-inflicted problems requires a fresh management but not internal succession where the product of the current leadership is promoted to succeed the poorly performing management, better pricing strategies that provide value for the customers’ money, and heavy capital investment to improve their product quality and carry out promotion campaigns (Keith, 2012).
Aldi supermarkets entry
It is advisable for Aldi supermarkets to enter the Australia market because there are many opportunities to exploit than the threats that can limit its success. When Aldi enters the market, it can provide high-quality product at a lower price an issue that is making Woolworth’s customers complain. This will help it to capture this part of the market from Woolworth.
Woolworth supermarkets though strategically positioned has not been able to provide better convenience, superior freshness, appealing range and in-self availability of product and these are potential opportunities for Aldi to exploit providing a friendly point of entry (Philpott, 2014).
Though the Coles ‘customers are attracted by lower prices, they are not comfortable with the value of their money offered in these supermarkets, and this is another opportunity for entry by Aldi supermarkets.