Supermarkets and Grocery Industry †Free Samples to Students

Question: Discuss about the Supermarkets and Grocery Industry. Answer: Introduction Wesfarmers is Australian agglomerate. It was established in the year 1914 named as Western Australian farmers'. It has its presence in Australian and News land retail segment. Companys headquarters are situated at Perth, Western Australia. The company has various businesses, which includes supermarkets, convenience stores, liquor, hotels, home improvement, office supplies and department stores. The company also has an industrial division which involves sectors such as chemicals, energy fertilizers, coal, industrial and safety products. In the year 2016 Wesfarmers was Australias largest company in terms of revenue. Today the company is the topmost employer in Australian private sector. It has about 530,000 shareholders. It can be seen that, the company has diverse product portfolio. For this report we will take into consideration Coles Supermarkets. Coles Australia is a division of Wesfarmers. Coles Supermarkets were founded in the year 1914. Coles Supermarkets were a brand of Coles Myer group till the year 2006. In 2007 Wesfarmers took over the firm. Under the ownership of Wesfarmers the company went through various changes and achieved success. Today company covers a big share in the Australian markets. One of the close competitors of the firm is Woolworth. Today Coles Supermarket is the trusted brand name in the Australian households. The company deals in Australias supermarket and grocery industry. This industry can be described as highly competitive and concentrated in nature. To stay in the competition major market player have cut down the prices this has reduced the wide profit margins for the firm. In the recent time industry is laying much pressure on Coles and Woolworths (Mudditt, 2017). Growth and Profitability: In the recent year it has been observed that growth of the firm have slowed down and profit margins are reduced. The reason for the slowed market growth is credited to increased competition in the market. Another reason for the slow growth is Woolworths turnaround plan is now started taking the shape. This year the company opened 4 supermarkets and closed 3 supermarkets (Chung, 2016). To accelerate the growth the company has planned to cut product range by 15 per cent. The company is planning to replace those products with its own brand products. The company aims to remove all the underperforming SKU (stock keeping unit). The company has planned so because it every SKU adds a cost on supply chain and removing underperforming SKUs will reduce the cost (Chung, 2016). PESTLE analysis is the analysis of external factors that impact the environment. It is categorised into 6 forces political, economic, social, technical, technological, legal and environmental (Reinhardt, Domingo, Garca Christodoulou, 2017). PESLE analysis of Coles Supermarket for Australian markets is done as follows: Recently the federal government has taken steps to remove duopoly in the market. Coles and Woolsworths have duopoly in the Australian market. This decision of government has reduced entry barriers and many players have entered the market this creates struggle for Coles. The economic downturns, weakening of Australian dollars has reduced the purchasing power of Australian customers. The customers are now becoming more prices sensitive. The company is trying to reduce the price of products to the minimum possible profit margins. The company is increasing power of suppliers. Due to government decisions more competitors can enter the market. Previously there were only two players in the market therefore the suppliers have no option and had low power but with the more players in the market the suppliers will have other options and their power will increase. The social forces that impact the company are favourable. The company recently received an award for fair trade practices. The company provides various products which are certified under fair-trade. The company also provides extra money to farmers and producers for various facilities such as education and medical facilities. The company has also joined hands with an organisation named Red kite. It contributes for the cancer care of children and young. The company has joined hands with an organisation called SecondBite. It provides excess of fresh food, bakery products and vegetables. This helps to reduce waste as well as provides the food to many. The company always tries to keep pace with the technological development. The company uses latest tools and software in its operations. It has introduced the self-check- out facilities at the exit to reduce the queue. The company has also introduced cloud infrastructure in its operations. The company provides the facility of online shopping and contactless payment by the use of internet. The ACCC has introduced legal contradiction against the company for unethical behaviour against the suppliers. The ACCC closely monitors the organisations in the environment and takes suitable actions for any kind of discrepancy. The Coles encourages the use of sustainable products. It is working for protection. The Coles supermarkets are designed to reduce the greenhouse gases emissions. The company constantly keeps on investing on various projects that help to achieve environment conservation goals (Coles, 2017). SWOT Analysis: Strengths Well aware of the market needs because of the long existence in Australian markets. Well-developed advertising and branding Established brand name. World class supply chain management. Weakness Negative image was setup when the case of unfriendly supplier practices was highlighted. Threats Economic conditions in Australia Legal and political implications Increase in the number of competitors Opportunities Opportunity for international expansion in emerging markets. Diversification opportunities SWOT analysis of the companies demonstrates the company has various strengths and very few weaknesses. This can be reduced if the company takes measures to overcome the weakness. Market segmentation Targeting: Market segmentation can be described as process of dividing the large markets into small groups on the basis of similarity that exist among them. Market segmentation is important for determining the marketing strategy of almost all the successful organisations. Market segment provides the clarity and close view to the needs and wants of a particular consumer group. It helps to build more realistic marketing goals and achieve higher results (Lamb, Hair McDaniel, 2011).Segmentation of the markets for Coles can be done on the following basis: This divides the market on the basis of age, income, sex, caste, race etc. (Ham Church 2014) The demographic segmentation of Coles Australia is divided on the basis of age. The two segments on the basis of age are children (below 15) and adults (above 15). One the basis of income there are three categories high income group, middle income group and low income group. This divides the markets on the basis of lifestyle. On the basis of lifestyle two important segments are working group who do not have much time to shop and non-working group. On the basis of behaviour segmentations can be made on the basis of knowledge, character and reaction of the consumer (Rupp, Kern Helmig, 2014). Coles has divided the market into two groups on the basis of behaviours. These segments are of customers who have intense market knowledge and customers who have low market knowledge. Primary and secondary target markets: After the segmentation the next step for the company is to decide the target market. The primary target market of the firm includes adult households. The secondary target involves the children. The company designs it marketing strategies and services keeping the focus on adult households who have various cooking habits. It also caters the needs of working class group and tries to provide them the relaxing and time saving experience. The company devotes fewer efforts for catering the needs of children.The level of involvement your primary segment is likely to have towards your organisation in terms of the decision making. The primary target market of Coles that is adult house hold has a high level of involvement towards organisation in terms of decision making. Before arriving at any conclusion or decision the organisation first keeps the interest of the primary target. Keeping their needs in mind the company always provides with fresh, safe and healthy products. Considering the requi rements of working class it has also installed Self check out facilities, online shopping and contactless payments. In todays era being customer centric matters a lot because consumer has numerous options in the market place (Sotiropoulos, 2016). High involvement of targeted customers in decision making is therefore very important. This involvement does not means only the direct involvement it also involves the indirect involvement of the targeted group. It focuses on the middle income segment this is reflected in the various decisions taken by the firm to reduce the product cost and make customer aware about the lower prices. The company has decided to remove underperforming SKUs to reduce the product cost. The companys marketing campaigns are focused on price sensitivity. Various time to time decisions taken by the firm, show direct or indirect involvement of primary target in the decision making. Coles and Woolsworth are two major players in the industry up till now. But the rise of ALDI have challenged their position in the market .The other competitors of the firm are IGA and Costco. According to the reports of 2016, the market share of ALDI raised to 7.9 per cent. The Woolworths and Coles share came down to 34.2 and 29.2 per cent respectively. Last year the share of ALDI was 7.4 per cent whereas Woolworth and Coles covered 40 and 30 per cent of market respectively (Range, 2016). The figures reveal the decline in the shares of company due to rise of competitor. This competition has resulted into price wars among the competitors. Every firm is trying to cut down the cost of its products in order to remain in the competition. Strengths and weaknesses to your main competitor: For a firm to remain in the completion it is important to identify strengths and weakness of the competitor. For Coles there are two major competitors one is Woolworths and other is emerging competitors ALDI. Strengths and weakness of Woolworths and ALDI are discussed below: Established and recognised brand name. Has stores at various locations in Australia Deals in various businesses. Effective CSR programme Weakness Losing the market share Confined to national boundaries. Late entry in the online retail segment. Strengths Have experience of operations in various countries. Provides the products at lower prices. Developing very fast. Weakness Still new to Australian markets Less established brand name. Less stores as compared to competitors. Positioning: Positioning is the combination of all the steps and activities that sets a differentiated brand image. It sets up the brand identity in the minds of people (Kapferer, 2012). Positioning makes the organisation think about the brand element which is to be emphasised in the eyes of target customers. The element that is chosen for the purpose of highlighting must be relevant to the primarily targeted group (Riezebos Van der Grinten, 2012). The positioning of statement of Coles focused the brand as the Fresh food brand. For a long time this positioning statement was helpful for the company in grasping the market share. All the promotional campaigns of the firm emphasized on this element. But with the increase in competition the price war also increased. This will require the firm to bring a change in its positioning strategy. Now the positioning strategy of the firm will focus on promoting the competitive prices. According to the reports the fresh positioning of the company will promote low prices to maximise the interest of its target audience. The firm will be adopting a customer centric approach (Homewood, 2016). Current environment analysis of Australian markets reveals that economic downturns have increased the price sensitivity of customer. Also the entry of competitors in the market made the firm to rethink on its positioning. To gain more market share in the current era the firm focuses on price sensitivity. Cre ating a brand image that provides Fresh foods at competitive prices will help the firm to fetch more market share in the Australian markets. The positioning statement of the company must convey that the brand fulfils your daily requirement of fresh foods and at the same time it provides saving in the cost. Conclusion From the above report it can be concluded that Wesfarmers is a much diversified brand. It deals in various businesses. Coles is just a part of Wesfarmers group. It was acquired by Wesfarmers group in the year 2006. The Coles also deals in various portfolios. The Portfolio that is considered for this report is Supermarkets. The Coles supermarkets along with its key competitor Woolworths capture majority of share in the Australian markets. Its stores are spread in various locations in Australia. The aim of the company is to provide fresh food products to the customers and it has been successful in doing so since various years. But the recent trends in the Australia demonstrate the economy downturns, lowering the purchasing power of the customer. The government is also taking actions to remove the entry barriers to the industry for the other firms to enter the grocery industry. The government rules are no more in the favour of duopoly of Coles and Woolworths. All this led to the rise of new Competitor ALDI. The ADLI is a growing company capturing the market share of the giant market players. The company has taken the competitive advantage the providing the products at lower price. Now in order to satisfy the targeted customer base wools has also shifted its positioning strategy to competitive pricing. The company holds potential to maintain and grow its market share if it comes with the competitive prices. References Boone, L. E., Kurtz, D. L. (2013). Contemporary marketing. Cengage learning. Chung, F. (2016). Coles sales growth slowing. Retrieved from https://www.news.com.au/finance/business/retail/coles-sales-growth-slowing/news-story/ae6a75789bed380dc13612d5fe65c8c5 Chung, F. (2016).Coles to cut product range by 15 per cent. Retrieved from https://www.news.com.au/finance/business/retail/coles-to-cut-product-range-by-15-per-cent/news-story/55328f4da492e197e2f47662c12fcff6 Coles, (2017).Environment. Retrieved from https://www.coles.com.au/corporate-responsibility/environment Coles. (2017). Our Hisory. Retrieved from https://www.coles.com.au/about-coles/centenary Ham, E., Church, M. (2014). Types of Segmentation. Homewood, S. (2016). Coles eyes off the customer and 'fresh' positioning. 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