Marketing Strategies of Australian Supermarket Chains

This report analyzes the marketing strategies of Australian supermarket chains Woolworths and Coles Group Ltd. and their process of implementing strategies to gain a competitive advantage in the market. The report discusses the retail industry in Australia, compares the business territories of Woolworths and Coles, and examines evidence of sustained competitive advantage. The report also analyzes the objectives and strategies of both companies and explains the use of penetrating and promotional pricing theories as business strategies.

Running head: MARKETING STRATEGIES OF AUSTRALIAN RETAIL CHAINS
Case study on marketing strategies of Australian supermarket chains
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1MARKETING STRATEGIES OF AUSTRALIAN RETAIL CHAINS
Table of Contents
Introduction....................................................................................................................3
Case selection and description.......................................................................................3
Overview of the Australian retail industry.................................................................3
Comparing business territories of Woolworths and Coles.........................................4
Evidence of sustained competitive advantage................................................................5
Objectives and strategies of Woolworths group........................................................5
Objectives and strategies of Coles group Ltd................................................................6
Analysis and explanation...............................................................................................6
Penetrating and promotional pricing theories as business strategies.........................6
Conclusion......................................................................................................................7

2MARKETING STRATEGIES OF AUSTRALIAN RETAIL CHAINS
Executive summery
The report aims to deliver an analysis of strategies incorporated by Australian supermarket
chains, Woolworths and Coles Group Ltd. in order gain a strong competitive advantage in the
market. The report will concentrate on the retail industry of the country and will discuss
about the process by which these two organisations are implementing their strategies and
helping the business to grow. It has been made very clear from the beginning that business
industry is undergoing a crucial transformation due to several factors like changing
preferences of the customers and advanced technological aspects. Still considering the
purpose of customer satisfaction how these two organisations are executing and innovating
strategies in this competitive business environment that will be elaborated with the help of
some business theories.

3MARKETING STRATEGIES OF AUSTRALIAN RETAIL CHAINS
Introduction
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 (Špička 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.
Case selection and description
Overview of the Australian retail industry
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

4MARKETING STRATEGIES OF AUSTRALIAN RETAIL CHAINS
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.
Comparing business territories of Woolworths and Coles
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.
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

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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.
Evidence of sustained competitive advantage
Objectives and strategies of Woolworths group
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.

6MARKETING STRATEGIES OF AUSTRALIAN RETAIL CHAINS
Objectives and strategies of Coles group Ltd.
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.
Analysis and explanation
Penetrating and promotional pricing theories as business strategies
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

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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).
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

8MARKETING STRATEGIES OF AUSTRALIAN RETAIL CHAINS
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.

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