Coles Supermarket Marketing Strategy

This assignment tasks students with analyzing the marketing strategies employed by Coles Supermarket in Australia. The analysis should encompass key elements such as segmentation, targeting, positioning, and an assessment of the macro-environmental factors influencing Coles' operations. Students are expected to delve into Coles' branding efforts and evaluate how the supermarket effectively competes within the Australian grocery landscape, particularly against discounters.

Running head: Marketing
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Marketing
Coles division of Wesfarmers Group

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Table of Contents
Introduction...........................................................................................................................................2
Brief description of the industry:...........................................................................................................2
Growth and Profitability:.......................................................................................................................2
PESTLE Analysis:....................................................................................................................................2
SWOT Analysis:......................................................................................................................................3
Market segmentation & Targeting:.......................................................................................................4
Market Segmentation:.......................................................................................................................4
Primary and secondary target markets:............................................................................................5
Competition...........................................................................................................................................5
Competition in the industry and current market standing:...............................................................5
Strengths and weaknesses to your main competitor:.......................................................................6
Positioning:........................................................................................................................................6
Conclusion.............................................................................................................................................7
References.............................................................................................................................................8

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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.
Company’s 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 Australia’s 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.
Brief description of the industry:
The company deals in Australia’s 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:
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

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environmental (Reinhardt, Domingo, García & Christodoulou, 2017). PESLE analysis of
Coles Supermarket for Australian markets is done as follows:
Political
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.
Economic
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.
Social
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.
Technological
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.
Legal
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.
Environmental
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).

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SWOT Analysis:
The SWOT analysis of Coles is done as follows-
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:
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:
Demographic Segmentation
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.

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Psychographic Segmentation
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.
Behaviour segmentation
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
requirements of working class it has also installed Self check out facilities, online shopping
and contactless payments. In today’s 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 company’s 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.
Competition
Competition in the industry and current market standing:
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

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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:
Woolsworths-
Strengths
 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.
Aldi-
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).

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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. Creating 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.

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References
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story/ae6a75789bed380dc13612d5fe65c8c5\
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