Identification and Evaluation of Marketing Opportunities for Coles Supermarkets

This article provides an analysis of the marketing opportunities for Coles Supermarkets in Australia. It includes a market analysis, identification of new marketing opportunities, and a marketing strategy for market penetration and product development. The article also discusses the target market, key competitors, and environmental factors affecting the industry. The new marketing opportunity identified is the publication of Coles magazine in its mobile application platform. The marketing strategy includes market penetration and product development, with a break-even analysis provided.

IDENTIFICATION AND EVALUATION OF MARKETING OPPORTUNITIES
Name of the Student
Name of the University
Author note

IDENTIFICATION AND EVALUATION OF MARKETING OPPORTUNITIES
Table of Contents
Background of Coles:.................................................................................................................3
Aims and Objectives of Coles:...............................................................................................3
Market Analysis:........................................................................................................................4
Marketing background and competitiveness:.........................................................................4
Market size:............................................................................................................................4
Market growth:.......................................................................................................................5
Key Competitors:...................................................................................................................5
Environmental Factors:..........................................................................................................6
Target market:........................................................................................................................6
Identify and evaluate new marketing opportunity:....................................................................7
New marketing opportunity:..................................................................................................7
Marketing Strategy:................................................................................................................7
Market Penetration:............................................................................................................7
Product development:.........................................................................................................8
Market development:.........................................................................................................9
Alignment of the strategy with different industry codes:.......................................................9
Privacy laws and ethical principles:.....................................................................................10
Break-even analysis:................................................................................................................10
Changes to Current operations:................................................................................................11
References:...............................................................................................................................13

IDENTIFICATION AND EVALUATION OF MARKETING OPPORTUNITIES

IDENTIFICATION AND EVALUATION OF MARKETING OPPORTUNITIES
Background of Coles:
Coles Supermarkets Australia Pvt Ltd is an Australian Supermarket chain. It is
engaged in the arena of supermarket, retail and consumer services. It is based in the state of
Melbourne and is headquartered in the same place. It was founded in the year 1914, in the
town of Collingwood in Melbourne and is owned by its parent company, the retail giant
Wesfarmers. It is engaged in the task of producing and distributing various kinds of bread &
bakery, fruit & vegetables, meat, seafood & diary, eggs, meals, drinks, liquor, health and
beauty and various other diverse ranges of products. It is engaged in the business of providing
quality household items to the Australian masses, through its wide range of distribution
outlets in the form of its widely acclaimed supermarket chain, across the Australian sub-
continent (McCarthy and Murphy, 2013).
Aims and Objectives of Coles:
Coles was originally established with the objective of catering to the needs of the
Australian masses. The retail giant Wesfarmers had taken a gamble after the downfall of
Coles, to invest in the supermarket chain. The gamble had ultimately paid off and now Coles
accounts for almost 80% of the Australian market. It has reached at this stage, because of the
incessant and faithful service it has rendered to the Australian masses. One of the biggest
reasons for the immense amount of success is because of the inherent objective of the Coles
Management team, which was later imbibed into each and every employee of Coles. The aim
of providing to the people of Australia, a shop which they can trust for ensuring delivery of
quality products, services and value. The overall objective of catering to the household
requirements of the Australian masses is what has kept the company going.

IDENTIFICATION AND EVALUATION OF MARKETING OPPORTUNITIES
Market Analysis:
Marketing background and competitiveness:
Marketing structure of Coles Supermarket is among the largest among the retail and
supermarket segment. Cole food and grocery market has been very active in the segment of
food and retail sector. The market has seen quite a lot of ups and downs, but the dominance
of Coles and few other firms has been constant. The particular market structure of the
Australian supermarket is ‘oligopolistic’ in nature. Woolworths Group has led the market by
a mammoth market share of about $32.2 billion (35.7% market share), closely followed by
Coles with a $30 billion (33.2%). While other companies like Aldi, IGA are far behind with
$11.9 billion (13.2%) and $8.4 billion (9.3%) respectively. There is the presence of few
dominant firms and the type of product being delivered is similar in nature. It is because of
this that the barriers to entry in the Australian retail and supermarket segment are very high.
In this particular market, the companies, (Coles, in this case) are the actual price makers,
because of the dearth of excessive competition and each are dependent of the pricing
strategies of the fellow firms. This has been the scenario of the Australian retail and
supermarket market, where Coles holds a significant place.
Market size:
Cole’s supermarket has been a consistent performer in the Australian retail and
supermarket segment. It has only been behind retail giant Woolworths in the super market
segment. As mentioned earlier, Coles has a market share of roughly around 33% of the super
market segment. It is just behind Woolworths in this case. In terms of monetary value, the
retail subsidiary of Wesfarmers has a market size of about $30 billion and is again behind
Woolworths which has a market size of $32 billion.

IDENTIFICATION AND EVALUATION OF MARKETING OPPORTUNITIES
Market growth:
According to the reports of IBIS World, it has been concluded that the Australian
super market industry is expected to grow by a rat of 2.2% in the financial year 2017-18. It is
largely due to the rising demand for premium quality of food products, mostly demands of
organic fruits and vegetables (Richards, et al., 2013). The resurgence of Woolworths in the
food division of Australia, has had a tremendous impact on the Australian super market
segment. The trend of t this resurgence would continue for the rest of the 2017-18. The
company has refocused on the food segment because of its bad performance in its hardware
business. However, the company has drastically reduced its prices, in order to effectively
compete with Cole and ALDI. Notably, Cole’s performance in the supermarket segment as it
has continued to face insurmountable amount of pressure from ALDI and Woolworths. The
news of the entry of US retail and online giant Amazon has also sent shockwaves in the
Australian retail sector, as a result of which Coles and Woolworths have initiated expansion
of their online business segment.
Key Competitors:
The Australian retail and super market segment is mainly of oligopolistic nature, with
the dominance of few prominent firms. Notably, Woolworths, ALDI and IGA are some of the
most prominent firms competing in this segment (ABC News., 2018). A pictorial
representation of the current competitive scenario of the Australian retail and supermarket
segment has been provided below:

IDENTIFICATION AND EVALUATION OF MARKETING OPPORTUNITIES
(Source: Roy Morgan, Australia, 2016-17)
Environmental Factors:
There are a variety of barriers to the entry into the Australian supermarket and retail
segment. These barriers to the entry of new firms are one of the primary reasons for the
continuation of the oligopolistic market. The presence of few firms has made this a lucrative
industry, which is managed and owned by a small number of dominant firms (Knox, 2015).
There are various kinds of barriers to entries which are prevalent in this scenario, such as cost
of entry, presence of existing goodwill, economies of scale, dealing with suppliers,
characteristics of consumers and presence of various kinds of convenience stores. Foreign
giants are increasingly making their presence felt in the Australian retail and supermarket
segment, particularly Amazon and Alibaba, because of their financial might and global
goodwill.
Target market:
The target market of Cole consists of mainly median income earning consumers, and
is of lower middle age. They have the tendency to buy more during the presence of larger
pantry stockings trips. On analysis of the demographic of the consumers, it can be seen that
the advent of the women consumers is more than their male counterparts and the larger
number of consumers are of Caucasian origin. There is always a way, to increase the target
market, which is, by the expansive use of the advertising medium, by introducing products of
the newer market segments, catering to the demands of the new group of customers, apart
from the target market ones of the middle age groups of consumers. By opening new outlets
and by expanding the product range, there is a possibility of increasing the target market of
Coles.

IDENTIFICATION AND EVALUATION OF MARKETING OPPORTUNITIES
Identify and evaluate new marketing opportunity:
New marketing opportunity:
Coles has been widely successful in the grocery section of its supermarket and retail
section. It is on the basis of the initial success of the grocery section, upon which the
performance and the subsequent growth of the company has stood. In the case of the new
marketing opportunity the publication of the famous ‘Coles magazine’ in its mobile
application platform, the ‘Coles app’ would be a game changing marketing opportunity, in
the age of online transaction and growth. The company has received much of its acclaim from
its magazine success apart from its grocery and super market business. It is a unique kind of
product, which would be providing improved kind of marketing prospects to the retail
company.
Marketing Strategy:
Market Penetration:
In the case of market penetration, this would be a highly successful affair. The
company already provides its magazine in printed and soft cover forms and also in the form
of its website, of ‘Cole’s magazine’. The company already has a well-established brand
name of its magazine and this strategy pertains to the expansion of the magazine in its online
mobile section. This strategy has been devised in order to milk in the opportunity of the
already established brand of the company’s magazine. It is the most read magazine in the
Australian sub-continent with a monthly readership of 4.1million. The mobile application
platform is a robust platform for expanding its reach to all the age groups apart from its
traditional customers and target groups.

IDENTIFICATION AND EVALUATION OF MARKETING OPPORTUNITIES
Product development:
The product would be developed on the basis of the writers of the magazine, which already
exists because of the already existing product of the famous magazine. The mobile
application needs to be created. The cost of creating such an application would depend on the
type of application which would be developed by the company. Coles already has a tech
savvy app for the purpose of ordering its grocery products. The company must develop the
same quality app for this purpose, which should cost around, $171,000 including the
development, testing, app administration, infrastructure, features, and design and planning
costs. The cost of publishing and including the cost of the magazine into the mobile
application platform would consist of the costs for the development. The details of the cost of
app development have also been provided below:

IDENTIFICATION AND EVALUATION OF MARKETING OPPORTUNITIES
(Source: Contus, 2018)
Market development:
The market of magazines relating to information about health issues, food products
about the benefits of organic and natural food items, which is provided by these magazines
highlights the importance of such magazines. Moreover, the market for mobile application
users, which is based on the internet applications. Since the complete takeover of the
marketing forums and businesses by internet mediums, the development of the magazine
market through online mediums of mobile application, is a lucrative idea. The company
would be able to take advantage of this idea with the realisation of this mobile magazine idea.
Alignment of the strategy with different industry codes:
 ADMA: - In accordance with all the different provisions of the marketing
practice standards, the magazine application of Coles for mobile platforms
would abide by all its relevant provisions. It will not make any false claim for
misleading consumers, it would try to create and entertain accurate
information, it would also refrain from using any kind of fraud claims or
fictitious endorsements and would try to provide authentic information at all
times (ADMA, 2018).
 Free TV Australia: As the product to be created is completely internet and
mobile application based, the industry code of practice of free TV Australia is
not applicable.
 Australian e-commerce best practices model: The Company being one of
the pioneering grocery and retail sector super market chains takes it upon them
to maintain its high standards in terms of providing the right content through

IDENTIFICATION AND EVALUATION OF MARKETING OPPORTUNITIES
its mobile application of its health magazine. It would mandatorily follow all
the necessary provisions including the protection of the rights of its customers,
authentication requirements, rightful interaction with the minors and various
other imperative provisions of the e-commerce model.
 Trade practices Act: Before formally launching the mobile application of the
magazine, Coles would like to form a legal expert team in order to make sure
that its new marketing strategy duly follows all the provisions of the
Australian Competition and Consumer Commission, the National Competition
Council, the Australian Competition Tribunal along with all its administrative
provisions (Legislation.gov.au, 2018).
Privacy laws and ethical principles:
In order to successfully initiate and launch the mobile application of the magazine, it
is necessary to follow all the relevant principles of ethics and the laws related to privacy. The
company would be very much careful during the purpose of launching the application, as it
wants to prevent any kind of violation of the privacy laws and the ethical principles. The
company would differentiate between personal information, sensitive information and health
information, while creating the contents of the magazine and uploading them on the mobile
application. It would adhere to all the privacy policies of the Australian government.
Break-even analysis:
All the information about the fixed cost, variable costs, contribution, contribution
margin along with the break even units and amount has been provided below, along with a
graphical representation of the same.

IDENTIFICATION AND EVALUATION OF MARKETING OPPORTUNITIES
Items Price/unit ($)
Online magzine 2.5
Variable cost 1.1
Contribution 1.4 0.56
Fixed cost 1,71,000
Break even 3,05,357 units
7,63,392.86 amount
Here the unit of anticipated sales of the app magazine has been taken amounting to 30,535
units and the contribution margin being 0.56. Thus the company must earn around $281,000
in order to break even.
Changes to Current operations:
According to the, Australian anti discrimination law, “ it is illegal to differentiate on
the basis of a number of secluded attributes including age, disability, race, sex, intersex
status, gender identity and sexual orientation in certain areas of public life, including
education and employment” (Ag.gov.au, 2018). The company would not differentiate
between its employees on the basis of these grounds, who will be entrusted with the job of
creating and maintaining its mobile application for its magazines. To ensure this, active co-

IDENTIFICATION AND EVALUATION OF MARKETING OPPORTUNITIES
operation and indulgence of the HR department would be ensured and a feedback portal
would be provided to the employees to voice their opinions and suggestions. In association
with this, it would be specifically looked after by the HR dept. that the employees both the
present ones and the prospective ones are given equal opportunities to prove their worth.

IDENTIFICATION AND EVALUATION OF MARKETING OPPORTUNITIES
References:
ABC News. (2018). Woolworths widens the gap on Coles as 'down, down' looks down and
out. [online] Available at: http://www.abc.net.au/news/2018-02-23/woolworths-beating-
coles-in-supermarket-battle/9479544 [Accessed 1 Jun. 2018].
ADMA. (2018). Code of Practice. [online] Available at:
https://www.adma.com.au/compliance/code-of-practice [Accessed 1 Jun. 2018].
Ag.gov.au. (2018). Australia’s anti-discrimination law | Attorney-General's Department.
[online] Available at:
https://www.ag.gov.au/RightsAndProtections/HumanRights/Pages/Australias-Anti-
Discrimination-Law.aspx [Accessed 1 Jun. 2018].
Coles.com.au. (2018). Coles Supermarkets. [online] Available at: https://www.coles.com.au
[Accessed 2 Jun. 2018].
contus.com. (2018). Contus - A SMAC Driven Digital Transformation Company. [online]
Available at: https://www.contus.com [Accessed 1 Jun. 2018].
Gain.fas.usda.gov. (2018). [online] Available at: https://gain.fas.usda.gov/Recent%20GAIN
%20Publications/Retail%20Foods_Canberra_Australia_12-18-2017.pdf [Accessed 2 Jun.
2018].
Knox, M., 2015. Supermarket monsters: The price of Coles and Woolworths'
dominance (Vol. 6). Black Inc..
Legislation.gov.au. (2018). Trade Practices Act 1974. [online] Available at:
https://www.legislation.gov.au/Details/C2010C00426 [Accessed 1 Jun. 2018].

IDENTIFICATION AND EVALUATION OF MARKETING OPPORTUNITIES
McCarthy, B. and Murphy, L., 2013. Who’s buying organic food and why? Political
consumerism, demographic characteristics and motivations of consumers in North
Queensland. Tourism & Management Studies, 9(1).
Richards, C., Bjørkhaug, H., Lawrence, G. and Hickman, E., 2013. Retailer-driven
agricultural restructuring—Australia, the UK and Norway in comparison. Agriculture and
Human Values, 30(2), pp.235-245.
Scutt, D. (2018). The 'new world' Coles is entering is very different to the one it left a decade
ago. [online] Business Insider Australia. Available at:
https://www.businessinsider.com.au/coles-listing-wesfarmers-supermarket-competition-aldi-
amazon-2018-3 [Accessed 2 Jun. 2018].
The West Australian. (2018). Is Amazon planning fresh food attack on Coles, Woolies?.
[online] Available at: https://thewest.com.au/business/mergers-and-acquisitions/coles-
woolies-rattled-after-amazons-whole-foods-market-deal-bombshell-ng-b88511138z
[Accessed 2 Jun. 2018].