The Influence of Coles Environment and Customer Demographics on Satisfaction

This presentation discusses the factors that influence customer satisfaction at Coles Supermarket, including competition, issues with suppliers, and store environment factors such as ambience, design, and social factors. It also explores the importance of customer satisfaction in the retail industry and provides recommendations for Coles to enhance customer satisfaction and remain competitive in the market.

The Influence of Coles
Environment and Customer
Demographics on Satisfaction

Background
Cole supermarket is one of the leading Australian consumer
service chain and retail company with its headquarters in
Melbourne(Knox, 2015). The firm has dominated the retail market
due to its strong marketing strategies.
The main aim of the supermarket is to offer customers with high
quality and taste products at affordable prices.
The supermarket embraces proactive customer investment offer
as it strengthens the customers’ base preventing new entrance by
competitors.

According to Lee & Yang (2013), retail marketing is considered
as a form of marketing which involves undertaking activities
such as selling products to consumers through channels such
as stores, malls and other fixed locations.
Currently, the retail industry plays an important role in today’s
global economy because they enable the society meet its
current needs satisfactorily according to their living standards,
tastes and preference.

RESEARCH OBJECTIVES
 To determine the factors of retail store environment that have substantial
positive impact on Coles’ customer satisfaction.
 To critically analyse the variables of customer demographics influencing
customer satisfaction in a retail environment.
 To examine various satisfaction levels with regards to variables of
customer demographics.
 To evaluate how the influence of factors of retail store environment
affecting customer satisfaction differ across various customer
demographic segments.

RESEARCH QUESTIONS
 What are the factors of retail store environment that have substantial positive impact on Coles’
customer satisfaction?
 What are the variables of customer demographics influencing customer satisfaction in a retail
environment?
 Which are various satisfaction levels with regards to variables of customer demographics?
 How do the influence of factors of retail store environment, affecting customer satisfaction,
differ across various customer demographic segments?

Factors Leading to
Management Decision-
1. Competition
Coles supermarket has dominated in the market for many years
and gained a strong competitive advantage over its competitors.
However, currently, the company faces competition both locally
and globally with the Woolworths, ALDA and other companies
presenting such threats. With the entrance of Woolworths into
the market, Coles faced many challenges which resulted to
many managerial problems.

Literature Review
As the business environment becomes more proactive, retail businesses face global
economic challenges which compel them into evolving and changing with time to
meet the customer changing requirements and demand that changes with
time(Duong 2016).
Currently, online businesses are prospering with diverse alternatives offered for
customers to choose from leading to stiff competition among retailers in the
industry.

Literature Review (cont.)
Emergence of new threats made it difficult for the Coles supermarket to
undertake appropriate steps to continue being the leading retailer. Majorly,
management problems emerged from competition threats the company
experienced from emerging food suppliers.
Competition in the Australian grocery market is stiff making Coles supermarket
operations unsuccessful.

2. Issues with Suppliers
This is another managerial problem Coles supermarket faced.
The firm experienced delays in delivery of goods to its stores which
led to unavailability or insufficient products in shelves. This reduced
customer demand resulting to decreased customer satisfaction .In
the long run, the firm lost its competitive advantage.

3. Store Environment Factors
According to a research conducted by Mari & Poggesi (2013), the aspects of the store
environment which include ambience, design and social factors have a strong
influence on customer behaviors and perceptions. These factors are the determinants
of the customer level of satisfaction.
According to Allameh et al.(2015), the store environment not only influences impulse
buying but also patronage. Store environment is considered as the major determinant
factor influencing customer demand, sales and satisfaction.

Environment factors are a major determinant of the level of
customer satisfaction.
Customer satisfaction is commonly pursued by all types of
business both locally and globally. The concept of customer
satisfaction is becoming more complex and striking in the retail
industry (Dwivedi & Merriless 2013).
The study has taken into consideration store environment factors:
ambience, design and social to determine their influence on
customer satisfaction.

Customer Satisfaction
Research studies reveal that customer satisfaction can be
positively influenced by quality service, customer experience
and expectation.
The implication is that provision of quality goods and services
will result to improved customer satisfaction. This in turn leads
to increased customer demand resulting to increased company
sales and profitability.
Retailers should learn about the importance of various
environment factors and implement as a way of attracting
customers.

Customer experience is achieved when employees or workers treat
their customers well. Improved customer experience and expectations
positively influences customer satisfaction.
Customer satisfaction and loyalty is increasingly becoming an essential
factor in the retail industry.
Coles supermarket, in the retail industry is striving to adopt various
business practices with the aim of improving its customer satisfaction.

i).Ambience Factors
The factors of ambience such as: lighting, music, scent and
temperature of the Cole supermarket greatly influenced customer
satisfaction.
According to Mohan et al.(2013), store environment factors which
include music, lighting, assortment and employees’ attitudes
positively influenced customer satisfaction. On the other hand,
factors such as scent, layout, interior design had no influence on
customer satisfaction.

Music plays an essential role in marketing strategy of retailing
stores as it is used to create a more pleasant atmosphere
encouraging shoppers stay longer.
Customer’s mood and cognition is affected by music in
shopping centers.
Lighting in retail stores helps to highlight merchandise as well
as creating customer’s mood as an added dimension on the
environment.

ii) Design Factors
Factors of design such as assortment, layout and interior
design influence customer satisfaction by creating a
memorable and distinctive image of store environment.
The primary objective of store design is to implement the
retailer’s strategy by meeting the requirements of the target
market, thus establishing a sustainable competitive
advantage.

Design in store environment involves both merchandise and physical
location of products. It helps guide customers all through the store as
well as enabling easy access in locating products.
Coles supermarket has a convenient layout structure which increases
shopping efficiency of its customers leading to increased sales and
profitability in the long-run.

iii) Social Factors
Social factors are related to human issues such as customers
interaction with employees.
Customer relationship is an important factor which retailers
should manage in order to ensure efficient customer satisfaction.
Customer market segment refers to a group of customers sharing
a similar set of needs or wants. Age, family size and income
among other factors influenced consumer satisfaction
differently.

There is a relatively positive impact on high levels of income on
consumer satisfaction. Individuals with higher income level are
likely to satisfy their needs compared to low income earners.
Other research studies indicated that age impacts on customer
loyalty and satisfaction while others argued that gender has no
influence on the same.
Customer satisfaction can also be influenced by cultural
differences.

Management Decisions
Administrative Management Structure.
Coles supermarket should work on altering its
administrative structure to ensure responsible people are
appointed to manage various departments so that the
company enhances customer satisfaction, relationship and
experience.

Technological Problem
Coles supermarket faces the challenge of prospering online
businesses which gives consumers varied alternatives to choose from.
To address this issue, the firm should improve on its services structure
and offer convenient services to the clients of their products using the
reliable e-commerce systems to gain competitive advantage.

Enhancing Customer
Satisfaction
Customer satisfaction is a key competitive tool enhancing customer satisfaction.
Coles supermarket should adopt technologies which helps improve both services
and quality of products enhancing customer satisfaction.
The firm should constantly produce quality goods or services and improve
customer experience and satisfaction which could in turn increase competitive
advantage.

Delayed Delivery
This normally arises when suppliers do not deliver goods on time. To
address this challenge, the firm should appoint executives to ensure
that goods do not miss on shelves everyday. This helps increase the
company’s competitive advantage over its competitors.
Also, the firm should regularly communicate with suppliers to evaluate
their delivery performance.

Competition Challenge
Coles supermarket experiences fierce competition both locally and
globally from its competitors such as Woolworths.
To address competition challenge, the firm should take appropriate steps
and strategies to emerge the leading retailer in the market.
The firm should also improve its advertising and promotional strategies in
order to venture new markets.

Another way to address the issue of competition is through product
differentiation. This is where a company produces products unique
products from those of competitors in both design and functionality.
Coles supermarket should continuously embrace on current
technology and innovation in development and marketing of its
products to gain competitive advantage.

SWOT Analysis
SWOT analysis refers to an analysis tool used by a firm to evaluate its
position in the competitive market in terms of strengths, weaknesses,
opportunities and threats.
It helps a firm accomplish its set of goals or objectives and overcome
obstacles to achieve desired results.
SWOT analysis is important in market segmentation, production and sales.

Strengths
This describes where or what an organization does best compared to
competitors. Strengths of an organization include strong branding,
customer loyalty, unique innovations.
One of the Coles strength is the use of a powerful and impressive
online marketing module that gives the company an advantage over its
competitors. It also offers an efficient delivery service to its clients.

Coles supermarket brand name has different generic styles intended
to cater for specific needs or wants of a buyer.
The firm’s branding strategy is global wise making it one of the best
giving it competitive advantage over its competitors.
Strong and generic branding strategy has helped to grow market for
the company’s products.

The firm also employs advertising matched with promotional
campaigns as a way of creating awareness and insight of its products.
It uses slogans of patriotic nature such as ‘Proudly Australian since
1914’ and others specifically framed for consumers.
The firm has conducted successful campaigns with companies like
Apple computer and other prominent suppliers.

Another strength of the Coles supermarket is its pricing
strategy.
Coles supermarket employs an attractive pricing strategy
accompanied with price discounts. For instance, the price range
of the Coles products are affordable to consumers of all income
levels.
The company capitalizes on its cost leadership power to
effectively make good pricing decisions and promotional offers
to help market new products in the market.

Weaknesses
This encompasses areas where an organization is performing poorly
and needs to make improvement for it to remain competitive in the
market. These include: higher turn over level, inadequate and
inefficient supply chain and lack of capital among others.
Coles supermarket should work on strategies to address the issue of
delivery delays and logistics.

Coles supermarket operates on low margins compared to some of
its competitors like Woolworths. With a reduced margin, a firm
stands the risk of losing to competitors.
There is publicity issue which has brought great impact on
negotiation between suppliers and the management leading to
deterioration of the public sentiment towards the company.

Opportunities
This refers to external environmental factors an organization can employ
to achieve its competitive advantage.
The firm aims at seizing greater opportunities internationally with the
intention of controlling supply chain to maximize sales and profit returns.
The firm has opened new stores on its company name to take advantage
of the companies thus growing a strong market reputation.

Threats
This refers to external factors that are likely to harm
business firms’ operations. These include high input costs
and threats of new entry.
Coles supermarket is experiencing stiff competition from
companies such as Woolworths, ALDI, IGA and Costco.This
intensive competition has led to sharp decline of product
prices to lower margins.
The Australian market for liquor and food is changing
constantly with competitors entrance making the firm lose
its competitive advantage in the industry.

Coles supermarket uses diverse and distinct generic brands to
advertise its products. However, this confuses consumers when
they do not get a clear and distinctive meaning of each generic
brand.
Also, there is the possibility of buyers opting for small scale
retailers and independents such as green grocers.

Conclusion
Coles supermarket faces stiff competition in the global market despite
its dominance in the retail industry for several years.
The competition is mainly caused by delay in deliveries by suppliers,
emergence of online stores which offers consumers with alternatives
to choose from, threats from competitors such as Woolworths,
technological and logistics among other challenges.

For instance, the emergence of Woolworths into the market caused
competitive challenge resulting to various managerial problems.
Coles supermarket environment factors such as ambient, design and
social factors affect customer satisfaction in one way or another.
Customer satisfaction is a key element in many businesses today as a
way of enhancing their business loyalty.

For a business to ensure customer satisfaction, it has to adopt
strategies, practices and technologies aimed at improving service
and quality of products enhancing customer satisfaction.
Customer satisfaction is positively influenced by improved quality of
services, enhanced customer experience and expectation. All these
enable a firm to gain competitive advantage in the market.

RECOMMENDATION
As part of managerial decision, the firm should alter the administrative
structure to ensure that responsible people are appointed to ensure that
the company satisfies the needs and wants of its customers.
Also, the firm should work on improving its supply chain structure and
logistics so as to ensure efficient and timely delivery of goods by suppliers.

Recommendation (cont.)
The company should improve advertising strategies, improve on the company’s
generic brand and pricing strategies as well as promotions to remain competitive
in global market.
Coles supermarket should improve its product differentiation strategies with
current technologies to enhance customer satisfaction and reduce threats of new
entrance in the retail industry.

References
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Asadi, H. (2015). Factors influencing sport tourists’ revisit
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quality, perceived value and satisfaction. Asia Pacific Journal of
Marketing and Logistics, 27(2), 191-207.
Dwivedi, A., & Merrilees, B. (2013). Retail brand extensions:
Unpacking the link between brand extension attitude and
change in parent brand equity. Australasian Marketing Journal
(AMJ), 21(2), 75-84.

Duong, Q. B. (2016). The influence of store environment on
customer satisfaction across different customer demographic
segmentations within Australian supermarkets.
Knox, M. (2015). Supermarket monsters: The price of Coles and
Woolworths' dominance (Vol. 6).
Lee, H. J., & Yang, K. (2013). Interpersonal service quality, self-
service technology (SST) service quality, and retail patronage.
Journal of Retailing and Consumer Services, 20(1), 51-57

Mari, M., & Poggesi, S. (2013). Servicescape cues and customer
behaviour: a systematic literature review and research agenda.
The Service Industries Journal, 33(2), 171-199.
Mohan, G., Sivakumaran, B., & Sharma, P. (2013). Impact of
store environment on impulse buying behaviour. European
Journal of Marketing, 47(10), 1711-1732.