Coles and Woolworths Market Dominance

This assignment requires an analysis of the economic structure and performance of the Australian retail industry, with a particular focus on the market dominance of Coles and Woolworths. It examines factors such as supply chain management, environmental impact, training qualifications, and corporate strategies employed by these major retailers. The analysis draws upon various sources including reports, articles, and company publications to provide a comprehensive understanding of their influence on the Australian retail landscape.

Running head: Marketing Management 1
Marketing Management: Market segmentation and decision
making

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Table of Contents
Introduction................................................................................................................................3
1.Briefly describe the industry market for the organisation and evaluate current trends in:.....4
A. Growth...............................................................................................................................4
B. Profitability........................................................................................................................5
C. Macro Environment(Pestle Factor)...................................................................................5
2. Outline and examine the major market segments for the organisation and identify the
primary and secondary target markets.......................................................................................7
Figure 2: Global position of Woolworths..................................................................................9
3. Discuss the level of involvement the primary segment is likely to have towards the
organisation in terms of decision making..................................................................................9
4. Describe the nature of competition in the industry. Explain and analyse the organisation’s
place in the market by comparing and contrasting its strengths and weaknesses to the main
competitor................................................................................................................................12
5. Taking into consideration the primary segment, their level of involvement and the
competition, create a positioning map for the market place....................................................13
Conclusion................................................................................................................................15
Works Cited.............................................................................................................................16

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Introduction
Marketing is the most important aspect of all businesses presently. Marketing plays a
vital role in the growth and sustaining of any business. For this proper marketing
management is to be observed by the organisations. In the context of the Woolworths
supermarket chain, Australia, the study of marketing management has been reflected. In this
paper, different aspects of marketing management of Woolworths which includes market
segmentation, targeting, positioning, micro environment, macro environment, strengths and
weaknesses of the organisation, opportunities and threats are discussed with valid evidences.
The Woolworths supermarket chain is a leading name in the retail industry of
Australia. It was founded in the year 1924, 5th December. Woolworth’s total no of employees
are over 200 thousand, 6500 of them are serving the company and its customers for more
than 25 years. It has contributed remarkably to the economy of Australia and it ranks 18th in
the global retail industry. It pays off $ 2.1million to the government(Australian Food News,
2015).

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Tasks
1. Briefly describe the industry market for the organisation and evaluate current trends
in:
The Woolworths supermarket chain is actually a renowned and one of the ancient
organisations of Australia, specialised for their food products and farm fresh vegetables,
fruits and meat products. Woolworths is known to be the first to open fresh food stores in
Australia. It has drastically transformed its business strategies over the century, reaching
different countries of the world with its strongbusiness objectives. In Australian market
Woolworths has solidified its position through fresh food supply direct from the farm and
good service to the customers over years and offering good products at reasonable price.
There are 190 000 employees out of which nearly 6500 are serving in the stores for over 25
years and over 28 million of loyal customers still choose Woolworths for their daily
needs(Andaleeb, 2016).
The current trends of Australian market for Woolworths are described below in terms
of:
A. Growth
The Woolworths supermarket chain being one of the ancient and trusted organisation
of Australia has an upper hand over the other companies. It has been serving customers with
good food and better service at reasonable price since 1924. It has grown immensely since
1924 and now it has over 3000 stores across Australia and New Zealand. The agenda of
Australian citizens to have healthy, farm fresh and local grown food has greatly benefitted
Woolworths in its business (Global Farmers in Australia, 2016). Recently it has launched

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sushi stores outside the supermarkets which avails fresh and handmade sushi by the chefs in-
stores. Besides, fresh sea-fishes are another attraction of the Woolworths supermarkets.
B. Profitability
In spite of the fierce competition in a market like Australia with new companies
popping in Woolworths has been able to sustain its position quite strongly in the market of
Australia. The Woolworths supermarket group have earned $56.7 billion of annual turnover
in 2012. It pays the Australian govt. $2.1 billion tax. It earned $48.6 per share in 2015 which
is a good profit level. Moreover it employed over 190,000 of people which means it
contributes to the economy of Australia significantly (Booth & Coveney, 2015).
C. Macro Environment (Pestle Factor)
The macro environment of the Woolworths supermarket group includes political,
economic, social, technical, legal and environmental factors which influence the
organisational operations.
Pestle analysis:
Political: Woolworths is a very renowned organisation and it has faced all the ups and
downs of political disturbances and upheaval of the nation, and managed to keep it position
intact. Political condition of any nation highly influences the organisational activities, both
internal and external. Issues regarding the consumption of liquor can be recently found in
Australia, which can affect the company (Wardle, 2015).
Economic: A nation’s economic condition contributes to the growth of any business.
Conditions like recession and unemployment affects the organisational growth. However the
economic condition of Australia has elevated a lot which has contributed to the growth of the
company.

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Social: The social condition of Australia has improved drastically since 1924, when
Woolworths began. The income of the middle class has increased considerably and the
outlook of the people towards food habits has changed remarkably. The inclination towards
healthy foods and local farm products has greatly influenced the company’s growth.
Technological: Technologically Australia is very rich, with numerous companies
supplying new machineries, gadgets and invention of new farming techniques have benefitted
the organisation. Moreover the digital media has eased the efforts of Woolworths from the
beginning. The Woolworths supermarket group was the first to introduce self-help stores.
Environmental: Natural environment of a country greatly serves to the growth of a
business. For food chains like Woolworths, environment plays very important role in the
smooth functioning of the company, since these food based organisations are dependent upon
the cultivation and farms directly. Woolworths takes care of the environmental issues like
wastage of water, garbage dumping, location of warehouses in safe regions and environment
pollutions.
Legal: The legislation of the nation determines the healthy growth of the businesses.
The organisation needs to comply with the food laws. It needs to meet the standards of the
food set by government in its products. Moreover in case of opening new outlets it needs to
follow the regulations set by the govt. and licenses need to be renewed from time to time
(Kew & Stredwick, 2017)

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Figure 1: Growth rate of Woolworths in comparison to AUDUSD rate
[Source:(Sydney Morning Herald , 2015)]
2. Outline and examine the major market segments for the organisation and identify the
primary and secondary target markets.
Woolworths has efficiently identified the market segments it has to keep its grip
continuing. The customers of Woolworths are varied ranging from the regular shoppers to
online shoppers and the liquor lovers. From time to time it has been launching new services
and schemes to keep adding new customers and creating a host of loyal customers. As
mentioned before Woolworths have 28million loyal customers out of which nearly 14.6
million are regular buyers. Woolworths has successfully positioned itself into the homes and
minds of customers. It offers to the customers a plethora of choices in their stores knowing
the different customer demands. Its stores are filled with stocks of various ranges which are
up-to-date, fresh and reliable for the customers (Andaleeb, 2016).

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Woolworth’s new addition to its business strategies are fresh sea-fish corners in the
stores which stocks fresh packed fish fillets and choices of different sauces for no extra cost.
Another attraction of the Woolworths is the availability of meat and beef freshly supplied
from the farms for the meat lovers, well-packed and easy to carry. Recently sushi bars have
been introduced outside the supermarkets which sell fresh and hot handmade sushi by the
chefs in stores for the healthy-food lovers. This way Woolworths have successfully occupied
the position in the minds of the customers of different backgrounds and diverse lifestyles
(Woolworths Group, 2017).
The Woolworths supermarket group is the leading retail industry in Australia. It has
43% of the total Australian market share which is quite huge portion. Woolworths enjoys an
annual turnover of $56.7 billion. It pays the government huge taxes which accounts $2.1
billion. Woolworths have successfully gripped the Australian market and New Zealand
market which are its primary target market. But Woolworths compared to other MNCs have
very few markets globally(Rajabian Tabesh, Batt, & Butler, 2016). In recent years it has
developed its subsidiaries in nations like China, India, South Africa and Japan. While other
multinational retail industries like Wal-Mart has successfully grabbed global retail industry
shares through its business in US, Canada, Mexico, UK, Asia, South America, Europe.
Though it’s very important for Woolworths to extend its business globally, international
market can be considered as the secondary market. Since Australia and New Zealand is the
home ground for Woolworths, it needs to keep its grip tight over the home market while
trying for global market. It has been ranked 18th in the global retail industry market which is
very important for Australia (Wilkins, G., 2014).

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Figure 2: Global position of Woolworths
[Source:(Global Farmers in Australia, 2014)]
3. Discuss the level of involvement the primary segment is likely to have towards the
organisation in terms of decision making.
The primary segment of Woolworths refers to the grocery shoppers, liquor lovers,
household shoppers and the online shoppers. It is said in recent report that Woolworths is
likely to change its strategies towards a better experience for both the online and stores
customers. It is said that they will keep the prices for the online shoppers in par with the store
prices, so that they put Woolworths always first on the list. Segmentation as we know is a
very important part of the marketing strategy. It helps the organisation to understand the
behaviour of different groups of customers. Segmentation as known can be done in three
ways geographic, demographic and psychographic. Woolworths focuses on all the three ways
of segmentation that is why it has decided to refurbish 80 of its stores according to the

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demand of the local customers. Further they say that Lean Retail Model strategy will be
applied under which $500,000 cost reduction will follow in the financial years of 2015-16
(Australian Food News, 2015).
To sustain its position and increase the annual sales Woolworths supermarket chain
has announced a host of programmes for the customers. Also to grab the most share of the
grocery basket of the customers Woolworths authorities have decided to improve the stocks
in the stores, a Click and Collect procedure for the online shoppers have also been introduced
which will ease the efforts of online shoppers and quick delivery will be followed. Through
this program, a more convenient way of shopping for the online shoppers is reflected(Bailey,
Price, Pyman, & Parker, 2015). Further new stores opening in proportion with the increasing
population in Australia and New Zealand has also been declared by M.D. Brad Banducci.
More attractive loyalty programmes for the customers have been thought of by the
Woolworths authority. Woolworths Rewards is a famous loyalty program in Australia and is
most popular.

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Figure 3: Strategic approach of Woolworths for sustainability
Source:(Woolworths Group, 2017)
From the above programs decided by the Woolworths authority reflects how the
primary segment influences the decision making of the organisation. An organisation like
Woolworths is always known for its dedication towards customers. Its customer feedback
system enables it to know the demands of the customer and their advices and suggestions are
always prioritised to help improve their products and services. The Voice of the Customers
program and the Support Office are said to be very efficient customer feedback system
through which daily feedback from customer are received. This proves that Woolworths
supermarket group emphasizes on the customer feedbacks to improve their techniques and
strategies. The primary segment is deeply involved in the decision making of Woolworths
supermarket authorities (Woolworths Group, 2017).

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4. Describe the nature of competition in the industry. Explain and analyse the
organisation’s place in the market by comparing and contrasting its strengths and
weaknesses to the main competitor
The Australian retail industry market has been majorly occupied by the Woolworths
supermarket group with Australian market share of 43% until the growth of organisations like
ALDI and Coles. Coles is definitely the main competitor of Woolworths with a total of 37%
of the Australian market shares. The competition among the retailer tycoons Woolworths and
Coles are fair. The competition lies in keeping the customers engaged in choosing a brand as
the numero uno in their everyday list of household needs (Arli, Dylke, Burgess, Campus, &
Soldo, 2013). Woolworths has numerous businesses under different banners like Safeway
Supermarket, Big W, Dan Murphy, Dick Smith and others which are spread all over Australia
and New Zealand. The companies keep on bringing new strategies to the fore in order to
attract and retain customers. Recently the Woolworths low pricing strategy was answered by
the Coles in form of price rewind strategy. In 2011 it is reported that Woolworths with other
major retailers and suppliers developed a Charter of Fair Trade which encloses the key
principles of supplier-retailer business relationship (Flannigan, 2011).
Strengths and weaknesses:
Woolworths is leading in terms of Australian market shares. While Woolworths has
43% of market share, Coles is lagging behind at 37%. The financial performance of
Woolworths is far better than Coles in terms of profit margin and revenue per share and
annual sales even after the Easter adjustments. The total annual sale of Woolworths is $55.5
billion in 2017 while it is only $2.87billion for Coles in 2017 (Woolworths Group, 2017).
Woolworths is the reputed brand and it was ranked as the largest retailer in Australia
and New Zealand in field of business size, range of products, services and prices. Also it has

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the reputation of meeting customer needs through innovative processes. In the year 2012 it
was awarded as the sustainable retailer by BRM AMP Australian retailer. TheColes have a
good reputation about their advertising and promotional campaigns which are better than
Woolworths. Recently they have carried out promotional campaign in collaboration with
Apple brand and other major suppliers ‘Apple for Students’ which was successful(Smith,
Smith, Hampson, & Junor, 2015). The Coles also have a remarkable pricing strategy which
characterizes different promotional offers and price cuts
The relationship of Woolworths and its suppliers, producers and distributors are
considered very strong and they take pride in it. Woolworths’ the Fresh Food Future
programme in 2007, helped the farmers by encouraging and promoting sustainable
agriculture. The Coles have recently gone through negative publicity about their relationship
with the suppliers. This impacted their sale greatly.
Woolworths and Coles both need to extend their businesses across the world. Though
Woolworths have in recent years developed subsidiaries in nations like China, Japan, US,
France but they have to face terrible competition with global retailers like Wal-Mart, Costco,
Amazon, Tesco PLC and others (Baker, 2014).
Woolworths has significantly facing debts in last few years which can affect the
growth of the organisation. The Coles has also faced losses of $89 million in its hardware
businesses in UK and Ireland ( (SBS, 2017).
5. Taking into consideration the primary segment, their level of involvement and the
competition, create a positioning map for the market place.
The primary segment as identified by the organisation is the grocery customers, liquor
lovers and household shoppers. In the context of positioning an organisation can place itself

Quality
Price
High Quality,
High Price
High Price,
Low Quality
Low Price, High
Quality
Low Price, Low
Quality
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in one of the four different quadrants in the positioning map. The positioning map is depicted
in the figure below,
Figure 4: Positioning Map
(Source: Author’s Creation)
It can be seen from the above diagram or the position map that an organisation can
position itself in one among the four different quadrants. These are low price and high
quality, low price, low quality, high price low quality and high price, high quality segments
(Sohal, 2013). As Woolworths is an organisation which is widely known as the grocery
market leader in Australia it will certainly position itself in the low price, high quality
segment. Woolworths reserves this position to provide price competition to its rival firms. In
order to do so Woolworths accrues fresh raw materials directly from the growers and farmers.
This is the underlying strategy followed by Woolworths to maintain low price and at the
same time provide high quality products as well.

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Conclusion
Thus, it can be seen from the above paper, the influences of market segmentation on
decision making for any organisation. Segmentation, targeting, positioning are the key
components for marketing management. Moreover the Marketing management also involves
evaluating the current market trends which are also discussed in terms of growth, profitability
and the macro environment. Through Pestle analysis macro environment has been presented
and also shown how it affects the growth of the organisation. Further the influence and
involvement of the primary segment over the organisational policies has been described with
valid evidences. The SWOT analysis helps to realize the position of the organisation and its
growth tendencies can also be evaluated. Lastly a position map has also been created to clear
the understanding of the reader about the organisation.

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