Supermarket Industry Analysis

This assignment delves into the Australian supermarket industry, providing a comprehensive analysis of key factors shaping its landscape. It specifically examines Woolworths, a prominent player in the market, analyzing its market share, competitive positioning, and strategies. The report considers various external influences such as political, economic, social, technological, environmental, and legal (PESTEL) factors impacting the industry's operations and future prospects.

MARKET
SEGMENTS AND
DECISION
MAKING

Table of Contents
INTRODUCTION ...............................................................................................................................3
1 Industry market for the chosen organization and current trends running in the industry.............3
2 Nature of competition in industry ................................................................................................3
3 Outline of major market segments for organization and identification of primary and secondary
target market ...................................................................................................................................5
4 Discussion of level of involvement of primary segment that is likely to have towards the
organization in terms of decision making .......................................................................................6
5 Positioning map for the market place ..........................................................................................7
CONCLUSION .................................................................................................................................10
REFERENCES...................................................................................................................................11
APPENDICES ...................................................................................................................................13

INTRODUCTION
Decision making process is critical and complex process and it requires systematic and
organized approach from the side of management. Market segmentation is done for targetting
specific group of consumers and it supports for selling commodities and services to large number of
customers (Wilson & Gremler, 2012). Present report is based on Australian corporation Woolworths
(Woolworths. 2016). The report describes about industry market for the chosen organization and
evaluation of current trends in growth, profitability and macro environment has been mentioned. In
addition to this nature of competition in industry has been described. Moreover, major market
segments for the organization and strategies adopted for meeting the competition that exist in
market has been explained.
1 Industry market for the chosen organization and current trends running in the industry
(A) Growth :-Woolworths is a leading supermarket chain of Australia that deals in
supermarket industry and provides superior quality food and services for its consumers. Grocery
store sector in Australia is facing intense competition and pressure. Supermarket retail sector is
facing competition as many players are trying for starting their business (Kotler, & Armstrong,
2015). According to AFCG industry reports it has been observed that supermarket and grocery store
industry is growing at the rate of 4.1% annual growth. In addition to this it has been forecasted that
this industry will observe growth of more than 2.9% in financial year 2016-2017 (AFCC
INDUSTRY REPORT. 2016).
(b) Profitability :- Supermarket industry is facing fierce competition and this industry
renders huge success and growth opportunities (Shani & Chalasani, 2013). As per data revealed by
AFGC annual report Overall revenue earned by supermarket and grocery industry in financial year
2015-2016 was $105 Billion. It shows that huge success and growth opportunities are provided by
this sector.
(c) Macro factor :- Diverse range of factors gives impact on working and operational
activities of supermarket and grocery industry. List of macro factors includes political, economical,
social, technological, environmental and legal factors (HShani & Chalasani, 2013). Overall
performance of supermarket industry gets affected due to it and it is vital that impact of these
elements should be considered while carrying out functions of this industry.
2 Nature of competition in industry
Supermarket and grocery store industry in Australia is growing at a faster rate and it is
offering huge potential for gaining success and financial revenues. The grocery store and
supermarket industry is fiercely competitive and intense competition is faced by existing market

players (Hall, Timothy & Duval, 2012). Woolworths and Coles are major players of supermarket
industry that hold more than 80% market share and position. ALDI which is a German based firm
has created big challenge for existing supermarket firms in Australian market. In last five years
ALDI has gained big market share and it is creating challenge for existing firms such as
Woolworths and Coles. Aldi is offering products at reasonable rice rates and due to that popularity
and large consumer base has been gained by it majorly due to the discounted price label products
(Chandon & Wansink, 2012).
Woolworths, Cole and other supermarket firms are now forced to cut prices of their products
for facing the competition that has been created by ALDI. Competitive strategy has been adopted by
existing firms and goods and commodities are sold at reduced price rates. Current trends that are
going in supermarket and grocery industry is to cut prices of the goods so that large number of
consumers can be sold goods of supermarket firm (Cairns & Caraher, 2013). Majority of firms have
opted for competitive strategy instead of product differentiation strategy. Price war is going among
existing companies Woolworths and Cole and arrival German based firm ALDI.
(SOURCE- Pulizzi, 2012)
Illustration 1: Australia supermarket market shares

As per current trends going in the industry companies are focussing on gaining market share
and strategies are formed for gaining big market share instead of gaining more profit and financial
revenues. Retailing in Australia has grown at a rate of 3% and huge growth opportunities are shown
by this industry. Online selling also ha improved and consumers are giving more preferences for
purchasing products through online mode. Companies are focussing on increasing and
strengthening their global presence (Crouch & Housden, 2012). In the supermarket and grocery
industry integrity has been assured by making use of a sophisticated quality system. In addition to
this concentration is paid by companies for providing fresh vegetables, fruits, dairy products and
other food items. In addition to this Woolworths and Coles are facing issues with their private label
strategies. Both the enterprises offer plain packaging in their home made products while competitor
firm ALDI uses Superior quality packaging in their products.
3 Outline of major market segments for organization and identification of primary and secondary
target market
Woolworths is a leading supermarket chain of Australia that offers superior quality food
products and other consumable goods to consumers. Market for selling goods and commodities of
enterprise has been segmented on the basis of demographic, phychographic and geography
segmentation. It supports in designing and selling goods of enterprise as per the requirements and
preferences shown by consumers. Major market segments for Woolworths are as described below :-
Primary target market for Woolworths :- Primary target market defines about total number of
potential buyers for the organization. Consumers who are most likely to buy products of the
company are included under this category. Some vary common characteristics are shared by
consumers in primary market area (De, Hastings & Angus, 2013). Large volume of sales and
majority of financial revenues are gained by company in this market area. Most of revenue and
funds comes from primary market areas consumers are likely to purchase goods and services that
are offered by the enterprise. Presently company is offering products by doing market segmentation
on the basis of demographics and buying behaviour criteria (Proctor, 2014). In demographic
segmentation consumers are targetted on the basis of age, income, occupation , education and
financial status. Primary target market areas of enterprise includes Town hall, Woolloomooloo,
Riley, Double way, Albion street Barangaroo etc.
Secondary target market for Woolworths :- Secondary target market for the company describes
about consumers who can purchase goods offered by the enterprise in near future. In the secondary
target market estimations are made about future primary buyers that will likely to buy goods offered
by company in near future. Consumers who give preferences for buying commodities of enterprise

through online medium are included in the category of buyers in secondary market (Glanz, Bader,
& Iyer, 2012).
In addition to this major market segments for Woolworths company are as described :-
Geographic segmentation :- In this segmentation criteria consumers are identified and targeted on
the basis of climate, population density and population growth and region of an particular area.
Moreover, location of stores and regional industrial growths are also considered while doing
segmentation. Location of place where supermarket market stores of Woolworths are operating
plays a significant role in doing segmentation on the basis of geographic criteria.
Demographic segmentation :- In this category segmentation is done on the basis of age, occupation,
education level, marital status and financial background of consumers (Grönroos, & Gummerus,
2014). Products and services offered by enterprise are segmented on the basis of mentioned criteria
and it supports for developing the products as per the needs and requirements of consumers.
Psychographic segmentation :- This segmentation method has been adopted in enterprise on the
basis of lifestyle, interest, preferences and preferences shown by buyers. Necessary attributes and
features are added in the existing foods and other grocery products that are offered by corporation.
Woolworths company follows this segmentation criteria for selling their goods and commodities to
large base of consumers.
4 Discussion of level of involvement of primary segment that is likely to have towards the
organization in terms of decision making
Woolworths is a leading supermarket entity that renders superior quality food and other
grocery products to consumers. Market segmentation supports for developing and designing
effective action plans for the enterprise (Rowley, 2016). Segmentation done on the basis of
geographic, demographic and psychological criteria aids for taking appropriate decisions for the
enterprise. Two major market areas for Woolworths company includes primary and secondary
market areas. Under primary market existing consumers are included which are purchasing products
and services that are offered by the enterprise. In addition to this in secondary market area
consumers are included which are likely to purchase goods that are offered by enterprise.
Involving primary segments supports in taking effective and appropriate decisions for the
organization. Preferences and needs of consumers can be identified and on the basis of that
decisions can be taken in the company (Cherian & Jacob, 2012). Advantage of existing market
opportunities can be taken by involving needs and requirement of consumers in decision making
procedure of the company. Various methods are adopted for assessing needs and requirement of
buyers. It helps in formulating effective marketing strategies and segmenting markets with objective

to target specific group of consumers. Involving primary segments also helps in effectively
positioning products of company in the competition. It is vital that decisions in business should be
taken by collecting appropriate data, facts, figures and other details so that effective strategies
should be formed for carrying out business activities (Wilson & Gremler, 2012). Use of survey,
interview, questionnaire and observation method has been used for gathering information about
consumers and it has supported for assessing and evaluating needs and requirement of buyers.
Advantage of available market opportunities can be taken and different strategies can be formed for
adding new attributes and features in existing products.
More effective and superior quality commodities can be offered to consumers and action
plans can be formed for meeting the needs and requirement of buyers. Diverse range of decisions
and strategies that can be formulated includes market penetration, market development, product
diversification and product development strategies (Hall, Timothy & Duval, 2012). Consumers are
most significant stakeholders that provides financial revenues and funds by purchasing products.
When needs and preferences of buyers will be included in decision making procedure than better
judgements can be taken for gaining competitive advantage.
Big market share and market position can be achieved by rendering commodities as per the
requirement and need of buyers. Products can be developed as per the choice and demands of
buyers and it will aid for making improvement in existing products and developing new products as
per the requirement of buyers (Shani & Chalasani, 2013). New products can be launched in new
market areas and it will aid for diversifying the company's existing strategies for mitigating the risks
that is associated with the business. Moreover, innovative methods can be adopted for making
significant changes and adding new attributes and features in food products and groceries that are
offered by the enterprise. Involving prime segment helps in meeting with the needs of consumers
and providing better products. Market conditions can also be assessed by involving prime segments
in the decision making procedure of Woolworths company.
5 Positioning map for the market place
Positioning map is done for diagrammatically representing perceptions and needs of exiting
buyers and potential buyers of the corporation. Position of a company is defined through its
products, products line and market position of a brand. Existing position of products of the
enterprise in market is represented under position map (Cairns & Caraher, 2013). By making use of
position map decisions can be taken by enterprise for positing their existing products. It also
supports for formulating strategies and action plans for carrying out business activities. Presently
market share of organization is as described in diagram.

Woolworths supermarket firm offers diverse range of products to millions of consumers and
on the basis of that position map of the organization can be defined as follows :-
(SOURCE- De Mooij, 2013)
As per the positioning map buyers of the organization has been divided in four categories
and products can be developed and sold by making strategies as per the positioning map of the
enterprise (Kotler & Armstrong, 2015). Different products that are offered by Woolworths can be
placed in four different Quadrants of position map and it will help in making effective action plans
for business to sell their products in prime segment market, consumers can be divided into four
Illustration 3: Position map of Woolworths
Illustration 2: Market share for supermarket firms in Australia

different segments which are as described :-
Young buyers :- Consumers belonging from young age group give preferences for purchasing
products as per their lifestyle. They give more preference for purchasing products that are of
superior quality (Proctor, 2014).
Conservative buyers :- They give preferences for purchasing products that are available at a
reasonable price. Super market industry of Australia is facing fierce competition and due to that
majority of firms dealing in grocery industry are giving focus on cutting price of commodities that
are offered by them (Glanz, Bader & Iyer, 2012). Some products can be designed and developed
for meeting the needs of buyers that belongs to conservative buyers' category.
In positioning map products can also be categorised in different areas and it includes :-
Low price and High quality products :- Patties party pack, Sweet chilli and soup cream, Lemonade,
High quality and High price products :- Soft drinks, Shampoo and hair care products, Australian
Calypso mangoes, Clothing products, Woolworths branded car, gold
High price and lower quality products :- Food products including vegetables and fruits, Nutritional
products
Low price and Low quality products :- Farmer's own milk
Diverse range of products that are offered by Woolworths can be categorized in four
different categories and necessary attributes and features can be added in the existing products and
services that are rendered by organization. In the position map products that are offered by
Illustration 4: Position map for Woolworths

enterprise have been divided into four major segments and it includes Low price and high quality
products, High quality and high price products, High price and lower quality products, Low price
and lower quality products (Rowley, 2016). Dividing products in this four specific categories aids in
adding necessary attributes and features in existing products as per the needs of buyers.
CONCLUSION
Summing up the present report it can be concluded that supermarket industry of Australia is
facing intense competition. It is vital for existing organizations to make effective strategies and
action plans for gaining competitive advantage and capturing big market share. ALDI which is a
German based supermarket firm is creating challenge for the existing players such as Woolworths
and due to that intense competition is faced in grocery and supermarket industry. Supermarket
industry in Australia is growing at annual rate of 4.1% and it offers huge success and growth
opportunities. Different macro environmental factors such as political, economical, environmental,
social, technical and legal factors gives impact on operational activities of supermarket industry.
Segmentation of market can be done on the basis of geographic, behavioural, psychographic and
demographic basis and it supports for targetting specific group of consumers for selling goods and
commodities offered by the enterprise.

REFERENCES
Books and Journals
Cairns, G., Angus, K., Hastings, G., & Caraher, M. (2013). Systematic reviews of the evidence on
the nature, extent and effects of food marketing to children. A retrospective summary. Appetite.
62. 209-215.
Chandon, P., & Wansink, B. (2012). Does food marketing need to make us fat? A review and
solutions. Nutrition reviews. 70(10). 571-593.
Cherian, J., & Jacob, J. (2012). Green marketing: A study of consumers' attitude towards
environment friendly products. Asian Social Science.8(12). 117.
Crouch, S., & Housden, M. (2012). Marketing research for managers. Routledge.
De Mooij, M. (2013). Global marketing and advertising: Understanding cultural paradoxes. Sage
Publications.
De, A. M., Hastings, G., & Angus, K. (2013). Promotion of electronic cigarettes: tobacco marketing
reinvented?.Bmj,347.
Glanz, K., Bader, M. D., & Iyer, S. (2012). Retail grocery store marketing strategies and obesity: an
integrative review. American journal of preventive medicine. 42(5). 503-512.
Grönroos, C., & Gummerus, J. (2014). The service revolution and its marketing implications:
service logic vs service-dominant logic. Managing service quality.24(3). 206-229.
Hall, C. M., Timothy, D. J., & Duval, D. T. (2012). Safety and security in tourism: relationships,
management, and marketing. Routledge.
Hays, S., Page, S. J., & Buhalis, D. (2013). Social media as a destination marketing tool: its use by
national tourism organisations. Current issues in Tourism.16(3). 211-239.
Kotler, P. & Armstrong, G. (2015).Marketing. Pearson Higher Education AU.
Proctor, T. (2014). Strategic marketing: an introduction. Routledge.
Pulizzi, J. (2012). The rise of storytelling as the new marketing. Publishing research quarterly.
28(2). 116-123.
Rowley, J. (2016). Information marketing. Routledge.
Shani, D., & Chalasani, S. (2013). Exploiting niches using relationship marketing. Journal of
Services Marketing.
Wilson, A. & Gremler, D. D. (2012).Services marketing: Integrating customer focus across the firm.
McGraw Hill.

Online
AFCC INDUSTRY REPORT. 2016. [Online]. Available through: <http://www.afgc.org.au/key-
projects/industry-performance/>. [Accessed on 29th December 2016].
Woolworths. 2016. [Online]. Available through: <https://www.woolworths.com.au/>. [Accessed on
29th December 2016].

APPENDICES
POLITICAL Policies, norms and rules that are formed by government of state is
mandatory to follow for organizations that are operating in supermarket
industry. When changes are there in political situations than due to that
sometimes policies also changes and it becomes necessary for
enterprises to make changes in their existing procedures as per the
guidelines given by government.
ECONOMICAL Recession, inflation, Deflation, tax policy and GDP growth rate of
nation are some elements that gives impact on the economic
environment of nation. Business activities of supermarket industry gets
affected due to it. Purchasing power of people also gets affected and due
to that selling of supermarket firms also gets affected.
SOCIAL Trends, beliefs, values, costumes and traditional practices that are
running and followed by people of society also gives impact on
purchasing pattern and buying behaviour of people and due to that sales
activities of enterprise gets influenced.
TECHNOLOGICAL Changes and new innovations happening in technical sectors also
affects the working of organizations and due to that it becomes
necessary for organisation to adopt technical advancements for gaining
competitive advantage.
ENVIRONMENTAL Supermarket industry is facing pressure for reducing carbon footprint
and water uses in their operational activities. Moreover, for reducing
wastages recycling processes are also used for providing better
protection to environment.
LEGAL Taxation policy formed by government and legal guidelines given are
mandatory to follow for all the organizations that are operating in
supermarket industry.