ECO600: Pricing and Non-Pricing Strategies of Woolworths and Coles

This report, submitted by James Alexander Segelov for the ECO600 Economics and Finance for Business course at ICMS, analyzes the pricing and non-pricing strategies of Woolworths and Coles, two major players in the Australian supermarket industry. The study delves into the competitive landscape, examining how these companies utilize various pricing models, including manufacturer suggested retail price (MSRP), loyalty programs, and personalized pricing, to attract customers and maintain market share. The report also explores the growth strategies employed by these firms, referencing Porter's Five Forces and strategic positioning models to understand their approaches to competition and market expansion. Furthermore, the report evaluates the effectiveness of these strategies, considering factors like predatory pricing, investment in research and development, and the use of advertising and online platforms. The analysis includes visual aids like figures and tables, and ultimately aims to provide a comprehensive understanding of the economic and financial dynamics within the retail sector, with a focus on how Woolworths and Coles adapt to market pressures and strive for competitive advantage.

Running head: Economics and Finance for Business by James Alexander Segelov
ECONOMICS AND FINANCE FOR BUSINESS
Student Name: James Alexander Segelov
Student No: 4010870
Subject Code: ECO600
Subject Name: Economics and Finance for Business
Lecturer/Tutor: Hermanath Swarna
Assignment Title: Pricing and Non-Pricing Strategies between Woolthworth and Coles
Word Count: 2210 (including abstract and reference list)
Due Date: 3 May 2017
I am aware of the ICMS policy on plagiarism as stated in the ICMS Student Handbook. This
assignment does not breach those requirements nor has it been previously submitted for
assessment contributing to any other subject or course. The ideas and information that are not mine
have been referenced accordingly.
Signed: James Alexander Segelov

1
Economics and Finance for Business by James Alexander Segelov
Abstract
The whole study will be mainly dealing with various pricing and non-pricing technologies
that will bring innovative designs in the product pricing. The whole study will deal how the
companies will be mainly aiming to increase the development of resources. On the other
hand, companies like Woolworth and Coles will definitely increase the development of
resources so that they will definitely reach the share of the market. Study dealt with various
pricing strategies that will ignite the improvement in the marketing of products.
1. Introduction
Competition in the markets are one of the important aspects for the growth of the companies
like Woolworth and Coles in the international market. Pricing and price strategies will be one
of the key factor that will help the companies in developing their position in the international
market. The main aim of this study is to highlight the development of growth strategies that
are taken by the firms in order to improve their position in the international market. The study
is significant in the sense that it will definitely indulge the development of economic factors
that will develop the business activities. The analysis of the pricing strategies will
automatically allow the companies like Woolworth and Coles to identify their strategies to
increase their revenue growth and also the rate of production. Moreover, the deep analysis of
the factors will indulge the improvement in the economy that will not only increase better
production but will also bring better quality of resources.
2. Pricing strategies
Pricing of products is one of the important concept in the economic discussions as the degree
of responsiveness of the customers is directly linked up with the pricing policy. The basic of
differentiated pricing is that some of the customers are inelastic in nature regarding the
quantities of goods purchased with changes in price and some customers are elastic in nature

2
Economics and Finance for Business by James Alexander Segelov
regarding the consumption of goods with change in prices. Moreover, the customers of life
saving drugs are more or less inelastic in nature. On the other hand, the customers in the retail
industry is more or less elastic in nature. This is the main reason why companies doing
business in retail markets sets single price for all the customers. The retail companies are
looking to incorporate the development of prices for multiple customers or standardised
pricing technology.
Figure 1: Movement along the demand curve
(Source: Created by Author)
The retail environment is competitive in nature. The brands are fighting continuously with
each other for one dollar. In order to increase the customer reach, most of the companies in
retail industry are using local and internal brands to decrease the level of competition.

3
Economics and Finance for Business by James Alexander Segelov
Figure 2: Pricing strategy
(Source: Iacis.org, 2019)
The main pricing strategy that has been taken by the retail stores includes the Manufacturer
Suggested Retail Price or MSRP. This is the listed price that the retailer need to pay. Now in
order to increase the retail pricing, most of the retail shops are using strategies like provision
of loyalty cards, discounts to customers and various loyalty programmes. Many firms also
use the technology of augmented reality and pricing. The major advantage of using this
technology, is that it has the potentiality of the retailers to maximise the profit by optimising
customer identification (Porter & Heppelmann, 2015). Using modern tools and software, the
retailer groups can identify the kinds of customers visiting the shops, tastes and preference of
the customers regarding the goods and products they are purchasing. Information that are
being collected from loyalty programme data will automatically allow the companies to
increase their growth rate within the international and domestic market. The loyalty
programme card and VR system will increase the customer attraction and will able to get the
discounted price of the most important products.
Figure 3: Opportunity of personalised pricing
(Source: Iacis.org, 2019)
The left side figure is showing that standardised pricing where the customers are willing to
pay a single price. Customers are not willing to pay that much for which the services are not

4
Economics and Finance for Business by James Alexander Segelov
served. Through this process actually the profit percentage of firms as consumers who are
willing to pay more are charged with less price. The immediate impact of personalised
pricing is that the consumer surplus will definitely increase as more customers will be willing
to pay less. On the other hand, through the development of the resources it will be important
for the firms to incorporate the development of pricing strategy. This will automatically allow
the firms to increase the development of better technology that will not only increase the
consumer and producer surplus but will make the level of competition high and through this,
the other competitors will play in an effective manner.
3. Growth strategies taken by companies
In order to make an analysis regarding the growth strategies that are being chosen by the
multinational companies the porter’s five forces will be a key strategy to analyse.
Figure 4: Porter’s five forces
(Source: Created by author)
Rivalry
among
existing
competitors
Bargaining
power of
buyers
Threat of
substitution
Threat of
new
enetrants
Bargaining
power of
suppliers

5
Economics and Finance for Business by James Alexander Segelov
Most of the multinational companies are looking to maximise their growth by looking at
porters five forces to increase the growth of their country. More or less through the
maximisation of these five forces, it is highlighting the fact that in order to increase the
development of resource multinational companies will aim at rivalry among existing
competitions. This is important in the sense that looking into strategies taken by the existing
firms will help in the development of strategies. Threat of substitution is going to increase the
development of resources in a better way. On the other hand, the concept of competitive
advantage was penned by Porter in the year 1985. The main aim of this theory is to bring
competitive advantage that the firms have chosen to increase. Competitive advantage
describes the situation that helps the companies to supply best quality of products. On the
other hand, through the development of the positioning mapping will allow the companies to
identify their position in the international market, not only this but the development of the
development of policy will bring better utilisation of resources.
Figure 5: Strategic positioning model
(Source: Upg-bulletin-se.ro, 2019)

6
Economics and Finance for Business by James Alexander Segelov
The above diagram is showing how the companies do make their strategy planning and plan
their market position according to the structure and range of market, costs associated with the
manufacturing of products, differentiation of products and many other factors. This is one of
the important aspects in the sense that through the analysis of technologies will allow most of
the companies to do better performances within any economy. Cost leadership strategy will
definitely allow the low costs goods and services to deal high profits for the organisations.
This is important in the sense that products having low costs of production will be having
high demand from the economy as most of the companies doing business in the retail markets
will leave the market because of the bargaining power of buyers. Through the incorporation
of cost leadership strategy, the lower price will bring more amount of competition within the
consumers as well as producers. The producers will cut down the cost of manufacturing of
their products and other companies in the industry will follow the same strategy to cut down
the prices. This will automatically bring down the prices of the necessary items. On the other
hand through the development of cost leadership strategy the companies will be mainly
indulged in making better products using better technologies that will not only increase the
development of resources but will indulge the improvement in the marketing of products.
Moreover, through the development of this strategy the companies will be able to minimise
the overall cost and will restrict the entry of new entrants to the firms. On the other hand,
through the development of this strategy the market will be more refrained and will be able to
highlight the importance of international strategies.
4. Evaluate the pricing and non-pricing strategies used by the businesses
Most of the firms take the pricing policy to capture the major share of market, increase their
profit and increase their marketing of the products. Moreover, through the development of the
various pricing strategy like bulk buying discount, predatory pricing, limit pricing and many
more will definitely allow the economy and the multinational companies to increase their

7
Economics and Finance for Business by James Alexander Segelov
aims and objectives. On the other hand, through the development of non-pricing strategies in
the form of advertisements and many other activities have indulged the development of
resource based activities that will increase the involvement of stakeholders regarding the
development of economic ground (Xia, 2015). On the other hand, using better technology
will always indulge the importance of better accessibility that will not only induce the
development of human and capital resources but will increase the improvement in the
policies. Another technology that will be effective in the sense that making own goods more
desirable in the market will automatically increase the demand of the economy from within
the economy. This forced situations will force the rival companies to decrease the price level
of their products so that they can stay within the competition level (Porter & Heppelmann,
2015). Moreover, responding to this situation, the competitors will automatically force the
company to go bankrupt if they cannot induce the development of their price. Moreover, with
the required level of improved level of production rate will increase the development of better
accountability.
Figure 6: Price list of wools worth and Coles
(Source: NewsComAu, 2019)

8
Economics and Finance for Business by James Alexander Segelov
The method of predatory pricing is one kind of strategies that are taken by big firms to bring
their cost of own products below owns average cost curve that will force the rival
competition to go bankrupt. Apart from this, increasing the level of investment on the
research and development will automatically bring new technologies that will automatically
increase the resources utilisation and will bring more amount of FDI to invest in the country.
Using the technology of advertisements, the companies will be mainly looking to bring more
amount of customers for the development of better marketing (Edelman & Geradin. 2015).
Most of retail markets in Australia like Wools worth and Coles are looking to induce the
development of resources and setting up of online business will improve the development of
better market even in the international markets. This is going to increase the reach of the
company as more amount of customers will reach.
Moreover, with the introduction of online technology and other tools and platforms the
companies dealing in the retail sector will be looking to counter the development of the
pricing policies that will definitely increase the development of marketing of goods and
services. This is important in the sense that through the development of pricing the economy
and companies like Coles and Woolworth will be able to segregate their market based on the
demographic factors of the market. On the other hand, through the development of resources,
it will be highlighting the fact that in order to indulge the development of market, the
customer segregation will help in the economic development. Understanding the taste and
preference of the customers will allow the companies to indulge the development of
resources utilisation that will not only increase the development of better policies but will
channelize resources. Many economists’ claims that pricing of the goods and products will
bring the monopoly like situations in the whole market and the competitive character of
market will be lost.

9
Economics and Finance for Business by James Alexander Segelov
5. Conclusion
The whole study is focusing on the development of company growth taking the help of
pricing and non-pricing strategies that will automatically allow the companies to grow and
develop their strategies. Moreover, with the development of better accessibility of pricing and
non-pricing technologies will definitely increase the reach of the customers. On the other
hand, through the development of resources, the companies will increase the rate of
production of goods and services. Taking into account the pricing and non-pricing strategies
will allow the economy to bring in better development of resources but will also incorporate
the price of the products that will bankrupt the rival companies. On the other hand, through
the incorporation of non-pricing technologies, the companies will be mainly aiming to
increase the development of better accessibility of the market.

10
Economics and Finance for Business by James Alexander Segelov
Reference list
(2019). Iacis.org. Retrieved 19 May 2019, from
http://www.iacis.org/iis/2017/4_iis_2017_116-123.pdf
(2019). Upg-bulletin-se.ro. Retrieved 19 May 2019, from
http://www.upg-bulletin-se.ro/archive/2015-1/7.Rizea.pdf
Edelman, B. G., & Geradin, D. (2015). Efficiencies and regulatory shortcuts: How should we
regulate companies like Airbnb and Uber. Stan. Tech. L. Rev., 19, 293.
Mum finds out which supermarket is cheapest. (2019). NewsComAu. Retrieved 20 May
2019, from https://www.news.com.au/finance/business/retail/is-it-worth-shopping-at-another-
supermarket-chain-a-savvy-mum-did-the-research/news-story/58ee7c49120aa370ea633e60ce
Porter, M. E., & Heppelmann, J. E. (2015). How smart, connected products are transforming
companies. Harvard business review, 93(10), 96-114.
Xia, B. S. (2015). Innovation policies in managing growth for high-tech companies: a tactical
synthesis of management insights. International Journal of Service Science, Management,
Engineering, and Technology (IJSSMET), 6(4), 33-42.