Strategic Report: Countering Amazon's Disruption of Supermarkets

This report examines the disruption caused by Amazon's entry into the Australian supermarket industry and proposes strategies for incumbent supermarkets like Woolworths to compete effectively. It identifies key issues such as poor online customer service and declining customer loyalty, offering solutions like improving online interactions and enhancing customer engagement. The report also discusses implementation and control strategies, including focusing on online customer purchasing trends, improving website interfaces, controlling high pricing, and developing customer loyalty programs. Furthermore, it touches upon relevant digital business theories such as game theory, network theory, collective intelligence, and generational theory, emphasizing the importance of understanding consumer behavior and adapting marketing strategies to the dynamic business environment. The report suggests a timeline and budget for implementing these strategies and highlights the need for supermarkets to adapt and innovate to maintain their market share in the face of Amazon's competition. Desklib provides students with access to this and other solved assignments to aid in their studies.

SCENARIO: AMAZON IS DISRUPTING MAJOR
SUPERMARKETS

Table of Contents
Consumer Decision-making Process 2
Two chosen issues and Solutions 3
Implementation and Control Strategy 4
Timeline and Budget 5
Digital Business Theory 5
References 7
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Consumer Decision-making Process
With rapid globalization and business development, new business theories have come into
relevance. Since one of the main objectives of all business organizations is to satisfy consumer
needs or demands, it is vital to discuss the consumer decision-making process that gets inside the
mind of a consumer and explores the various stages of decision-making before selecting on a
particular buy (Karimi, Papamichail and Holland 2015). McKinsey developed a new and relevant
model to describe the stages of consumer decision-making, which will be discussed in order to
understand the requirements and shortcomings of the chosen Company—Woolworths.
McKinsey’s model explores various consumer behavior patterns to provide an in-depth
understanding of the consumer purchase process. The various stages of the model are briefly
discussed below:
Initial Consideration: The first step of the consumer decision-making process is triggered by
the initial need for a product or service that leads to the consideration of a purchase (Fang, Wen,
George and Prybutok 2016). The initial consideration process starts with a consumer’s
realization of the need for a product and can be manipulated by business institutions through
marketing and promotional activities.
Active Evaluation: The next step of the consumer decision-making journey is to evaluate the
product in reference to the existing needs, affordability and available alternatives. The evaluation
process involves a comparison of the product’s price, quality and indispensability (Karimi,
Papamichail and Holland 2015). In the case of Woolworth, the price is a major factor, along with
the readily available alternatives in the market.
Moment of Purchase: The moment of purchase marks the step where a consumer is decided on
the purchase and actively takes part in purchasing the product. The purchase moment comes after
the consumer is decided that they need the product, the product is affordable for them and there
is no better alternative to the product.
Post-purchase Experience: The post-purchase experience refers to the consumer’s response to
the bought product. In most cases, when consumers are satisfied or dissatisfied with their
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purchasing experience, they actively speak out publicly in favour of the product or vice-versa
(Scott et al. 2016). This includes responses to social media as well as mouth-to-mouth preaching.
Loyalty Loop: This is the final stage of the model that emphasizes the consumer’s loyalty
towards the organization or brand. In most cases, when a consumer is satisfied with the product
buying experience, they would come back for more buys. This is referred to as loyalty towards
the brand and marks the success of an organization.
Two chosen issues and Solutions
Woolworths Company has been facing stiff competition in the market due to various external as
well as internal issues that need to be resolved. This paper takes up two issues respectively that
directly or indirectly affects the organization and aims to provide relevant solutions for them.
The two chosen issues are briefly discussed below:
Poor online customer service: Customers of Woolworths have been complaining about the
Company’s online interactions with its consumers. The company has failed to provide a user-
friendly experience for their customers when it comes to online shopping. Lack of transparency
and miscommunication between the company and the clients have caused great loss to the
company. The customers complain that they are unable to inquire or ask questions or seek advice
for their interest in a particular product.
Poor customer loyalty: With a poor online presence and decreased engagement in customer
satisfaction and various other factors have contributed to the present situation faced by
Woolworths (Faulds, Mangold, Raju and Valsalan 2018). Poor customer loyalty is no surprise
when competing enterprises like the Amazon is implementing many quick ways to quickly take
up the market share of Woolworths. Even though after acquiring such a wide customer base or
market share, Woolworths has noticed that their brand reputation is decreasing while Amazon’s
increasing.
The relevant solutions to these issues are briefly discussed below:
Improving online customer service: Woolworths needs to employ more enhanced individuals
when it comes to online customer care. Helping out a customer in any possible way develops the
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chance of future investment by the consumer as the consumer feels satisfied with the Company’s
service whenever necessary (Brown-Liburd, Issa and Lombardi 2015). Improving website
development is also important to present a unique user-friendly interface which should be
exceptional and easy to operate so as to gain more recognition and popularity. In today’s modern
world, consumers are more engaged in online interactions. Woolworths needs to understand this
and take advantage of the various means of technologies that can improve their online service
and presence and introduce training methods for the employees to help with customer
satisfaction online.
Developing Customer Loyalty: Customer loyalty is very hard to gain in the FMCG market.
Customers can keep purchasing from the company as long as they are satisfied with the service
provided to them by the Company (Young Jr, Adams and Parker, Hypertherm Inc 2017). As
soon as there is any kind of inefficiency in the Company’s service, a customer’s loyalty may
quickly deviate or shift to another Company’ services where the customer is being valued. So, to
develop customer loyalty, the Company should first look into the methods used for providing
regular smooth service to their customers and implement strict control measures to monitor these
relationships between the consumer and the Company.
Implementation and Control Strategy
Identifying the challenges and the respective remedies to them is not sufficient without a proper
strategy to implement them on the current workforce of the organization. The Woolworths
Company has been facing stiff challenges related to customer loyalty and achieving consumer
satisfaction. The implementation strategy to develop consumer loyalty and improve customer
satisfaction is briefly discussed below:
1. Improving online customer service:
● The Company needs to emphasize more on online customer purchasing trends and
demands in order to thoroughly understand what is required of them (Tsai and Honka
2018). The rapid growth in the technological revolution has increased the consumer’s
access to the internet and worldwide information. In order to beat the current rise in
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online purchasing and interaction trends, the Woolworths Company needs to focus more
on online customer servicing demands.
● One of the rising issues pointed out by the customers of the organization is that the
Company fails to attend frequently asked questions from the customers, in the process of
purchasing groceries from the website as well as mobile (Weiss 2018). In this case, the
Company needs to be more attentive and responsive to the interactions that take place in
online media.
● In addition, the Company can focus on developing their online interface that would
enable the customers to browse more easily and directly interact with customer-service
professionals in case of doubts and queries (Ali, Amin and Ryu 2016). Improving online
servicing of potential customers is a vital element that would help the organization meet
the current requirements of their customers.
2. Developing Customer Loyalty:
● FMCG market refers to the market of Fast Moving Consumer Goods or packaged goods
that are sold at a relatively lower cost in the supermarkets and retail shops. In order to
develop customer loyalty, Woolworths needs to primarily control its high-pricing (Beck
and Kenning 2015). Most of the consumers prefer companies like Amazon over
Woolworths due to their high-pricing, in relation to the available alternatives in the
market (Zimon 2017). Therefore, the Company needs to control its expenditures and
production processes so as to be able to provide goods and services at a lower price.
● Developing customer loyalty is a vital element in the process of beating rival
organizations like Amazon in the online retail market (Beck and Kenning 2015). In order
to improve the customer loyalty of the Woolworths brand, it is necessary to focus on the
consumer’s purchasing experience, by utilizing the different business theories.
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Timeline and Budget
The end of Google the exact understanding of the business process to be Incorporated in the
selected organisation should be presented within a time period of one month. To understand the
certainty business operation can only be understood if there is a certain possibility set up a a
benchmark for the organisation.
The following is the evaluation of the budget.
Outsourcing of experts. $3000
Training of existing experts. $4000
Mamagement of training period $2000
Budget management $1000
Total budget. $10000
Digital Business Theory
Digital business theories represent the methods used by companies in order to accelerate their
digital growth (Rezaei 2015). Marketing strategists and theorists use scientific approaches to
understand and identify various consumer behaviours and attitude towards specific products.
Some of the relevant digital business theories are explained below:
Game Theory: The game theory emphasizes on the strategic interactions between agents and
customers that help in manipulating customer choices and preferences. Since agents and other
stakeholders involved in the process have different priorities and preferences; this theory helps in
providing relevant insight regarding how consumers respond to various events (Deng, Pao-
Chuan, Lin and Nguyen 2016). The Woolworths Company can use this theory to gain sufficient
knowledge regarding the various requirements and shortcomings with reference to digital
marketing. The management of the Company needs to build up social interactions via the
website in order to meet the rising demands and queries of their customers, which would also
indicate the specific requirements of the strategy.
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Network Theory: The network theory emphasizes on the various relationships shared by the
various stakeholders of the Company in order to understand the particular trends and preferences
in consumer behaviour. Analyzing the interactions over social networks can provide useful
information as to how the various stakeholders are interconnected with each other and how the
changes in the external or internal environment affect their behavior patterns (Wang and Yu
2017). The Woolworths Company needs to focus more on their networking and customer-
servicing aspects in order to gain sufficient knowledge regarding their consumers’ behaviors.
Collective Intelligence: Collective Intelligence theory promotes the idea that a group of workers
is more efficient than individual workers. In the time of Internet revolution, applying collective
intelligence theory is not only beneficial but also more productive (Peters and Heraud 2015). The
concept of crowd sourcing refers to breaking down projects in small parts and distributing them
amongst a large number of individuals, who work together to meet the objectives. The
Woolworths Company needs to apply this theory in order to develop its resources in the perfectly
competitive market (Mulgan 2018). The Company needs to develop its online networking
practices in order to gain useful data regarding the consumer behaviours and provide accordingly
to them.
Generational Theory: The generational theory stresses on the fact that every generation has
their specific trends and behaviours when it comes to purchasing and other business interactions.
Identifying these generational trends and preferences provide useful insight regarding the current
demands and expectations of the consumers. Before the rise of social media, the consumer
behaviours were significantly different from now, when social media is a major pillar of business
development. The Woolworths Company needs to improvise their marketing strategies based on
the dynamic business environment. The entry of rivals like Amazon.com in the market is a
significant change that marks the difference between two generations.
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