Wesfarmers Marketing Report: Market Analysis and Decision Making

This report provides a comprehensive market analysis of Wesfarmers, a diversified retail company operating in Australia and internationally. The executive summary outlines the report's structure, which begins with an overview of Wesfarmers' industry market, assessing its growth, profitability, and external environment using PESTEL analysis. The report then identifies and examines Wesfarmers' major market segments, differentiating between primary and secondary target markets. It also delves into the company's decision-making processes, considering the involvement of the primary target segment. Furthermore, the analysis includes a positioning map to illustrate Wesfarmers' market placement and a discussion of the competitive landscape. The report concludes with a summary of the key findings, providing a complete market audit of Wesfarmers' operations and strategic positioning within the retail sector, including its various divisions such as Bunnings Warehouse, Coles, and Kmart.

Running Head: MARKETING 0
MARKETING
MANAGEMENT

MARKETING 1
Executive Summary
This report outlines the industry market of Wesfarmers with evaluation of the current
trends in relation to progress, profitability and external environment of the industry in which
organisation operate. The nature of competition in the industry is also being stated and
various market segments including primary and secondary targeted market. The decision-
making process of the organisation is also encompassed in the project.
This report signifies external environment of the whole country and industry where
the company drives their function with help of the PESTEL exploration of market. The fortes
and weakness of Wesfarmers in relation to its key rival are also being deliberated here.
Hence, it provides a complete market audit of Wesfarmers.

MARKETING 2
Table of Contents
Introduction................................................................................................................................3
Growth, Profitability and Environment analysis of Wesfarmers...............................................3
Macro environment analysis..................................................................................................4
Markets Segments and Targeted Markets..................................................................................6
Identification of the primary and secondary target markets...................................................7
Decision-making procedure.......................................................................................................7
Positioning map for the market..................................................................................................8
Industry competition..................................................................................................................8
Conclusion................................................................................................................................10
References................................................................................................................................11

MARKETING 3
Introduction
The corporate structure of Wesfarmers is diversified in retail sector. The company
was shaped in retail sector and it’s headquarter is situated in Perth, Western Australia. The
company compacts with production of coal, chemical fertilisers and safety products. In
addition, Wesfarmers is serving in many countries worldwide such as Australia, India,
Ireland, New Zealand and United Kingdom. In 2017, the company earned a revenue of
A$68.44 billion with around 223,000 employees (Hatch, 2017). Moreover, they have a vast
scope of operations such as Bunning Warehouse, Coles supermarket, Coles express and
central, Harris technology, Unigas, Wespine industries and many more.
The founders of Wesfarmers build superior corporate governance in the best interest
of the organisation as they were essentially driven by the axiom of sustainable success.
Growth, Profitability and Environment analysis of
Wesfarmers
Recently, there is a rapid growth in the industry where Wesfarmers is operating. The
rate of unemployment in the country is also going down. The market in this industry is also
grew rapidly with various new policy measurements and government intrusions after the
global financial crisis of 2007 (Reinhart & Rogoff, 2008). The Wesfarmers follows a agenda
for the organisation corporate model and includes various strategies in relation with core
values and growth enablers focused on attaining their main goal of delivering a pleasing
return to the stockholders. The growth of the company is focused on the six key enablers,
which helps the company to adapt various sustainable practices. These enablers include
innovation, outstanding individuals, commercial excellence, endowing culture, social
responsibility and vigorous financial capacity (Wesfarmers, 2018).
The growth of the organisation can be seen in terms of recent significant changes
events. In 2017, the first Bunnings warehouse store was opened in UK for trading (Chung,
2017). This will open a path to at least four pilot stores with generating 120 jobs. In 2016,
Wesfarmers established a new division for its departmental stores, Kmart and Target. This
will help in raising various opportunities while maintaining and growing these Australian
brands. Moreover, the company also acquired UK home improvement and garden retailers

MARKETING 4
Homebase from Home Retail Group for £340 million. Like these, the company is developed
with various acquisitions, expansion and formation of divisions such as acquisition of
Workear Group, Linde Gas, Coles, Crombie Lockwood and expansion of ammonium nitrate.
Moreover, the retail segment of the nation has revealed a rise in the turnover by 3.7
per cent in the last year (Insideretail.com, 2017). There is a yearly growth rate with above
three percent in most of the states while it is found that there is little rate of growth in some of
the states such as Queensland and Western Australia.
In terms of profitability, there is a significant increase in their revenue every year
through developments in their retail and manufacturing business. This strong cash generation
reflects their philosophy of concentrating on return on capital in each of their respective
business. This also enables them to grow and invest in the people, and communities in which
they deal. Moreover, the increasing growth rates also signify rising profitability through
maximising sales or gaining a better market share in the nation. The Global Financial Crisis
also brings out more competition in the industry. The companies have broad control over the
profitability in the industry. The retailers of Australia devote more on staff rentals than most
of the industrialised nations (Doman, 2017). The speciality retailer’s profitability in Australia
is 9.4 per cent presently and there is a profitability of 9.9 percent witnessed in the department
stores.
Macro environment analysis
Various factors in the external business environment have a substantial effect on the
management and decision making in an organisarion (Mason, 2007). Wesfarmers is also
influenced by certain external aspects and PESTEL analysis provides greater detail relating to
operating challenges Wesfarmers Limited is facing in its prevailing macro environment.
 Political analysis – In Australia, the retail industry is usually influenced by various
political factors. Wesfarmers is continuously surge their trade and creates supremacy
in the autonomous retail superstores. This creates competition for small retailers and
thus restricts the government to come out with necessary plans and policies. On the
other hand, decisions like lucrative perspectives in coal industry, elimination of
barrier to interest rate on electricity and so on have been favourable for the

MARKETING 5
organisation. Other political aspects include restrictive trading hours, planning, zoning
and retail tenancy leases and Ad hoc regulations also have a crucial impact on the
functioning of Wesfarmers (Rosser, 2008).
 Economic analysis – The economic state of the Australian marketplace widely
impact the performance of Wesfarmers in relation to buying behaviour and consumer
demand. The global crises of 2009 have influenced the market consumption behaviour
leading to less disposable income (Waycott et al, 2009). The business of Wesfarmers
is also affected by chemical and fertilisers due to natural calamity and climate change.
In addition, there is also a trend of low growth in the retail industry in Australia and
Wesfarmers as a retail brand can also measure this aspect deeply in their financial
statements. In comparison with global markets, there are higher wage costs for the
company that increase the costs at various levels such as operating costs,
manufacturing costs, logistics, etc. On the other hand, there is also a positive aspect
for the company as from a long time, there is continued increase in the strength of the
Australian and New Zealand dollars.
 Social analysis – In Australia, Wesfarmers is from one of the major companies who
employ a vast base of workers as well as stockholders in their enterprise (Kent &
Zunker, 2013). After the acquisition of Cole’s group, the company will focused on a
larger population (more than 22 million). Hence, various initiatives will be taken out
by the company for the welfare of society. In addition, there will be engagement
strategies too with Aboriginal and Torres Strait Islander people. There is a negative
aspect too for the company as the average life expectancy has been gradually
increasing and this will have a significant impact on the employment in Wesfarmers.
Increasing participation of women in the workforce also creates a distinct image of
the company in the globe.
 Technological analysis – In every sector, technology plays an important role in the
success of the corporate (Zott, Amit & Massa, 2011). Wesfarmers is doing well with
technology and ‘One-Shop’ model. The company also successfully deployed the use
of technology at various places such as manufacturing process, logistics, supply chain,
warehousing, in-store experience, etc. The company also using big data to predict
customer preference and reducing business costs. Hence, Technology enabled value
added services.
 Environmental analysis – Across the entire business portfolio held by Wesfarmers
has kept superior protective actions to not cause much impairment to the environment.

MARKETING 6
In addition, the organisation invest in various sort of technology to avoid wastage of
resources and thus maintains high standards towards protecting environmental
damage. There are some environmental laws also in Australia that need to be followed
by every retail brand. For instance, Wesfarmers needs to report their emissions under
NGER Reporting act.
 Legal analysis – The performance and productions of Wesfarmers are also impacted
by various legal implications including Australian Carbon taxation, fair tax policies,
etc.
Markets Segments and Targeted Markets
The geographic market segment displays the location wise marketplace behaviour for
the Wesfarmers. For Wesfarmers, there is less demand in rural areas in comparison with
urban areas. Moreover, the demand pattern also changes with the change in location.
Individuals with higher income are used to purchasing goods more from supermarket Kenny
(2013). However, it also depends on the various customer traits, taste and preference. There
are various psychographic aspects like personality and lifestyle also which influence demand
for the goods sold by Wesfarmers. People belong to higher-class demands for more high-end
goods. Customer having behaviour traits, it is easy to judge and forecast demand in the
market.
There is a vast diversified portfolio owned by Wesfarmers where the business
operates in superstore, hardware and departmental stores, gas processing and energy
dissemination, chemicals and fertilisers, industrial products and so on. For explicit research,
the retail segment (division) of the company is chosen. Their retail section has a huge series
of operations from superstores and departmental stores to hardware and office suppliers
(Biddle, 2017).
The segmentation and targeting will be based on the supermarket division including
Coles, functioning as a retailer of groceries and other household consumables through Coles
and Bi-Lo superstores in Australia and New Zealand with attaching to their online business.
The Wesfarmers team of marketing also focus on certain special aspects with
continuous exploration with the markets to identify the potential customers and examine the
substantial market most favourable for the enterprise. To determine the proper needs and

MARKETING 7
wants of the customers, right segmentation is essential to discover out whether the products
are being targeted at a definite segment is applicable or not in terms of better sales and
profitability. The major segment of Wesfarmers in terms of supermarket includes Grocery
shoppers and shoppers of home and lifestyle products (Sherwin, 2018). This segment also
includes tech-savvy shoppers of age between 18-25 (both male and female) do shopping for
self-only, young mothers of age between 18-45 do shopping for family. The tech-savvy
shoppers sought benefit in terms of service and value whereas the young mothers sought
benefits in terms of quality/freshness, service and healthy products. Both need to belong to
middle-income category for enjoying shopping experience in Wesfarmers.
Identification of the primary and secondary target markets
According to Palmisano, Tuzhilin & Gorgoglione (2008), the highest revenue
generated market is termed as a primary target market for any business enterprise. On the
other hand, the secondary marketplace includes those who will transfer to the forthcoming
primary target. The primary target market of Wesfarmers includes those people having age
group of eighteen to forty-five who purchase various necessary household products. On the
other hand, the buyers in the secondary target market purchase home improvement tools. In
both of these clusters, male and female buyers have made their presence from all the places
where the enterprise has shop-fronts.
Decision-making procedure
The decision making practice in relation to the goods sold by Wesfarmers broadly
based on the target markets of the business enterprise. The primary target markets decide
what will be on display in most of the outlets of Wesfarmers. In addition, the primarly-
targeted groups also have an applicable demand pattern followed by the company in respect
with all outlets having presence over the nation. Every year, Wesfarmers commits a survey
where the data represents what are the primary target group demands. With this survey, the
supply will be done based on following of demand pattern. However, the primarily targeted
groups can change with time and this will have a substantial impact on the organisation
decision-making practice.

MARKETING 8
Positioning map for the market
Industry competition
According to Akbar and Ahsan (2014), the industry competition is unbiased however;
it is affected by various decisions made by certain dominative company such as Woolworth
limited, Caltex Australia Ltd, Wesfarmers Ltd, and others. These organisations have most of
the share of the market and thus their decision easily affect the market condition and factor.
In addition, various laws of the government help the organisations in staying competitive and
also works as blockade from building a cartel. These aspects increase the total efficacy in
industry. Therefore, it can be stated that the companies have fairly control over the prices of
the commodities they are trading. In addition, the economy also presents a monopolistically
competitive marketplace for this segment.
Woolworth limited is the major competitor of Wesfarmers. Both these organisation
gather around seventy per cent of the total market share (Keith, 2012). The Wesfarmers gains
High Customer Service
Low value for money High value for money
Low Customer Service
Aldi
Wesfarmers (Current)
Wesfarmers (Future)
IGA
Woolworths

MARKETING 9
20 million customers per week and on the other hand, Woolworths gains 28.4 million
customers. Around thirty thousand shop fronts are managed by Wesfarmers and on the other
side Woolworths has 961 operational shop-fronts.
The strengths of Wesfarmers lies in their strategy of reduced labour cost, barriers to
market entry, other organisation assistance, global experience and resources. In addition,
Wesfarmers also faces several threats in the form of price changes, certain government
regulations, rising cost of production, issues in technology and rising rate of interest. On the
other side, Woolworth has the advantage of being one of the oldest and pioneer organisation
in relation with growth of retail trade model of the modern era (Vidal & Mitchell, 2013).
They have various subsidiaries and also more numbers of customers visit their outlets in
comparison with Wesfarmers. They also have numerous own store brands and thus they gain
a strong brand name in the industry. However, Wesfarmers have high global presence than
Woolworth. In addition, Woolworth also failed in building and applying various applications
of sustainable strategy in the business. The organisation also entered late in the online market
and thus this reduces their profitability and has impact over their company price. Wesfarmers
also have the opportunity to add more values to the products with the help of more number of
employees. Both the organisation function in same sector of the industry. Hence, this shows
that the strengths and weakness of these two organisation are more or less same. In addition,
the variations lie in their business and strategic goals, objectives and other aspects.

MARKETING 10
Conclusion
Wesfarmers is one of the pioneer organisation in the retail sector and maintained a
distinct position at the top of list. The company is driven with hostile economy after the
Global Financial Crisis 2007 and thus got the first rank in the industry. Woolworth is the
main and key competitor of Wesfarmers who have significant impact over the business
decisions and the market segment of Wesfarmers in the positioning map. The primary target
market of the organisation includes both men and women from the age group of eighteen to
forty-five who needs of household products and their demand pattern helps Wesfarmers in
their decision-making practice.
The future of the company seems promising with the assumption of growth rate and
profitability of the industry. In addition, the macro environment aspects are also contributed
positively to the company and hence help the organisation in raising their supply chain from
last few years. The company is also operating in international market and this experience
helps it to function beside the national rules and guidelines.

MARKETING 11
References
Akbar, S., & Ahsan, K. (2014). Analysis of corporate social disclosure practices of Australian
retail firms. International Journal of Managerial and Financial Accounting, 6(4),
375-396.
Biddle, I. (2017). Target Marketing: Gaining customer details to maximise marketing
strategies. Busidate, 25(4), 10.
Chung, F. (2017). ‘Exciting news for sausage fans’: Bunnings opens first UK store with
sausage sizzle. Retrieved from
https://www.news.com.au/finance/business/retail/exciting-news-for-sausage-fans-
bunnings-opens-first-uk-store-with-sausage-sizzle/news-story/
e8f6fbca1b83a8e62403b13f8db957e9
Doman, M. (2017). How good is renting in Australia?. Retrieved from
https://www.abc.net.au/news/2017-02-16/how-good-is-renting-in-australia/8275520
Hatch, P. (2017). Wesfarmers lifts profit 27% despite Coles slump. Retrieved from
https://www.smh.com.au/business/companies/wesfarmers-lifts-profit-27-despite-
coles-slump-20170816-gxxseo.html
Insideretail.com. (2017). March figures signal alarm for retail industry. Retrieved from
https://www.insideretail.com.au/news/march-figures-signal-alarm-for-retail-industry-
201705
Keith, S. (2012). Coles, Woolworths and the local. Locale: The Australasian-Pacific Journal
of Regional Food Studies, 2(1), 47-81.
Kenny, G. (2013). The stakeholder or the firm? Balancing the strategic framework. Journal
of Business Strategy, 34(3), 33-40.
Kent, P., & Zunker, T. (2013). Attaining legitimacy by employee information in annual
reports. Accounting, Auditing & Accountability Journal, 26(7), 1072-1106.
Mason, R. B. (2007). The external environment's effect on management and strategy: a
complexity theory approach. Management decision, 45(1), 10-28.

MARKETING 12
Palmisano, C., Tuzhilin, A., & Gorgoglione, M. (2008). Using context to improve predictive
modeling of customers in personalization applications. IEEE transactions on
knowledge and data engineering, 20(11), 1535-1549.
Reinhart, C. M., & Rogoff, K. S. (2008). Is the 2007 US sub-prime financial crisis so
different? An international historical comparison. American Economic Review, 98(2),
339-44.
Rosser, A. (2008). Neo-liberalism and the politics of Australian aid policy-
making. Australian Journal of International Affairs, 62(3), 372-385.
Sherwin, G. (2018). Top tips from an ASA company monitor-Finding a healthy
company. Equity, 32(4), 14.
Vidal, E., & Mitchell, W. (2013). When do first entrants become first survivors?. Long
Range Planning, 46(4-5), 335-347.
Waycott, M., Duarte, C. M., Carruthers, T. J., Orth, R. J., Dennison, W. C., Olyarnik, S., ... &
Kendrick, G. A. (2009). Accelerating loss of seagrasses across the globe threatens
coastal ecosystems. Proceedings of the National Academy of Sciences, 106(30),
12377-12381.
Wesfarmers. (2018). 2018 Strategy Briefing Day. Retrieved from
https://www.wesfarmers.com.au/docs/default-source/asx-announcements/2018-
strategy-briefing-day-presentatione296536999c863f7bfccff00000e9025.pdf?sfvrsn=0
Zott, C., Amit, R., & Massa, L. (2011). The business model: recent developments and future
research. Journal of management, 37(4), 1019-1042.