Kaplan Business School MBA600: Woolworths Business Report Analysis

This report provides a comprehensive analysis of Woolworths, a major Australian retail supermarket. It examines the company's business operations, including its organizational strategy, marketing mix (product, pricing, promotion, and placement), product development, innovation, and growth strategies. The report highlights Woolworths' branding strategy, change management, and strategic implementation. It discusses the company's market position, competitive landscape, and challenges, such as price manipulation and increasing competition. The report also offers recommendations for Woolworths to enhance its performance, focusing on areas such as product differentiation, product positioning, and perceptual mapping, and suggests improvements in its strategic and core business models. The report also includes an executive summary, introduction, and conclusion, providing a detailed overview of Woolworths' market strategies and business models.

Running Head: Woolworths
Woolworths
Report
System04104
8/20/2019

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Executive Summary
Woolworth is a giant retail supermarket of Australia and New Zealand. Woolworth is known
for its quality and fresh food products and excellent marketing strategy in the Australian retail
market. The company has many subsidiaries company like Coles, BIG W, BIG, BS, and Dan
Murphy’s etc. Woolworths covers more than 82% of Australia retail market with Coles
(Woolworths, 2018). However, the company was criticized for its price manipulation
strategy. The company purchases the fresh vegetables and raw food products from local
farmers and producers and sells it under its own packaging and labelling. This allows the
company to manipulate the real prices of the products. However, the increasing competition
in the retail market is another challenge for the company even company is one of the
innovative companies of Australian retail market. These challenges need a specific and strong
marketing strategy from the Woolworths to increase its profitability and ensure future growth
in retail sector.

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Table of Contents
Executive Summary...................................................................................................................1
Introduction................................................................................................................................3
Overview of the Company.........................................................................................................3
Business operations of Woolworth............................................................................................5
1. Organisational Strategy.......................................................................................................5
Marketing Mix of Woolworths...............................................................................................6
Product development..............................................................................................................7
Innovation...............................................................................................................................7
Growth....................................................................................................................................8
Branding Strategy of Woolworths..........................................................................................9
Change and Strategic Implementation of Change..................................................................9
Recommendations....................................................................................................................10
Conclusion................................................................................................................................11
References................................................................................................................................12

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Introduction
Woolworth is one of the retail organisations of Australia and it has more than 1000 retail
stores all over the country. There are very few competitors in Australian retail market and
Woolworths is one of among them (Woolworths, 2019). Woolworths is known for its retail
products and low pricing strategy in Australia. However, the company faces strong
competition from the other retail organisation such as Aldi and Coles etc. Woolworths and
Coles almost forming duopoly in the Australian retail market. This report is based on the
marketing strategy of Woolworths. This report includes strategy, business operations,
marketing, growth, innovation, change etc. of the Woolworths Company. This report also
includes key recommendations for Woolworths to identify the area of focus and opportunity
to enhance the performance of Woolworths in the future (Pulker, et. al., 2018).
Overview of the Company
Woolworth is known for its large retail chain stores in the Australian retail market. The
company have wide experience of dealing in grocery products, furniture, digital products, and
home appliances, etc. Woolworth is known as one of the giant supermarket of Australia and it
running its business through more than 1000 stores including some convenience stores (Xu,
Gao, and Hammond, 2017). The company was established in 1924 and it has more than
115,000 employees. The parent company of Woolworths is Woolworths Group. The
company operates its business in more than 1000 locations and revenue of the company is
A$56.726 billion (Woolworths, 2018).

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(Source: Woolworths, 2018)

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(Source: Woolworths, 2018)
Business operations of Woolworth
1. Organisational Strategy
Woolworths enjoys the duopoly with Coles with 82% market share in the Australian retail
market. The company has strategy to provide fresh food and grocery products to the people at
low prices. The low pricing strategy of the company makes it different from other countries.
Woolworths always change its marketing strategy according to its customer demands and
requirements. The company is providing facilities to its customers to purchase the products
from the company’s online mobile app that provide more convenience to people as well
(Abratt, Higgs, and Nel, 2015).

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Marketing Mix of Woolworths
Product Strategy
Woolworths is dealing with more than 14000 retail products (Woolworths, 2018). The
company has diversified product business because Woolworths involves in selling of fresh
food, meats, vegetables, furniture, magazines etc. Woolworths buying vegetables and other
agriculture products from the farmers and Australian growers and labelled the products by its
own name and sell it on the low prices than competitors in the market.
Pricing Strategy
The self-labelling facilities of the company provide the opportunity to manipulate the pricing
of products in the market that further enables the company to sale the same products on low
prices than competitors do (Woolworths, 2018). The company purchase fresh products from
the supplier on the low prices and same product is sold by the company by its own labelling
and pricing tags. The penetrations pricing strategy of the company almost kill the competition
in the market and give an edge to Woolworths over its competitors in Australian retail
market.
Promotional Strategies
Woolworths provide large number of offers to its customers to retain existing customers
attracting new customers to the retail stores. The business experts and marketers of the
company suggest innovative ways and strategies to the company to attract new customers.
The company uses social media platform and its own website to inform and aware people
about its offerings (Phillipov, 2016).
Placement Strategies
Woolworths operates its business in more than 1000 stores in Australia (Woolworths, 2018).
The major locations of Woolworths are the large cities and supermarkets such as Melbourne,
Sydney, victoria etc. Company also places its products through mobile app and online
platforms. Apart from this, the company also operates its stores in New Zealand. The major
target customers of the company are middle-income class people and lower middle-income
class people because company is charging low prices for its product (Schleper, Blome, and
Wuttke, 2019).

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Product development
Woolworths is an innovative company that cares about the customer needs and requirements.
The company focuses on product quality and freshness of its food products. Woolworths
purchase its raw material or fresh food from the suppliers or farmers and sell the products
with its own labelling. The TradeStone’s Merchandise Lifecycle Management (MLM) is
responsible to ensure the quality and packaging of products in Woolworths (Al Shishany,
Kharabsheh, Elnsour, and Adams, 2017). The major emphasis of the company is to ensure
that customer will get fresh and quality product and services from the Woolworths stores. For
this purpose, company recruit various product development engineers in the organisations
who care for the need of customers and design the products accordingly. The company is
recently entering in the endeavour drinks. The company gets the strong sales of its drinks
under the BS and Dan Murphy’s. The large number of customers added through this new
product development in the Woolworth group (Woolworths, 2018).
Woolworth is also focusing on the branding strategy and cost reduction of the product.
Company uses the penetration pricing strategy for its product (Bailey, Price, Pyman, and
Parker, 2015). For branding of its product, company uses some innovative ideas like social
media use, customer reviews, and involvement of people in various activities of the
organisation. The company also considers the review and ideas of customers for further
product development and research on the products (Woolworths, 2018).
Innovation
The innovation is the part of modern marketing world where change in technology and needs
force the organisation to care about the innovation part. Innovation is really necessary for
survival in modern competitive business world. The innovation and change in technology
also forces the organisation to consider the needs and perception of customers (Woolworths,
2018). Innovation in technology rapidly changes the buying behaviour and shopping trend of
customers and it force the organisation to consider the requirements of customers and bring
changes on online platform (Jie and Gengatharen, 2019. Woolworths ensure that more
customers can buy the products from its online portal. Woolworths ensures that customer can
get all the facilities and convenience during their purchasing or shopping at the Woolworths
stores of through online platform. However, the company also provide door-to door delivery
facilities to its customers and ensure that customer will get fresh and quality products within
the expected deliver time.

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Growth
The revenue of the company is more than A$56 billion and it covers 78% of Australian retail
customers. Every year the company gets the growth in sales with minimum 8-10%
(Woolworths, 2018). The turnover of the company is increasing annually and it serves more
than 29 million customers per week. The company is focusing on continuous transformation
in its food business. Woolworths is dedicated to the customer satisfaction and this is the
secret of its continuous growth and development. The company is also focusing on
sustainable development approach that helps the company to build its reputation among its
customers (Richards, Kjærnes, and Vik, 2016).
(Source: Woolworths, 2018)
Woolworths is a recognised retail giant in Australia with some of the trustable brands like
Countdown, BWS, Dan Murphy’s, BIG W etc. The company also associated with thousands
of farmers, producers, and manufactures for its business processes. According to the annual
report 2018, Woolworth’s revenue is growing at 3.4%, EBIT up 9.5% and NPT growth of
12.9% (Woolworths, 2018). The market share of the company is also increasing every day

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with growing number of customers. This is the reason that the number of subsidiaries of
Woolworths group is also increasing every year.
Branding Strategy of Woolworths
For the branding strategy, Woolworths is focusing on building strong customer relationship.
the company focuses on understanding the customer needs and demand and enhance the
customer loyalty of its consumers by providing them best products on low cost. The company
also make a balance between physical stores and online sales by leveraging the online system
of the company (Bailey, 2016). However, the Woolworths continuously focus on new
product development and quality of products with innovation. For effective branding the
Woolworths is focusing on these three factors:
Product Differentiation: Woolworths almost 60% of its products sell under its own
packaging and labelling (Woolworths, 2018). The prices of products are also determined by
the Woolworth and it facilitates the company to manipulate the pricing. However, the
attractive packaging and best quality products makes it better than other competitors or brand
products (Chimhundu, McNeill, and Hamlin, 2015).
Product positioning: The Company creates an image of cheap and best quality products in
the mind of customers. This image of Woolworths makes it different in the mind of customer.
Apart from this, the purchasing of fresh vegetables, approach sustainability, and support to
the domestic farmers and producers also create a positive image in the mind of customers
(Sutton-Brady, Kamvounias, and Taylor, 2015).
Perceptual Mapping: The Company is generally known for food products and grocery
products. These are the star products of the company. However, the entry in endeavour drinks
is an opportunity for business organisation to enhance its business and increase its customer
size. However, the major issue is related with its fashionable brands and electronic brands in
which Woolworth deals.
Change and Strategic Implementation of Change
The company is doing well in the food and grocery product services. However, the company
wants to expand its business of fashion and technology segments. It is really a challenge for
the company to bring changes in the organisation and focus on diversified business model.
Apart from this, the penetration or low pricing strategy of the company affect the profit of the
company and it needs to be done according to the customer demand and requirements. The

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new business of the company of endeavour drink products really gives a competitive
advantage to the company over other players in the market. Woolworths needs to focus on its
strategic and core business model rather than diversified business model.
The diversified business operation of Woolworths creates many threats for the company such
as financial risk, strategic risk, and operational risk etc. However, Woolworth was also
blamed many times that it delivers inferior quality products to its customer. The company
was also fined by the Australian government for its inferior quality products. Therefore,
company needs to bring changes in its strategy and it should also focus on the quality of
products (Kurnia, et. al., 2015). The company was also investigated by the Australian
government to provide irrelevant or false information to its customers. Therefore, company
needs to change its operational strategy because the above weakness of the company can
destroy its reputation among its customers and also shows its supply chain failure that
required to be improved. To overcome these barriers the company can focus on the ‘lean
retail’ model that improve the growth and efficiency of Woolworths in Australian retail
market (Xu & Lee, 2019). Apart from this, the company also need to focus on its pricing
strategy that is an important part of Woolworth’s profitability. Apart from this, Woolworths
should also focus on innovative ideas and growth strategy because the other competitors of
the Woolworths are diversifying the business and increasing the number of stores even in
urban locations.
Recommendations
These can be the following recommendations based on above study of Woolworths:
1. Woolworths should focus reviewing its pricing strategy. The Woolworth was blamed
by the competitors and other people that it manipulates the pricing of products and
can charge different pricing of same products under their own packaging and
labelling. It has been found that cost of food products is quite expensive in Australia.
2. Company was blamed for displaying false information to its customers. It was also
investigated by Australian government in past to deliver inferior products to the
customers. The Woolworths needs to review its supply chain and information flow
strategy. This will affect the overall growth and image of the company.

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3. The company needs to lower its operational cost because it directly affects the
profitability of the company. For this, the company can remove the intermediaries and
should focus on online sales.
Conclusion
In conclusion, Woolworths is known for its quality and fresh food products in Australia. The
company is one of the large retail supermarkets in the country but now it is facing more
challenges from the competitors. The low pricing strategy and high operational cost are the
major problems. Although the company is continuously enhancing the market share, and
increase its profitability but somewhere the inferior quality products and false display of
information affect the image of company. However, if company will review its pricing
strategy and supply chain process, it would increase the effectiveness of its marketing
strategy and increase its profit in future.