MARK21: Woolworths' UK Market Entry - A Detailed Marketing Report

This report provides a detailed analysis of Woolworths' planned entry into the UK retail market. It begins with an evaluation of the target market, considering factors like demographics and consumer behavior, with a focus on segments with high disposable income. The report then recommends suitable market entry modes, including joint ventures, direct exports, and franchising, with a joint venture being the preferred strategy. It also suggests marketing strategies, such as market segmentation and targeting, product differentiation, and promotional activities, including a unique selling proposition like animal trading cards. Furthermore, the report explores the marketing mix, recommending strategies for product, price, place, and promotion to gain a foothold in the UK market. The PESTEL framework is used to analyze the macro-environmental factors of the UK. The report concludes by emphasizing the importance of a multi-pronged marketing approach to compete with established supermarket chains in the UK market.

Running head: MARKETING
International Marketing
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Executive Summary:
The report aims at providing an insight into the Woolworths brand and its entry into the UK
market. Woolworth has been one of the reputed retailers of Australia selling fresh food products
along with other items. The report commences with an evaluation of the target market that the
brand is supposed to enter. The report also puts forward recommendations for the suitable market
entry modes that would enable the brand to capture a substantial share of the market. There is
also recommendations on the marketing strategies that the brand can adopt to attract an increased
number of customers. Further, the report also provides an insight into the marketing mix which
the brand needs to adopt to get a foothold in the markets of UK.

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Table of Contents
Introduction:....................................................................................................................................3
1. Evaluation of the Target Market:.................................................................................................3
2. Recommendations for Market Entry...........................................................................................6
3. Recommendations for Marketing Strategy..................................................................................8
4. Recommendations of Marketing Mix:.......................................................................................12
Conclusion:....................................................................................................................................14
References:....................................................................................................................................16
Appendices:...................................................................................................................................16

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Introduction:
The report aims at providing an insight into international brand Woolworths that tries to
make an entry into United Kingdom (UK). Woolworths is one of the biggest supermarket brands
of Australia that operates close to 995 stores across the continent and has close to 115,000 store
members, distribution center and support offices and serves the customers with superior value,
range, convenience and service (Woolworths.com.au 2020). The unique aspect of the brand is
that it closely works with the growers and farmers of Australia thereby ensuring quality products
to the customers. The brand is believed to source 96 percent of fresh fruit and vegetables and
close to 100 percent of fresh meat from Australian farmers and growers. Woolworth is also
considered as the innovative Australian retailer as they implement newer and simpler means of
shopping. This made the company launch the supermarket app thereby allowing the consumers
to undertake shopping as per their convenience and get groceries delivered right in front of the
kitchen bench.
The report here provides a detailed analysis of the Woolworth brand in planning to make
an entry in retail sector of UK. The report commences with a discussion on the evaluation of the
target market. The report also puts forward a discussions on the recommendations of market
entry. This is followed by recommendations for marketing strategy and the marketing mix.
1. Evaluation of the Target Market:
The Woolworth brand engages itself in the activities of retailing and provides groceries,
daily necessities, household products coupled with fashion accessories and clothing line
(woolworthsgroup.com.au. 2020). Like Australia, in UK too the company aims at holding a

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major market share. The variability of the prices of products will enable the brand in succeeding
towards catering to demands of a larger segment of the market. Woolworth however remains
focused towards the maintenance of the market share through aligning it potentially with the
freshness and authenticity of the products offered.
The management of Woolworth considers quality and convenience proposition thereby
providing the consumers with higher product quality at greater prices at the convenient locations.
Removing focus from the comparison of prices to quality, the differentiation of Woolworths
holds relevance in the quality context. Hence, ‘The fresh food people’ holds much relevance in
the quality context (woolworthsgroup.com.au 2020).
As far as segmentation is concerned, it holds relation in dividing the total market into
various sections depending upon the criteria that comprises of the demographical features,
product characteristics and the socio economic features (Wilkinson 2013). Each of the segment
comprise of the consumers having preferences for significant products or service coupled with
the similar level of consumption pattern of product. The various segment which relate to
demographic feature of the consumers comprise of the consumers age, their gender and the level
of education. Gender holds a vital role towards the development and the inception of huge
number of the retailing products and the services owing to fact that a specific product is mostly
designed for catering to the specific gender. The homecare and clothing product has been
manufactured differently depending upon deviations in preference levels of the consumers who
belonged to the various genders.
In case of Woolworths, segregation of the retailing product depends on age levels which
represents a key policy for the mitigation of the overstocking or the inventory preference. The

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infants belonging to the 5 year old age group are usually provided with infant food. This is then
followed by the consumers belonging to 6 to 17 years age which then gets concluded by catering
to the consumer requirements who belonged to the 55 years old category. Besides, segmentation
with respect to income levels of the consumers has facilitated the various set of initiatives in
product procurement from manufacturers or producers. This resulted from fact that purchasing
power of the prospective clients have the tendency of dictating growth rate of the particular
product. Besides, for a specific product line the actual demand for product is mostly evaluated
through actual income levels of clients.
From the perspective of consumers, the question always lies as to whether the shoppers
of UK would pay more for the groceries if it implied better convenience and quality. It has
however been suggested by the retail analyst that one of the strongest demographic that
experiences immense level of growth are the couples with no children and the singles having
highest level of disposable income. This group is supposed to portray close to 55 percent of the
households by the year 2031. They are most found in the city areas and looks for convenience.
There is another segment who belongs to the category of higher incomes thereby displaying a
higher level of disposable income. In addition to this, the segmentation of Woolworth implies
that the higher product quality would also appeal to the achievement consumers in the UK
market. These consumers mostly buys services and products that demonstrates success to the
others. Hence, in the UK market, Woolworths will look forward towards targeting the multiple
segments having a higher level of disposable income and will be found to tailor the different
products to different segment at each of the locations. The primary target of Woolworths will be
the household segment in retail market which will get reflected through the higher number of
sales that will take place in terms of grocery sales followed by the home products. The brand will

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also have the inclination towards targeting young females since it also sell huge sets of the
women wear as well as the fashion accessories (Knox 2015).
2. Recommendations for Market Entry
A brand like Woolworth should determine the desired level of flexibility, commitment,
presence, control and risk before entering the markets of UK. Therefore, it is vital analyze the
present macro environmental forces of the United Kingdom before Woolworth makes an entry.
This done with the help of the PESTEL framework that represents the political, economic, social,
technological, environmental and legal.
Political Politically stable but existence of
administrative split between the local and the
national level. Provides opportunities of
internal and foreign entities (Nugent 2017).
Economic Higher rate of foreign direct investment (FDI)
and lower rate of gross domestic growth
(Mathias 2013). The larger population ensures
cheaper workforce.
Social Represents a multicultural place that
encourages the emergence of various kinds of
people (England 2017)
Technological The country has updated and improved
information science and technology that leads
to the efficient implementation of the
intellectual property (Bateman et al. 2013).
Environmental Implementation of the environmental
standards in the policy making that promotes
the sustainable development and focuses on the
overall development of the European Union
(McCormick 2013)
Legal Government implements strong policies
whose laws remain applicable across the
United Kingdom (Walker and Jones 2012)

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With regard to the present scenario of UK, Woolworths can either choose between joint
venture, direct export and franchising while making an entry into UK.
Joint Venture: This mode of entry is considered as one of the preferred entry modes
into the international markets for the business that is not hesitant to share the knowledge,
expertise and brand. The key advantage of the entry mode is that it will allow Woolworths to
easily expand into the UK market and have a proper understanding of it in detail. This is possible
since this mode of entry allows forming a joint venture with some of the local and reputed
grocery stores of UK like Sainsbury and Tesco. This will help the brand in easily penetrating into
the UK market and introduce its products (Pongelli, 2016). In a similar manner, this would also
enable Woolworth in saving the intangible and the tangible assets in this regard. Besides,the
brand can utilize the experience and workforce of the partner for understanding the strengths and
weakness of the market. In addition to this, this mode of entry will allow both the partners in
leveraging the expertise for growing and expanding into the chosen market. The mode will also
involve lower political risk due to presence of local partners who already possess the knowledge
of local market and the business environment. The mode also ensure transfer of knowledge and
technology between partnering firms.
Direct Export: This involves the direct export of the goods and the products to the
overseas market (Fernandes, Gouveia and Pinho 2014). For certain business, it is considered as
one of the fastest entry modes into international business. Woolworth can also opt for this mode
of entry while entering the UK market. This will allow the brand to operate in Australia while
also introduce the product into the markets of UK. In this particular regard it can use various
platforms or channels. For example, Woolworthe might use the online plaform or it might opt
for forming a susidiary in UK. This particular entry allows the brand in choosing the foreign

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representatives in overseas market. The mode allows the brand with an option of testing the
products in the internaional markets of UK before making bigger investmemt in overseas market.
This strategy will also enable Woolworth in protecting the goodwill, patent, trademark and the
tangible assets.
Franchising: This is a mode of entry will allow another individual or person to assume
business risk on the behalf of company (Baena 2013). The entry mode will allow Woolworth to
franchise with the local so that they are able to operate the business in UK using an image and
brand name. This seems a better option for the developed nations. In others words, this entry
mode lowers the entry cost and minimum investment. It also puts across a passive income
source.
Nevertheless, the most suitable strategy for Woolworth in entering the markets of UK
seems to be the Joint Ventures as it will enable the brand in experiencing growth in the
international markets through local partners.
3. Recommendations for Marketing Strategy
The Woolworths Supermarket need to focus on the marketing strategy that will not only
enable it in increasing the sales but also attain a sustainable competitive advantage in the UK
market. Woolworth is expected to face immense level of competition from the prominent
supermarkets chains like Tesco, Sainsbury, Asda, Morrison and Lindl. Therefore, Woolworth
needed to adopt a marketing mix that will help it in increasing its profits. This will also enable in
determining position of the Woolworth as the fastest growing retailers of food. Woolworth can
also think of introducing Animal Trading Cards that will acts as its Unique Selling Point (USP)
and help the retailer in attracting a larger market share for the children in the UK market as well.

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The brand launched as the ‘fresh food people’ therefore needed to follow multi-prolonged
strategy in business for attracting increasing number of customers after making its entry into the
UK market. Hence, the marketing strategy that Woolworth needs to adopt in the UK market are
as follows:
Strategy 1: Market Segmentation and Targeting
This represented a three step approach where the brand will focus on the decisions in relation to
target market of company. These steps can be explained as segmentation, targeting and
positioning
A. Segmentation: Here the overall market needed to be divided into smaller markets
depending on the different criteria which includes demographic, geographic, psychographic or
behavioural segmentation
i. Demographic: According to this, Woolworth needs to divide the UK market based on
age of the customers, values, gender and the income level. The brand needs to target the
customers falling in the age group between 6 to 55 years since will provide all the commodities
of the daily use. To capture a better market share, the brand also need to target customers with a
higher level of income who prefers quality over price of the products.
ii. Geographic: It needs to cover all the prominent locations of UK in order to capture a
better share of the market.
iii. Psychographic or Behavioural: The company needs to target people who would
prefer quality over the product prices. Although there would be competitors who would provide
products at lower price, the strategy will enable the brand in carving a niche amongst the
customers.

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B. Targeting: This will represent the second step. Here Woolworth needs to predict the
target market based on the geographical segmentation and will most comprise of the consumers
belonging to every age group who can pay premium price for the goods in exchange of the
quality products.
C: Positioning: Woolworth should aims at attaining a higher position in UK market with
regard to the quality products it offers.
Strategy 2: Developing a Value Proposition
This refers to the competitive advantage of the brand through the VRIO framework. The
framework helps in evaluating the competitiveness of the business based on the four parameters
that includes valuable, rare and imitable and organisation (Hinterhuber 2013). Like Australia, in
UK too, Woolworth should maintain sustainable competitive advantage. Considered to be one of
the most valued brand within the retail sector, it can represent a permanent competitive
advantage to business. In UK, the company should focus towards local sourcing. Like its
competitors, it should introduce the online app which might be able to fetch it a constant
competitive advantage amongst the competitors. The brand aimed at attaining the $8 million
mark in UK.

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Woolworth V R I o Competitive
Advantage
Reputation
of brand
    Sustained
Plan of
Local
Sourcing
 X X  Maintaining
Competitive
Parity
Online
Presence
 X   Temporary
Competitive
Advantage
Loyalty     Sustained
Figure 2: VRIO Framework Woolworth Expects to Achieve in UK
Source: (Lin and Tsai 2016)
Strategy 3: Application of Porter’s Generic Strategy
Figure 3: Porter’s Generic Framework