Comparative SWOT Analysis of Woolworths Limited and Aldi Australia

The task involves a detailed SWOT analysis of Woolworths Limited in comparison to Aldi Australia. Students are expected to evaluate the strengths, weaknesses, opportunities, and threats for Woolworths within the context of its competition with Aldi. Key focus areas include market segmentation strategies, customer service approaches, supply chain efficiencies, and competitive advantages. The assignment aims to provide insights into how Woolworths can leverage its strengths and opportunities while addressing its weaknesses and external threats in the dynamic Australian retail landscape.

Running head: MARKETING AND MANAGEMENT
Marketing and Management
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Introduction......................................................................................................................................2
Industry trends.................................................................................................................................2
Market segments overall..................................................................................................................5
Primary segment and decision-making............................................................................................6
Competition.....................................................................................................................................7
Positioning map for Woolworths...................................................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

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Introduction
Marketing is the key that determines the success of the business organization. By
effective marketing, the business organizations are able to create a unique image in the eye of the
customers as well as stand out from the competitors. The marketing and management strategies
developed and implemented by the business organizations ensure growth, profitability, targeting,
segmentation and positioning. Effective marketing ensures growth in business, customers and
profit for the business organizations (Armstrong et al., 2015).
This report introduces Woolworths, an Australian retail chain by briefly describing the industry
of the organization and analysing the current trends. Additionally, the report also investigates the
major market segments of Woolworths and discussing the involvement of primary market
segment in decision-making. The report also evaluates the strengths and weakness of
Woolworths and compare with the main competitor Coles. Lastly, the report also develops a
position map in order to determine the position of the company in the market.
Industry trends
Woolworths is a leading supermarket in Australia established in 1924 and covers almost
80% of the Australian market. Woolworths mostly deals with selling groceries but also sells
beauty products, households, pet products and stationery items. It has over 1000 stores in
Australia with 968 supermarkets and 19 convenience stores. The report suggests that
Woolworths has confirmed sales growth in the industry by 4.7% thereby, estimating $9.63
billion in the beginning of 2017. The requirement of the groceries and fast food has risen
drastically in the Australian market due to which the sales have grown to $36.37 billion over the

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year (Arli et al., 2013). The management of the Woolworths is satisfied with the overall sales
growth of the company but aim towards building the progress in order to maintain their growth
and profitability. It has been seen that Woolworths has been growing continuously since 2010
and has 37% of Australia’s supermarket whereas Coles has only 31% of Australian market share.
It has also been seen that Woolworths has bounced back with $1.5 billion profit in the Australian
supermarkets and has become the star of the profit (Kang & Gray, 2013). The company has also
opened more convenience stores for the Australian market thereby, ensuring growth and
profitability in the Australian market.
The PESTLE analysis of retail in Australia is stated below:
Political: The political conditions of a country largely determine the success or failure of an
organization. The retail industry in Australia has maintained its momentum since decades as the
country has undergone several developments in terms of society and the economy. The political
condition of Australia highly affects the retail industry in the country. A stable political
environment is essential for any organization or industry to bloom in a country. The changes in
the policies of the Government highly impacts the organizations present in the country (Sutton-
Brady Kamvounias & Taylor, 2015). The retail industry in Australia has witnessed excellent
growth in the past few years as a result of an increase in the population of the country as well as
due to the increase in the purchasing power of the Australians. The policies developed by the
Federal Government in Australia largely determine the success or failure of the retail sector in
Australia.
Economic: The economic condition of a country largely determines the success or failure of the
organizations in the country. The price of the property is higher in Australia as compared to the

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income levels of the population of Australia. This has resulted in the increase in the price of
rental properties (Bailey et al., 2015). As a result, a large portion of the income earned by the
Australians is spent on rent. Australia has witnessed a decline in the economic market conditions,
which has adversely impacted the retail industry in the country. The fluctuations in the rates of
currency exchange also impact the retail industry in Australia. The weak position of the
Australian dollar has adversely affected the retail industry in Australia.
Social: The social factors have a huge impact on the industries located in a country. Australia
comprises of mainly three social classes namely working class, upper class and the middle class.
This social stratification highly affects the retail industry in Australia. The change in the social
trends largely affects the retail industry in Australia. The success or failure of an organization
highly depends upon the manner in which the organizations initiate target market segmentation.
The changes in the tastes and preferences of the target audience determine the success of an
organization (Brotchie et al., 2017). The Australians nowadays prefer purchasing goods and
services from the organizations that are socially responsible and are involved in some kind of
social activities. Therefore, the retail organizations that initiate social activities are likely to be
more successful in Australia.
Technological: The technology plays a vital role in determining the success or failure of an
organization. The retail industry is largely affected by the technology and technological
advancements help the organizations to improve their efficiency and achieve economies of scale.
Technology helps the organizations to provide better quality products and services to the
customers at lower prices (Balaji & Roy, 2017). Australia is a developed country and is well-
equipped with the latest technologies, which has helped the retail industry to obtain the latest
technologies easily for improving their operations. The application of technology has enabled the

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retail sector in the country to improve its operations and continue successful operation of the
businesses.
Environmental: The environmental condition of a country highly affects the functioning of a
business in a country. The organizations can be successful in long- run only when its business
activities do not harm the environment (Nepal, Menezes & Jamasb, 2014). The retail industry in
Australia has adversely affected the environmental conditions in Australia, which has indirectly
affected the profitability and performance of the retail sector in the country.
Legal: The legal factors involve the legal environment of a country in which an organization
operates. The legal changes affect the costs incurred by the organizations along with the demand
for a product or service. The carbon tax implemented in Australia has largely affected the retail
industry in Australia (Davidov, 2014). The regulatory bodies in Australia such as the Australian
Competition and Consumer Commission and several others have affected the business activities
of the retail industry in Australia. The legal regulatory bodies keep a check on the activities of
the organizations in order to ensure that the organizations follow a fair policy while conducting
the business. The strict regulatory bodies have negatively affected the retail sector in Australia.
Market segments overall
Market segmentation provides an opportunity for Woolworths to divide and segment the
customers based on their needs and wants. As commented by Wilkinson (2013), segmenting the
customers allows the business organizations to categorise the customer needs, demands and
develop marketing strategies accordingly. Primary and secondary are the major market segments
of Woolworth in Australia. As mentioned by Braun (2016), primary target market allows the
business organizations to believe will give the best chance to sell their product. Thus, based on

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the type of industry and organization, the primary target market for Woolworths are the people
with higher income and people with the standard living measure. According to the current
economic condition of Australia, a vast majority of the people falls into the group with higher
income. Setting the primary market segment allows Woolworth to develop a business strategy
accordingly to the demands and needs of the customers in terms of price and quality of the
product.
As commented by Deakin (2013), the secondary target segment of the business
organization is the second most important section of customers that companies prefer to target
for additional profits. Thus, these sections of customers are expected to have less money and less
product demand. Thus, the secondary target market for Woolworths include the customers with
lower income and the growing section of black middle class people. Woolworths expect that the
people with low income and the growing black middle class will shop from the retail stores in
the coming years due to better income opportunities. In addition, Woolworths can develop their
business and pricing strategy in such a way in the coming years so that the people with low
income and the growing black middle class are able to shop. Thus, setting the primary and
secondary target market segments is essential for Woolworths, as allowed the company to
develop their marketing and business strategy for attracting more customers, expanding business
and maximizing their revenue.
Primary segment and decision-making
Primary market segment highly influences the decision-making process of the business
organizations. This is because the business organizations develop business strategies such as
price, quality of the product; marketing based on the demands, expectations and needs of the

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primary customers. Thus, it is essential for the business organizations to consider the demands
and needs of the primary market segment for their business (Weinstein & Cahill, 2014). It is
essential for Woolworths to consider the demands, needs and expectations of the primary market
segment, that is, people with higher income and standard living. This is because considering the
demands and needs of the primary market segment will help Woolworths to develop products
according to them. As a result, Woolworths will be able to attract the majority of the customers
and satisfy them by fulfilling their needs (Ashton, Maguire & Spilsbury, 2016).
On the other hand, considering the demands and needs of the primary market segment is
essential for Woolworths, as this segment will result in the majority of the sale for the company.
Thus, Woolworths need to ensure that the demands of the primary market segment are fulfilled
by maintaining the quality of the product, the price of the product and the type of the product
launched for the customers (Dey, Lahiri & Zhang, 2014). Additionally, considering and fulfilling
the aim of the primary market segment of Woolworths will also help the company in gaining
competitive advantage and stand out from the major competitors in the Australian market.
Competition
The Australian market highlights pure competition in the retail sector that has a
homogenous range of products. The number of retail supermarkets in Australia includes:
 Wesfarmers
 Metcash
 Coles
 Costco
 Lidl

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 Aidl
 Star Mart
From the aforementioned list, it can be said that the Australian market has pure competition
with several retail supermarkets dealing with similar products thereby, providing endless and pre
competition. One of the major competitor Woolworths in the Australian market is Coles.
The SWOT analysis of Woolworths includes:
Strength
 One of the oldest companies to
introduce model retail trade
 With more than 968 retail outlets and
19 convenience stores
 Strong brand name
 Sales products manufactured by the
company
Weakness
 Negligible global presence
 Failed to gain competitive advantage
 Late entry to online marketing
 Extended length of offers on products
Opportunities
 Using electronic media for advertising
 Comparatively low price to the
competitors
 Extending channels for customers
 Adopting multi-option retail to cope up
with changing needs
Threats
 Higher and aggressive competition
 Increased cost of raw materials
 Economic recession
 Political intervention

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From the above analysis, it can be said that Woolworths has a more competitive
advantage compared to Coles in the Australian market.
Strengths: Woolworths is one of the oldest companies that have introduced the model of retail
trade in Australia. The company has more retail outlets throughout Australia compared to Coles.
Thus, the majority of the Australian population prefers Woolworths than Coles due to the higher
brand presence and brand name. Additionally, Woolworth’s sales sole manufactured products in
terms of vegetables and fruits that are not done by the sole competitor Coles in the Australian
market. These strengths helped Woolworths in gaining a competitive advantage over Coles (Dos
Santos, Svensson & Padin, 2013).
Weaknesses: The weakness that determines the position of Woolworths from Coles includes the
negligible presence of the brand or the company at a global platform. Coles has the worldwide
recognition that has helped the company in gaining better competitive advantage both in the
national and in the international market. Additionally, Woolworths opted for digital marketing
much lately compared to Coles (Fernie & Sparks, 2014). As a result, Coles succeeded in
capturing large Australian market compared to Woolworths. Another drawback of Woolworths
that affected its position compared to Coles is the extended length of offers on the products.
Coles provide offers for limited and short period thereby, engaging the customers effectively.
Extended offers by Woolworth's results hamper the customers’ willingness to shop from the
supermarket (Corkery, Mikalsen & Allan, 2017).
Opportunities: Woolworths has better opportunities compared to Coles, as the company uses
electronic or digital media for advertising their products and offers. As a result, in a huge market
like Australia, Woolworths is able to reach out to a wide range of customers thereby, increasing

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High quality
Low quality
High price
Low price
Woolworths
their sales and business. The use of digital media by Coles is limited that hampered them in
capturing the Australian market recently. Considering the huge competition in the current
market, Woolworths has kept less price of the products compared to Coles (Flax, Bick & Abratt,
2016).
Threats: The major threat for Woolworths in the Australian market is the fierce and aggressive
competition with the competitors such as Coles. Additionally, increased cost of raw materials,
economic recession and political intervention are the potential threats that Woolworths encounter
compared to Coles in order sustain in the Australian market (Zarkada-Fraser & Fraser, 2015).
Positioning map for Woolworths
Figure 1: Market Positioning of Woolworths
(Source: Gong et al., 2013)

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From the position mapping of Woolworths, it can be said that the company is categorised
under high quality and high price. This is because the primary target markets of the company are
people with higher income and people with standard living style. The primary target markets
have high and stable income that has helped the company in maintaining this position in the
position mapping. Based on the demands and the income of the primary customers, the
Woolworths have to maintain a standard price and quality of the product. This is because the
primary target segments of Woolworths are the segment that the company will sell their majority
of the products and incur profit.
Conclusion
In this report, it can be concluded that Woolworths is one of oldest and most successful
retail chain in the Australian market. Since its establishment, the company has grown drastically
in the Australian market with an estimated 1000 retail outlets all over the country. From the
various market reports, it has been seen that Woolworths have maximised their growth and
profitability over the years. From the nature of the company and its products, peopled with
higher income and people with standard living style are the primary target market of
Woolworths. Thus, the position mapping of the company is categorized under high quality and
high price. The company needs to develop their business, product and pricing strategy based on
the demand and expectations of the primary market segment, as the company will sell the
majority of the product to this segment. Woolworths has selected the people with low income
and growing middle class black community, as the company predicts growing customers and
sales from the secondary target market.