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Introduction
This report presents on Coles marketing issue and situation analysis. The main
issue of Coles marketing is the non-creative marketing strategy that could not
make Coles outstanding from other supermarkets, especially Woolworth. With the
high competiveness, only low price strategy (the current strategy with DOWN
DOWN promotion) could not win the customers. As a result, the new marketing
strategies are introduced and linked to the marketing goal for the next 12
months. The main goal is to increase the market share to 33%, which is more 2%
than previous year. The market target and position was discussed and analysed
(section 3). The market strategies based on target position analysis is presented
in section 4. The proposed marketing strategies are new and innovative to
handle the multi-channels retailing service. Eventually, the link between the
strategy and the market plan is discussed in section 5.
2. Marketing Objective
1.1 Coles marketing issue
Coles is on the of the largest supermarket chains in Australia with 31% market
share in the financial year 2012 (Connell, 2012). The core marketing strategy
focuses on the customers want and need. Coles lunched the low price strategy
to satisfy the customers (i.e. down-down promotion since 2010 (Ross,2012)),
however, the quality of goods remain at high bar and freshness (i.e Baked
Today, Sold Today promotion (King, 2013)). With these two factors, Coles
strategy is to balance between price and quality to establish the best
supermarket in Australia.
It should be noted that Coles was not the biggest market share in Australia, but
the Woolworth does with 41.1% market share (Connell, 2012) in the financial
year 2012. One of the main issues of Coles is the similar marketing strategies to
other supermarkets, especially Woolworths. Nowadays, the supermarket business
is high competitive and the similar marketing strategy could not make the
business win. For example, Woolworths has cooperated with Caltex for gas
station convenience and Coles has cooperated with Shell applied the same
strategy. Coles has focused in the fresh production in bakery, butcher, and deli
sections (Greeblat et. al 2010 & Mcllwraith et. al 2010) but Woolworth has
Low prices : Down Down promotion (Ross,2012) and $10 family meal
Coles loyalty : FlyBuys card (Ross,2012)
Environmental friendly shopping : soft plastic food packing, local
Even though these marketing strategies were successful, but there were no
different between Coles and Woolworth market strategy. Therefore, the creative
marketing strategy is essential for this situation. Personally, the new market plan
should be focused in the following dimensions:
The market target of Coles can be categorised into four main segments. The old
generation who love to shop at Coles and non-prefer the technology. New
generation segment is prefer to shop online and want to try the new thing.
Working generation is prefer the most convenient way to buy the products and
not concern much about its price if they satisfy. The young generation segment
has no money to shop much, but it the good segment target that Coles can build
the brand recognition. In table 1, the link between the segment and the proposed
market strategy is presented.
Table 1. Suggested Target Markets and the link of proposed market strategy
Segment
Priority
Age
s
Middle
5067
New generation
Middle
2540
Working
generation
High
3550
low
1025
Old generation
Young generation
Focus
Old-fashion
shopping
strategy
Price concern
Occasional
concern
New
technology
concern
Convenient
concern
Product quality
concern
Price concern
Available in
campus
Brand
repeatable
Proposed Market
strategies
Freshness-to-prices
strategy
occasional price
strategy
low price
e-Commerce
Pick-up-Today strategy
low price
Pick-up-Today strategy
(combination POS and
e-Commerce)
e-Commerce
occasional price
strategy
Freshness-to-prices
strategy
Brand recognition :
Coles-on-Campus
Community support
3.2 Positioning
As the main position for Coles is the low price, it was successful and potentially
improved the number of customers. In figure 3 presented the comparison the
percentage of customer who shops at Coles and Woolworth. Since March 2010
after Down Down promotion released, Coles performance has improved and
higher than Woolworth (44.6% for Coles and 42.7% Woolworth at March 2013).
There is the high opportunity for e-Commerce market, and Coles has not fully
developed in this target group. In figure 4 shows the new position of Coles in
terms of multi-channel marketing strategy. Coles should pay attention to other
market channel, especially the e-Commerce, and the combination of eCommerce and retailing as collect at the store. It should be noted there are no
interesting marketing campaign for these channel at all.
Figure 3. Low price association with the supermarket where main grocery buyers
shop (source Roy Morgan Single Source (Australia), April 2003 to March 2013, 12
months average n=8425. Base: Main Grocery Buyers 14+)
Moreover, the new position of Coles in the product quality & freshness and price.
I recommended Coles to adjust the price based on the product freshness and
honestly notice the customer about the product. The customer then can feel that
they pay more they get more. The price should be set and balance between price
and the product quality, especially the fresh food. At the moment, the discount
for the food can grab high attention of customer, but it does not provide the
honest feeling that can gain the customer loyalty eventually. It can be called that
freshness-to-prices strategy.
Figure 5. Perceptual Map: Product Quality & Freshness and price focus
As the current Down Down promotion is used in store, Coles is considered as one
of the cheapest supermarket in Australia and grabbed a big attention from
customers. Coles realised that only cheap promotion cannot win the customer
mind, the product quality and freshness is another factor, which plays the key
role for customer decision-making. To balance between the product quality and
freshness to the price, I introduce the new product and price strategy, namely
freshness-to-prices strategy. I suggested that Coles should put the freshness
indicator label together with the price.
This will provide more information to the customer in terms of the product
freshness (see Figure 6). The price will be dropped if the product does not fresh.
On the other hand, the price is bit high but affordable if the products are fresh.
To be honest with the customer would be potential benefit for long term period.
The customer will experience that Coles provides the freshness and reasonable
price to the customer, Coles never takes advantage to customer. In the long run,
the Coles reputation will be increased and target segment will be extended into
the high-class customers who consider only the product quality.
The new generation customers prefer to buy goods online nowadays. Therefore,
Coles should pay attention in development of e-Commerce program. The new
design and using the high technology in development of e-Commence
application becomes essential. The easiest way customer can buy the products
means the customers tend to use the e-Commerce application more. The design
is another factor that can attract the customers to shop online. The
advertisement is very important to introduce the e-Commerce website to
customers. The e-Commerce in supermarket still has room for develop and can
increase the large number of customers in the future.
4.2
Distribution Strategies
As consider the principle of product distribution, there are three basic ways
including in-store, e-Commence, and collect goods at the nearest store. In my
investigation the current Coles distribution, only small advertising and market
strategy development were focused in the e-Commerce and collect goods at the
nearest store channels. Coles should pay attention more in these distribution
channels.
Moreover, Coles can use the benefit of e-Commence to extend the products. For
example, Coles offer the other product category available only online shopping.
Once the customer orders online, Coles deliveries it to the designated Coles store
for free within the next day. After that, the customers can go and pick-up goods
by tomorrow or using the mobile software for tracking the delivery. With this
strategy, Coles is able to extend the product range into other type of product,
not just for the food, drink, cosmetic, and basic stuffs. I name this strategy as
Pick-up-tomorrow.
Promotion Strategies
The promotion strategies should connect with other market strategies and
support them to achieve the market goal. There are four main market strategies
that I stated in the previous section. Table 2 presents the link between promotion
and market strategy.
Moreover, the customer service in-store should be developed to impress the
customer services. The main Coles Company should establish the training
program for employees. The knowledge and know-how for training came from
the Coles experience and customer experience, how to deal with the difficult
customers, and how to solve the problem quickly. The program can extend the
quality of customer service in-store and reduce the large number of customer
complaints. That means Coles will gain reputation and the fresh customers tend
to visit Coles with the word-of-mouth marketing.
Market strategy
Freshness-to-price
strategy
Promotion
- Price will be dropped if the product
freshness is less.
- $10 off for first register and purchase
Online shopping
Pick-Up-Tomorrow
- Free delivery to the designated Coles store
from the central warehouse
Coles-on-Campus
Figure 9. The link between marketing plan & goals and the marketing strategies.
6. Conclusion
This report is the analysis of marketing situation of Coles supermarket and the
recommendation of marketing strategy based on its analysis. Coles is the second
largest market share in supermarket business in Australia with hold 31% market
share by end of 2012. The current Coles market strategies are common and have
no different from the main competitor, Woolworth. As the result, Coles has faced
the difficult time at the present.
However, there are some target segment seem to be ignored from the current
marketing strategies, for example, young generation. I introduced five marketing
strategies, including freshness-to-prices strategy to show the company loyalty to
customer, better e-Commence system for new generation shopping online, Pickup-Tomorrow strategy to extend the product range and reduced the local stock
issue, Coles-on-Campus; the small supermarket at the university or school to
build the brand recognition and reputation for community, and the training
program for better customer services. The next step, Coles should consider the
Reference
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McIlwraith, Ian (2010) Wesfarmers gets serious with Coles revamp, Sydney
Morning Herald, 9 April, online at: http://www.smh.com.au/business/wesfarmersgetsserious-with-coles-revamp-20100409-rylt.html (accessed May 2011)
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