Australian Supermarket & Duopoly (Chapter 4)

Kaustav Ghosh

Chapter IV

Company analysis and Marketing strategies: Coles vs Woolworths

i)Cole’s core competencies.

Highly Effective Supply Chain: Coles efficient supply chain is both a resource and a capability when it comes to company’s inbound and outbound logistics. The substantial cost saving techniques provided by the supply chain enables Coles to compete effectively with Woolworths.

Brand Reputation: Coles brand image has been developed due to positive consumer experiences which can be attributed to the stringent quality assessment. It offers substantial differentiation of products from the rivals, and contributes of the high level of customer satisfaction.

Effective Top Management: The top management is able to navigate the increasingly competitive environment by formulating new policies for the proper function and the management of the company.

Sustainable advantage: – When framing the strategic advantage four criteria’s needs to be satisfied; rare, valuable, non-substitutable and costly to imitate. Through its economies of scale and value chain the company is able to offer customers products of high quality at lowest possible price.

Value chain analysis: – Coles motto is “Down Down, Prices Are Down” and “Quality food costs less at Coles”. The goal of these activities is to offer customer values that exceed the cost of the activities, thus creating a profit margin.

ii) Woolworth’s core competence.

Resources: Woolworths operates over 3,000 stores across the Australia & New Zealand, and Employes over 180,000 people. This means that its resources are very high and strong. Woolworths has efficient human resource management and wide range of product and product innovative skills, strong brand image and reputation and well designed logistics management, good quality and fresh food, partnership with big companies.

 Capabilities: Capabilities refer to productive use of resources through organizational skills. From 1924 Woolworth is running business very successfully, it means that it capable to use right person in right position and set its resources on the right track.

World-class supply chain: Through its supply chain Woolworth’s innovation and competitive advantage have developed through its supply chain. Woolworths has significantly focused on cost cutting in managing unnecessary expenses.

Branding & Market: Woolworth’s motto is “The fresh food for people” this slogan, has created a differentiated image of quality product at responsible prices.

Innovation: Woolworths has implemented several project by diversification of product line, including re-fresh, the new idea program petrol retailing.

Integration: Woolworths has been producing its own inputs to increase its market power share.

iii)Marketing strategies

The ACCC has introduced various policy changes which has opened up the industry to the competitors. Various legislative changes that include regulatory environment and tax are factors that both retail chain should take into consideration when formulating strategies. The company should then focus on maximizing the full potentials of the markets by targeting people between 15 to 67 years because they occupy major portion of the market. Products related to 80+ age group should also be targeted as this population percentage is also very high. There is increased usage of computers and other technologies to shop online. Both these retail chain must uses the latest technology to a pleasurable online shopping experience and to track the process of its stock and also to survey the change in consumer taste and preferences.

Currently consumers want organic products so the industry who is offering the sale of organic foods and products will get a greater market share. This presents an opportunity 11 to venture into healthy and organic foods and products. This will enable the company to tap into the market and also respond to the changes in the tastes and preferences of customers. Trading hours should be expanded to 1AM so as to meet the demands of time sensitive customers.

Extending the range of products to customers is a good strategy. There is a reduction of consumer’s purchasing powers. Buying directly from the producers will eradicate the middle man costs and will help in increased sales due to reduced price and will help in capturing a greater market share. Products from all over the world compete in the local economy. Similar products should be made in the country and price must be low so that the competition must be reduced or eliminated. If that is not possible then there must be a tie up with these product manufacturers so that they sale these products though the big retail outlets.

 This will help in getting the share of profits. The biggest determinant of the level of competition is the store location, product and the price which also play a major role. Woolworths are Cole supermarkets biggest competitors in the industry. The rivalry in the industry is bound to increase in the future due to the entry of new players in the industry. So a tie up with the new players is essential. Merger and acquisition is another alternative to the expanding competition. The threat of new entrants is expected to remain low in the foreseeable future as the economics factors are expensive like land and infrastructure. The new entrants must 12 invest heavily in infrastructure and facilities, and seek for expertise to manage the business.

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