The drawbacks of a price-based strategy
Many stores and other business have based their marketing strategies on the price of commodities and have neglected other factors for a long time. Cutting of prices has been used by very many businesses in an effort to gain competitive advantages over their rivals. However, price-cutting is associated with many inconveniences and does not serve the purpose of product promotion fully. Therefore, we need to ask ourselves whether this is the most effective way of product promotion.
If not then what are the strategies that can be used other than cutting prices to be able to secure the largest share of the market? The following is an analysis of the current market situations in the food industry in French and the grocery retail sector. It looks into the current strategies used in marketing the products and the reasons why there is a lot of shift of the strategies to new one other than price-cutting. Other strategies such as advertisement have also been looked into and the justification of the best strategy given.
The food industry is a crucial sector in the Australian government and contributes a lot to the growth of the economy. It also contributes to employment and finances to the government. The marketing strategies that are currently used in the country have incorporated many changes that are very significant to the promotion of market in the country. The industries are well known for the production of fresh and quality food (Norkaew, 2018). This has enabled the country to remain the top food producer in the world. The production processes have also improved by the incorporation of high-quality raw materials to improve the quality of food produced by the industry.
The marketing strategies that are currently being used in the food industry revolve around lowering the prices of the commodities. Different chain stores such as Coles use taglines such as “why pay more, cheap groceries” and others in their advertisement to promote their sales (Ma, Dewally, & Huang, 2017). The company gives a huge discount to their consumers to be able to compete with other companies. However, the company is recently in a campaign to shift from the price strategy to other strategies.
The initial marketing strategy of Cole supermarket
Cole’s current strategy is based on price adjustments that use tones such as down down and cheap cheap. Their competitors apply this in their efforts to bring the chain store down. Its competitors have been on their shoulders wondering what the company would do next after the strategy of price reduction. This is in their effort to reduce the effect of Cole’s strategy and bemoaning the strategy success (Fung, & Liu, 2018). They would come up with similar tones such as cheap cheap that would push the marketers away from a green corner.
However other than the woollies supermarket, there have been new players who are now coming up to challenge the chain store’s values and grip (Gnanapragasam, et al 2018). For instance, Aldi is one of the businesses who are bringing a great threat to Coles. The company has a fresh approach to the market and therefore has become an alternative for those people who are bored by Coles and Woollies tit for tat games. They are also bored with the down tones and are willing to hear something else.
Shifting from the price-based strategy
From the argument, it is clear that Cole ought to change from the down-down campaign to some other strategies that will have more impacts. The down down and cheap-cheap tones are supposed to be left for some other small food businesses such as chip and fish wrappers. This strategy is outdated and people are now shifting to a more reasonable and convincing strategy (Cole, et al 2018). Retail as per now is not about cheap cheap and down-down but is about “new news”. Therefore, there is the need for the business to change from their initial magic to be able to compete with other retail businesses. Coles need to change their companies to a different thing other than down-down tones. Some other business changed a long time ago and is now enjoying the benefit.
The rationale for shifting from the price-based strategy
Now one may ask why there is need to shift from the price based marketing strategy and yet it has been used for a long time by successful business (Dean, Griffith, & Calantone, 2018). The price based marketing strategy is accompanied with some very critical inconveniences that can be avoided by application of other strategies. First, when the price is the main selling point there will be an automatic decrease in the shopper’s royalty. Therefore, customers change to become more conscious about price. On the other hand, price strategies are very costly for retail business operators.
This is because the cost of operation remains constant and yet there is a reduction in the price of commodities. At the end of the day, the business will be out of the margin and thus make losses. For instance, Cole’s result for half a year shows that there is a decrease in the earnings. This is from $920 to $790 million, that is a 14.0% decrease (Sexton, & Xia, 2018). On the other hand, Woolworths who applies a different strategy recorded 11% increase in their earning the same period. Woolworth dropped the cheap-cheap campaign early enough and that is why there is a significant increase in the earnings.
Alternative strategies
- Embracing user-generated content
Now Cole has given up the old price based marketing strategy and is should now move to other attributes. This attribute includes community, local produce, and sustainability. The business after a critical consideration and comparison with the Woolworth chain store there is clear reason why there is need of a shift. The strategy is all about using stories and the application of classical advertising techniques to sell themselves (Abdelkafi, & Pero, 2018)
. This strategy allows the chain store to be able to pass very positive feelings about a specific experience. The business is able to do this by featuring people while telling their stories. People are able to give their stories about the experience they had in the supermarket as part of advertisement. Therefore, new customers will be convinced to try Cole’s supermarket. This is after hearing what people are saying about the experience they had in the supermarket.
Alternative strategies
2) Collaboration with influencers
Secondly, the business should also used sports as a way of advertising their products. The company together with Woolworths should put the commonwealth games into utilization by featuring sports stars in their advertisement (Tang, & Hsu, 2018). The company’s recent campaign should feature athletes and the way they are connected to Fresh food. The company should also use the stars in connection with the company’s position. These show the qualities of services offered by the company are the best in reflection to the sports stars. In addition, the store should collaborate with uncle Toby’s in the sports school campaign (Devin, & Richards, 2018). This will enable the business to feature young energetic and very attractive athlete who are very successful. As a result, the company will be linking their success to the purchase of their product.
3, Collaborate with allies
Collaborating with allies comes along with very many businesses. There is available content about the market that is used during the market campaign. On the other hand, there is a good channel to expose the commodities to new people. The business is able to expose their brands so that they can acquire a new audience (Dyer, Singh, & Hesterly, 2018). This is a very effective way of advertising the commodities even without having to cut the price of the commodities.
Recommended alternative
This change from the price based marketing strategy and focusing on a story involving storytelling is the best strategy for Cole’s supermarket. Both Coles and Woolworth supermarkets should engage their customers in a process referred to as internalization (Jie, & Gengatharen, 2018). This enables people to take the company’s issues as their own. Unlike price, internalization creates a strong psychological effect that cannot be forgotten easily. The company is, therefore, able to capture the mind of the consumer in a different attribute of the company and therefore does not necessarily need to reduce the prices of the commodities. Instead of reducing prices, the companies will focus on some other important attributes that have more impacts than price strategy.
For a fact, consumers are not interested in the prices but are now looking at the value that the company is providing them with and in an entertaining way. In as much as Cole reduces the prices, they cannot be able to take one customer from Aldi or Woolworth.
Therefore, the best strategy that can be used is by the use of a different advertising style. The company needs to tell people what value they are providing them with and in an entertaining way (Crawford, & Bailey, M. 2018). This the only way they will be able to acquire customers even from their greatest competitors. The business does not need to ask the customers what they want or expect from them but should let them speak for the business (Goulding, Kelemen, & Kiyomiya, 2018). Experiences from the customers will enable the business to convince new buyers and as a result, compete effectively.
Conclusion
In conclusion, the price based marketing strategy is a strategy that is out of puff. Companies need to take another direction in their efforts to promote sales and compete more effectively. Companies need to adopt a strategy that gives information to the shoppers in an entertaining way. The value of the message passed in an advertisement is the most important thing and should come first. Use of sports stars and shoppers to tell stories about the business are the best strategy that can be used by the supermarkets.
References
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