About Woolworths Ltd and its marketing orientation
The company was founded in early1920s, dealing in the provision variety of retail businesses such as foodstuff, beverages, petroleum products and general merchandise (Kylel1, 2009). The company has had a track record of superb performance in Australia and its outskirts by its increasing revenues which have enabled it to take over various subsidiaries. The company is ranked 2nd largest in Australia in service delivery, and continuous profits realized. In addition to this, the organization has a great pool of dedicated employees, managers and customers who have contributed to this excellent performance in the retail industry. Woolworths Ltd has remained relevant in the Australian market by effectively managing its marketing strategy from within (Grant & Butler, 2011, p. 70). This has made the Company to further spread its roots to New Zealand where it has become a force to reckon. The paper has undertaken to fully analyze such factors both internally and externally with the help of analytic tools such as SWOT and Porters Five Forces which form the basis of our discussion in the subsequent sections of this paper (James, Paul, Debra, & Paul, 2011).
Woolworths having explored different businesses under a variety of industries, it has largely contributed to the promotion of peoples’ welfare through the creation of income to the citizens as well as contributing dearly to the GDP of the two countries where it has been in operation..The retail sector’s slogan of attracting consumers’ appetite for fresh food has played a significant role in distinguishing it from other competitors who might be providing the same services since it creates an impression that it only deals in perfect products which are up to date.
Additionally, it has customized on a subsidized price-oriented market strategy that focuses on the satisfaction of the clients in service delivery through ensuring that all the needs of their customers are available conveniently under a single roof with 100% concern for customer care. The organization’s brand, having been known for quality, it has gained a lot of goodwill among consumers thus having a competitive edge on the market due to this good reputation over an extended period in offering products that are not expired and free from harm in the case of hotel services.
As a company, it has a vibrant brand name which has put the products in high demand due to certain quality over decades. Most importantly, the company was among the first in the country to introduce trade at a retail level which has continued to enjoy a strong liking by the increasing population making it hard for the competitors to outdo it. The company’s name is famous all over the market with a long-term record of value and customer based services hence increasing its sales volume. Furthermore, its increased profits have enabled it to absorb many other subsidiaries where it owns more than 50% of ownership. Finally, on the strength, this firm has capitalized in employing highly skilled personnel which is well trained and well oriented towards quality service delivery. It has a pool of workers and managers led by the able CEO that is satisfied and highly dedicated to yield expected results through proper implementation of clearly set goals (Rothaermel, 2008, p. 215).
SWOT analysis of Woolworths Ltd
However, this firm has also weak points that need to be improved if it has to continue in operations effectively and efficiently. The fact that some of the outlets under this company have been recording massive losses led to those branches to be closed down and others to be sub-contracted. This was as a result of the firm’s failure to control its competitive edge in those areas where it operated. Moreover, the company’s primary competitors are more visible globally than it is (Fleisher and Babette, 2003, p. 60). This might be associated with relaxed promotional measures internationally. This in turn results in decreased demand, narrowed market and thus the low volume of sales which cut down proceeds thus leading to the closure of such branches. To conclude on the aspect of weakness, its delayed entry into e-commerce was a great undoing since other firms had already gained grounds and therefore it was difficult for it to penetrate online market which is a looming business resulting to the unfavorable competition about its rivals. With the dynamics in business, the company was not able to capture a large market that was available on the internet.
Never the less, apart from these weaknesses, the sector has various points for the future hope which involve exploring the alternative of product promotion through coming up with effective methods of advertisement to boost the sales by either sales promotion, trade discounts, free samples, packaging services, media investment among others. This is a ripe option for this sector if well invested in due to the gap that exists which has not been fully maximized. This will eventually see to it that the company’s items penetrate a large market both within the country and worldwide. The increase in the scope of the market served always has a positive impact on turnover which consequently improves profits for the sector (Mohapatra, 2012, p. 270).
This can be done both through the website, road-shows, and exhibitions and in-depth personal selling. Another opportunity for the organization is its possibility of acquiring other firms strategically using its strong financial base to further expand the market. Proper and well-planned acquisitions can provide the business with remarkable returns if appropriate measures are undertaken to manage such takeovers. The profits in these absorbed entities could be used to pay expenses in the mother company and also be invested in other profitable ventures to ensure continuity of the enterprise. Also, many benefits come with the expansion of the business which is referred to as economies of scale.
Porter’s Five Forces analysis of Woolworths Ltd
In this regard, this company faces various specific challenges which need to be scanned and appropriate measures taken in advance to counter them. The above company is confronted with various threats such as an increase in the overall cost of materials that are needed for the manufacture of products. This means there will probably be an increase in the cost of production which must be taken into account in the determination of the selling price of the products. The general effect of this is raising the price of the final product to absorb the cost. This finally leads to a decrease in demand in the short run since customers take a long time to adjust to new prices (Grundy, 2006, p. 220). Reduced demand leads to a small volume of sales thus decreased profits which are a symptom of failure for any business.
In addition, the firm is possible to face stiff competition from emerging and well-established companies internationally. There is an increase in the rate at which new businesses that provide the same goods and services are entering into the industry. This has the effect of either cutting down prices or entering into extensive market research for one to penetrate (Blume and Easley, 2008, p. 299). With reduced product prices and more expenses in research and development, the weaker firm may be unable to make profits thus left with an option of either quitting or continue making losses which eventually will land the company into insolvency.
Also, the state of the economy poses a very great challenge to this company. In this setting, a recession in economy implies that there is a decrease in per capita income which might be caused by inflation, unfavorable terms of trade which has a direct impact on demand. With such an economy, there will be no need of more production thus the company is unable to adequately invest in its returns (Bustamante, 2015, p. 306). This might lead to the winding up of the business particularly when the impact is greater. Under these circumstances, companies encounter more strikes from workers, reduced sales volume, increased costs of almost all factors of production and finally strain in its general operations.
Under this, the customers are looked at based on the following criteria.
- Customer’s ability to bargain: Due to different firms inter- playing in the retail industry, buyers are exposed to a wide variety of products to choose from. They can select an item that they deem price-friendly and with high quality. This accords them a high bargaining power for the products.
- Buyers’ knowledge of the market: Australia serves a market whose customers are well informed of what they expect at any given time. With this, the firm is unable to blackmail them on the value and prices of products. I n the food industry, the target individuals are those with a greater interest in new consumables, mainly the people who earn high and medium salaries. These people have been identified to be interested in quality foodstuffs and refreshments since their pay can afford such without much strain. These clients are also more informed about the products and the services that they should be accorded.
The company ventures in a variety of goods and services in different sectors. Some include; hospitality, breweries, oil and general services, it has a variety of distributors of their relevant raw materials which include Caltex which ensures the supply of petroleum products (Thompson, Peteraf, Gamble & Strickland, 2014, p. 105).
Customer behavior, suppliers, distributors, and competitors of Woolworths Ltd
It has been a character of Woolworths to partner with other companies which they ended up in amalgamation. These joint ventures have been of great importance to the company regarding availing the products and ready services on the market in which they have been operating before such joining. The company’s history of forming cartels has enabled it to control a larger market and also increase its competitive advantage over an extended period. Most of the businesses that it has been found running were as a result of partnership which led later to fully taking over of the firm by Woolworths (Palmer, 2008).
It can be observed that since the company was operating some ventures in a processing industry, the suppliers of raw materials are wholesalers and producers who were responsible for the provision of raw materials. The company has also created a rapport with significant non-governmental organizations to boost their safety in the provision of their goods. Additionally, it has also partnered with the community to ensure that it safeguards the environment. The reasons for partnering with the two latter bodies are to create a good reputation in the society which forms the market for their products. This also ensures that the company complies with the regulations of these organizations for the efficient running of their activities in the area. The overall impact for this is improving market penetration which increases the net sales annually.
The company just like any other business, it cannot operate in a vacuum or isolation. It faces rivalry from other players in the same industry who also tries thick and thin to gain a substantial market share in the economy. Competition is of great importance to any healthy business if it has to make sense in its operation on the market. It gives birth to creative thinking among top management which is essential in any given business (Millan, Román and van Stel, 2012).
In this case, the company has major rivals both in food industry such as Macro Whole foods limited which is trying to have a significant market share out of the existing market within and without the country. This company poses a major threat to Woolworths and therefore for it to maintain its sales volume, it must think of extra efforts to counter and gain a competitive edge to continue enjoying mega profits. This necessitates injecting more funds in advertisement measures, differentiating the products more, increasing value and if possible decreasing the price of goods and services (Kotler & Keller, 2016). Furthermore, in the general retail and liquor industry, there exists an ALDI, Walmart and TESCO Company which gives this firm a headache as far as share of the market is concerned. They provide rivalry in these sectors to ensure that they are also able to compete favorably and continue in the economy. Amidst such competitive environment where firms are tempted even to engage in price wars and other dangerous methods to outdo one another, prices for products are pulled down thus making the cost of production higher than selling price which leads to the creation of significant losses. As a result of this, weaker firms are forced to exit the economy.
Finally, on this analysis, it is evident that other forces play a major influence in this Company since they determine the viability of the enterprise to carry out its operations in a given scope (Gabriel, 2009).
Regulatory bodies such as food and drugs determine the kind of food to be sold in these outlets and the conditions under which such meals were prepared and served. This is to ensure that consumers are protected about their health. Sale of bad and expired meals to clients is an ultra-vires and therefore would attract an unpleasant penalty which might strain the company (Zouridis, Muller, Kistemaker, and Frishman, 2012, p. 335). Another one is the environmental act on forestry. Since this company was also involved in tissue manufacture, it had to avoid clearing of trees without replacement as much as possible for it to be safe and comply with such authority (Ford, 2013).
Finally, the company has ventured in e-commerce as a modern way of doing business. Through this, the company can expand its market globally through inventions such as OLX and many others like advertising its products using social sites (Laplume, Pathak and Xavier-Oliveira, 2014, p. 810). This has an overall result of increasing visibility of goods at a low cost thus propagating hope for a rise in demand. Also, a recession in the country’s economy has an adverse influence on the business since the general demand goes down thus no need to expand the market (Colovic and Lamotte, 2015, p. 622).
Conclusion
Regardless of the many challenges facing this company ranging from emerging competitive environment to the general economy of the system, Woolworths has continued to operate efficiently, expanding its operations in the three top countries where it has a major influence on the market share. This is attributed to its strong workforce, superb reputation, significant economies of scale, strong financial background and quality managerial staff that are result oriented. The company is still expected to do well in the market over an unforeseeable period due to these mentioned factors.
It is recommendable for the business to observe the following for it to continue penetrating the market in future;
- The company should invest more in Internet marketing strategy due to the changing demand patterns and consumer behavior. This will enable it to increase its scope of coverage by attracting the attention of more potential buyers.
- The firm should also carry out adequate research before acquiring new businesses. This will save the entity from investing in unprofitable ventures.
References
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