Background of the company
This report is about the service marketing management of the famous retail store. Service marketing management can be described as the marketing concept in actions. The service companies should always be customer based and customer oriented. The company should develop the competitive marketing strategy for the long term success and growth in the market. For creating effective marketing, there are two ways i.e. identifying the target customers and their requirements and developing the marketing mix to satisfy the unique requirements of the customers. For the analysis of marketing strategies in this report, the famous Australian retail company Coles Limited has selected (Abbasi, 2016).
Coles is the largest retail super market in the Australia which is famous among the customers. Coles is the subsidiary of Wesfarmers. The company was founded by G. J. Coles in the year 1914. Headquarter of the company is in the city of Melbourne. In present time, the company has around 770 outlets in all over the Australia and around 100,000 employees. The company Coles is using innovative techniques and tactics to deal with the suppliers and various advertising and branding strategies to stay competitive in the retail industry. The company also pays attention over the promotions to attract a huge customer base (Coles, 2017).
By the SWOT analysis, it can be observed that Coles has the strength of the existing strong brand name in the market and it is easy for the company to introduce new premium products. But there is the need to handle the competitors due to the changing preferences of the customers in the market (Grant, 2015). SWOT analysis for the company Coles is described below:
The strengths of the company are those factors which are controllable by the company. In case of Coles, the company has 33.5% of market share in the supermarket industry of Australia. Having strong market share, Coles is able to present a strong and effective e command over the market and the customers. Further, Coles has a well structured and established logistics, supply chain and distribution networks. By the effective supply chain, company is able to provide the products to the customers when they need them. Along with this, company offers the online order and delivery services which is extremely impressive and mostly used by the customers to buy the products. Coles provides wide range of products having various brands including its own private labels.
This is also a controllable factor by the company. Despite of strengths, there are some weaknesses also in the business of the Coles. The profit margin of Coles is very low as compared to its competitors i.e. Woolworths. This is the cause of financial loss for the company in the operating market. Due to the negotiations carried out by the suppliers of the company, Coles has to face very negative publicity in the market and it has affected the brand image of the company. Along with this, there are some marketing issues also in the company and those are the cause of high attrition rate of the employees in the company.
SWOT Analysis
This is the uncontrolled factor for the company. Coles has the opportunity to introduce new and premium products to attract more and more customer base in the market. Further, company can also seek for more geographical and global expansion for higher market share in all over the world. Along with this, Coles has the big opportunity to increase its sales by focusing on the higher imports of the products. The company can import the specialized global products from various countries which will be helpful in attracting the customers from all the segments (Powers & Loyka, 2010).
These are also the uncontrolled parts of the company which affect the business operations of the company in the market. The competition in the supermarket is very strong and it is affecting the business operations of Coles Limited. There are strong competitors such as Aldi and Woolworths which are increasing their business continuously. It is well known that the customers are shifting towards the mobile and online based shopping because they have busy life and they do not have time to visit to the stores. So, there might be required by the Coles to close its physical stores. There might be the big loss for the company (Beare & Szakiel, 2009).
The competitive advantage of any company depends upon the task and general environment of the market. It is well known that the Coles are one of the famous supermarkets in Australia. With the changing and developing trend of technology, there is the need of technological advancement to maintain competitive advantage in the market. Coles has competitive advantage in the market due to the initiatives taken by the company to meet the expectations of the customers (Pearson & Henricks, 2011). It includes removal of product or service duplication, on-shelf availability of the products and various strategies to improve the experience of the customers at the time of shopping. Company is successful in terms of customer satisfaction, retention, market strategy, innovation in product strategy, financial capability and strong work culture. Consumers trust the company and buy 96% of the products due to fresh and safe food which is available and sustainable at the time. After Woolworths, the company has second position in the market in terms of the retail products
The core business concept of the Coles is to reduce the cost anyway. By the effective pricing strategy, the customers select Coles for the purchasing the products and by this, company is able to get competitive advantage. Although there are many competitors using low pricing strategy but Coles is different from other companies in terms its method of implementation. Blackmore always takes advantage of tariff-free status of Australia under a free trade agreement for maintain the competiveness in the market. The judges of Australian Export Awards were impressed by the sales growth of Blackmore. The company has done effective use of pricing strategy to gain strong competitive advantage in the operating markets (Keating, 2015).
Competitive Advantage
Market segmentation can be described as the group of the customers based on the specific needs and demands. Dividing the market based on the requirements of the customers is called market segmentation. The demands of the customers are based on product, price, and the value and by focusing the demands of the customers, companies are able gain competitive advantage in the market. In the case of Coles, the company is famous in the retail industry for its quality products. The company is focused on the segmented population who need the products under one roof. The service of company is faster but satisfying to the customers (Mckeown, 2012). The segmentation by the Coles limited is described below.
This segmentation includes various demographics measures such as age, gender, education, income ethnic background and family life cycle. In case of Coles, the company targets young, adults and female for the business. The reason is that young and adults are more conscious about the quality retail products. Female are the parts of daily activities so by targeting them, company is able to increase the sales of the products (Lancaster, Massingham & Ashford, 2002).
This segmentation can be described as dividing the customers based on the geographic location. This segmentation is usually done by the region vs. city markets. This type of segmentation is used by various business markets where the needs and requirements are based on locations. Coles targets the customers based on region, and density. In the region factor, Company targets the people of Australia along with the international customers of China, Europe and Asia region. In the density factor, Company focuses basically on the urban areas and opening the stores in those areas where the stores are not available.
Company does the marketing segmentation based on the lifestyle of the customers and this segmentation is called psychographic segmentation. The key factors of this segmentation includes personality types of the customers, lifestyles, social status etc. this is basically based on the assumption that the purchasing decision of the customers is based on the lifestyle and characteristics of the customers. In case of Coles, the company focuses on the busy and hectic lifestyle people who do not have time to go for shopping on different places. For such type customers, company provides all the necessary products under one roof. The company targets the working professionals who have an extremely hectic and busy lifestyle. Further, company also focuses on the lower, middle and working class customers (Harris, Schwartz & Brownell, 2010).
Segmentation Analysis
At last, in this form of segmentation, customers are targeted based on the way they respond and use of the products and services by them. The behavioral segmentation includes usage, consumption, benefit and loyalty for the company. In case of Coles, the company has segmented the customers based on degree of loyalty, personality, user status and benefit sought. For the company, benefits for the customers are cost advantage. So, the company targets the customers who seek for the low price products. Such type of customers are cost conscious and always want to buy the products at the lower prices. Further, company also targets the customers who are potential users, first-time users or ex-users of the products (Taylor & Lee, 2007).
Marketing mix basically explains the business and marketing strategies of Coles. The marketing mix includes 4Ps i.e. product, price, place, and promotion of the company.
Coles provides fresh food, liquor, groceries, fuel, general merchandise and financial services. In the product strategy, Coles provides the products of various brands. Along with this, there are various business segments i.e. Coles supermarket, Coles financial services, Spirit Hotels, Coles express, and Coles online (Chaniotakis, Lymperopoulos & Soureli, 2010).
Coles is a cost leader in the market. Coles is adopting lower prices from last six years. The company always provides the products to the customers at lower prices along with the quality of products. The objective of the company is to lower the cost of the weekly basket of the products which is the competitive advantage for Coles.
Coles has around 2,300 outlets by which it is able to reach out to the millions of the customers. The company has adopted open market-style fresh produce section and in-store bakery. Coles has opened 20 new supermarket stores now. Coles online is also very effective having 25% of growth in the market.
Coles uses taglines such as ‘extra value for you- and me’, ‘Why pay more’ and ‘Cheap Groceries’ which show that company do the value of the customers’ money. Coles has discount, loyalty and promotion scheme for the customers. Along with this, Coles has the promotional schemes during the New Year and Christmas (Thiel & Romaniuk, 2012).
Coles targets to those customers who are busy and have economic level and who wish to buy those products which are unique and special. Such people seek for the high quality goods and services which meet their expectations. By the ‘down down’ pricing strategy, company is able to improve its brand image in the market. As discussed above, the company targets the customers based on different segmentations (Zhang & Duan, 2010).
There are number of shareholders engaged in the annual meeting of the company. The main stakeholders of the company Coles are investors, customers, suppliers and employees. The investors of the company are on the highest priority and on the other hand, the suppliers are the on the lowest priority. Investors are interested in the profits and they want Coles to earn more profit. Along with this, investors are also interested in reducing g the operational cost of the company. Further, customers are interested in the low price products with the quality. Employees mainly have two interest i.e. high wages and job security. Coles has policies and programs to provide job security to the employees. Suppliers provide good products which are needed by the company in its stores. The company has business leverage to attract the suppliers (Wesfarmers, 2012).
Coles Limited is the leading food retailer of Australia. The company has responsibility towards its customers, employees, society and the environment. The focus of the company is simple and the goal is to continue the work towards sustainable future of the society. For the sustainable environment, Coles is continuously investing and exploring in the projects related to the environment. By the effective supply chain, reducing greenhouse emission, company is able to focus and the waste reduction and recycling. Along with this, company encourages the suppliers and industry experts to adopt the responsible practices for the welfare of people and environment (Coles Supermarkets, 2017).
There are some new marketing strategies for the company Coles. Those are increasing revenue, building customer loyalty, increasing customer base and increasing g competitive advantage in the market.
The main objective of the Coles is to increase the sales of products. The aim is to increase the sales more than $150,000 every year. The management of the company expects that the sales should be increased by 50% in each year. Coles offers many products which are expected of higher returns. But, company faces strong competition from the other retail companies. Coles always has relied on the fresh produce which are the most convenient for the customers. So, the strategy of the company is to diversify its products which suit the customers in terms of their economic capabilities. The strategy is for those customers who want to do one stop shopping.
Next strategy of the company is to maintain its customer’s base in the market. To achieve customer rate in the stores, company has located its stores in the big cities and town in which there are high traffic. The company is much interested and focused in maintaining the customer loyalty. For this, the strategy of the company is to open the stores in those areas where the stores are not available. The strategy is to implement the royalty program in such a way that customers are rewarded according to the purchasing of the product (Huang & Sarigöllü, 2012).
The Coles have many products for the customers such as daily products, bake house, grocery, meat, general merchandize, and liquor and customer services. So, there is the need of differentiation of the products to maintain its competitive advantage in the market. The reason of this is to ensure the quality the product and services offered by the company to the products. Improved products and services will improve the competitive advantage and rating of the company (Ingenhoff & Fuhrer, 2010).
After deciding the marketing objectives for next year, it is important now to set the action plan to achieve the marketing objectives. To improve the customer base and to increase the sales of the company, it is important for the company to open the stores in such areas, where the stores of the company are not available (David, 2013). It will take time but company will be able to attract more and more customers and by more customers, company will be able improve its sales and revenue in the market.
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Action Plan |
Jan-Mar (2018) |
Apr-June |
July-Sept |
Oct-Dec |
Jan-June |
July (2019) |
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Looking for investor for opening new stores |
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Make plans to open the stores |
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Selecting proper location which will be convenient for the customers |
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Hiring people for constructing new stores |
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Hiring employees for stores |
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Opening new retail stores |
Company needs to monitor and evaluate the marketing strategies effectively. By the proper human resource management, Coles would be able to create high values for the products. For maintain long term relationship with the customers, proper human resource management would be effective in the company. Further, company can create strong online community which will be helpful in improving brand loyalty of the customers towards the products (Elliott, Rundle-Thiele & Waller, 2014). Further, focusing on the financial resources will also be helpful for the company. Mass media strategy can also be used by the company for its customers. it is very important for the company to spread the information about the products, so social media will be very effective tool to increase the awareness among the customers (De Mooij, 2013).
Conclusion
The report has discussed about the marketing strategies and the marketing mix adopted by the Coles Limited to satisfy the specific needs and requirements of the target markets. From the above discussion, it is observed that Coles is enjoying the competitive advantage over the competitors in the operating market. The company has the strength of brand name and high market share. Company is always trying to provide quality products to the customers at the lower prices. Further, it is also observed that the company wants to improve its customer base, sales and the revenue. For this, the strategy of the company is to open the stores in those areas where the stores are not available.
References
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De Mooij, M., (2013), Global Marketing and Advertising: Understanding Cultural Paradoxes: Understanding Cultural Paradoxes, Sage Publications
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Zhang, J., & Duan, Y., (2010), The impact of different types of market orientation on product innovation performance: evidence from Chinese manufacturers: Management decision, 48(6), 849-867
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