Coles Marketing Plan Basing on Coles Situational Analysis - Case Study Example

Student: ID: Tutor: Course title: Course code: Institutional affiliation: Date of submission: Reflective view on Coles marketing plan basing on Coles situational analysis From the situational analysis, it emerged that Coles is the second biggest retailer in Australia facing great competition from the likes of Woolworths and ALDI. Coles supplies to Australians general household requirements including groceries, electronics, snacks, laundry products among others. Coles has been able to include a high number of its own labels for goods stocked after slashing 30% of its product lines to include its own brands in 2008 to increase profitability. Coles has relied on a strategy of competitive pricing and online sales to remain profitable in a highly concentrated market (Kruger, 2012). The supermarket has performed well in terms of profitability improving by 4% to $35780 million in 2013 (Wesfarmers, 2013) , however Coles needs to take care of tensions between it and its suppliers to ensure long-term sustainability of its business model. All the same Coles is a strong brand which has the capacity to expand internationally to boost profits. Marketing objectives for the next 12 months From the situational I noticed that Coles did actually perform well considering the level of competition in the Australian retail industry. According to Wesfarmers annual financial results, Coles made a profit of $ 34, 117 million in 2012 financial year and $ 35,780 million for 2013 (Wesfarmers, 2013). However Coles needs to come up with strategies to grow their market share and most importantly retain the growth momentum that it has sustained over the years. The strategy shall be advised by the marketing objectives identified by the company. Some of the objectives I believe Coles should have as part of its marketing plan include: Increasing grocery market share to 36%- According to Deloitte economics report, as of December 2012, Coles controlled 31% of the total grocery market share behind Woolworths which controls more than 40% of the market share (Deloitte Access Economics, 2012). I Believe Coles will be able to reach a market share of 36% if a well formulated and implemented aggressive marketing effort is made. The efforts should include plans to introduce gradually a few of branded products popular especially with financially strong middle class. This target market ranging between the ages of 25 and 40 are more likely to be attracted to brand salience rather than price (Erasmus, 2002). Having them shopping at Coles would most likely boost the sales of the groceries as they shop for them in the same stores. Increase operating efficiency and cut advertising cost to save up 10% of costs to pass 8% of the same to suppliers- Part of the threats facing Coles supermarket as at now is growing discontent amongst suppliers on poor prices from the supermarket (Rolfe, 2013; Carney, 2012). The issue is now becoming a major political issue that has the potential of affecting the current good performance of the company and future growth potential according to an article by (Martin, 2013). Coles can solve this by improving the prices it buys from consumers; this will be achieved by improving operational efficiency such as reducing unnecessary staff, reducing supply chain expenses such as warehousing related expenditures. Coles can also cut advertising costs by 20% to lower operating costs. Saving these costs will enable the supermarket offer suppliers a better deal thus lowering the heat coming from the politicians and industry stakeholders. This will improve long-term relations of the supermarket and its suppliers thereby ensuring a sustained capability to compete effectively with other strong players in the market. Increasing store numbers to 800- I believe Coles should not at all adopt a strategy or reducing the number of stores that it operates. A large chain of stores may be expensive to maintain in a competitive retail sector. However I believe with prudent management and stores support, Coles can be able to increase its full service stores number to 800 across Australia in order to increase its market share. At the same time loss making stores can be closed to free up resources to open up stores in high prospects areas. Target market Coles target market currently is the family shopper who most of the times happen to be a mother. I think this is a very important target market since family consumption is a great driver of the retail market. I think this target market should remain a part of Coles plans for the next 12 months. Market segmentation is as follows; Family unit Demographic This target market is composed of family members ranging from all ages. As such they use general consumer goods such as grocery, food items, and laundry and home appliances. The decision maker is mainly an adult between ages 35 and 60 (Erasmus, 2002). They have a good income but prefer shopping wisely meaning quality and price is a preference. Behavioural This group prefers cheaper yet quality products. They also prefer wide choice to fulfil their various needs. Price is a major determinant of their consumption behaviour. Young middle class shoppers Demographic This is a group ranging between the ages of 25 and 35, they are probably single or couples without children. As such their shopping will mostly comprise personal items. Behavioural This group is mostly composed of heavy spenders on expensive brands; they are not moved by price a lot but by brand salience, convenience and perceived benefits. They mostly shop personal grooming items such as cosmetics and also home improvement items such as expensive electronics, furniture and also trendy clothes (Erasmus, 2002). They expect to find all this in Coles if they are to become regular shoppers. Coles can be able to target both of this target segments since they have the capability to increase Coles’ market share. Currently Woolworths is leading in quality customer service and product offering. This is most probably the reason why Woolworth’s market share is high as compared to Coles who offer cheaper products than Woolworths (McCrann, 2013). Coles should position itself as a hybrid retailer stocking general family products including fresh grocery and at the same time position itself as a preferred supermarket for the young shopper with improved customer service, wide offering of popular brands, trendy clothing and high end electronics Overall approach to an appropriate marketing mix I believe a marketing mix should have the four functions complementing each other to achieve the marketing objectives of the business, a view held by Solomon, Marshall, & Stuart (2011). For Coles to achieve the set objectives in 12 months, the same case applies. I suggest the following marketing mix for Coles in the next 12 months; Product Coles should offer a wide variety of products meaning it will have to reintroduce some brands to attract young shoppers attracted by popular brands that Coles doesn’t stock currently. Coles’ service delivery should also be improved to lower time spent at payment points, online shopping will also complement efforts to attract the busy middle class shoppers. Coles should however not disregard its core target market as at now which is the family unit that prefers affordable quality goods meaning it has to maintain a reasonable percentage of private labels to ensure lower prices. Price The retail market is competitive; the only feasible strategy will be to lower operating costs and thus lower products prices. This will ensure retention of the current market share and attract more shoppers into the supermarket. Promotion Coles should try as much to attract both the target market through appropriate media channels. I believe both target markets can be reached through TVs, radios and outdoor advertising platforms. The message should be focused on positioning Coles as the supermarket of choice for the family and also a trendy brand to attract the young middle class by promising quality, variety and convenience. Place Coles has done a good job in reaching its customer base with conveniently located stores at gas stations, shopping malls and suburbs through out Australia. This strategy can be strengthened further though opening of more stores in these areas. The online platform is also another growth frontier that the company can pursue. Links between marketing plans elements The marketing plan elements must be in harmony if the expected results are to be realized (Solomon et al, 2011). The marketing mix is dependent on the objectives reached by the marketing department. For example the marketing mix has to consider that the company hopes to capitalize on a strategy aimed at attracting the middle class to boost sales. As such prices and product features must be positioned to attract this group. The marketing mix also has to consider the core strategy of competitive pricing. As such costs should be as low as possible to make this strategy feasible. Conclusion This marketing plan will help the company achieve the objectives I have identified in the plan. It will act as the original blue print towards achieving the desired results in the next 12 months. It should be noted that the plan has both short term and long term targets for the business. The plan intends to make Coles competitive by improving supplier relations and increasing market share as long term strategy. Tactically it will be used to increase profitability in the short run by attracting a critical section of the market that is the young middle class shopper that currently does not fit in the Coles competitive pricing strategy. References Australian Food News (2010 September 9) ‘CHOICE puts own brands through their paces’, 9 Sep 2010, AFN. Retreived from: HYPERLINK "http://www.ausfoodnews.com.au/2010/09/09/choice-puts-own-brands-through-their-paces.html" http://www.ausfoodnews.com.au/2010/09/09/choice-puts-own-brands-through-their-paces.html [Accessed: 4 November 2013] Carney. M.,(2012 , August 14). Coles, Woolies ‘deliberately killing competition. NEWS, retrieved from: HYPERLINK "http://www.abc.net.au/news/2012-08-13/report-accuses-coles2c-woolies-of-killing-competition/4196454" http://www.abc.net.au/news/2012-08-13/report-accuses-coles2c-woolies-of-killing-competition/4196454 [Accessed: 4 November 2013] Deloitte Access Economics. (2012). Analysis of the grocery industry- Coles supermarket Australia. Deloitte . Erasmus, A. (2002). consumer decision-making models within the discipline of consumer science: a critical approach. Journal of Family and Consumer Sciences , 29, 82-90. Kruger. C., (2012 November 3). Coles, Woolies turn the screw on competitors. The Sydney Morning Herald. Retrieved from: HYPERLINK "http://www.smh.com.au/business/coles-woolies-turn-the-screw-on-competitors-20121102-28px6.html" http://www.smh.com.au/business/coles-woolies-turn-the-screw-on-competitors-20121102-28px6.html [Accessed: 4 November 2013] Martin. P., (2013, June 18). Independent MPs join forces to take on Woolworths, Coles over high market share. Sydney Morning Herald. Retreived from: HYPERLINK "http://www.smh.com.au/federal-politics/political-news/independent-mps-join-forces-to-take-on-woolworths-coles-over-high-market-share-20130617-2oeg0.html" http://www.smh.com.au/federal-politics/political-news/independent-mps-join-forces-to-take-on-woolworths-coles-over-high-market-share-20130617-2oeg0.html [Accessed: 4 November 2013] McCrann. T., (2013 March 04). Shoppers are winning in Coles and Woolworth supermarket war, but it won’t last’. Herald Sun. Retrieved fro: HYPERLINK "http://www.heraldsun.com.au/business/terry-mccrann/shoppers-are-winning-in-coles-and-woolworths-supermarket-war-but-it-wont-last/story-e6frfig6-1226589476967" http://www.heraldsun.com.au/business/terry-mccrann/shoppers-are-winning-in-coles-and-woolworths-supermarket-war-but-it-wont-last/story-e6frfig6-1226589476967 [Accessed: 4 November 2013] Rolfe. J., (2013 August 13). Woolworth, Cole slash prices grocery discount war heats up. NEWS. Retrieved from: HYPERLINK "http://www.news.com.au/money/cost-of-living/woolworths-coles-slash-prices-as-grocery-discount-war-heats-up/story-fnagkbpv-1226696579372" http://www.news.com.au/money/cost-of-living/woolworths-coles-slash-prices-as-grocery-discount-war-heats-up/story-fnagkbpv-1226696579372 [Accessed: 4 November 2013] Solomon, M., Marshall, G., & Stuart, E. (2011). Marketing: Real People, Real Choices. Prentice Hall. Wesfarmers. (2013). Annual Report 2013. Wesfarmers. retreived from: http://media.corporate-ir.net/media_files/IROL/14/144042/wes/WESFARMERS%20ANNUAL%20REPORT%202013.pdf [Accessed: 4 November 2013] Read More