woolworths case study

Introduction
Woolworths is the largest supermarket chain in Australia, and Coles is the main competitor of Woolworths. As Australian supermarket is in the growth stage in product life cycle, Woolworths Supermarket has to evaluate new strategy to maintain its marketing leadership position, such as improve its logical and costumer service efficiency by technology and innovation development. Woolworths has kept the leader position in Australia for more than 80 years, so it has a famous brand recognition, which means it has a strong market force. However, Woolworths’s debt also increase so quickly that it becomes the major concern of the investors. In addition, the highly logic expense also make Woolworths suffer from a lot of pressure. Since the demand of daily use are predicted to be grown continuously after 2009, Woolworths can consider expand product manufacturing line and export to China. After the analysis, our group advise Woolworths demonstrate the advantages and value of its product to attract the further the consumers. In addition, Woolworths may think about entering into a new market such as China, and it can also cooperate with grocery manufacturers either in those countries because where the labor costs are much more reasonable.

Marketing Objectives

According to the analysis in the assignment, Woolworths has kept a leader position of supermarkets in Australia for many years. Therefore, the primary marketing objective is that Woolworths need to keep this strength for the future 12 months. Woolworths needs to find ways to strengthen the strong position of local market first in order to lower the risk when doing other investment during the future 12 months. In addition. Woolworths may consider to expand its overseas market as a second marketing objective. Since some oversea market has a great demand for daily use high quality product, Woolworths has an advantage entering into a new market with its good reputation in the industry. Besides, Woolworths can take the benefit of lower labor cost in some overseas market such as China and India.

Target Markets and Positioning

Market segmentation involves dividing a market into groups or segments with distinct needs and wants. Consumers within a given market segment are similar to one another in terms of needs and wants and different from consumers in other market segments. Customers and organizations purchase and use the products provided in Woolworths only for daily use. So customers will not spend quite a long time on choosing and comparing the quality of the products provided by Woolworths, because these are for daily use, and these goods are easy to find a substitute goods. Woolworths can segment the markets by both consumer and business type. Since the online business has developed fastly during recent years, Woolworths may consider to focus on the online B2C market. In addition, the oversea markets such as Chinese market will attract a lot consumers.

Woolworths will select on-line and traditional type in China as the targets. Our core product is food, laundries, fruits, and some other goods for daily use, and our actual product is the good quality, and the augmented product is the goods with services. Consider the situation, Woolworths plan to use market penetration and market development strategy. Since Woolworths already has a good reputation in Australia, it can using the high-quality exported from Australia and New Zealand to do advertisement to attract new customers in China.

Marketing Mix Strategy

In a practical way, Woolworths may consider to transform the analytical findings from the past year into marketing objectives for next year.

Marketing strategic planning
A matrix called Product- Market Growth Matrix, known more as Ansoff Matrix (Igor Ansoff, 1957) is a basic tool to clarify what is marketing strategic planning and how to use it. Ansoff Matrix proposes four strategies between offer (products) and demand (markets) with some recommended paths for a controlled development.

Market Penetration

To continue penetrate in the current markets, Woolworths must control the manufacturing costs and operating expenses, promote branding force, improve customer services, and enhance sales and marketing force. This strategy is suitable considering the great potential of growth in both Austrlia and exports to overseas such as Chinese markets. Retailing industry is a capital-intensive industry with a big proportion of fixed cost and a high marginal income so it is fit for low-price strategy. Woolworths can streamline the manufacturing and operating operations as well as improve the logic management to control the overall costs to develop a cost advantage over its competitors to attract more price-sensitive consumers. Branding can be achieved through extensive advertising campaigns and promotions.

In Australia, Woolworths has kept a leadership position for a quite a long time, but in order to enhancing products’ economic value in the mind of the consumer, Woolworths needs to maintain a good reputation and upgrade after-sales service quality. Woolworths should try to focus on selling daily shopping goods such as food and laundries to the public, for instance, it needs to lower cost in order to boost sales volume. Good supply chain management is really important for Woolworths, because it can lower the cost effectively. For instance, Woolworths may consider using just-in-time inventory policy, which means booking the inventory when ordered. This will lower the storage cost, but it needs a strong supply chain support. To build a strong supply chain management, Woolworths need to earn a good reputation in order to improve the creditability with the logistic companies.

Providing prompt and high quality customer services not only strengthen the customer loyalty, but also provide an additional source of revenue with high margin. Dealer bridges the manufacturers and consumers. Therefore, a strong dealership increase the coverage of Woolworths’s products, deliver better services to consumers and provide timely feedbacks, which in turn, boost the sales volume of Woolworths.

Market Development

According to bureau of Statistic China (2012), the amount of the elderly people between 50-70 years old will increase dramatically during the following 10 years. This is a new market with great potential and little competition. Given the fact that aged people are cautious in spending, Woolworths’s products are attractively to them plus little improvement, because it has a highly recommended reputation. Next year, Woolworths will target and emphasis on entering into a wholely new market like China. Woolworths’s goods and services can totally attract the customers in China comparing with the other oversea enterprises such Wal-mart and Carrefour.

Cost Leadership

First, Woolworths may adapts Just-in-time production, a Japanese philosophy that components are not stockpiled months in advance, but ordered when required. It removes storage costs. Secondly, production activities are in diverse countries and regions to pursue the lowest cost, for instance, vegetables and fruits from Japan, milk from Australia and rice growing in China. Lastly, Woolworths may use its R&D center to find a more effective way to corporate with different logistic company. In addition, Woolworths also need to integrates global research resources, addresses financial issues and insufficient technical people in specific areas with the help of R&D centers in order to lower the cost.

Localization

Localization makes Woolworths catch taste of local people and takes advantage of local resources. For instance, in order to transfer core competency and specific organization culture to subsidiaries, Parent company send technical people to subsidiaries to teach local employees core technology or require senior technical people to learn the core competency in overseas factories. Moreover, Woolworths should respects local traditions and beliefs. Based on that, it promotes Woolworths’s philosophy and concepts of operation and management. This strategy is more likely that core competency leak out. Change is only consistent thing. As long as Woolworths keeps changing its strategy and product versions to follow the trend, the risk will be reduced. By the way, employees from overseas specially should be given a lot of trust and responsibility, and they can be trained to be multi skilled. This leads to a high level of job satisfaction which makes employees work better.

Conclusion

Woolworths’s influences on the local economy are great. The transnational strategy creates employment in the local areas. Local people become wealthier and spend more and therefore local services and economy benefit. These effects create the money needed to enhance the infrastructure and image of the area, therefore more industry is attracted. In this report, our purpose is to analyze the operation of Woolworths and set the target market and position for Woolworths. In order to identify the best strategy of Woolworths for next 12 months, marketing analysis and strategies are really important for Woolworths. This report have faith that these strategies will help Woolworths effectively to stand out in the supermarket industry in both local Australia and overseas market.

References
Ansoff (1957) Ansoff’s Matrix, pain and gain Growth strategies and adaptive learning among small food producers Anonymous. Geelong Advertiser [Geelong, Vic] 28 Jan 2010: 30. Woolworths Slowdown Bowery, Joanna. Marketing (Apr 20, 2006) Woolworths

Hasell, Nick. The Times [London (UK)] 20 Nov 2008: 77. Woolworths Bureau of Statistic China (2012)