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Background to the task

Questions:

1. Using the information in the articles “Supermarket Confidential” and “Tricks of the Trade”, and using research from supermarket and Fast Moving Consumer Goods (FMCG) related marketing and industry journals.


a. Create a detailed list of marketing mix components describing how the “ideal” supermarket should be structured. A detailed list will help demonstrate your comprehension of theory relating to the marketing mix.


b. You may use a diagram and photographs to illustrate.


2. Visit the two supermarkets you will be using for this report and


a. Draw the layout (approximately in proportion) of each supermarket and if possible include photographs. Indicate the name of supermarket on each diagram.


b. List all the aspects of marketing you can observe, e.g. product layout, product range, pricing structure x product, sales promotion or advertising, etc.


c. NOTE: As the size of the store may be a contributing factor to store layout make sure you eliminate this factor by having stores of ‘equivalent’ sizes—do not have a large and a small store.


3. Using the information from #1 and #2 compare and contrast the marketing mix for each store.


a. Construct a table with marketing mix elements as rows and “ideal” and the two selected supermarkets as columns (total 3 columns) and record your data /judgements /observations.


b. Beneath the table, write an analysis on what you have discovered in the table, above, expanding on the insights and observations and linking them to researched and referenced marketing theories and concepts.


4. Describe in detail a target market/segment (one) for each branded supermarket.


a. Describe them using socio-economic, psychographic or lifestyle profiles from marketing theory; remember that observation research is a valid method for data collection.


5. Given the selected target market, analyse consumer influences on purchase behaviour, e.g. situation influences (number of people in store, ease of parking, etc), how much time the target market has to shop, how often they shop and the role that shopping plays in the overall lifestyle of the consumer, etc. (refer to assignment 1 to develop your criteria list).


a. Construct a table with Influences as rows and the Target Markets for column and record your data/judgements/observations


b. Analyse the table, expanding on the insights and observations by linking them to researched and referenced marketing theories and concepts.

6. Selecting one of the supermarkets you have visited, make recommendations regarding the marketing mix for the identified target market (in #4 & #5 above).


a. You are presenting your recommendations to the marketing manager of your selected supermarket. Your recommendations should focus on as how the supermarket can improve the shopping experience as a means of generating greater revenue. Do not focus simply on price reduction or advertising… you are considering the entire shopping experience.


b. Justify your recommendation using researched and referenced marketing concepts and theories.

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Background to the task

Supermarket has been encountering major challenges due to increasing competition. Effective marketing strategy is essential for the successful achievement of organizational objectives.

Purpose of the Report

Purpose of the Report

This paper has focused on providing an insight to the current marketing strategy and recommend for overcoming its limitations in order to ensure sustainable growth in future.

Format of the Report

This report has been segmented into three major sections. First section will discuss the marketing mix components and layout. The second section will focus on the target market and the last section will provide recommendations.

The products of a supermarket must have the potential to satisfy the need of the target market. Supermarket must understand the need of the customers and design its product range accordingly (Andrews & Currim, 2004).

Supermarket has been encountering extensive competition and must adopt competitive pricing, psychographic strategy. Initially, market penetration pricing strategy can be adopted by the supermarkets (Blythe, 2006).

It must be located in a convenient place and the cost of distribution must be minimized (Winer, 2004).

Promotional strategy of an ideal supermarket must utilize the traditional as well as emerging medium of marketing communication (Pride & Ferrell, 2008).

The idea supermarket needs to place the daily essentials such as milk, bread etc at the end of the store so that the customers need to walk till the end and in between other products will be noticed by the customers. Additionally, the fresh vegetables must be kept in the part where sunlight is adequate (Sheehan, 2011).

Woolworths focus on offering quality as well as easily accessible products. It positions its products as healthy and wholesome product. The organization has been able to clearly identify the need of the consumers and understood that consumers want to have value for money. Additionally, it was found that the customers have placed value on the private labeled products of Woolworths. At the time of recession, Woolworths has provided an opportunity to offer high quality as well as cost effective products to its customers (Czinkota & Kotabe, 2001). The strong quality control system is responsible for ensuring great value to the customers (Blythe, 2006).

The pricing strategy of Woolworths is monitored and changed periodically. This procedure is not highly capital intensive. The supermarket uses distinct approaches for attracting the customers through promotional offers, discounts on some products etc. Discount on price helps in broadening the customer base by resulting in higher revenue (Hwang, Bronnenberg & Thomadsen, 2010). The innovating pricing strategy helps in attracting the customers. It does not have a discounted store but the cost effective products and its value helps in attracting as well as retaining its customers. Woolworths believes that price is not the only factor for attracting customers and therefore do not focus on offering huge discounts always (Mitchell, 2014). 

The stores of Woolworths are located in the areas which will be convenient to the customers. It will be accessible for the customers. Additionally, the supermarket has focused on choosing the place where the demand lies. Hence, it can be found that Woolworths has focused on both the convenience of the customers and the locations with high demand. Additionally, Woolworths have launched online stores and it has become more convenient for the customers. Recently, mobile app has been launched by Woolworths so that the customers can shop anytime from anywhere (Omar & Sawmong, 2007).

Format of the Report

The promotional activities of Woolworths are supported by the broadcasting media such as radio and television. Billboard advertising is one of the popular medium utilized by Woolworths for communicating with the target market. Additionally, promotional activities are carried out within the store. For example, in store point of sale, demonstration of products within the store etc are the in store promotional activities.  It publishes product catalogue and magazine for undertaking promotional activities through effective communication (Wowlink.com.au, 2015). 

Aldi offers wide range of own brand labels which is cheaper in comparison to other labels. Their own specialized brands are responsible for contributing in the positive financial performance of the firm. Apart from food products, Aldi offers various products which have a significant association with the season. For example, in winter, warm camping gear and snow gear are offered by Aldi. Aldi has positioned its products as high quality and low price which has significantly helped in attracting large customer group (Sheehan, 2011).

Pricing strategy is considered to be the most crucial aspect of the marketing strategy. It is evident that Aldi offers its products at a cheaper price. It has introduced the national pricing policy which offers cheaper price in all locations. Aldi has adopted a unit pricing strategy so that the customer can compare it with others. Aldi combines price penetration, competitive pricing and psychological pricing strategy for designing its pricing strategy.  Aldi sets low profit marin for the non-food items and the low profit margin gets compensated by the grocery sales (Pride & Ferrell, 2008).

The store layout is kept simple so that it becomes easier for the customers to purchase those. Aldi focuses on minimization of waste at the time of transportation of goods as it offers cheaper price. It has opened new stores where the population is growing. Additionally, it focuses on the fact that the store is situated on main road which will be convenient for the customers. Online website of Aldi is quite popular and it has also launched mobile app for providing convenience to the customers (Sandhusen, 2000).

Aldi uses various promotional tools such as advertising, public relations, offers etc. Special offers are communicate to the target market through advertising on television. Printed catalogues are published regularly. Donating for the charitable work is considered to be one of the major public relation activities of Aldi (Czinkota & Kotabe, 2001). Social media are used for effective marketing communication.

Marketing Mix Components

Ideal

Woolworths

Aldi

Product

According to the need of customers

Own label, high quality

Own label, high quality

Price

Combination of competitive and psychographic pricing and at the time of entering the market penetration pricing.

High price

Profit based pricing

Cheaper price

Combination of competitive pricing and psychographic pricing

Place

Convenient as well as where the demand is high.

Convenient as well as place with high demand

Convenient as well as place with high demand and where the distribution cost is low

Promotion

Traditional and emerging mediums

Advertising, in store promotional activities, bill boards, catalogues, magazine.

Advertisement, catalogues, public relations, social media.

It can be found that Aldi has been preferred by the customers due to its cheaper price. Additionally, the promotional strategy of Aldi is effective and helps in attracting customers (Omar & Sawmong, 2007). The high quality product of Woolworths and strong quality control system has focused on product differentiation.

Woolworth is one of the largest growing supermarkets in Australia. Aldi is a supermarket based in Germany. Australia and Germany are potential markets for the growth of the supermarket.  A target market analysis of the companies has been conducted.

Aldi

Woolsworth

Socio-economic

Aldi targets the middle and lower middle class of the society. Post the global financial crisis, the consumers has become aware of their spending. Aldi sells products at discounted rates. The global financial crisis has changed the sentiment of the consumers.

Australia is a developed economy. The standard of living of people is high. The Government provides adequate support to the people residing in the country. The economic condition of the country is favorable for the growth of super market. The products sold at Wools worth is aimed at the higher class of the society.

Psychographic or lifestyle profile

Australia has a modern and advanced society. There is plurality in the lifestyle of the Australians. The Aussies shoppers have a tendency to buy from the urban markets. Aldi is positioned in the urban areas in Australia.

Since Australia is a developed economy, the standard of living of the Australians is high. The disposable income of the population if high. The increasing growth of the supermarket has been possible due to the high purchasing power of the consumers.

Factors Influencing the consumers purchasing behavior

There has been a major shift in the purchasing behavior of the consumers. The consumers prefer e-commerce sites for purchasing products. However, Aldi is one of the largest supermarkets in Australia.

Post Global financial crisis, the consumers in Australia are spending wisely. Shopping has become a mindful process in Australia.

The target market of Wools worth is high income earners. The standard of living of the consumers has to bear the high cost of the products of Wools worth. Woolsworth aims at social development and focus on the environmental needs of the people of the country. Wools worth sells its product to a range of customers. The strategy of the firm is to increase its market share in future. The target market aims at attracting the people of a range of age. The advertsising targets at all age group of people. Wools worth believes that it is important to sell the product to a wide customers in order to gain competitive advantage. Wools worth approaches the target market via mass customization of the product that is required to improve the relationship with the customers by using the marketing strategies (Abs.gov.au, 2015). In Australia, 76% of the people purchase mostly from the super markets. Wools worth is one of the major supermarket choice for Wools worth. The position of Wools worth plays a major role behind attracting the consumers. Supermarket shopping is preferred by the shoppers in Australia (ABC News, 2013).

Marketing Mix Components

On the other hand, Aldi offers regular discounts to the customers (Palmer, 2014). It offers highest quality products at cheap prices. This is the strategy of Aldi. The success of Aldi depends on providing high quality products to the customers (archive.treasury.gov.au, 2015). Aldi provides its customers highest quality products with cheap prices. This is the major reason behind the success of the company (Butler, 2014). After the global financial crisis (Ausfoodnews.com.au, 2015), the consumers in Australia has reduced their percentage of buying. The consumers prefer to buys products at a discounted rate. Shopping has become a mindful process among the consumers belonging to the lower economic class. Generating the loyalty of the customers has been the major drive of Aldi. The marketing effort aims at encouraging the customers to that are familiar with the brand Aldi. The various brands in Aldi demonstrate variety of quality to meet the need of the customers. The target market of the customers of Aldi are middle income and low income earners (competitionpolicyreview.gov.au, 2015).  The consumers prefer organic products which are sold by Aldi (The Conversation, 2013). This has been the major driver for the growth of the company. The markeing strategy of Aldi is quite different from the other supermarkets in Australia. It minimizes unnecessary packaging of the products. This has made the products attracting to the comsumers. The consumers regularly check for products that are offered at discounts. Shopping has become a mindful process for the consumers in Australia (Greenblat, 2013).

Wools worth should revise its pricing strategy. The price set by Australia is higher than the other supermarkets. They are keeping high profit margin. The quality of products offered at Wools worth are similar to the products offered by other supermarkets. The reputation of the company is high. This has maximized the market share of the company. But the company has to revise its pricing strategy in order to survive in the long run. This will help the company to target a larger segment of the market. The profit of the company will remain the same if it attracts to wide range of customers. It has to start competitive pricing strategy.

In case of Aldi, the pricing of the products is done keeping in mind the larger audience. The company can increase its revenue by raising the promotional activities of the company. This will help the company to increase its market share. The revenue of the company will increase which will be helpful for the future growth of the company. The company can sustain in the long run by increasing its promotional activities like other supermarkets of Australia. This will ensure a dominant position of the supermarket in Australia.

References

ABC News,. (2013). Crunch time for supermarket food suppliers. Retrieved 30 January 2015.

Abs.gov.au,. (2015). ABS Housing Releases. Retrieved 30 January 2015.

Andrews, R., & Currim, I. (2004). Behavioural differences between consumers attracted to shopping online versus traditional supermarkets: implications for enterprise design and marketing strategy. International Journal Of Internet Marketing And Advertising1(1), 38. doi:10.1504/ijima.2004.003689

archive.treasury.gov.au,. (2015). Creeping Acquisitions - The way forward. Retrieved 30 January 2015.

Ausfoodnews.com.au,. (2015). ALDI | Australian Food News. Retrieved 30 January 2015.

Butler, S. (2014). Aldi vows to fight on in supermarket price war as UK profits leap 65%. the Guardian. Retrieved 30 January 2015.

competitionpolicyreview.gov.au,. (2015). Submission to the Competition Policy Review. Retrieved 30 January 2015.

Czinkota, M., & Kotabe, M. (2001). Marketing management. Cincinnati: South-Western College Pub.

Greenblat, E. (2013). Coles, Woolworths still in sights of ACCC despite new code of conduct. The Sydney Morning Herald. Retrieved 30 January 2015.

Hwang, M., Bronnenberg, B., & Thomadsen, R. (2010). An Empirical Analysis of Assortment Similarities Across U.S. Supermarkets. Marketing Science29(5), 858-879. doi:10.1287/mksc.1100.0564

Mitchell, S. (2014). Woolworths may need to sacrifice profit margins for growthThe Sydney Morning Herald. Retrieved 30 January 2015.

Omar, O., & Sawmong, S. (2007). Customer Satisfaction and Loyalty to British Supermarkets.Journal Of Food Products Marketing13(2), 19-32. doi:10.1300/j038v13n02_02

Palmer, K. (2014). Supermarket trick: 'I save £1,000 a year - and don't even buy basic'  - Telegraph. Telegraph.co.uk. Retrieved 30 January 2015.ml

Pride, W., & Ferrell, O. (2008). Marketing. Boston: Houghton Mifflin Co.

Sandhusen, R. (2000). Marketing. Hauppauge, N.Y.: Barron's.

Sheehan, B. (2011). Marketing management. Lausanne, Switzerland: AVA Pub.

The Conversation,. (2013). ACCC's inquiry into supermarket bullying misses the real issue of duopoly power. Retrieved 30 January 2015.

Winer, R. (2004). Marketing management. Upper Saddle River, NJ: Prentice Hall.

Wowlink.com.au,. (2015). Woolworths wowlink | Marketing Support. Retrieved 30 January 2015.

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