Factors Impacting Marketing Strategy, Coles AUS Report
Introduction and Company Overview
Coles AUS is an Australian based company and a leading stores retailer in most of Australia’s retail markets. The head office of Coles AUS is located in Melbourne City, Victoria. The company seeks to offer high-quality retail services for the customers, suppliers, shareholders, and employees in every market it operates (Burch, Dixon, & Lawrence, 2013). The company meets customers demands through undertaking dynamic, innovative, retail businesses which are leaders in value and service. The company targets customers of both genders, both children, and adult aged clients. The company provides personalized gifts and optical products and services and operates in two market segments, things remembered and Cole Vision (Lawrence, Richards, & Lyons, 2013). The products offered include Target Optical, BJ's Optical, Sears Optical, Pearle Vision among others. In the retail sector, Coles AUS faces stiff competition from Aldi, Costco, and Lidl who offer their customers with similar products offered by Coles but at significantly reduced prices.
Current Organizational Capability and Level of Core Competence
Currently, Coles AUS meets consumer needs through dynamic, innovative, retail operations whose value and quality is unique. The company recognizes customers as a valuable asset to its success. The company has been able to improve the organizational capabilities of delivering high quality and value retail services to customers by establishing a long-term and mutual relationship with the suppliers (Li, 2010). The level of core competence of Coles AUS is proper, and this has resulted from the management's ability to understand situational factors in the market environment that shape consumer behavior and habits.
The organizational capability has been the top priority of Coles AUS in its retail operations in the industry. The company manages its employees to offer high value and quality retail products and services to consumers, and this helps the company gain a competitive edge over the competitors (Mathooko & Ogutu, 2015). The company's organizational capability focuses on the businesses ability to address consumers needs, and for Coles AUS, this has been unique to such an extent that the competitors cannot replicate. The effectiveness of organizational capability at Coles AUS has been enhanced by:
Coles AUS effectively makes optimal utilization of the current management and retail knowledge, technologies, and talents of the employees in the creation and innovation of new products. The company values creation of changes in the quality and delivery of goods and services to customers destination (Porter & Heppelmann, 2014). This dynamic innovation has assisted Coles AUS to analyze customers needs efficiently and hence identify the unexploited market opportunities as well as solve retail consumer related complaints about their products in the market.
Consistent provision of high-quality products to the customers
In light of the corporate appraisal processes, the management of Coles AUS continually assesses the strengths and weaknesses in the early stages of strategic plan setting. Coles online department has various advantages of little or no rent expenses, staff costs, stores and maintenance expenses and this makes the company deliver high-quality supermarket products and services to the customers (Rosemann & vom Brocke, 2015). Further, the company offers convenient online shopping. However, on the issue of internal weaknesses, Coles faces competition from Kogan and Woolworths. To address these challenges, the management has cut down prices on essential consumer products.
Building long term mutual relationship with suppliers
Coles supermarket enjoys mutually beneficial relationships with providers of BJ's Optical, Sears Optical, Pearle Vision products and this makes it for customers to have a readily access to the supermarket's commodities as at and when required (Cabral, 2011). This strategic step has made Coles remain competitive in the market for customers gain confidence in its products. The reduced competition has kept costs down and thus increasing Coles profit margins over the years. Further, this has resulted in affordable prices for the goods and thus consumer loyalty.
The Porters five forces of competition shape the core competence and strategy of Coles (Porter, 2008). In light with the corporate appraisal techniques of Coles AUS, there are various core competencies that the company potentially has on the market.
About Coles, the porters five competitive forces include:
- Threat of substitute products in the industry
- Increased bargaining power by suppliers of raw materials
- Threat of new entrants which pose competition in the market
- High bargaining power by the consumers
- Competitive rivalry with other firms in the sector
The core capabilities of Coles enable the company to gain a competitive advantage through the development of competitive strategies. The core competencies of Coles supermarket are:
The use of Modern Technology
Corporate appraisal processes require the use of sophisticated technologies by a firm when running its business operations. Coles have adopted the use of modern business related technologies such as online shopping and e-commerce. Further, the use of modern technology has enabled Coles employees to innovate high-quality products and services that help customers shop friendly in the supermarket (Rothaermel, 2015). This has offered the company with a competitive edge against the rivaling firms since the company can understand the changing customer demands as well as price changes in the industry.
Coles AUS is strategically located at Melbourne City, Victoria where there is a high population that forms the market for its dairy products, health foods, and pantry fillers among others. The company does market research to know customers demands so as to identify the unexploited business opportunities in the industry (Wang, Chen, & Chen, 2012). This core competence has substantially contributed to Coles customers satisfaction on the products offered at their reliable destinations.
Excellent Customer Services
Coles AUS enjoys good customer services as major strengths to its success in the retail industry. Coles employees consistently speak and address customers complaints in a polite, friendly, and fast manner. Other companies such as Wesfarmers rarely talk with clients, and this creates a competitive edge for Coles (Porter, 2008). Coles has acquired competitive advantage against Kogan, Woolworths, and IGA online grocery retailers since it is a large retail store, extensive range of consumer products, and improved customer response mechanisms.
Impacts of Competition on Coles AUS
The competition for supermarket customers in Australia has been very stiff. Coles supermarket faces an intense rival from Woolworths, Aldi, Kogan, and Wesfarmers among many other firms operating in the retail sector (Johnson & Zinkhan, 2015). Although Coles have been successful in the company, this competition from other businesses affects its operations in the following ways:
Loss of Market
Woolworths is the main competitor of Coles whose pricing mechanisms and customer services are better than that of Coles AUS. Most shoppers keep flocking Woolworths since the company offers a favorable chain of discounts than Coles. As a result, the company has lost a considerable number of customers to the competitors. The potential customers of Coles perceive products offered by other firms more better and thus selecting to buy from the competitors (Wiek, Withycombe, & Redman, 2011). The competing companies of Coles have always positioned themselves firmly in the market by establishing competitive strategies which contribute to market loss by Coles.
Increase in Competitive Intensity
Competitive intensity in the industry has positively impacted on the performance of Coles. The rise in competition has made Coles become customer focused. The company delivers competitive product brands to the consumers so as to attract and retain the existing customers (Porter, 2008). The increase of retail firms in the market has created price competition wars. As a result, the management of Coles AUS has advanced the quality of its products and retail services as well as setting affordable and consumer friendly prices. This is a positive impact of competition on the success of Coles in the delivery of goods and services to the customers.
Pricing Changes to Coles Products
The stiff competition in the retail industry affects the pricing strategies of Coles AUS. The range of products and services offered by Coles has been greatly influenced by the high competition levels in the sector. For instance, Walmart sells more superior products to the consumers at a lower price than those of Coles. This has contributed to the management's decision to cut down their prices to make better sales (Porter, 2008). There has been intense indirect competition posed by other different firms in other industries selling the same foodstuffs and supermarket brands offered by Coles. For the company to remain competitive, they have lowered prices as a strategy to stay competitive in the market.
Potential Customer Markets
The establishment of credit cards and online shopping techniques for the customers have nade the existing consumers of Coles maintain the loyalty of the products offered. Other than the present market for the wide range products of the supermarket which are provided in the departmental stores, women clothing stores, and liquor stores, there are other potential consumer markets for Coles (Baker, 2014). These potential markets include:
Insurance Sector Market
Coles financial stability offers the company with an opportunity to exploit potential business in the insurance industry. The company should look for ways of delivering value to the motor car industry by insuring these vehicles (Cravens & Piercy, 2006). With advancements in technology, Coles has the potential to diversify its retail services to financial and insurance services.
Wholesalers in the Industry
Coles supermarket has other potential markets of wholesalers who operate under the retail industry. The smaller businesses depend on the large organizations for the supply of goods and services which they offer to their customers (Dapiran & Hogarth-Scott, 2003). Wholesalers are a perfect consumer market for the supermarket since they buy and sell consumer products to customers on behalf of Coles.
The supermarket is surrounded by different communities whose demands and consumer preferences differ. This is a perfect market opportunity for Coles, and thus the management should design strategies of attracting and retaining these customers (Cravens & Piercy, 2006). The supermarket hence has developed large retail chains whose ability drive rezoning through the consumer systems with proper consideration of community needs.
Impacts of External Environment
The operations of Coles supermarket are affected by external business environment factors both positively and negatively. The most common external environmental factors affecting Coles are political-legal and economic variables.
The Australian government has established regulations which govern the operations of businesses in the organization. Coles supermarket has been licensed as a retail firm, and the government requires the activities of the company to adhere strictly with only the licensed activities (Baker, 2014). This licensing has positively helped Coles by preventing more players in the market who are not licensed. However, being a supermarket Coles is highly taxed by the Australian government, and this lowers its profitability.
Inflation, price changes, and the imposition of taxes adversely affect the retail operations of Coles AUS. Due to stiff competition in the market, the rivals lower their prices, and this tempts consumers to shift and buy competitor products. The supermarket has been forced to keep informed of the market changes, inflation rates, and price changes when making orders to avoid incurring losses (Agha, Alrubaiee, & Jamhour, 2012). Further, the imposition of corporate tax adversely affects the net profits of Coles and thus affecting its competitiveness and sustainability in the market.
Recommendations on External Environmental Factors
Political-legal and economic factors significantly impact on the overall marketing strategies of Coles AUS. As analyzed above, both negative and positive effects arise. The following are recommendations on what the management should address these impacts when forming overall marketing strategies of Coles:
- The management of Coles should obtain the right permission when undertaking marketing campaign programs about the company's products in the market. This will avoid any punishment by the government.
- The company should carry out market research to understand consumer behavior, attitudes, and perceptions of their products before designing the marketing strategies.
- When advertising a new product in the market, Coles should understand consumer needs and preferences to ensure that such requirements are factored when broadcasting the information to the market.
- The management should employ a degree of caution when forming a strategic plan and estimate the price of products and services to offer to different consumers in future.
Globally, the retail sector is highly concentrated and competitive. Most companies try to initiate unique marketing strategies so as to gain a competitive advantage against the rivals. Consumer behaviors differ from one customer to another.Understanding consumer behavior, habits, and attitudes help managers decide what marketing strategies to use so as to attract and retain the customers. The adoption of modern technologies, the offering of excellent customers services, and strategic location of a firm creates core competence over the rival companies. Further, the ability of a business to provide quality products and services, be innovative, and establish beneficial relationships with clients raises the core capability of a company. Therefore, companies should adopt the use of core capacity and competence strategies in their operations so as to gain a competitive advantage over their rivaling firms.
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